Saturday, December 27, 2008


The insurance is a product which ensures safety and security of persons. The importance of insurance is unparalleled in its effectiveness in time of distress. No other product can replace its worth in gold at any time. I have always recommended that the main wage earner of the house hold must insure himself to protect his dependents from the economic distress in case he ceases to exist suddenly. How much should be insured and when insurance should start? These two questions have been asked repeatedly by friends, relations and wage earners repeatedly now days. No fixed amount can be recommended for Life insurance. It would depend on the person who wants take a policy to protect his dependents. It is generally dependent on his income and on his capacity to spare money for a longer time. But taking thumb as a rule a person can take an insurance policy five time of his gross annual salary, if he can afford. For example if a persons gross annual income is Rs. 20,000/- then he should insure at least for Rs 1 lakh . Insurance is a great product for safety and security of the family. But it is not a product of investment.

Recently many insurance companies have introduced a new guaranteed return product. The insurance companies have tried to attract & lure investors from investment products as the equity market is in doll drum They have introduced guaranteed return product with insurance benefit, tax benefit and tax rebate facility under section 80 C of IT act. But the companies have not really spoken out the full truth on the rate of returns. The subscribers to such a policy should be educated fully by the insurance advisors about the implications of such product. It is a good product no doubt but those persons who want to take these policies must take an informed decision before subscribing these insurance product.

Insurers Compounded return (after tax) % Single premium
In Rs. Maturity benefit Benefit on death
Religare 7.20
50,000/- Rs. 1,00,211 2..5lakh
IDBI Forties 6.85 51,000 Rs. 1,00,000 2.57845
Aviva 7.00 1,00,000 Rs. 1,96,715 5, lakh, first year, less later years.

LIC Jeevan Astha 7.40 48, 975 Rs. 1,00,000 3lakh first year Rs 1 lakh later years

From the table above you can notice that the best return comes from Jeevan Astha. (Closing in January) The return is 7.40 %.( without tax) No doubt from the point of view of insurance product it is a good return. It is just above the present rate of inflation of 6.80% which is expected to come down further. Yet the PPF provides still better return of 8 %.( without tax) The guaranteed return in the insurance product doubles up only in 10 years. Only saving grace is the insurance benefit. But in this case also the real monetary benefit would be available during the first year only. On the later years benefit is equivalent to insured amount only. It would much more appropriate to take a Termed Insurance and subscribe to PPF for better guaranteed returns.

The LIC has advertised with great hype that Jeevan Astha policy would provide guaranteed return of10 %. But when you calculate, taking into account tax free elements, the return reduces to 7.40 %.This fact needs to be told to policy holder. How good is this guaranteed return policy as insurance product? These products are meant for shorter duration of five years and ten years so it is not very alluring unless some one dies either in accident or of sudden illness like heart attack or renal failure. The pre tax benefit is higher but after deduction of tax it comes down substantially as shown in the chart.

Among all the guaranteed Insurance product LIC’s Jeevan Astha could be a better product. But it would always be better to take either PPF with term insurance. However the best bet would be to subscribe to ELSS for it had given a return of 14.39%. even in worst period of last17 years. If you can face risk take ELSS. Other wise PPF with term insurance or subscribe to guaranteed product of Insurance. Choice is yours.



Everyone desires to have a dream house for the family to live happily always. Some manage to build house, some do buy outright. But a few may not be able to construct
A house in his prime time for non availability of funds. Till twenty years back it was not easy to arrange home finance. In the event a few bank agreed to finance, there were lots of formalities .The quantum of loan was not enough too. With the liberalization policy initiated by Dr. Man Mohan Singh and later continued by the subsequent Governments it became possible for young people to have their dream house early in their career.

In 2004 the interest rate, for a housing loan of Rs. Thirty lakh given for twenty years, was 7.75%.Slowly the rate kept on increasing and in 2008 once interest rate reached a high of 12.75% percent. It was almost impossible for the middle class people to take loan at this rate. For taking loan of thirty lakh for twenty years the returnable interest components stood at Rs. 68 lakh. When the loan was initially taken by the person in 2004 his interest component was Rs. 29 lakh only. This amount was reasonable for him to return over twenty years without any difficulties. As the interest kept on increasing it become impossible for him to meet both ends met. As a middle class salaried person his income did not increase leaps and bound in last four years. The inflation however kept on increasing from 3% to 12% there by bringing down the real income. He with his limited income needs to take care of his children’s education, marriage of daughter even if he agrees to forget about the luxuries of life. Some of the middle class persons were in his wits end. They were in tremendous tension, thinking as to how to manage the finance for the dream house,( when interest component became Rs 60 lakh) which their family so dearly cherished. Fortunately the month of December 2008 saw a relief in sight. The most of the nationalised bank reduced the housing loan to 10.50% (above Rs. twenty lakh) for twenty years. In case loan is required only for five years then rate is much lower (8.5%). With the reduction of rate it would be now possible for middle class to approach banks for fiancĂ© to build their own home. The home loan finance now is 9.25%( up to 20 lakh) & it may get further reduced in future. Interest can be frozon for five years.

Before taking a loan it should be assessed whether with available finance he would be able to pay instalments regularly. The EMI could be reduced if larger initial payment be made. So, person who wants to own a house must start saving from the beginning of his career. During youth a person has less responsibility. He can invest in diversified Mutual funds for five years. The amount would come handy to pay for initial payments. The building of house could be taken up only after ensuring flow of regular income. As far as practicable the loan, to be taken for the dream house, should be divided between both husband and wife (if she also earns), to avail income tax benefit by both. The total cost would come down. In case the family has also a working child the loan should be taken in the name of all three persons so that income tax benefits could be availed by all three of them. Before taking a loan consult your income tax advisor. He would be able to give you proper guidance on quantum of loan and income tax benefit. Another important point is to be noted that every time interest rate goes up by 0.25% percent points the repayment period gets longer and total payment gets multiplied.. Fortunately the interest rate is expected to go down further after some time. So when you opt for mode of interest payment do not opt for fixed rate now. In case interest rate go down to 7.75% or even 8% it would be prudent to opt for fixed rate. New home loan takers can wait for some more time for better bargain. There is a possibility to get home in lower price in the New Year for raw material cost like cement and steel are coming down further. The existing person who have entered contract already may request for discount as the cost of construction is coming down. Hope, the New Year would usher in a better deal for acquiring a dream house.

Friday, December 19, 2008


The change is the only constant thing in life. I have observed in last few years that our society of Northeast India have greatly changed their attitude towards investment. Now a day’s most young men and women have started talking of investment at the beginning of their career itself. A few mothers, now senior citizen, have also called me up to ask how their daughters can be made investment Savvy. One of my classmates asked can really any person from middle class be a multi - millionaire (crorepati). How much time would it take? She was not asking about business enterprise. She wanted to know if any salaried daughter ever can be a millionaire while pursuing the path of honesty and integrity .The person was a single mother and raised her daughter with great care and through lot of hardship. She is happy that her daughter grew up well and is occupying a decent position in a Multinational Company now.

My reply to the friends was that her daughter (for that matter any body) being a young person of 23 years and earning a decent salary is an obvious candidate to become a multi-millionaire before she turns 53 years. But trait of a prospective millionaire is patience, hard work and attitude towards saving and investment. She must be frugal in her habits and must not be spendthrift .These traits and habits are very rare in younger generation but not impossible. The mother was not very convinced and again asked how much money would she require if she start investing from 2008? It will depend on the money she can afford, was my reply.

If her mother, maternal uncles or paternal uncles donate her around Rs.75, 089/- at this time she can be crorepati in 35 years by investing in good Mutual fund. There are a few persons who kept on investing Rs5233/- per month in the account of their daughters from First September 1992 and found that at the end of fifteen years on 31st August 2007 she received a sum of Rs Fifty lakh on 15th years. If they could have spared double the amount the net realisation could have been a crore. But most important thing is not how to become a crorepoti but to develop the habit of saving and investment on a regular basis. How can that are achieved?

This can be achieved by explaining the magic of cumulative effect to children. Take them to a bank early in life and show how a bank or post office operates. Give them a piggy bank and ask them to collect and save one rupee coin whenever government Mint issues it. Let the entire monetary gift, received by them every year from their relations, be deposited in PPF account. Explain to them what PPF is.( LIC’s single premium policy, Jeevan Astha, is excellent for children& elders where return is 10% without tax for 10 years, with tax rebate under 80C. It is open till January only! No other plan provide such higher return with safety)
Show them how they can build up a fortune through the magic of cumulative effect. A small amount collected and saved regularly can make our children a millionaire. The fact can be noted from the example given here under. Take the children to ATM. Show them how these are operated. The children would be excited. Some of the modern schools have stated teaching at the primary level, how to plan marketing, how to budget and how to save money. These are fundamentals of life. Parents can take initiative and can coach boys and girls to save money and ask them to buy a book on general knowledge rather than buying an expensive garments, shoes and cell phones as they grow up.
Returns In 10 years In 15 years In 20 years
9% 5168 per month 2643 per month 1498 per month Rupees
12% 4348 per month 2002 per month 1011 per month Rupees
15% 3634 Pr month 1496 per month 668 per month Rupees

The above table clearly shows that assuming a return of 9%, a monthly investment of Rs. 1498/-for 20years can give an investor a return of Rs. One million. The 9% interest is available in Housing companies, and in many other corporate houses and also in banks. In case the person wants to invest in Mutual fund as low as Rs 668/- P.M. also can given him a million in 20 years. If a person can afford Rs 3634/- per month to save he can be a millionaire with in 10 years time. To become a millionaire is not very difficult as it is made out to be. The required qualities are the patience, hard work and formation of habit to spend less and save more for brighter future.


Friday, December 12, 2008


“What is the best saving instrument for us now”, asked a worried senior citizen to his friend.

“I am worried myself. How do I advice you? Replied his friend. Both the friends decided to visit one of their chartered accountant friends for his advice. All three friends sat together over an evening cup of tea in the chamber of their friend, Mr. Hazarika, who was also a specialist in tax and investment matter.

Mr. Hazarika advised them after seventy years senior citizens need not invest in equity unless the risk taking capacity is very high. The volatility of share market is unpredictable. So persons dependent on income out of investment should not invest in equity or equity related instrument generally. Both the friends asked him then what should senior citizen like them do?

Mr. Hazarika said that all the invest able funds available should be distributed to fixed and fluctuating income instrument like Bank fixed deposit, Debt instruments like debt fund, gilt fund , liquid fund and equity based arbitrage fund, depending on the tax paying factors. Both the friends become awe struck and conceded that they had not heard much about the arbitrage fund, gilt fund and debt funds. Only vaguely they were aware of Bond fund of Reserve Bank of India which is no longer exist. Mr. Hazarika advised his friends that the senior citizen must learn more and more on investment avenues now a days. The inflation cuts away more than thirty percent of income. This must be protected. What is to be done now?

Mr. Hazarika asked whether both of them are tax paying citizens or not. Both replied in affirmative. In that event it would be appropriate for you to divide your investment into two segments. First invest at least sixty eight percent of your invest able amount in Fixed deposit in Banks and balance in tax saving instruments.

“Why sixty eight percent? Why not sixty or fifty percent? Asked one of his friends.
“Because you are sixty eight years old. You are still capable of taking some risk we are deciding on the premises that no more equity exposure from seventieth years only.”

“Oh! We understood your reasoning now”!
“But it is not necessary that you have to invest in equity at all! If you are still risk averse
You can keep all your money in Debt instruments from now onward. But that would give you limited return of 10% to 12% percent in total...

Both the friends unanimously replied that they could subscribe to equity at least 10% of the invest able income for they needed to beat the inflation.
Hazarika advised them that in that case they can keep 5% of their investment in balanced fund.
Which Balanced fund to be subscribed?
“Go to and you can subscribe to any five star or four star funds. You can consult also. But my preference is value research. It is independent, honest and valuable advisory”, said Hazarika.

Since Seventy three percent of you invest able fund had been taken care of now balanced twenty seven percent should be deployed. Out of this twenty seven percent if you have existing PPF account you can keep 7% percent there subject to a maximum of Rs 70,000. And the balance twenty percent you can invest in IDFC long term Bond fund or in ICICI gilt Fund. These are not taxable and giving return of 13% to 20% percent at present. Alternatively you can keep the amount in Arbitrage fund with no tax and with return of around 8% to 11% all the time. You must know during present world’s financial crisis when equity tumbled down to -50% only funds which withstood the turmoil were Bond fund, gilt fund and arbitrage fund. The return of Bond and gilt fund may go down if interest rates stop going down or if it comes up. But Arbitrage funds hold it own irrespective of melt down. You can have faith on this fund. It is all weather friend of senior citizen with no tax impact.


Thursday, December 4, 2008


The recession has brought in unemployment . The ripple effect of the melt down has reached the shore of realty sectors, investment banking sectors and later it took under its spell all export oriented industries. The slow down in bank, retail and automobile industries have greatly affected IT and IT related industries. Many industries have laid off workers and executives. unemployment inUSA has touched 5,00,000 person in November against economist's predication of 2,00,000. It is understood that Mr. Obama hopes to launch a stimulus program that helps drive the agenda of his presidency: improving the nation's power grid in ways that reduce carbon emissions and cut energy costs, shoring up roads, bridges and tunnels, and computerizing medical records so that doctors have up-to-date information on patients.

The financial institutions of India have stood their ground as banks were not involved in sub prime situation. For enduring support of RBI and Government of India liquidity position of Indian banks have stabilized to a great extent. But unemployment situation have worsened as the recession has set in. Again Repo rate needs to be brought down to ensure growth & employment.

The recession in Steel, Graphite and Aluminum, affected graphite electrode industries, Calcined Petroleum Coke industries, Electrode carbon paste industries even Refineries. All the four refineries of Assam producing best petroleum coke of the world are carrying higher inventories. There are no takers of RPC. The IOC is bound to bring down price to generate demand. In Assam, unlike other states, none of the industries have laid off workers till now. But only time will dictate how long industries will be able to sustain the pressure. Rural employment could be generated, by State, promoting small industries and starting farming through private & public joint enterprise. It would create large employment.

The recession has created highly educated unemployment in India. Some of the companies like Syntel and Wipro have postponed the appointment of engineers. Engineering graduates of 2008 are only expected to join in the third quarter of 2009. Wipro has even reduced the salary from 2.75 lakh a year to 1.30.lack a year. Though salary has since been reinstated but the condition of working in a BPO first has become mandatory for 18th months before getting a hardcore technologists job. . With such offer engineers are feeling nervous. Under the circumstances what new students are going do?

Hitherto, the recession had affected world for a maximum period of eighteen months. But this time employment creation will be effected at least for three years. The new boys passing out higher secondary may think of Power Engineering. The graduate courses are available in Jadavpur University and IITs have post graduate level. Graduate engineers can take MTech. Course now .Within three years infrastructure areas would develop so power sector & civil engineering would get a new lease of life. This is the time for “Core Engineering” courses (Mechanical, civil, and electrical) rather than IT sectors. However IT would comeback in great demand after four years.

More than the organized sector, workers at the unorganized sector are getting affected. There are lots of workers working in diamond polishing & other small scale industries. Workers in handicraft segment, hospitality and tourism industries are greatly affected. In organized sector the most effected area are BPO, IT & automobile. No new job creations are envisaged in aviations, steel and cements too.

What is to be done now? Those persons who have lost jobs may try to utilise the time by developing new skills. They can take up course for SAP, join MBA or Chartered Financial Analyst course. These are new areas with ample opportunities. The course in animation, power engineering, and environmental engineering and bio technologies may be thought of. Fresh graduates can take up some assignments in well known companies even in low salary, waiting for better assignments, where skill can be learnt. HCL, Vodafone and Idea may take engineers in Assam. Public sectors jobs offer decent opportunity for advancement now. Graduates from Arts, science and commerce can prepare for jobs in banks, insurance and civil service.

The enhancement of productivity would be the watch words for workers. Gone are the days when workers could ignore the productivity and revolt. (Dunlop offered monthly compensation of Rs2000/- P.M to all workmen for temporary period to avoid recession. CITU Trade unions agreed but workers disagreed resulting in suspension of work.) The workers may avoid lay off and forced leave concept by discussing with employers for increased work load & cost reduction methods temporarily. Steel and aviation industries have accepted temporary pay cut and are surviving. Industry may be able to avoid lay off for sometime with better productivity. The recession may engulf all of us. We need to fend for ourselves with patience by developing new skills and government by developing new areas like private farming.


Saturday, November 29, 2008


Indian Commandos have been able to defeat the terrorists. Kudos to them! The Government of India never tried to negotiate with the terrorists unlike on previous few occasions. It was befitting reply that terrorism cannot be negotiated. Our commandos have done a tremendous job. But would our government and civil society now be able to eradicate the terrorism from our nation ? I hope for the best but do not like to believe that people are capable of challenging the terror. .The main reason is that our beloved country is a fragmented nation and is full of dichotomy. Neither our social leaders nor our political leaders can get united to voice in unison against terrorism. Everyone has his own axe to grind.

Has any group from our country said, irrespective of caste,creed and religion ,that we will never allow the terrorists to overcome us whether it is in India, Israel, Thailand or America or any part of the world? None ? Even our leaders have to think twice to demonstrate an united face even at the time of national catastrophe like terrorism. No two religions will also combine to even loudly protest. Hindus would think of Krishna, Christian reaches for God and Muslims seek asylum in Islam before even words of condemnation are uttered against terrorism .

Terrorism had started at first as an ideology to win over control of geographical area. Now terrorism have become a profession.Terrorists have no caste creed or religion .They are killers. Incidentally they pursue a religion. They would not even spare any person of their own religion when they pursue the blind attack. Should terrorism in Bombay be taken as an isolated case? Or is it a part of the grand design of terrorism all over the world? How do we challenge the terrorism? If all sensible human do not combine it would impossible to contain terrorism in the civilized world. Do anyone have any answer how to deal with terrorism?? If we sleep over the problem today there would be no tomorrow for all of us. Do You agree ??

A friend of mine wrote to agreeing that terrorism must be contained yet he asked a pertinent question. I quote him since he is from North east and seen what terrorism is. "I agree with you. But terrorism had to be define well as in case of Nelson Mandela and Dalai Lama. Dear sir I am from Nagaland and I cannot brand my people fighting for their right to self determination under the provision of UN'(Indigenous People right to self determination) as terrorist."
At first, it appeared, he was little confused so I wrote back to him with the following words "Congratulations for your conviction. But terrorism should not be confused with the Right of self determination. Terrorism is not a mission for the love of its its own people, place and culture. If some one obstruct and become impediment then only you retaliate but do not start an act of terrorism. Both Mandela and Dalai Lama were apostles for the cause of their own people.Both were great fighters for their culture, land and people but were never a terrorist. Both were harbinger of peace, progress and wisdom. The fight for right of self determination is not an cowardice act of terrorism. It an honourable act.Even UN has provision for it. We salute your conviction but not terrorism. We have great regards for the honorable way of the right of self determination." My friends was of course convinced that terrorism should be rooted out of the society.

Many people all over the countries responding to the discussions initiated by me in the google blog wrote back to me as under;"The thing about Mumbai terror attacks is that no one knows exactly what the terrorists want. Not trying to be judgemental or anything, but Indian constitution, and the Indian system, is one of the most liberal ones, and no one is being discriminated against, at least not on the basis of religion".

If there is someone who is being discriminated against, it is the common man...The terrorist come out and kill him, The government regulations will affect him, and his life is made difficult by so many other ways.

The Mumbai attacks are not an isolated case, as recently Delhi underwent a series of blasts, in which many people were killed.

Terrorism has to be dealt with an iron hand, and that is the only way to deal with it. For the first time in India, the authorities refused to negotiate with the terrorists and that is a good thing. In the past the terrorists had managed to bargain and thus get many hardcore prisoners released. At least this time no such thing happened.

But the most important points out of our discussions emerged that until almost all the educated citizens come out openly against the act of terrorism boldly ,with anguish ,always people from outside the nation would take advantage of the society. The terrorist have no love for the country and society where act is perpetuated. Today terrorist are not always foreigner. Without convince of local people they can cannot take up venture of terrorism repeatedly. So Sealing of borders, sealing of sea route must be the top priority. Raising of internal security ministry perhaps would be the foremost duty. The entire contingency plan to deal with terrorism must be taken up with right earnestness under an independent commission headed by person of the status of a General. He should report directly to the Internal security Advisor. The raising of a Commando force and stationing it in the capital is farcical. It should be stationed in the border areas and sea bordering towns and land lock areas where terrorism are actively pursued or there are probability of pursuing. Intelligence and infrastructure need to be improved a lot. What is the possible reason that Europe especially France, Germany and Britain have been able to contain terrorism? It is for the people of those countries who believed in the golden dictum that "Eternal vigilance is the price of liberty".The civil society of those countries raised their voice against terror and forced the government to actively put the mechanism on place to tackle terrorism. Those countries gave more importance to intelligence system than the guns. It is the civil society who became the active agents against terror. That made it impossible for terrorist to mount sustained attacks. Perhaps the same thing would be required for our country too. This kind of awareness in some of the workers of the tea gardens once made it impossible for terrorist to penetrate the tea garden after initial hiccup. Danger is not only from outsiders it is equally required to confront insiders. If the society can evolve solid understanding then no power in the world would be able to penetrate terrorism into our society. Commando would then stand by like in Britain, France, Japan and Germany only in readiness!
For the first time the Government of India did not try to negotiate with the terrorist this time. Of course on many occasions it is a tactics for gaining time ,to understand the environment, situation and strength. In case of Mufti Muhammad Sayeed( when he was Home Minister)the Government succumbed very fast to release the political pawn. That was bad. I do not know if there was no political heavy weight in the present Bombay siege. Commandos have defeated terrorists today but would we be able to kill the very base of terrorism? How?
Do we think merely with guns terrorism can be contained? Do we believe that the conviction of civil society can root out terrorism? Have we stopped behaving like a selfish entity? Have we tried to become more humane? Has intelligence improved? Are anyone there to answer us???How can we stop terrorism?

Monday, November 24, 2008


I found a question asked by a fellow blogger: what makes a great blog? It was a very interesting question. The question appealed me and I replied to the fellow blogger in a discussion plate form. Yet, I thought there are a few admirer of my writing who may be interested to know as to what have I replied to my fellow blogger friend. I am repeating my reply for the benefit of those who do not participate in blog discussion yet go through my blog sometime. Here it goes:

"A blog can be attractive if blogger can think in an unique way for himself and can touch the mind set of his readers. A successful blogger is he who can articulate his thought in a way that others feel that to be their idea! Every blog is an unique expression of mind, because each writer of the blog is an unique person. Yet there can be a harmony of thoughts. The way of expression may differ. As an individual he or she is an unique phenomenon or personality. A human can think of the same thing in thousands of way, dream similarly, acts differently and perceive in an outstanding way. The content of the blog must touch a chord in the readers heart and mind. If a blogger can empower others, make a person happy and usher in total happiness and absolute peace to readers he would be the most sought after blogger. We really hail a great blogger with an unique mind.
Greetings and congratulations to an unique, interesting and empowering blogger. GPB,5,Deshapriya park Road, kolkata, 26'India. e"

Wednesday, November 19, 2008


Pulak Lahiri was a giant of a friend. A friend in need is friend indeed! I met pulak long back when I was a young boy of seventeen. It was the day of admission and I was looking for the place where interview would be held. Noticing my hesitant steps a smart slim and confident looking person came forward and asked me " Have you come for the admission interview?" I nodded my head hesitantly. He showed me the way and told "Go ahead. Best of luck . Throw away your all inhibition. Dame it ! you are going to be a Cottonian indeed". Later, I knew the person was Pulak Lahiri, a well known football player of the school and college tournaments. Pulak was an educationist, Sportsperson, writer, a sports journalist and a compassionate friend but above all he was a humane per excellence!

He used to live at a hilltop house at Sukleshwar temple near Panbazar. Pulak was a class senior to us and was intimate with Pradip Baruah, then a great table tennis player and a brilliant college theater personality. Pulak, Khagen Dutta Baruah and Pradip were friends from youth.All were sportsmen to the core of their heart, friendly and vibrant.During the college days of Cotton I was not very intimate with pulak. Yet, we used to meet him at college canteen or and at Ashoka, panbazar for a cup of tea sometime. He was a witty person. His knowledge of sports was vast We used to nick named him as "Encyclopedia the sportica". Whenever there was any doubt on records relating to sports, pulak's was the final words. "How many times Viay Hazare scored centuries?" OR Did DaTTU Phadker played for Bengal or Bomaby before inclusion in Indian team"? "Who was the first Indian to score triple century"? All queries were settled by Pulak.

During our post graduate days, Pulak used to educate us which are the best shops in calcutta that catered to the tasty Sandesh in season. Is it Bhimnag or Nakur or SenMahsoy? He would always vote for Nakur. Which is the best printing press? Saraswati or Gossain. He would always select Saraswati. Which one is the best Bangla magine "Desh or Amrita"? He would name "Desh" to be far superior. Not that those things mattered much to us . yet it was good information in a collegiate rendezvous.But Pulak was always at the centre of the rendezvous. He used to preside over the session naturally. In fact he used to magasticaly preside over the gossip session and was known as the "Firstclass Addabaz". For him our general knowledge was at its best. After our post graduation we went away in two different directions. He went to education and I joined business house. But our common link remained to be the creativity. Since LBS have remained my major publisher, very often we used to meet at the bookstall presided over by Khagendra Nath Dutta Baruah.Here also though Butu presided over the session, Pulak used to be the Master of the ceremony. Here I used to meet many wellknown writers including Biremdra Kumar Bhattacharyya,Lakhmi Nandan Borah, Sananta Tati and Suren Medhi. As soon as pulak saw us coming, he would yell to Darika,an assitant, for organising hot black tea and ask us " hey, how about a peg of Rum now?" The black tea was nick named as Rum. Most of the time I would reply " rather a glass of coffee liqure would be preferable". Bhutu, knowing my preference, always sent for Coffee from Ashoka.

One day during ninties of the last century pulak came to me at looit Sora where I used live then for sometime while visting Gauhati. He said let us edit a book of poems written by Nabakanta Barua. I was surprised. I asked him Did you ask the permission of the poet? His poems are wellknown already. Why do you want to edit it? Already all the copies of "Hey Mahanar..." were sold out. He replied "it would be different kind of publication where some of the selected poems of the poet would be printed. Bhutu wants to publsih it that way. He took permission of Barua sir with a rider that in this project you should be also associated". The conversation of that day ultimately resulted in a slick book of poems later, which was distributed along with a CD of recitation. The publiction was recived well by younger generation. Bhutu's dream came true for the efforts put up by Pulak!

Pulak's son worked for a while as an executive in our company. One day he rang up from Gauhati informing me that he is visiting calcutta to meet me. I asked why do you have to visit calcutta? I would visit Gauhati next week. we can meet then. He insisted that he needs to met me soon. I asked him to tell me over phone his problem. He hesitated first then told "Look Gautam, I am very upset. My son wants to leave the job at garden.
what is this? I do not want him to leave the job of Magor. He is getting a job in Bombay." I replied " convey my greetings to him. Tell him he has done well. You should not stop him. It is his life. Why should you interfare? If he does not change how would he go up?" Ultimately he agreed to the request of his son and allowed him to join the new job. Pulak somehow thought in case his son leaves the job I would feel bad and he would be embarassed. This was a wrong perception of his. When I explained he felt relieved. He never wanted to upset his friends from Youth till now.

I am little surprised to hear the sad news of his demise. He had no0 sickness and was robust. I got the news too late. This was the time when terror did hit Gauhati. everyone was talking to me but forgot to mention about his demise the same day when more than Ninty people died. When I got the news it was too late. His son came, performed last rites including memorial and religious services. Whom do I communicate with for expressing my grief? I talked to my wife and thought I would visit gauhati and meet Pradip Baruah ,his life long friend to express my condolences. Pulak was never a high flier, always a high achiever with silence. He truelly left for his heavenly abode silently without the gaze of his lots of admirers.He was great person full of humility and humanity. I lighted up a lamp today to pay my respect to the memory of Pulak. Surely, God will bless him!

Tuesday, November 18, 2008


To save from the effect of down turn of Global economy it would be necessary to stimulate the Indian economy in a sustained and disciplined manner from now on ward.The Government of India has taken some measures. The RBI has also taken some strong measures of monetary control. But these are not enough.I must admit that the RBI's steps to reduce CRR and repo rate are good but not enough. These steps should have been take much before. According to me there are further scope to reduce the repo rate to ease the liquidity situation and to stimulate the growth rate of the economy.According to me Government alone cannot stimulate the economy.The trade and Industry have also responsibilities to reduce price of their products. Realty sector is suffering but have not yet reduced per square feet rate. why? The cost of steel and cement have come down. Why would not builders bring down the per square feet Price? If Government of India is sanguine that a further stimulus are necessary there should not be any reason to delay the further bringing down of repo rate for empowering bank to stimulate growth. The argument put forward by Rahul Bazaz that price cannot be brought down is not tenable. Automobile sale will boost if adequate price cut is initiated. If it is not done voluntarily the market dynamics would force to bring it down after sometime.

Yes it is a fact that the inflation has come down to a single digit figure. It is no mean an achievement. According to our calculations the inflation, despite reduction of interest rate ,would further come down due to better availability of farm products during January and February and would remain low till the month of March 2009. However it is expected that inflation may overtake the economy again in the April, May and June in case Monsoon fails. Perhaps inflation would further comedown to 7.5% in the months of February.

However we are not very sure that growth rate would stick to 8.5% during the last few months of the year.The finance Minister has been stating that he expect a decent rate of growth in current financial year. We do not think so. Despite the fact that there are only four months to end the year it would not be possible for the economy to hold high growth rate. The turmoil of the world would manifest in Indian economy now. There is no reason to believe that the Indian economy would remain decoupled from the impact of the global down turn. No economy in the world can stand alone now especially those economy who has direct link with the economies of Britain and USA.Even India would get backlash of the recession of Japan. The export to Japan whether it is iron ore or tea would surely be effected. Less and less of business persons from abroad would visit India during these four months. Indian Hospitality industry used to make hay during these months. These industry would suffer due to impact of less number of visits by executives from abroad. These four months are crucial months for hospitality industry and tourism industry. These two industries would be bound to suffer during this period.It is time for hospitality industry also to bring down the price of their product.It is understood that Hospitality industry is contemplating to bringing down price soon.On our current forecast, GDP growth is poised to fall to a seven-year low of 6.0 percent in 2009/10, from an estimated 7.2 percent in 2008/09.
It is understood that the government imposed a 5 percent import duty on a range of iron and steel products, and slapped a 20 percent duty on crude soybean oil imports to protect domestic producers in the face of falling commodity prices. This is a commendable act. Similarly Government must bring pressure on the realty sector and auto sector to bring down the price instead of giving indirect incentive to the prospective customers. The reduction of price in the basic cost structure would provide higher incentive to customers due to cut in tax etc and that would stimulate sale of automobile instantaneously. The RBI also advise banks to bring down the rate of interest of Housing loan too so that more and more people are interested to build houses,apartments and condominiums.( To stimulate growth Government of India may consider nil interest to certain sectors in line with Islamic banks of Dubai). Once the housing loan( in 2004) was 7.75%. It is now 10.75%. I would like to urge that RBI should bring down further repo rate soon with an understanding that both housing loan and auto loan interest would be brought down further by 100 basis points i,e. to 9.50%. This would ensure lot of activities and would stimulate growth.

Foreign funds have withdrawn $13.1 billion from Indian shares this year, adding to pressure on the rupee which is also weighed down by a widening trade deficit as export growth slows.Chidambaram, our finance Minister recently said that,India, Asia's third-largest economy could miss its annual export target of $200 billion for this fiscal year as the slowdown in developed nations trims overseas demand. Despite the fact that Government of India feels that the growth rate would remain high during this financial year and the next year would seen much better growth large number of our economist friends believe that the growth rte end up in 7% in this year and the next year's growth would not be substantially much higher.It could go up marginally.
It is understood that in G 20 meeting there was complete unanimity among the participating countries on the need for a co-ordinated fiscal stimulus. The fact that the group had agreed to meet again in April means that the new administration in the US would be involved in the action plan.

It is further understood that while regulatory changes would be implemented at the national level, global bodies could be tasked with oversight.

Dr. Ahluwalia Deputy chairman of planing commission mentioned about providing a counter-cyclical fiscal stimulus to the economy and said government should step up its investment in infrastructure. We entirely agree with this suggestion. The country must step up development of infrastructure for the sake of multiplier effect on sustained growth of the economy.It is true that normalcy in markets would return only when the people are confident that no further collapse in the financial system is likely.

The hope of the Government that there won't be any job losses in the economy as a whole, would remain an illusion. Despite the fact that some of the business houses responded to the prime minister appeal not to affect the job cuts the economic slow down have already taken the toll on unemployment. Employees have been asked to either accept pay cut up to the extent of 30% or to stay away for a period a three months with half pay. In certain place like Bata, in SahagungBihar, agreed but workers revolted. This kind of arrogance would bring in catastrophe not growth. The employers would be forced to declare suspension of operation, which would be counter productive for all concerned.In case depression & deflation need to be prevented immediate actions as stated above must be taken forthwith by Government, Industries and workers.

It is true that our country is in a better shape, compared to Europe and Japan now, but unless positive measures to boost the economy are taken by all the stake holders the global turmoil would overpower our country' economy and there would be no escape route than to take care and revive the economy. I have complete faith on the new economic team headed by Dr. Rajan and his vision of growth. But measures should be crystallised soon and implemented effectively.


Thursday, November 6, 2008


It was a dark fall evening.On 20Th October,2008, lazily sitting on the western balcony of my house at Kolkata, I was reading a poem written by my friend Dr. J.l. Borkakoti of London School of Economics. The first paragraph of the poem was significant:

" To suck life from the booming drums
when blood freezes the skull,
Is not for you
To seek shelter from the strokes scythe,
From the stare of vacant shining plates."

Hardly I finished reading the first stanza, the telephone rang . I picked up the
phone. It was Smita, my daughter in law, from Castaic , LA. She enquired about our health and welfare. After exchanging pleasantries she pensively revealed the sad news of demise of Tapan Kumar Dutta. Smita said in a husky voice, uncle Tapan passed away peacefully at Hospital in Los Angles. I became thoughtful. Memories of past years passed through my mind. Only a few days ago I called up Aparna,his lovely wife enquiring of Tapan's health. But I could never realised that end was so near.

I lost track of Tapan after our college days for he went outside the State for his higher studies and to work, there after for a long time, abroad. I continued to work in India. In fact we never met during our working life though I continued to get information about his development, well being and career. Almost after twenty five years again we first met in LA(courtesy Dr.Maya and Anjan Bhaumik)& there after in Guwahati whenever he used to visit home. (During my visit to USA on official work during Seventies & eighties I never met him for he was working then in Saudi Arabia).
The news of Tapan's demise made me sad & nostalgic.It was a personal loss for me. He was my childhood friend. We lost track of each other for long years but regained contact almost after twenty five years. Tapan was a vibrant person. He had a personality which impressed everyone. He could endear himself with all ages. Tapan was not only an efficient engineer but a very compassionate human being. The thought of his death so early made me pensive. After receiving the news I went to my study and prayed for a while for the peace of the departed soul. We also invoked the blessings of God to provide strength to his wife and children to withstand the loss with a sense of resignation. A leaf of my childhood days passed by my eyes.....

We both were born in forties of last century & grew up together in the same area of Uzanbazar, Guwhati town of Assam. This was the area where we were raised in our early childhood.We played here & went to private libraries and were educated in well known schools.I met Tapan for the first time when we were twelve years old through a neighbourhood friend Utpalananda Bharali. Utpal and Tapan were great friends and classmate in Don Bosco. I was in Kamrup Academy. Both the schools were well known for its games and social activities beside academics. Don Bosco was an English medium school and Kamrup Academy was a vernacular school. Tapan learnt English under the supervision of Father Burns,an Irish Priest of Catholic order. Naturally Tapan could articulate his thoughts exceedingly well in English as a young boy. His power of expression impressed me most and I was awe struck during those days listening to vocabulary of Tapan. I felt proud when Tapan used to come to our house to invite me for a game of table Tennis.There was a famous photo studio own by late Dhani Ram Borah near our house in M.C. Road. In fact this was a great rendezvous for famous people like Kamkhya Nath Thakur,(artist and commissioner of scout) Purna Bharali,( Scientist) Golap Chandra Chowdhury( Headmaster) & Kirti Ram Baroowah(Doctor). All of them were famous people in their own right and they used to gather together regularly. In later years famous players of Assam used to meet at the same place to listen to radio commentary of test cricket. Tapan used to come to the studio to meet us and to play table tennis. In spite of our different schooling background we became good friend . This was possible for Tapan loved meeting and mixing with people.

Tapan was very intelligent & witty.He did not mind cracking jokes at his own expense. He was a fantastic human being. Though he was a student of science yet he loved recitation of poetry. I still remember when we met after twenty five years, his first question was : "Hey! what about your poems? Do you still write or not?" He was very happy that my poems in English were published by Oxford book of Kolkata. He had amazing power to remember small thing of life ! Helpful to his friends Tapan always enjoyed the achievement of his friends. A brave person always ready to face the turmoil coolly but never minced words. Even under challenging circumstances he never hurt any one. Humility & polish behaviour were his strength. The sportsman spirit was his hallmark.

As we passed out our matriculation we joined Cotton College.Tapan took to Tennis then . He played later regularly in India club. I played tennis for a short period but devoted more time to writing poetry, play and recitation.Tapan never took part in dramatics but he was very much interested in poetry. He used to encourage Ishan and me in our endeavour to write and recite poetry. I feel his loss greatly. How can I forget, it is at his suggestion, a group of Assamese resident gave me a reception, in a meeting, in LA few years back for writing a book of poems "A windowful of Sky" published by Oxford Books.

Tapan lived a truly satisfying life.Over the years we both grew up to become a senior citizen. I admired Tapan in my younger days for his vibrant personality. Yet I admire him now for his outlook towards life. He loved to enjoy life as it came!Tapan used to tell, "for a fool retired age is a bitter winter, but for a wise person it is a golden time for enjoyment." He told me "you must take care of your health to be able to reap the full benefit of retired life". Today Tapan is no more but his words are alive in my mind.There is a great difference between simply living a long life and living a full and rewarding life. According to a Buddhist philosopher "What is important is how much rich texture and colour we can add to our lives during our stay here on earth. However long that stay may be quality is the true value,not the quantity."
I am happy that Tapan lived a full & rewarding life. He added colour to his environment and in his relation with friend. He would be remembered for the quality of life he lived. Tapan's departure would crate a great void in us. We will be remembering him always- a bright vibrant friend who was long lost but regained eventually at last.! We pray Almighty for the peace of the departed soul.

Wednesday, November 5, 2008


The election of Barrack Obama today as the president of USA symbolises the rise of new order in the world. He stands for the change of perception of the people .His emergence signify that in a modern world skin is less important. What is more important is the capacity to empower humanity. His rise symbolises the synthesis of poor and rich, black and white & brown and yellow. The synthesis of unified colour of USA was evident for the first time when he addressed million people in Chicago to acknowledge his victory. He graciously acknowledged the contribution of McCain in the nation building. Obama requested for his expertise to build up new world . Hail Obama as the leader of the New world order! On 28Th August 1963 Martin Luther King delivered his famous speech "I have dream.." The election of Obama as the president is the fulfilment of that dream.

Why are Indian happy? Because, Indian middle class can relate with his reasoning and democratic vision of equality, fearless society and universal brotherhood. Apparently, he has made some remarks which are not apparently favourable, at the first sight, to common Indian. yet most Indian largely rejoiced his victory. The most urban educated Indian felt that some one of their own breed has been elevated. Obama had no connection, even remotely, with anything Indian. His respect to philosophy of Gandhi, tasting of Indian food, his friendship with his Indian room mate in his student days in new York are nothing remarkable. we all go through these phases in our life. I like Italian food that did not mean that I am admire everything Italian. I do not very much like British food yet I feel great about British pride on scientific achievements as well as human approach towards people of the world.Obama appealed in Malayalam and in Hindi. even that did not make him popular. His personality, his reasoning and his emergence out of depravity made him favourite.

Many people think Obama would not be as friendly to Indian Interest as George Bush was. This is a wrong conception.What he uttered during his campaign days that he would not tolerate outsourcing. It may rather prove beneficial to India. He might rather ask Indian firms to set up shops in USA so that outsourcing could be avoided yet Indian firm can flourish by appointing Americans who is capable of learning IT.

His utterance on Kashmir should not be wrongly interpreted. What he meant was that if better relation between India and Pakistan could be ushered in than both the country would be able to devote more time in confronting terrorism.He has never told that Kashmir should be handed over to Kashmiris or to Pakistanis. Did he said that? one thing must be kept in Mind that what he said in the campaign was a short crisp statement. As soon as he sit in the hot seat of the president he would weigh both the sides and proceeds with what is the best for the world.

Obama is for a change. The change is for a better world. The change is meant for oppressed& deprive people and the nations. The change is for the minority community.The small business in America ( including 7 to 11 stores) are mostly owned by Indian American.The most petrol pumps of new York are controlled by Indians. Obama promises that minority business would be looked after.In that event who would be benefited? Indian mostly, as they are the owners of small stores in America. Nobel Laureate Amartya sen , hearing the news of Obama election, said that he was delighted with the victory."It has important consequences for India". he added

I have followed successive elections very carefully. I have seen whenever Democrats win the election then America become a much more vibrant nation. The economy booms. One of my friends son went to America in 1990. I told him that he has gone in the best of time to come.At that time Republican were ruling. I told them that in another four years there would be elections and in case Democrats wins there would be more employment and better financial stability. In 1995 Bill Clinton came to power . America's entire economy changed for the Good. Unemployment were wiped out. More and more jobs could be created. The same thing would happen to America from 2009 to 2013.The economy would turn around and Barrack Obama would prove himself to be the one of the best President ever produced after Roosevelt.

Obama may also mess up his own vision and that may create hell in the world. But it is most unlikely.He was raised well with great values. He would be true to his gene. His father , a Kenyan by birth could impress a white lady even when society was not liberal. Both survived tension of the time and never fell apart. Obama is the product of those cherished values. He would surely survive all catastrophe especially when he has a lovely partner in his wife. His wife ,Michelle, is a great great grand daughter of Gim Robinson, a bonded labour.But she has overcome all that. She is a Princeton and Harvard educated lawyer today. Her earning has been much more than her senator husband. She left all that to fulfil the dream of her husband. She would now be the most educated First lady after Mrs. Clinton. Obama in his victory speech acknowledged that she was the tower of the family and is his strength.In fact the most enduring friend.

one thing is true, Obama is an American. He would surely think of the welfare of America always.He would do his best what is good for his country.It would be foolish to expect that he would side with India, China or Kenya at the cost of America. Forget about such silly things. He is born as American citizen, raised in America and he loves his country dearly. It is natural for him to promote his country not any other culture.
I pray God to give him strength to serve his country well and bring peace to the world. World is looking at him with a great expectation. Take care Obama! God bless you!

Thursday, October 30, 2008


Why terrorism in India is uncontrollable ? It is because our civil society does not have guts to protest really. We, rather all encourage it! Never our Government have been able to motivate people to stand together firmly against human rights and human values. In fact, at times, the some Government directly or indirectly encourage violation of human rights. Neither our government, nor our parties nor our institutions & clubs have taught us how to value human life!

In Assam, terror struck this morning. Many people died. Every news channel have reported the matter. Almost all the news channel have beamed the episode with vivid description. But no channel have devoted enough time to condemn it & to encourage civil society to stand up against it. Reporting the matter repeatedly is one thing but discouraging the terrorism is another responsibility. The vivid show of terrorism is not enough. It is necessary for the media to devote enough time to discourage the event too. The terrorist have liked the flash of news. They need publicity. Whether it is mujaheddin, Ulfa ,ISI or any group from any other country all get encouragement when mass publicity is received instead of mass protest in unison. Actually our own society is to be blamed for recurrence of terrorism in our society. In a Strong civil society that value human dignity terrorism can not flourish.This is for the first time there were huge protest by people at Ganeshguri. People felt tired of bomb blasts and inaction of the Government.Where was the disaster management team? After blasting the first bomb it took twenty minutes to blast another in Ganeshguri. Why disaster management team could not warn all the market areas of Guwahati by that time? whose failure was that . Is there no disaster Management team in Guwahati? Sorry, It is unacceptable that even in twenty minutes time disaster management system could not be put into action! Civil society gets the government it deserves. Like our most citizen our government is also timid and weak.

Our Chief minister is a clean and honest persons. He earned many feathers to his credit during last few years. But his performance in yesterday's press conference was dismal! A friend of mine told me that our CM could not even articulate his thoughts . Rather he was more keen to conclude his conference. It is understandable that when city was burning CM need not get bogged down with press. Yet, he should not fumble publicly while articulating his thought. In to day's situation, as my friend suggested, a clean and honest Chief may not be required. Today you need a person of Guts who can lead the disaster management team from the front. My friend even suggested that with so much achievements in the past why the CM is wasting his time in the office. Rather like Lal Bahadur shastry he can voluntarily seek retirement and make a name for himself.After all what every person seek in life after a successful career ? The fame for his life! CM can earn fame by owning up moral responsibility of the failure of disaster management team and make a hero out of himself.later he might be able to occupy the position of chairman of lok sabha,, a Governor or a vice president, which are more administrative than statesman like position. The view of my friend is of course the expression of the frustration of citizens for the inept handling of the situation on terrorism. Perhaps his sudden departure may not stop terrorism but would revive value based politics in the society.The most admirers of his have asked where has Tarun gogoi of past gone who dared to resign, from the union cabinet in a matter moment, without even verifying with prime minister?

More than fifty people died in today blasts. Much more would die here after because there is no mechanism in our civil society to blame and discourage the terrorism. Similar was the situation in Europe once upon a time. It was the same condition in USA too. But it is not only government's efforts. More importantly civil society in those countries roared against terrorism. Today none can think of creating terror in Europe effectively. Why? Because citizen have built defence mechanism. Can we not build up the defence mechanism, against terrorism? There is almost no terrorism in New Zealand and in Australia at all ! Why? It is because of the self esteem of the citizen. The civil society doe snot encourage it at all. It is because citizens of the country, irrespective of economic division, want to live a contented life. They want to honour & value human life.The Day Indian would think as one nation and start honouring its own self there would be no terror in our country.

The terrorism would not be contained in Assam nay in India . It would comeback again and again so long as civil society fail to motivate itself in looking at people with a divisive mind of caste , creed and religion. Today fifty odd people died in Assam.Tomorrow 100 people would die in Kashmir , day after it would be in Hyderabad.

Indian are making politics out of the terrorism. Every subgroup has its own agenda. We are not a Nation but bunch sub nations having our own motive to look after our own selfish interest. Do we really want terrorism to end? Never ! Like flood, natural calamities hunger we really welcome terrorism in our heart but verbally we preach peace. We make politics out of human weakness. What a nation we are. Can we be a great nation? never! Shame on us!

Sunday, October 26, 2008


The last Friday saw bloodbath on bourses all over the world. The fear of loosing out has brought down the Indian market to pre 2006 level. Naturally investors panicked .It is even difficult for RBI to revive the market. The steps taken by RBI would ensure that liquidity improves and inflation drops. The repo rate cut would ensure financial stability only. According to me RBI might take further steps on Repo rate after sometime to ensure growth of economy.
I was pleasantly surprised to receive a call from a lady executive from Digboi asking which are the shares she can buy with such a fall. It appears lady investor of Assam has matured She bought shares of BHEL, Reliance industries a few days back and wants to buy now more. She also invested only fifty percent of saved money in equity that too in a systematic way. Yes, It is always prudent to keep the investment horizon simple especially for investors of Northeast as they have entered the arena recently. Of course the mutual fund companies also would try to attract investors under various new names and brands. But do not always depend on the brokers. Talk to a financial advisor of your choice with an open heart. He would advice you what to do with the newly launched funds. Try to do your own homework. Study investment MAGAZINES AND BOOKS WORTH THE NAME AND DECIDE YOURSELF WHAT YOU WANT TO DO. People earn money with great efforts .They have the responsibility to protect the hard earned money. If investors do not care for their money no one would manage it well for them. Long back Kautilaya explained that it was not enough just to earn money. It was necessary to save it for future. But still more important was to protect the hard earned wealth. This dictum of protection of past must be followed by every investor at all cost even now. Share market directly or indirectly reflect the state of economy. This is a difficult time. Everyone should think twice before investing. Investors can invest only if he or she can spare money for not less than five years. Indian market would come up only slowly. Unless investors can take calculated risk no investment be made. But keep it in mind that this is one of the best time for investment.

Recently Raja Deka (named changed) wrote to me that he has invested at least in sixteen mutual funds .But lost money in all of them except in two funds . HE WANTED T O KNOW WHAT IS TO BE DONE? He also bought the share of Himachal futuristic and lost enormous amount of money. He wanted to know how he can recover the loss. I was very sorry to study his portfolios. It is almost impossible to retrieve the situation. It was a real bad situation. I however advised him that some of the funds which were subscribed by him were good. H e would be able to get back not only lost money but be able to make a decent profit in due course of time. He needs to be patient. But some of the shares and funds are beyond retrieval. Either he can continue to carry his baggage till a decent up turn take place or he can retire the loss now and enter into large cap shares like L &T, reliance industry or buy nifty index and diversified mutual fund like HSBC Equity, DSPML equity 100 etc.

It is proven beyond doubt that the money management now a days depended on the level financial literacy. Monika Halan, executive editor of Money had made a bold statement in her recent article that financial literacy would soon be the buzz word in India. It was interesting to note that financial product manufacturers, regulators and stock exchanges had identified the lack of financial literacy as a key road block in conversion of savings into investment. This trend is more pronounced in North-East India where people have high small saving money but still unaware as to how it should be converted into asset class of equity. I strongly recommend to all educated persons to read the article in the “last note” of Money Magazine of10thSeptember. ( issue.
I have written on Fixed Maturity Plan sometime before. The Mutual Fund houses now aggressively introduce fixed maturity plan...

Equity linked FMP, in turn, invest primarily in equity linked debentures and securitized debt instrument. These are highly sophisticated yet complex structured product. Our investors are new and need not be exposed to complex product. If they are beaten once at this moment people would shy away from investment horizon itself. That would be unfortunate. They should be helped in choosing simple investment tools, like PPF, Diversified Mutual fund, ELSS, liquid fund, arbitrage fund and bank fixed deposit. Let them mature slowly and graduate to complex product of their own later.

Thursday, October 23, 2008



Once John M. Keynes famously said, in the long run we are all dead. So to make money in short term perhaps came FMP. In India the mutual funds started fixed maturity plans, as early as 2005 on a regular basis. At that time FMP were the darling of corporate houses and high net worth persons only. But in 2008, as interest rate went up & equity crashed the most of the mutual fund houses started offering fixed maturity plans in various period of maturity for common investors too. Investors who flocked to gold as the 'safe asset' were disappointed at the way the price dropped in August. Real estate rates too have dropped. People got attracted to FMP. Seeing the increased interest of large section of population more and more FMP s are on offer at present. Now, question has been asked as to how safe the FMP is?

The FMP s is generally a safer instrument. But as the mutual fund cannot guarantee the returns like bank fixed deposit, it only “indicates” the returns. The pre tax returns are similar or slightly higher than the bank fixed deposit. But post tax return is much higher compared to FD of bank due to tax treatment. Generally the FMP s is closed ended fund. Generally you cannot exit till the maturity of the plan. However there is a provision. But the exit load is high enough
Presently, the only asset that beckons is debt with interest rates rising. But would it make sense for an investor to move into debt? While this is a good time to reassess one's portfolio, it would not be wise to simply rush to income funds, Fixed Maturity Plans (FMP s) or fixed deposits.
Why people invest in FMP now days? Investors find FMP more tax efficient. In dividend mode it does not attract any tax in the hands of investors. (However dividend distribution tax of 14.5% is charged). If the plan is for more than a year long term capital gains tax is only imposed which is much lower than the regular income tax of 33%. Of late it is seen that some of the Mutual Fund Houses have offered 11.50% “indicative returns” for a period of three years. This kind of returns was unheard of before. It is observed that large numbers of taxpayers are lining up to subscribe to such plan.
It may not be very effective for non income tax payers. If any senior citizen’s yearly income is less than Rs.two lakh twenty thousand he or she would not be really benefited by subscribing to fixed maturity plan. The FMP attracts capital gains tax and dividend distribution tax. So FMP s would not be cost effective for non income tax payers. Widows, single mothers and senior citizen who do not pay income tax should continue to subscribe to bank’s FD. That would be much more beneficial to them. Whether FMP s is totally safe instruments? Generally it is safe but sometime bad realization of bond purchased by fund may disturb the apple cart. The FMP generally invests in high quality triple xxx papers rated by two credit rating agencies. Yet there can be slip between cups and the leaps. Up till now no such incidents have been reported. Yet there are talks in the air, after sub prime situation, that incase some mutual fund depended on the papers of non-liquid sector a possibility exist for delay in payments! In theory you can loose your money in FMP but in real practice you get back the money you are indicated at the time of subscription to the FMP. The FMP generally offers tenures of one month to 420 days. (ICICI’s three years tenure is an exception, offering 11.5% indicative return.) We recommend that persons who have trust in the system of mutual fund may subscribe to the fixed maturity plan after due diligence. If you are an Income tax payer, a high net worth person and need good return, in short term, may subscribe to FMP. But one thing must be kept in mind that in October,08, Warren Buffet is buying equity for he felt in the long term equity is the King. Of course you need Lion’s GUT to jump into equity now!


Thursday, October 16, 2008


I must admit this is a good question to ask. The Most of the common investors always try to invest their hard earned money when Sensex or Nifty go up. A very large number of investors bought mutual fund when sen sex moved up from 18,000 to 21000 Points. As the Sen sex touched 10,750 figure there are hardly any retail investors to buy funds. Is it a good trend?

It is not correct practice to time the market. None have benefited greatly by such an act.Timing the market is a difficult proposition. Rather investors should invest their money in a disciplined way. Systematic Investment plan is highly recommended for any retail investor. Many people have asked what should we do now when financial storm is lashing the market and economy. Should we keep our money in FMP? or Should we use FD of the Bank only? Should we totally avoid the stock market?

I have thought over the matter again and again .I felt at present our approach should be as under:

1. We should first calculate how much money do we have for investment? once we arrive at a figure then find out what is our age? If our age is fifty then we must deduct our age from a heavenly figure of 100. In the instant case the result would be fifty. Now, this figure of fifty should be considered as a percentage(%) that could be saved or invested in equity. Now we need to calculate out of this fifty percent how much we have already invested in equity through shares or through mutual funds. In case we have invested already forty percent then there are 10% left for fresh investment at present. In case you are risk averse then invest this 10% in Fixed deposit of Bank. If still you can withstand risk this 10% can be invested under the systematic investment plan for a period three years. It is expected that the storm lashing the financial world would calm down by 2010-11 or little later. You would there after make a handsome gain.

2 Should we avoid investment in equity? asked a reader of my blog.My reply was he can in case ne is risk averse. But he does not expect then to make money later. It will take time to get better return out of his already invested money since he had invested it when Sen sex did reach 21000 points.

3"Should we take out our money now, asked another reader. The investment has lost 50% value?" My reply was: It is a wrong perception of yours. You have not lost money. At present your loss is a notional loss. Perhaps you may lose further notionally. As soon as you take out money the loss will be the real loss. Can you really afford it? Have patience. Do not act in a hurry. What goes up it comes down. And what goes down it would come up especially stock market. Only thing it would take time. During 1932 stock market crashed. The great depressed followed. but it came up !The year 1945, saw a great rejuvenation in USA. They have not looked back. Germany faced worst financial situation after world war but by Sixties both Japan and Germany became one of the few richest nations of the world. We need not forget that destruction would be followed by rejuvenations. We must not panic now!

4. " I want to book loss once sensex reaches 15000 points to avail tax benefit, some time before the year ends. I would put back the money in liquid fund and invest through STP in mutual funds. when sen sex goes down thereafter I would be buying units in low cost. Can I not do that ? Would that not be a profitable to me?" Yes, that would be. But are you sure that the sensex would again go down just after you book the profit? What happens if sen sex goes up instead? Nobody can predict the behaviour of market. Not even Warren Buffet. We should be a investor and not a juggler! If you can predict surely that after you book profit sensex would further go down then surely go ahead and do it as you wish. But as a matter of practice I do not recommend such thing. IF you have extra money, in case you are capable of taking risk go ahead and invest systematically for long term and make money in the right way. Congratulations to you.

Wednesday, October 15, 2008


Karthik Rajaram, Los Angles based Indian, considered a financial wizard, found dead with his wife, sons and mother in law in his posh house in September. He killed himself & family members as his fortune was wiped out by the melt down in the US. Forty-five years old Raja ram once made over 1.2 million dollar in a single deal in London. An MBA of UCLA was named by The Telegraphs of London as the most astute investor. LA land records revealed that he even profited three times from the sale of his house before collapse of real estate market. Then, what had gone wrong? He over traded in the months of September. His entire money perished. So, my advice to my readers is never over invests. The safety of your money is First. Invest only a small part of your money in share market instruments, and avoid private sector’s FD at present.

The festive season has rarely been so full of turmoil. Indian Prime Minister Dr Man Mohan Singh recently explained that Indian market is now open to the world. So, it is not possible to insulate absolutely the country’s economy from the influence of other economies of the world. This apprehension of Indian prime minister have started showing up in the minds of some of the investors of the country, as gloom is spreading from trading floor to factories. Even Mutual funds are getting strong redemption pressures. Even hitherto stable liquid funds may not be as safe now. RBI’s promised funds of twenty thousand crore may not be enough to stablise mutual funds.

Ranjan Das, one of our esteemed readers called me to convey that he was in the midst of a dilemma. He confided that he had not been able to decide whether he should buy individual shares of the companies or Index based investment at this moment, when country is reeling under fiscal crisis.

I assured him that he was not a loner facing that dilemma. Many investors have burnt their finger during the month of January when they bought very good shares like SBI, L&T & Reliance Industry yet lost money heavily. I can only assure my readers that those shares are golden shares& none would be looser in the long term. But do not expect a miracle. It would take time. The World Bank has predicted that India will survive the fiscal storm. In share market patience is the greatest virtue. Invest systematically for very longer horizon only. Now let us discuss whether buying Nifty index is better or buying individual stock is a better move?

To answer this question it would be necessary for us to address two important questions. The first one is whether individual stock is the flavour of the day or buying index is more prudent. The second question is should anyone time the market? The answers to those questions are complex. It cannot be explained in one liner. It deserves a detailed explanation. If an investor has time and energy to do research and methodically study of share market it would be really nice to take a good look at individual stock. The index based investment is the sum total of all the index based shares. Only those investors who did not have time or interest for a detailed study need to buy NIFTY BASED INDEX FUND. When market goes up investors would be really making money. But when the market pushes itself down they would be loser surely! So the second question arises should we invest in nifty index now? For me timing the market is absolutely taboo. YET INVESTOR CAN INVEST NOW provided he is capable of withstanding the risk should market goes down further. It is essential to note that the market might go down even now. Yet it is expected come up only sometime in the year 2010-11 or later. At present share market is not meant for new investors. So my sincere advice would be that only veterans risk taking investors, capable of withstanding long term risk of the investment, may enter the market. The safety of investment must be the top priority always. Greed must not be allowed to take over the needs. Please consult your financial advisor before investment!


Tuesday, October 14, 2008


Perhaps nobody in the civilised world would answer the question of mine now.
who is the Culprit for financial crisis of the world? Perhaps, the financial mayhem was created by the greed of civilized world, educated world , innovative world and by financial wizards initially. The system went on merrily and every segment made profit out it. Banks made money, brokers and agents made money, insurance company made money and most importantly investment banks made huge money out of thin air. Knowing it well that poor creditors would not be able to sustain, in case of road block some day, Financial experts and intermediary preferred to close down their eyes for greed had over taken them.

But what regulators were doing? What rating agencies were doing ? How did the rating agencies gave Double & triple AAA ratings. were they blind? or did they fail do their research? or were they looking other ways? why? Is it intentional? or were they incapable? In case they were incapable they can be sacked but if it is intentional then they should be penalised for criminal breach of trust. Do not investors agree with me?

One of the economist has asked the question is this a case of suicide, accidental death or murder by the financial jugglers ? According to me it can be a suicide. But more likely it can be a perverted act of destruction of a system due to greed which brought prosperity to the world of business. It is a kind of annihilation out of aggression. People now will lose faith on the system. World's monetary system shall have to be perhaps rewritten! Why rating agencies are not hauled up for their failures. Why banks started providing mortgage to doubtful persons ? Since when business of finical institutions have become charity ? We know all business enterprise need to take care of the society and they should earmark fund for upliftment and creation of value. But should any business organisation is allowed to
sacrifice their corporate objective just to make additional money out of thin air?
Why after providing mortgage to weaker section of people without co-lateral intermediaries were allowed to issue derivative instruments which had no basis. Is this work of sound financial judgement? Were regulators sleeping?

It is now proved beyond doubt that the American regulators were aware of the highly risky bubble since the end of twentieth century. But connected persons kept it under the carpet. Can Alan Greenspan deny that he never knew of the great storm that was going to blow up financial edifice of the world ? At least some of us would not believe it. Why the present Treasure secretary had not helped Lamond Brothers when it approached for help? Why did he take so much time to realise that entire financial system was in peril? Cheer inefficiency or he could not dream of such a situation.
Perhaps the world would never know who was the real culprit. After few months surely business cycle will turn around and situation will improve. But how people, who lost out their life's savings & pensions without their fault, would regain wealth & more importantly the confidence on the financial wizards, who innovated the system of profiteering, but was not held responsible for the mayhem. Should these people go unpunished? Only time would reply!

Sunday, October 12, 2008

World's finacial crisis & Indian Banking

The world is passing through a worst financial crisis since 1932.The International Monetary fund warned that the world's financial system is near meltdown now. France assured that a meeting of the European leaders would be held in Paris to chart out the steps to contain the crisis & to stop triggering most sever global downturn in decades. By the time this article appears Great Britain would launch its biggest retail bank rescue operation when four Britain's largest Banks including Loyd's TSB, Royal Bank of Scotland, Barclay's and HBOS would ask for 35 billion pounds lifeline. If this is the condition of largest Banks of developed countries then what would be the condition of banks of Indian origin?
According to RBI ,fortunately Indian banks are better placed. Why? The Indian banks are conservative and do not indulge in sub prime credit. Indian banks generally do not lend without collateral securities and for that reason banks are relatively safe. But does it mean that Indian banking system will remain unaffected? In today climate of globalisation it is impossible to stand alone in seclusion. We need to be realistic. Melt down may sounds death nails for brokerage fund but depositors would remain generally safe. RBI governor has assessed the situation and identified that in our country the problem would be that of liquidity. The Government and RBI would ensure that enough liquidity is pumped into the economy so that inter banking credits are not effected. The Government would also ensure that companies with robust fundamental would not be allowed face the crisis of fund. One of the victim of the crisis could be Airline segment. Of course the share value may go up or down depending on the stock market situation. The investors would surely be effected in short term but in longer term it is yet possible to regain the strength.

According to me there is no reason to panic unless investors have indulged in over trading. The depositors need not panic & withdraw their funds. The Government India, unless catastrophic situation befall the economy, would see that depositors do not lose out of their savings in the nationalised or private banks. But one thing must be understood clearly that India shall have to face the storm of international financial crisis.Emerging markets like India have over the last few years offered spectacular returns but have always been considered "risky". It is not surprising that at the slightest hint of crisis foreign investors took the flight to safe haven.During last year FII invest around 15 billion dollars in Indian market. Already 9billion dollar left the market. More are prepared to fly out. But that would not really aggravate the situation . The problem would be that of liquidity in India.
One thing is true that we depend more on external market to sell our goods and services. In 129895-96 we wold 9.1% of our goods abroad. In 2007-08 we sold 13.5% of our goods to foreign buyers. This signify that we depends more on external funds to support our growth..We borrowed 29 billion and received 34 billion foreign direct investment. With financial crisis can we expect any help now? AS global recession would hurt us.Can we achieve 9% growth rate? It is impossible. Though Finance Minister is hope full to achieve *% growth I am not.I personally feel if we can achieve 7% growth even we should be considered lucky. This however doe snot mean that we are doomed. Our baking situation is much better . It is unfortunate that ICICI bank is in the eye of the storm. With over 27 million customers and hundreds of thousand investors the bank has been in the news for all the wrong re sons.RBI has already comforted the depositors yet there are people to spread rumours. Yes it is a fact that the rumours of bank's international operation has effected its reputation . This is in spite of the fact that the bank's saving rose to 43,456 crore as against 32,121 crore in the corresponding quarter of last year.

RBI governor reassured from Washington that the money of the depositors in Indian banks are safe.He said that RBI is geared to to inject more liquidity into the country's financial system and that there is no cause for anxiety. He however agreed that the baking sector has some exposure t distressed financial instruments and troubled financial institutions. But that exposure is part of the normal course of their business and is quite Small relative to the size of their overall business. One thing must be kept in mind that only a few bank have exposure in troubled spots and most of the Indian bank are out of it. Yet event in international scenario would effect the country's bank one way or the other and we must face the reality with a pinch of salt.
In today's great financial turmoil the greatest victim is not the money and wealth.It is the mind of people. The crisis of confidence in the mind of people will make or destroy the economy. The bad time does not last long but weak mind can destroy life and organisation, nay economy of country. The Banking runs on confidence. Let us hold hands march forward with head high and build up our strength.

Sunday, September 7, 2008

Entrepreneurs, Growth & Oppressed labour

There was time when industrial development brought in economic development on one hand and on the other hand ushered in an environment of exploitation of labour. This was the case of entrepreneurship all over the world.In America in the early Nineteen century there were number of factories to pack sardine fish harvested from Monterrey peninsula .In these factories thousand of workers, were employed who worked for eighteen hours a day with meager compensation and no facilities. Today such atrocious duty hours& compensation are unthinkable. The entrepreneurs then made profit out of exploitation. Slowly exploitation of workmen were stopped by legislation and by voluntary efforts of trade unions leaders and by liberated entrepreneurs. A time came,in early twentieth century, when workers started exploiting the entrepreneurs through lightning strike, work closures, Gheraos and go slow. Entrepreneurs were paid back through their own coins. But later liberated labour leaders and progressive entrepreneurs both understood that exploitation of each other would not really usher in proper development in real sense of the term.The survival of the enterprise is a must both for trade unionism and for entrepreneurs. The history of growth changed from oppression to patron ship and ultimately to partnership. Today in the modern world business enterprise survives on the premises of partnership yet employer and employee relationship remains to be the focal point of development.
The History of industrialisation in our country also followed the similar pattern The rise and fall of business empire and re-emergence of strong Enterprise in Bombay, Ahmadabad, Chennai and Kolkata strongly reflected the similar pattern. Out of the employers employee conflict most of the state have been able to come out successfully in the later part of twentieth century. The Bengal had also made strong efforts of late to get out the mess of industrial relations conflict but is yet to prove itself. What is the scenery of our own state of Assam now?

Assam remains one of the poorest industrially developed state of the country. Perhaps it is worse than even Bihar. The economic growth rate perhaps is even lower than Nagaland. During the time of independence our state was the forerunner in contributing substantial GDP of the country. What had happened in twenty first century? To be frank enough after sixties of Twentieth century there was no real development of new Industry in Assam.Four industry were set up in Assam when K P Tripathy was the industry Minister. Calcination, Hardboard, chemical& fertiliser and speciality carbon products etc. After sixty, like in Bengal, Assam had no real entrepreneurship. Of course tiny enterprise of Moulding, re rolling mills tarpaulin manufacturing battery and hardware products came and went bye. But no real manufacturing units came up.Perhaps due to lack of local entrepreneurship. During the twenty first century after surviving the mess of terrorism a few entrepreneurs really have taken a serious interest in investing in Assam now. This is the time when industrial scenery should be calm, empowering and reassuring. The government for the first time, after sixties, have assurance from local and outside entrepreneurs for solid investment. At this time a new mess has been generated in Assam which is very disturbing.
This is the rise of labour - Management conflict. An arrogant trade unionism ( non adhering even the advice of High court) with the help of anti social elements are forcing a non tranquil situation. Management is standing by as an on looker as the matter is subjudice. The Government is actively trying to resolve the who is responsible for this could be a subject matter of debate. But no development is possible in an climate of mistrust.
The four factors of production, land,labour, capital and organisation have its own responsibility to achieve a common goal. In modern growth theory the Enterprise must survive first to take care of not only all the factors of production , but also to share the social responsibility. To see that enterprise survives the conflict of labour and management,two other components of society have became guardians. They are(a) Government and (b) Judiciary. The arrogance of warring factions have no role in modern Growth theory. The conflicts needs to be resolved rationally.

Assam was never known for industrial unrest. There were conflict between management and trade union sometime in the past. but those were resolved quickly and enterprise always survive. Long back in early twentieth century there were conflict in Assam Oil company and sometime also in individual Tea gardens. But never was a time when conflict led to suspense of work for month together. Militant trade unions was taboo in Assam. Assam's veteran trade unionists saw to it that all disputes are resolved without arrogance and threat to either party. It is now seen that recently number of enterprise went through a process of closure, shutdown, suspense of work or lockout.It is imperative to find out what are the reason.Is it due to economic reason for non supply of raw material, non availability of power or non availability of capital? Or is it due to the conflict between labour and the management?It would be a sad day if any enterprise has to be closed down due to the conflict of human interest be it exploitation, arrogance and attitude of non work. Two recent incidents of Human resource of Management in Hindustan lever and Assam carbon might create boomerang effect on development and growth of Industrial enterprise in Assam.
We feel the trend is not healthy. The conflict between Management and Workmen must be resolved within the law of the land. No organisation can be managed with the whims and fancy of the conflicting parties.
Recently Amartya sen in his article "The Industrial Strategy, wrote " it is not an accident that every communist country reliant on pervasive state ownership in the world has either move to welcome private investment quite substantially (as china has done), or has declined and been replaced by straightforward capitalist system(as has happened in Russia and other countries in the former Soviet union). The exception is Cuba, but its economic success is extremely limited. It remains a poor economy."

Every one must realise that a modern workplace must be developed with purely through economic parameter of the modern times.With the globalisation economy of the scale, economy of compensations and economy of the supply chain would rule the roost. Neither militancy , arrogance, lack of skill nor attitude for less work would determine the character of an enterprise. The wind of change has started blowing. It is apparent. In bank, in media and in service sector people are working more number of hours than before handling multi-layers of work. Can manufacturing industry stand alone?
The management also have to stand for judicious compensation package. It cannot get better service with meager compensation. Industry-wise compensation package should be ushered in. Industrial disputes must be resolved within the parameter of the constitution. The interference by political process or by social club must be avoided if industrial development is required. The conflict resolution machinery must be up held either by the government in power or by judiciary. Assam is starving for economic development and without emergence industrial enterprise it would be impossible to solve the unemployment problem. In ten year urban unemployment would be resolved.there would be no educated unemployment in Assam but unless industrial development take place rural unemployment would bring in crisis in Assam. It would prudent for all concerned to see that new industry is brought in with modern work culture and let workmen work with redouble vigour with healthy attitude towards optimum work culture.

Wednesday, September 3, 2008


Bengal, once upon a time was one of the most advanced industrial states of India. Slowly it lost its preeminence position. During later part of seventies of twentieth century almost all important Houses deserted Bengal. The militant trade unionism made the situation worse during first part of Eighties. The left front slowly realised that without industrialisation the growth of the state would not be possible.The new Chief minister adopted new economic policy despite strong philosophy of communism and was successful in attracting number of well known industrial houses. But suddenly acquisition of land from TILLER OF THE LAND created social problem. Most of landowner agreed to sale the land but a few were opposed to the idea. Reason? The land were fertile enough for cultivation and they felt that industry could be set up in non fertile places. A conflict arose between rural society and the Government . The party in power actually gave the right of the land long back and thought rural population would listen to whenever the party dictates. The party was wrong. They did not do their home work initially. They had taken people for granted

In the meantime other opponent party grab the opportunity. The failure of the party in power to convince a section of rural population provided opportunity to opposition to oppose the acquisition tooth and nails.

In the meantime work of the project set up in the land have progressed well.Neither opposition was willing to leave the opportunity to pin down the party in power nor the state Government was in a position to leave the grand project. An impasse was created in the project site when blocked was created and workers were threatened. No industry can survives under threat, continuous fear of annihilation and violence. The demonstration was outwardly peaceful but inwardly felt threatened. The owner of the prestige project Tata decided to call it a day since it was not possible ensure safety of workmen and engine rs on the site. If the project fails to start production it would give a wrong signal to outside world. No industrialist would be willing to come over to the state. The growth of the economy would be jeopardise.

Now the question arise should opposition create so much pressure that none can set up manufacturing facility in the state? Is such movement desirable? what should be done ? The governor of the state has rightly intervened and wanted to resolve the impasse. But can the matter be solved if both the parties stick to their stand?

I only hope the day would come when matter would be sorted out. Perhaps law would be created to Di-requisition the land. Really unwilling worker would get back land if not at the project site but at the nearest village.Proper compensation package would be introduced and plant will start functioning with renewed vigour. This is a prime project which might change the face of Bengal. The success of such project would trigger other industrialist to come into the state. This is an opportunity not to be missed by Government, opposition and saner section of the population. Any comments???