Lokpal - Just another Institution

To all those people who were happy that the government has formed a joint committee to draft lokpal bill, here's a big news  -  the government has decided that 2 versions of lokpal bill will be sent to the cabinet, out of which the cabinet will approve one and that version will be tabled in parliament. Of course there's no prize to guess that the cabinet will select the version drafted by elected members over the one drafted by civil society.

So now Anna Hazare and company would be fasting again...and we are back to square one.

I have been thinking on this lokpal bill and the provisions present in it; but somehow this lokpal thing doesn't drive me enough now-a-days. I have lost faith in this lokpal bill - let it be the government's version or civil society's draft. I was a strong believer that a powerful lokpal can curb corruption in our country but this statement doesn't resonate with my feelings now. The basic idea that if we have someone watching over all the public matters and keeps everything in check, then we will have a clean society seems flawed. We Indians are so clever that we will still find some loop-holes and sneak out! 

And to top it all...what if the lokpal itself is corrupt, who would keep a watch on lokpal, after all the lokpal (or the ombudsman) is going to be selected from civil society and god knows who would decide on his selection. People don't get any chance to decide on that as he/she would not be an elected member. Now-a-days people seem to think that a person from civil society will be an honest person and we can't trust an elected member, which I feel is utter nonsense. So who decides on lokpal, well they have come up with some crazy rules saying that one who has got a noble prize would be eligible or one who has got a Magsaysay award would be eligible - now please note, that these people may have excelled in their respective fields but that doesn't mean that they can become a good public servant, these two are completely different things. God, when would people understand that?

So by now you must be angry with me thinking "What a pessimistic fellow he is - doesn't support something good which is going on". Well, I am not completely against lokpal but what I am saying is don't expect lokpal to completely cleanse the society. Before lokpal we had corruption, even after lokpal we will have corruption.

Let's look at the root cause of corruption. The basic question I am asking is why is that even well educated people who are in control of a public office indulge in corruption? Why is that people are forced to take bribes? Why do we listen stories where an officer is transferred just because he wasn't ready to accept bribe? From where are all these issues coming up?

The reason is we have a systematic failure in curbing corruption and which cannot be controlled by appointing any lokpal or a super-cop.

To expand on that.. let's look at today's India, the economy is booming, private sector is offering unprecedented salaries with great perks and we have big-shots like RIL, Airtel, Tata, DLF offering salaries which no one would have ever thought of some 10 years back. Now let's think of salary a public servant draws..Can you draw any comparison? Well frankly speaking I can't....it's mind-boggling. A person working in a private organization draws easily 10-20 times more than one working in government sector at the same level. This is ridiculous, I mean how can the government not pay enough salary to a person who works in and out for government. There's an age old idiom - "I give as good as I get", which in one line tells the reason behind widespread corruption. If the government doesn't take care of the basic needs of a person - like give him good salary, good respect, a nice standard of living then how can we expect the public servant to give his best at his job and tell me why would he not indulge in corruption.  For instance someone working in a municipal corporation as a site officer (don't know exact designation), one who approves the building plan, how much do you think his salary would be 10K, 20K ok at max 40K per month and now let's look at the people whom he deals with everyday..they are big shots in construction industry whose everyday expense would be equal to 10k. Now if he is seeing so much of money in private sector and the govt is giving him peanuts, you tell me why won't he accept the bribe. Like this I can give 10 different examples, if you are not convinced. We can create n number of institutions like lokpal in our country but that will not remove corruption from our country, as someone has rightly said "You can change the Indian Constitution 20,000 times but that will not make our politicians honest". 

What India needs today is REFORMS. We need reforms in police sector, in healthcare, electoral reforms and what not. If there's anything which can help it is nothing but reforms, and it's not that we need the reforms just now, but I feel we should re-visit the rules/laws every 5 years at max. So that we don't have age old rules still forcing us.

If the government wants it's employees to not to indulge in corruption, the government needs to  give the  public servant enough salary and benefits so that he can take care of himself, his family and focus on his job instead of constantly thinking about money. If the government gives competitive salary, a decent home, takes care of his children's education and respects him, I have no doubt that any sane person will give his 100% and will not indulge in corruption.

To sum up, the government has opened up market but it has failed to open up it's mind and this is one of the biggest reason why we are seeing more and more of corruption in our country post 1990-1991.

Tahrir square in India

Third day of Anna Hazare's fast is over and we have more than a million supporters. It's almost looking like a nation is now waking up for a good cause and forcing the government to take action against the corrupt people. People from all the states are unhappy and all want the government to implement the jan lokpal bill. This is the first time I am seeing people across the nation getting united against a good cause. Till now we only used to cheer about India and care about India during cricket matches. But today, we are seeing a different India, young Indians all over the place to support IAC (India Against Corruption). Hundreds and Thousands of supporters from all over the world are following IAC's twitter account and facebook pages. India is changing for sure.

When the government kept neglecting the lokpal bill for 42 years (UPA, NDA..all govts), how can we expect the government to tackle corruption effectively? It is clear that they themselves don't want such laws in place. So, the only option left with the people of India was to go on a protest and which is what their democratic right is.

Now let's come to a question which says that should civil society members be allowed to be a part of a committee to draft a bill? Well some people say that as per the rules, civil society can only give recommendations to the elected representatives, but eventually it's the elected representatives who has to form the bill. I feel we are seeing too much into the rules and forgetting the principle - the basic principle is that the power should be in the right hands, for the good of the people. However today we have a situation where no one has faith in the elected representatives as everyone knows that these politicians have been sitting on the lokpal bill for 42 years, creating a mockery of democracy and looting the country.

Long story short, only the elected representatives have the power to form a bill because those are the people who have been elected by the people, so ideally those are the best people to have the power to draft a bill. But in this case we cannot trust them at all because this bill is all about nailing the elected representatives if they falter at any stage, and obviously we can't expect them to draft a strong anti-corruption (read anti politicians) bill. So I think government has to make an exception in this case and form a joint committee, headed by a civil society member, which will draft a strong, ruthless lokpal bill.

I don't see a Tahrir square in India, as I still have faith in our democracy, so let's hope for the best and let's hope that the government forms up a joint committee and the committee drafts a strong anti-corruption lokpal bill.

Petrol Price deregulation in India

Hey Everyone,

Yesterday came out the news that the petrol prices in India will be deregulated and as a result the petrol prices in India will rise by 3.5/-. No one is happy about this fuel price hike and the media has gone mad about this. Everyone is thinking about themselves but no one is thinking about the country or the global advantage of this.

We may have to suffer the petrol price hike by paying a few extra Rs. per litre, but what we should consider is now the petrol price will be moving in tandem with the global prices. So, if the crude oil price increases (which is around 75 per bbl right now), the petrol price in India will increase as well. This may sound like more bad news, but trust me it isn't. By deregulating the petrol prices, govt has given us full control over fuel price. What we need to consider is the supply demand ratio which decides the upward/downward movement of crude oil price. If the demand for crude goes down, the crude oil price will go down. With India being the 5th largest consumer of crude oil, if we put our efforts in the right direction, we can reduce the global demand for crude oil, thereby reducing the crude oil price.

If we go by statistics, the oil consumption of India is approx. 2,722,000 bbl/day. Now that's a huge number. If we take this hike seriously and try our best to reduce the fuel consumption, we can make a very big difference. So, try to use as much of public transport, use bicycles whenever possible (See how China uses bicycles). If we don't act to this petrol price hike, and keep on the same old attitude, then there is really no point in deregulating the oil prices.

So instead of going on a strike for the fuel price hike, now is the time for us to wake up and act accordingly.

LazyFeed...I like it!

Today I was just browsing the web and came across this cool site www.lazyfeed.com The name itself attracted me to their site. It's a kind of tool which lets you enter your tags and then keeps on updating the content using RSS feeds. Now, I need not search through the web to get the latest

updates on my favourite topics, rather I would just add it to the lazyfeed tags and save it, Lazyfeed will do the rest for me and get me the latest content.

Do try it out.

www.lazyfeed.com

Unlock your Nokia Lock Code

Have you ever been in a situation where you had set up a lock code for your cell phone but are not able to remember the same code ?

Well, this is exactly what happened to me a couple of days back. I had set up a Lock code for my cell and when I switched over to a new sim recently the phone didn't allow me to change the sim unless and until I entered a correct Lock code (I had set the option to ask for Lock code whenever a new Sim is inserted, basically I didn't want my cell to be used by an unauthorized person but it backfired on me :P). I tried for all the possible combinations I can think of but was not able to recollect that damn code and I finally gave up thinking that I will go to a cell phone shop and will get it done by paying some 200 bucks.

However before heading on to a cell phone shop just thought that I will do a google search for Unlock Nokia lock code and see whether I am able to get something and to my surprise there were loads of forum where many people had posted that they had forgotten their lock code and were really looking for some help to get that code (Looks like there are so many people like me who like to have all the security options turned On, but unfortunately don't remember the code set up by themselves and are desperate to get that code). Finally with Google's help I came across to a site which gave an option to download a s/w which will give me back my original lock code.

I downloaded that s/w and installed on my cell and it worked perfectly. It started scanning through all the possible combinations of the code starting from 10000 (it's a five digit code) and after a few minutes displayed the actual lock code set on my phone (Manually one can't try to use all the possible combinations at once, as after 5 unsuccessful attempts the phone blocks your Lock code for 5 minutes).

And yes I got the original code back and got the new sim loaded. Then I started thinking that how dumb I was to not to try that code returned by the software (It always happens like that, just after you got to know what the correct answer is you start thinking that why this didn't come to my mind initially). I actually liked this software because it gives you your code back which is good and unless other softwares which breaks your code or gives some master code but don't give the actual code set up by you.

So nothing great in this post but just wanted to share this information along, so that if at all you come across such a situation don't worry just google it and eventually you will get what you want.

Here is the link to download UnlockMe which will help you to get your lock code back. After downloading you need to install the software on your cell phone http://www.symbian-toys.com/unlockme.aspx

Also I found the following link for Nokia secret codes, however it didn't help me in unlocking the lock code. This gives you a list of all the Nokia secret codes which you may found useful http://gleez.com/articles/did-you-know/nokia-secret-codes

Moral of the story - Each and everything can be cracked with the help of Google and Internet.

Well, can't imagine life without Google!

Dividend Reinvestments??

I am back to Blogging after almost a year! 

This time I am up with a small post related to investments. I was discussing with my friends and colleagues about where to invest to save tax and we had a discussion around various options available to invest under section 80c which gives tax breaks.

The only option which has the smallest lock-in and Tax free returns is the mutual fund one. However it has a great amount of risk involved in it and there is no capital shield for the money invested in tax saving mutual funds. These mutual funds which gives tax break under section 80C are typically called as Equity Linked Savings Scheme funds (ELSS funds). 

Under ELSS the lock-in period is 3 years and the return is based on the market conditions. Now under ElSS funds there are again various options to consider before diving into these schemes.

• Growth or Dividend?

The major difference between these two schemes is that the dividend funds declare some x percent dividends annually whereas growth options doesn't.

I think it makes sense to go for dividend funds, because these funds declare dividends each year which directly come into the investor's hand (Dividends declared by ELSS funds are tax free). This dividend is generally declared in the month of Feb/March. By investing in dividend funds we get the money back sooner than growth funds. Now the other part of the story is this is the same money which you have invested and when these funds declare dividends the NAV of the fund falls accordingly. The only good thing is you get your money back soon.

• Dividend Payout or Dividend Reinvestment

A word of caution! When investing in ELSS funds never go in for a Dividend Reinvestment plan. The name itself makes it very clear that what these funds do with the dividends. The dividend which is declared by the fund is again put into the same fund and you get some more units.By opting for this you go into a never ending vicious cycle of dividends reinvestments and you can never redeem all of your money(Some part of your investment will always be stuck with the fund, because every time it reinvests your money, those units get locked-in for 3 years).

The lock-in is only for ELSS funds so there is no harm in going for Dividend Reinvestment if you are investing in a fund other than ELSS because in that case you can anytime redeem your whole units.

For ELLS funds, if you want to go for dividends take a Dividend Payout plan which will give you dividends in your hands. One strategy to maximize the tax gain is to invest in a Dividend payout ELSS fund and then reinvest the dividend part again in a ELSS scheme so that you can again claim that part also under 80c! This is exactly what Dividend Reinvestment plan does(But it does implicitly and every year without giving the user an option). Dividend payout gives the money back to the user so he himself can decide whether he wants to put that money back in the fund or keep it with him.

Happy Investing!

The Bulls and Bears

It has been quite a few days that I am fascinated by the word Sensex. After all what is this Sensex all about?? Who drives the market?? How does the market actually works?? Who are FIIs and what role do they play??Why does Sensex fluctuates...and what impact does it have?? What is the bulls and bears???..and so on. All these questions have been hovering over me over the past few days..rather weeks. Actually Sensex is an index, which consists of the 30 major companies in the market. It's name Sensex means Sensitivity Index. According to Wikipedia Sensex is a value-weighted index composed of 30 stocks. It consists of the 30 largest and most actively traded stocks, representative of various sectors on Bombay Stock Exchange.
The whole point in blogging about Sensex is to have some knowledge for the beginners, and to consolidate the facts about Indian economy . This post might look foolish to economists, but it's just an attempt to increase knowledge about Indian stock market.
Well, I am just a beginner in this field, but it has really driven me crazy. It has been said that there are so many factors, upon which the markets work, which decides whether the Sensex would go up or down. But in a layman's term it's just a gamble of buying and selling the stocks in the market. The simple logic which I understood is that when one buys a stock, it would go up, and when one sells it off and it would certainly go down. This might seem a little overstatement, but consider a hypothetical case where there are only 10 traders in a market, then if all the 10 traders start buying a particular scrip, it's value would go up, and if they all sell if off, it's value goes down. But since the market being such a huge place and there are lakhs of traders around there, add the foreign institutional investors and domestic investors to it, the market strength becomes such a big place that no one can really predict that whether it would go up or down.
Here we come across one interesting chunk of the market players....FII. FII stands for Foreign Institutional Investors. Our market is mostly driven by FIIs. The FII invest in a large quantity, typically milllions of dollars in Indian economy and hence the volumes traded by these FIIs are bound to be very high. Now since these volumes constitute a major part of the volumes traded, these are market players who can really drive our Indian market. There has been many criticism for these FIIs, but it is because of these FIIs that the Indian market was touching new highs. Now when they sold off, the market was bound to fall and this is what happened when the BSE and NSE touched Lower Cercuits i.e the Sensex fallled 10% from it's previous close. One should be aware of all these facts before investing in the market, and one should do a complete research on a scrip before actually putting the money in that scrip. Now there are so many things which has to be studied before investing..... The first factor on my list is a Price to Earnings ratio. This ratio actually determines the actual market value of the scrip, and where this scrip is actually trading. Price to earnings ratio is actually dividing the current market price by the actual price, which is calculated based upon the results of a company. Typically this price to earnings ratio would be somewhere in between 5-50. A P/E ratio of about 5 means the market price of the scrip is 5 times than the actual earnings of the company. This is how valuations come into play. If P/E ratio of a scrip is about 5 then it is considered to be fairly valued, and it is suggested to pick up that stock, though there is no golden rule like that. A P/E ratio of 100 means the stock is already trading at 100 times its earnings and it isn't suggested to go for this stock. One can argue that how does this P/E ratio matters at all, because it's all about whether the market players buy or sell, and this is what which would decide it's price. Certainly, this is 100% true that the value is just determined on buying/selling of a particular stock, but in the long run the stock whose P/E ratio looks good would eventually outperform the other stocks. The other side of the coin is that one can't completely rely on this P/E ratio also, because everything in market is about expectations. Now if market players think that the company earnings are bound to grow, then they would start picking up that stock, no matter what it's current P/E is. So this is just one factor which would give a fair idea about where the stock is currently trading, but surely you just can't rely on this completely.
The other thing which you should look at before investing is the simple moving average of a scrip. It's name itself tells that it gives the cumulative value of the scrip over a period of time. Say a simple moving average over 30 days of a scrip is 150, which means that we take the average value of the stock over last 30 days, it would come out to be 150. So if the simple moving average of a scrip over 100 days is greater than the value at which the stock is currently trading, then that scrip seems to be attractive. This scene generally happens when the market crashes suddenly and the stock value plunges by a big margin. Some other things are Quarterly results of the company, it's net profit, the industry of the company, company's value, company's genuineness, Earnings per share, whether it's increasing or decreasing.
These all are just some factors which one should look at before putting money in market. No one can guarantee that if there is a scrip which scores best in all these factors then it would go up, it's just that there is much higher probability that this stock would go up. After all it's all buying and selling which decides.

Some important links for stock market research:

http://bseindia.com
http://nseindia.com
http://moneycontrol.com
http://economictimes.indiatimes.com
http://www.business-standard.com
http://in.finance.yahoo.com
http://money.rediff.com

Comments Welcomed!