Light For Education

Nuclear Liability Bill: What should it be

The Nuclear Liability Bill would be presented in the Parliament soon. Though such bills don't occupy front pages in papers, still they are very important to our country, specially when we're aggressively looking forward to nuclear energy as one of the main alternative energy sources in future.

The entry of many foreign companies in nuclear business is expected soon. So it's very essential to have a liability bill in case any unprecedented event or accident happens. Rediff had a detailed report on this. It's worth reading this report as it points out that our government seems to be in a haste to pass a very lenient bill. But at the same time looks like similar international laws (for example 1997 Vienna Convention) the are also in favor of the companies rather than the victims.

Perhaps that's what is the practice in a capitalistic market. But India being a motley of socialism, capitalism, communism such a bill is ought to evoke mixed reaction!!

Who is your competitor?

This is written by Dr. Y. L. R. Moorthi who is a professor at the Indian Institute of Management Bangalore. He is an M.Tech from Indian Institute of Technology, Madras and a post graduate in management from IIM, Bangalore

Who sells the largest number of cameras in India? Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones. Reason being cameras bundled with cellphones are outselling stand alone cameras. Now, what prevents the cellphone from replacing the camera outright? Nothing at all. One can only hope the Sonys and Canons are taking note.

Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours).

Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India. That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel's parent) are breathing easy you can't be farther From truth.

Nokia confessed that they all but missed the smartphone bus. They admit that Apple's Iphone and Google's Android can make life difficult in future.

But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?

The war is about "what is tomorrow's personal digital device"? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question - "who is my competitor?"

Once in a while, to intrigue my students I toss a question at them. It Says "What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won't compete on pure audio? "Elementary Watson". So also Kodak defined its business as film cameras, Sony defines its businesses as "digital."

In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question "who is my competitor for tomorrow?" The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared "internet is a fad!" and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today's competitor. Today's competitor is obvious. Tomorrow's is not.

In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned.

The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no.

Remember, if there is one place where Newton's law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC's price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then telepresence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!

India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film's competitor.

On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India Are called 3 hour "tamasha"(entertain ment). Cricket season might push films out of the market.

Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is "I don't remember!" For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.

One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker.

They were much more gentle though still quaintly called "alarms." What do we use today for waking up in the morning? Cellphone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!

On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley). Or will the competition be story telling robots? Future is scary!

The boss of an IT company once said something interesting about the animal called competition.

He said "Have breakfast ...or.... be breakfast"! That sums it up rather neatly.

Before civilized society it was "Survival of fittest", then came civilized sense of the "right to survive for everyone". Now it's like "what would not survive and who could be fittest" remains the question.

Budget 2010: Highlights

• Excise on locally refined gold at Rs 280/gram
• Basic customs duty on gold ore reduced
• 5% duty, project import status for MSOs
• Not to levy import tax on some equipment in road proj
• Uniform, concessional 5% duty on all medical appliances
• Customs duty rationalized on music, gaming, software
• Businesses with Rs 60 lakh turnover have to audit a/c
• Excise duty on CFL halved to 4%
• Central excise on LED lights cut to 4%
• Rs 50/t cess on Indian coal
• To raise central excise on non-petro products to 10%
• Increased excise duty on all non-smoking tobacco
• Excise on cigars, cigarettes to go up
• CET on petro products hiked by Re 1
• Partial rollback of excise duty on large cars
• Partial rollback of excise duty on cement, cement products
• Excise duty hiked to 10% vs 8%
• Professionals with Rs 15 lakh income need account audit
• Weightage deduction on R&D increased to 200%: Ernst & Young
• Weighted deduction from 150% to 200% for in-house R&D
• Surcharge for companies reduced to 7.5% from 10%
• MAT increased to 18%
• 10% tax for income between Rs 1.6-5 lakh
• Nil tax for Rs 1.6 lakh income
• Borrowing plan to be decided in consultation with RBI
• FY11 net market borrowing pegged at Rs 3.45 lakh crore
• To continue with practice of oil, fert subsidy in cash
• FY10 fiscal deficit revised to 6.9% of GDP
• FY13 fiscal deficit pegged at 4.1%
• FY12 fiscal deficit pegged at 4.8% of GDP
• FY11 fiscal deficit pegged at 5.5% of GDP
• Total expenditure this fiscal at Rs 11.87 lakh crore
• Revised estimate for tax collection at Rs 7.47 lakh cr
• Defence allocation at Rs 1.47 lakh cr
• To soon finalise symbol for Indian Rupee
• Allocated Rs 1,900 cr for UID project
• UID authority to issue 1st set of ID's in FY11
• To set up financial sector legislative reforms panel
• Allocated Rs 2,600 cr for Minority Affairs ministry
• Allocated Rs 5,000 cr to Social Justice ministry
• Launched women farmer fund scheme with Rs 100 cr
• Propose to launch skill development programme for textile sector
• Village & child development outlay up 50%
• Allocation for renewable energy at Rs 1,000 cr
• Unorganised sector social security fund at Rs 1,000 crore
• Health insurance extended to NREGA beneficiaries
• National Security Fund allocated Rs 1,000 cr
• Micro finance & equity fund doubled to Rs 400 cr
• Allocated Rs 2,400 cr for micro, SME's
• Allocation for slum redevelopment increased to Rs 1,270 crore
• To extend 1% interest subsidy scheme for affordable housing to Mar 2011
• Allocation for urban development at Rs 3,500 crore
• Indira Aawas Yojana allocation at Rs 10,000 cr
• Bharat Nirman FY11 plan outlay at Rs 48,000 crore
• Rs 40,100 cr for NREGA
• Rs 61,000 cr for rural infra development
• Banking for all villages with population of 2,000
• Allocation to Health Ministry at Rs 22,300 cr
• FY11 education plan outlay at Rs 31,030 crore
• Spending on social sector upped to Rs 1.37 lakh cr
• Ready with draft Food Security Bill
• One time grant of Rs 200 cr to Tamil Nadu for textile
• Clean Ganga Mission allocated Rs 500 crore
• Allocated Rs 200 cr to Goa to restore beaches
• To set up 20,000 mw of solar power by 2022
• Allocated Rs 500 cr to set up solar, small hydro power units
• Micro power project in Ladakh at Rs 500 cr
• To launch competitive bidding for captive coal mining
• To set up coal regulatory authority
• To loan Rs 16,752 cr to rail development projects
• IIFCL to double re-finance to banks for infra
• Road development allocation hiked to Rs 19,894 cr
• To construct 20 km of national highway each day
• Allocation for road transport raised by 13%
• ECB's now available for food processing sector

Where Devotion Really 'Pays'

It’s no secret that millions of rupees are spent during the major festivals in India. Often it’s criticized that it’s blasphemous to spend so much money in a poor country like us for things of entertainment and fun. People tend to point out that such huge amount of money be better spent on other more constructive things like health and education. Yes, there’s no debate on the point whether we need more expenses on education and health care. We know very well that effective spending in health and education has to be done by the governments. The NGOs and the private parties can’t cover the length and breadth of such a big country like India. The huge amounts of money that are spent in the Indian festivals don’t come from the government’s fund. People may argue that much of the black money is also spent in such events. But then that money won’t have gone to government anyway. So even if this huge amount of money is not spent in the festivals our governments won’t have spent more amounts for health care and education. On the contrary this huge expenditure that India does on these festivals is actually a direct channel through which a large amount of money reaches the relatively financially weaker sections of the society very fast from the comparatively richer people. I don’t see any other channel through which money can change hands so fast from the rich to poor in so less time. So from that point of view, these festivals – which are manifestations of our devotions, actually pay off in distributing wealth in otherwise financially skewed society.

Let’s take some example. I’ve been trying to get an estimate of the amount of money spent in Durga Pujas and the Ganesha Pujas in Bengal and Maharastra, Diwali throughout India and Id in certain areas. Not many festivals in India result in so much of private spending. But unfortunately I couldn’t find any authentic estimate of the total private spending in any of these events. In this blog site there is some realistic estimate of the amount that may be spent during Durga Puja just in Calcutta by the various clubs that organize the Pujas. This expenditure doesn’t include any of the spending that the people do in terms of buying new clothes. As per this blog a very pessimistic estimate would arrive at a figure of $250million. An optimistic estimate can very well reach close to $1billion for greater Calcutta. For the time being we can stick to this figure of $1billion. It’s true that a big chunk of this amount may be black money spent by politicians or local ‘dadas’ (the Bong equivalents of the Bhais of Bombay) who patronize many of these Pujas. That shouldn’t bother us because at least the money is coming out into the Indian economy rather than being stashed away in Swiss Banks.

Now let’s see how this $1billion is being spent and where the money is actually flowing. The first name that comes to my mind is Kumortuli – the traditional Bengali name for the place where the idols are made by highly skilled people who have been doing this job for generations. Without creating the idols all these people would have had absolutely no other job, because the only thing that they know is to create these highly artistic idols. This form of folk art is one of the few surviving old arts in India. Even if the number of people involved in this occupation is not something big compared to the 1.2 billion people of India, still it’s not very insignificant also. More over from the cultural point of view it’s very important to preserve the heritage of any form of art. A good portion of this $1billion goes to these sculptors.

Next comes the thousands of laborers who get employment for close to 100 days just for putting up the pandals. Employment for 100 days for something constructive is something that even the National Rural Employment Guarantee Scheme fails to provide in many cases. I’m not aware of anything else where people pull in money to create guaranteed employment for so many people. You have to just see the creations of these people to believe what’s the level of skills and creativities they have. Undoubtedly the pandals created during Durga Puja are folk art, technology and creativity at their zenith. I don’t know if there is any other domain where all these unknown faces of the creative world would have shown their skills in this big a scale.

Then there are the people involved in setting up the fabulous lighting. People who have seen the Durga Puja in Calcutta and around would know how fantastic and terrific the lighting is. There also a huge number of people are involved who don’t have much to do otherwise throughout the year. Each of them has some specific skill which can be exploited to its maximum only during the Durga Puja.

The millions of people who throng the various Puja venues are catered to by few thousands of small time vendors who sell snacks, handicrafts etc. Never ever do they get so many customers. They wait for this period of the year for the most brisk business.

Dhak, a form of drum (dhol), very specific to Bengal, is an inseparable part of the festivities in Bengal. You can’t imagine a Durga Puja without the sounds of the dhaak beat. The people who play these instruments are surely as declining as the Royal Bengal Tigers. Lack of proper opportunity is killing these people who have been playing dhak for centuries. If it’s not for the Durga Puja, they would have been a Dodo by now.

Finally, Durga Puja is also a cultural festival. Almost all the Pujas have back-to-back cultural programs for all the four or five days. These give opportunity to many artistes from various fields of performing arts. Even the highest paid singers in Calcutta await these few days of Durga Puja for a good remuneration. There are many artistes who may hope to get some work only during Durga Puja. Their numbers may not be huge, but still Durga Puja plays a critical role in patronizing art – something that has been in a phase of decline since the death of royalties in India.

A very crude estimate says that there may be roughly 5000 Durga Pujas in Calcutta. Even by the most pessimistic estimate, each Puja requires the involvement of at least 20 people for at least a month. This means Durga Puja in Calcutta creates employment for at least 100K people belonging to 100K households, which translates into at least 600K people - a better estimate may put this figure close to a million (160K households), which is almost 10% of the population of Calcutta. This figure doesn’t include the many more thousands of the vendors that put up temporary shops outside the pandals and even thousands more people involved in the industries (mainly cottage and small scale) that supply the raw materials for putting up the pandals and setting up all other logistics involved. Taking the example of one Durga Puja in Bangalore where I’m personally involved, I can say that out of the estimated $1billion spent in Calcutta, close to 60-70% actually goes towards the wages of the people (estimated at 150K – belonging to 150K households of 1million people) directly working for the Pujas and buying raw materials, and 30-40% goes for cultural programs and entertainment – which in turn impact many thousands of households which are not that easy to estimate.

Had it not been for the Puja, almost this entire amount of $1billion would have been either not spent at all or spent for something else which would have taken much longer to percolate to these 1million people. For example, say you pay Rs.1000 towards a particular Puja. Had there not been this Puja then you would have either saved this money or spent on eating out or buying some CDs, or watching a movie or just chilling out in a pub. In all these cases also your 1000 bucks would have percolated to few of these 1million people, but off course not at the rate at which it does in the case of Durga Puja.

The same mathematics would apply for the other festivals also. So all these festivals, which are indirect or direct manifestations of our devotions and religiosity, actually play a great role in our economy. So devotions do ‘pay’ at times!!

There's a hole in the bucket

There’s a children’s song which goes like this:

There's a hole in the bucket,
Dear Liza, dear Liza
There's a hole in the bucket,
Dear Liza, there's a hole.

Then fix it, dear Henry,
Dear Henry, dear Henry
Then fix it, dear Henry,
Dear Henry, fix it.

Hary Belafonte and his wife used to often enact the roles of Henry and Liza live on stage. I’d first heard this song as a small kid in our old gramophone on one of those 78 RPM discs. Little did I know that a bucket with a hole is indeed a very important thing. Within a few years the bucket with a hole came back in the maths book. I used to really dread those maths problems where we’re asked to calculate how long it would take to fill a bucket which has a hole. I used to always wonder who on the earth would like to fill a bucket with hole? Isn’t it much more efficient to first fix the hole, as told by Henry, and then fill it? There were certain sums where the bucket wouldn’t be filled at all because the rate at which the water drained out of the hole used to be higher than that of filling.

Times have passed. Gone are the days of those gramophones and Hary Belafonte and the maths of ‘hole in the bucket’. But the bucket never sank into oblivion. It’s there everywhere around me. And very much like the tougher problems where the bucket would drain out totally, the buckets around me also seem to be in a state of perpetual drain-out. More interesting is the fact that people are ready to pour more and more water in the bucket, but not ready to fix the hole.

According to reports, a fresh estimate from the ministry of food processing says a whopping Rs 58,000 crore (close to USD 1.5billion) worth of agriculture food items get wasted in the country every year.

In 2008 India produced 230 million tonnes of food grain and converted itself from a net importer to net exporter in the sector. Even though India is second in tropical fruit production after Brazil and in vegetable after China, the farmers over here do not get proper price for their produce. “The reason is we cannot process and preserve more than 10-15 percent of our production. It perishes. Else farmers sell it at throw-away prices” – that’s what Pranab Mukherjee has reportedly told very recently.

The government has issued a total of 223 million ration cards against a total estimated 180 million households. In other words, there are at least 43 million ghost cards.

According to published reports, The Planning Commission says, adding that “leakages” are common – higher than 75 per cent in Bihar and Punjab. During 2003-04, it estimates that eight million tonnes of food grains out of 14 million allotted to BPL families never reached them. “For every 1kilogram that was delivered to the poor, Government of India had to issue 2.23 kilograms” of food grains.

There is no comprehensive estimate about the exact figures of the leakages. But there’s no doubt that much of the food problem and poverty can be tackled if some Liza fixes these leaks. The recent budget presented in the Lok Sabha yesterday has gone gung ho over the various bucket filling strategies like National Rural Employment Guarantee Scheme and Antyodaya Anna Yajona. Many populist measures like Rs 3/kg rice to BPL families, free power and loan waiver are also in the plate - all these at a point when the fiscal deficit of our country is close to 10% (including the deficit of the states) of our GDP. No one is saying that filling the bucket is a bad thing. But isn’t it more efficient to first fix the hole in the bucket and then fill it with what ever you like?

To fix the 'hole' small NGOs may not be the solution because it would take ages to cover the full country. Government alone has to do this with the help of private partnerships. Things that we need immediately are:

• Much better food storage facility so that bulk of the perishable fruits and flowers and vegetables are not wasted daily. Our Finance Minister Mr. Pranab Mukherjee has recently pointed out that we need a revolution in Food Processing. Yes, we need that more than many other things.
• Much better retail chain that gets rid of the innumerable middle-men. The gap between the farmers and the end buyers should come down so that farmers can get higher sale price and buyers lower retail price. This has a positive effect on the standard of living of the farmers because they are also buyers of farm products produced by other farmers. Multi nationals like Metro Cash and Carry, Reliance etc should be encouraged in this area. The story of millions losing jobs due to these multi nationals is a political myth propagated by people with vested interests. Detailed studies have shown that the people who would be mostly impacted are the middle men, who have been exploting the poor farmers since ages. The small grocery store owners can be absorbed into the big retail chains in various roles. Even the middle men can also be absorbed - but they can't exploit the poor farmers any more.
• Much better infrastructure - good roads across the width and breadth of the country so that perishable farm products can reach markets in much faster time.
• Better yield of farming through corporate farming of large tracts of unfragmented lands. Swaminathan Anklesaria Aiyar had once pointed out that even with their full throttle Reliance and its likes can cover only 2% of the existing farm lands of our country. There's space for hundred more Reliances and ITCs.
• Better delivery of government aids. Using Smart Cards like National ID has a great role to play in. As pointed out earlier, “leakages” are common in this respect– higher than 75 per cent in Bihar and Punjab.

The public expenditure required in all these can be used for schemes like NREGS. Each of these activities will save government from the wasteful gimmicks like Rs3/kg rice. Similar thought process can really help us in this moment when our fiscal deficit is touching 10% of GDP.

COULD THIS BE THE SOLUTION TO THE Global Financial Crisis?

Money !

It is August. In a small town on the South Coast of France, holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt. Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a Euro100 note on the reception counter, takes a key and
goes to inspect the room located up the stairs on the third floor.

The hotel owner takes the banknote in hurry and rushes to his meat supplier to whom he owes E100.

The butcher takes the money and races to his wholesale supplier to pay his debt.

The wholesaler rushes to the farmer to pay E100 for pigs he purchased some time ago.

The farmer triumphantly gives the E100 note to a local prostitute who gave him her services on credit.

The prostitute goes quickly to the hotel, as she owed the hotel for her hourly room use to entertain clients.

At that moment, the rich Russian is coming down to reception and informs the hotel owner that the proposed room is unsatisfactory and takes his E100 back and departs.

There was no profit or income. But everyone no longer has any debt and the small town people look optimistically towards their future.

COULD THIS BE THE SOLUTION TO THE Global Financial Crisis?

My Contribution to Current Economic Mess

I'm facing the heat of the current economic crisis. My clients are doing bad and our business is hit. Same is the story with many companies that deal with consumer products. Though I'm a victim of the crisis but to some extent I'm also responsible for the same crisis which is hitting me hard. It's like shooting on my own feet. 

The present crisis is mainly caused by excess consumerism driven by the urge of consumers (I'd say dumb consumers) to buy things, which they don't need, with the money that they don't have. These dumb consumers world-wide (not that much in India, but mostly in US & EU) kept on chasing their aspirations of possessing the latest mobile phone that should take a 5 mega pixel photo or video and upload that immediately to the web for sharing with their near and dear ones; should have the space to contain 1000 mp3 songs so that they can keep on listening to the songs in office, buses, trains and every other place where they go; should have a screen of good resolution so that they can see youtube videos; should have all the facilities of checking mails, creating power point documents, editing excel files and everything else that they generally do in office; should have a well enough speaker so that the phone can be used as a boom-box if required; should have bluetooth, GPS, WiFi and many more.  I know that people are getting busy now-a-days and they should be always connected to the world of their office. Hence checking mails is something very essential. But I really don't know how efficient and ergonomic it is to check mails in such a small screen of a mobile phone. And believe me, even if Obama doesn't accept it openly, he will surely do so in private that typing a mail in a laptop is much easier than using even the QWERT compliant keyboard of a BlackBerry phone. Even if I accept the real need of checking mails while on the move (as if businesses used to collapse even a few years back when BlackBerry or similar services were not available), I really can't understand why people are so obsessed with clicking low quality photographs with their mobile. These photos are never usable even if it's 5mega pixel. A cheaper CyberShot camera worth some $50-60 has any day better picture quality than even the most sophisticated camera on a phone. A very ridiculous thing is watching a video on a small screen of the mobile. When the TV sizes are getting larger and larger to give a better feeling of watching a movie, does anyone really enjoy seeing the jerking videos on their phones? 3G is being promoted with the main intention of doing video calls and watching videos - as if the technology came into being just to facilitate a few jerks to view jerking video clips on their mobiles. I can tell some thousand more such useless innovations which have caught the fancy of the dumb consumers and the manufacturers have spent millions in R&D to come up with much more dumber features in gadgets. 

Long time back I got a mail about useless Japanese inventions. I remember of one gadget that was a fork fitted with a small motor that makes the fork rotate slowly. This is meant for eating chowmein. The rotating fork pulls up the threads of chowmein and if you place the fork near your mouth you get a continuous flow of chowmein. Wow, that is exactly what Charlie Chaplin had shown in 'Modern Times' - a world full of useless innovations which are consumed by dumb consumers. Now suddenly when the consumers not only spent all their money and also the money they had borrowed from banks and have nothing to pay off their debt, the sale of all the dumb gadgets have come to a halt. And that's how we're having a tough time - no sale means less work - cost cutting - layoffs - and the full mess that we all are in!!

Now let's come to the point. I've been abusing the consumers for spending money on dumb things. But the question is who made them dumb? Why have exploited the innocent consumers to be obsessed with silly things for watching jerking pictures of Lord of The Rings on a 8x10 cm screen? It's me!! I've been working on niche electronics technologies that are meant for niche people with a penchant for technology. I've created this hoopla that the business will stop if you don't check mails or edit a document on your phone. It's me and my friends in the semiconductor industry who have been putting extra hours to create really dumb things for which the innocent consumers have spent everything they had. We've created a hype about all these junk products. A perception was created that without these the life would be just dull and dumb. And the innocent consumers fell prey to our gimmicks. 

Well, it's not only me and my industry, it's also the housing industry which did the same thing that we did. They created this scenario where a couple started feeling suffocated in a house of 3500sq. ft, with a 4000 sq. ft backyard and 2000 sq. ft front yard and went on to buy another house situated on a hill top in Saratoga with a magnificent view of the south western Bay (well, what's that??) overlooking a beautiful lagoon and complete with a swimming pool, garage for four cars (two for the couple and two for the would be children to be born after 5 years), 4 bed rooms, 2 study and multiple levels of living rooms. Unless they bought this house their dream of being engineers in Bay Area won't have fulfilled!! Again things that they never needed but still they spent money (borrowed) for that. Where ever you go you see the same thing - people running after useless things. Now suddenly every thing has come to a point of no return. People don't have money to buy even useful things. And people who really need things can't afford to buy those useless gizmos.

Had the semiconductor industry not spent so much to innovate all silly things (like ridiculously large TVs, phones packed with dumb features which if used extensively would create serious ergonomic problems, smaller and smaller sized products on hugely costly latest and greatest of semiconductor technologies like 45 and 32nm -just to name a few) and thought of really useful things like unconventional energy products, more cost effective bio-medical products and general value-for-money simple gadgets then things would have been totally different now.

Just think about this. I've mentioned this in a previous blog:

India now has 350 million mobile phone connections. Considering the fact that there are still about 180 million households (~900 million people) in India thriving on less than $2/day per head- out of which 90 million households thriving on less than $1/day per head and only 40 million households earning more than $2/day per head, it's indeed a very interesting statistic. Even if we assume that the 40 million middle and upper class households, who earn more than $2/day, have one phone each for their members, still that accounts for only 160 million connections. This means that the remaining 190 million connections are coming from the households that earn less than $2/day.  So mobile phones are no longer items of luxury or aristocracy.  Even the poorest households can afford to have a mobile phone.

The handset market in India is about $5 billion. The 180 million households, who earn less than $2/day and who have already bought 190 million handsets, can still buy, on this date, 270 million more handsets (assuming 90 million households with income between $1-2/day buying 2 handsets per household and the 90 million households with income < $1/day buying 1 more per household), provided the price of the handsets comes down considerably. Even a price of $10 would mean a $2.5 billion more revenue, which is a straight 50% increase. Also at the same time the phones could have been made even more useful for the vast majority of people by providing usable Internet (say on on 3G technology) at a low price, say $15. There are 650K villages in India and it's not possible to lay the cables for broadband for all the villages immediately. But 3G has the potential to reach all such places. Exactly the way mobile went to places where landlines couldn't, 3G should go places where conventional broadband can't go. A centralized database keeping track of farming in each of the 650K villages, assessing the demands of each vegetable and grain across the country and accordingly regulating the supplies to maintain a steady price for all farm products can be a reality only if each farmer has access to Internet and that's possible through technologies like 3G. The impact of such an achievement is immense. As per reports about 72% of India's fruit and vegetable produce goes waste. The main reason for this waste is lack of proper storage and retailing facilities. With centralized database the retailing can be made much more efficient. Also government can make recommendations to farmers on various aspects of farming based on the projected demand and supply of any crop or fruit and vegetable. Lesser wastage and more efficient retailing would translate to higher incomes and facilities for the farmers - who constitute almost 70% of India's population. Just imagine how much impact can it have on India's economy!! I'm sure some one can make a gross calculation and prove that even without a single sale of niche products like an N-series Nokia phone or the biggest plasma TV, the manufacturers could have earned more had they catered to only the rural value-for-money market.

Does anyone know why a CT scan is so costly when a digital camera just costs a few dollars? The reason behind is that we've  never put our brains behind all these technologies. It's high time that people put their thoughts and energy in areas like biomedical, unconventional energy, power saving gadgets etc which are not only useful but also have immense social and environmental impact.

I feel it's good that we're having this crisis. Selfish people like us would arise and awake and do the right things that we should have done in the past decades. At the end of the crisis we'll all emerge with much better things that will remain for long and not end in a bubble!!