"Breakout Nations" by Ruchir Sharma

"Breakout Nations: In Pursuit of the Next Economic Miracles" by Ruchir Sharma published by Penguin India. Price Rs.599.00. pp. 292.

Nonfiction interests me more than fiction. Naturally, I am delighted to introduce a book of nonfiction thats creating records in India and the world. "Breakout Nations" by Ruchir Sharma is a super-racy book giving the last word on Emerging Markets, Frontier Markets and all the nations that are trying to make it to the cut in between. Who is Ruchir Sharma? His title reads as Head of Emerging Market Equities, Morgan Stanley. But for readers of "The Economic Times", Ruchir is a well-known writer on subjects of Economics. Infact, I think Ruchir's speciality is the sweet spot between Social History, Geopolitics and Economic Affairs and most often, the vicissitudes of the capital markets are self-evident in the overlap between these affairs. And Ruchir is best equipped to write on these matters. I always thought (and now a bird in Mumbai confirms) that Ruchir Sharma is recruited by Morgan Stanley only because of his ability to write on complex subjects intertwined as above and not because he has some great degrees at Yale or Wharton or that he can decode the formulae in financial mathematics or excel sheets.


Ruchir Sharma is MS's answer to other guys who can write very well on capital markets who are held in regard by the Icons of High Street Finance. Peter Bernstein (he passed away in 1995), David Darst (again from Morgan Stanley who wrote a treatise on Asset Allocation), Barton Biggs (Morgan Stanley, yet again, who wrote on the who-and-how aspects of sharing the spoils of the World War-II). Then of course, we have Jim O Neil (Goldman Sachs - the original guy who coined BRIC with Roopa Purushottaman before Roopa was lured by our own Kishore Biyani - it happens only in India!). Ruchir Sharma is different because he uses a whole lot of qualitatative yardsticks in analysing data pertaining to who will get past the round two of the next group of nations to "break out" of the orbit of middle-income trap and make the leap into the developed markets. Ruchir Sharma makes many statisitical inferences, fine examples, anecdotes and similes, cruel objectivity, and laser-sharp observations on countries from China, India, Brazil, Russia, Indonesia, South Africa to Turkey, and other frontier nations in the continents of South/Latin America, Asia, Eastern Europe, Middle East and of course, Africa. Its breezy and page-turning even for the unitiated in matters of Economics and financial markets.

Ruchir has been writing for "Newseek" and "The Economic Times" for the past 20 years and has been kicking tyres in some part of the developing world for atleast a week of every month of those 20 years. He is most qualified, therefore, to talk with conviction interlaced with consummate ease on why and what aspects are appealing about these markets. He also writes on what aspects are not. Maybe, he has a say in the rejigging of the MSCI universe of stocks across the globe from South Korea to Turkey and from South Africa to Mexico. As someone who has the license to get under the skin of every country which wants to be the next or the new G-7 nation in some time, Ruchir does a fabulous job in giving a National Geographic -equivalent picture of every nation on the radar of the FII, Endowments of developed world and the Foreign Individual Investors. I am amazed at the insights the book gives in one read about China, Brazil, Indonesia and even about our own India. Rightly so, he gives India a 50: 50 chance to be counted as a breakout nation. Swaminathan Anklesaria Aiyer, my second-most favorite columnist from "Economic Times" has already written his repartee to Ruchir in the previous week's column in The Times. But Ruchir makes a few stunning, off-beat observations about India which should make policy-makers worry and middle-classes wary. He says, bulk of India's youth get carried away by either jobs in government or Maoist movements because of growing inequalities between the rich and the poor. And unlike in China, where the top Forbes Billionaires keep changing every few years and also their combined networth is capped at $10 Billion or so, in India, much to the chagrin of the poor and the oppressed, the same list of Billionaires is displayed year after year since the 1990s and the combined networth is in excess of $70 Billion while India boasts of probably the lowest per capital income amongst all developing nations and widening inequalities. There are other telling points, mostly objective about India and China.In fact, Ruchir's commentary on China can rattle the most die-hard bulls of that country. (Jim Rogers might re-look at the title of his book on China -"A Bull In a China Shop"). I think, Ruchir has pre-empted the "India Today" magazine's latest survey on the arrogant South India vs. the Persevering North India.

Ruchir makes some outstanding denouements  on the new headwinds of world trade that call for a lot of economic negotiations between the affluent and the emerging nations. Ruchir, by virtue, of his being in a chair to hobnob with the heads of state as well as head-honchos of corporations, is able to distill a range of reports, surveys (some of them outright exclusive) and put a fascinating menu of options for Intelligent Investors of any country. He doesn't take the burden of making hypothetical statements that needed to be proved. Instead, he gives an eclectic but largely concatenated dosage of interesting and disparate data points to drive home a point that is hard to disagree with. Maybe he is good at story-telling but this is a book that concerns four-fifths of humanity in the most convincing fashion. It has few flaws and some unprovable truths but largely, the content is open-ended to let these nations decide in a passing parade who will need what to cross the rubicon. Antoine Van Agtmael was the first guy who coined the phrase "Emerging Markets", then wrote a book "Emerging Markets Century". It was like a premature baby. Ten years back, Jim O Neil wrote BRIC report - this allowed the toddler nations to feast and grow with a 450 per cent jump in the FII allocation to these countries. Now, the teenagers are turning brash and feeling self-important and simultaneously, many toddlers are crying for attention thats legitimate. Ruchir Sharma's new book is a good wakeup call to all of them - an honest and objective, intelligent and readable report card.

Penguin publishers tell me this book is already hit the second print run within one month of launch. This is going to be the best-selling Nonfiction book for 2012. Well done Ruchir.

AP crosses Rs.25000 crores Income Tax collections, so what?

Recently, the AP Income Tax Department (AP Circle) has celebrated a milestone in Income Taxes collected from the state of Andhra Pradesh. Rs.25000 crores is the total sum of income tax collections which include, inter alia, everything from corporate income taxes, individual taxes, companies paying Minimum Alternative Tax, Dividend Income, Capital Gains, Income from Business/Profession as well as a good chunk of Salary and Pension Incomes. From the viewpoint of various sources of income tax, the department may not have fully deciphered the potential.
But lets understand the reasons for this elation before we flesh out details of whether we need to pat ourselves or feel there's room for higher mobilisations: AP has become the 3rd state after Maharashthra and Tamil Nadu to cross Rs.25000 crores. clocking a 24.8 per cent growth against a national average of 23 per cent in tax collections over the previous year. While the numbers for Maharasthtra and Tamil Nadu are not known,  Rs.25000 crores is impressive considering that the total Income Tax Collections for the previous year as per the latest Economic Survey 2011-12 is pegged at Rs.5,25,000 crores. From that viewpoint, that is almost 4.76 per cent of the national collection. Sounds impressive but look closer, you will find the segments of collection may leave a lot to be desired - atleast for the IT officials from a state which was growing at above 9 per cent during the golden years of 1995-2005 but is now slipping below. We have already seen the latest India Today's survey of the arrogant South underperforming in Economic Growth Rates compared to the diligent North catching up. But thats another point which can be debated later.
Of the total Rs.525000 crores., more than 68.5% is from corporate income tax. Only Rs.165000 odd crores is the contribution from Individual Income Taxes.  Hyderabad, despite having over 700  listed companies out of the 8500 odd stocks on NSE/BSE doesn't have a noteable presence that can pull the weight on the Indices like Sensex/Nifty (only one company or so in the bellweather indices). Except one or two companies, there is hardly a presence that can make the tax tally anywhere close to the tally of companies based in Mumbai Circle or Chennai Circle or even Kolkata or Bengaluru. We are not even talking about the circles in National Capital Region. Point is, even if you add up all the taxes paid by the listed companies in AP whether as Advance/Income Tax, it will not be close to the tax paid by a company like, say, ITC. Also, it is likely that most of the top corporates in listed and unlisted space are headquartered in Mumbai - which is where, taxes  eventually get paid afterall. AP is not leading the country in other parameters which can make it get counted for its past glories. We score a diminishing picture of our past self in a range of parameters like Gross Capital Formation, Per Capital Income,  Literacy Rate, School Dropout rates  (which determine the employability rates), etc.
To make matters worse, most of the leading companies of national fame except Pharmaceutical industry are either outside AP or re-locating their hubs to other national and international locations. You cant win the Income Tax sweepstakes with just a huge base of employees.
There are other quallitative factors which will determine, inter alia, whether the cake of Income Tax collections is going to go up largely in the coming years. You can guage this by asking some simple questions: Are we creating the right Investment climate for New Entrepreneurs to start industry in AP? Are most of the state Industrialists increasing their footprint in the state of AP or are they showing inclination to invest outside AP and maybe outside India itself? Is there a concentration of just one city instead of several top cities in AP and also simultaneous and harmonious development of tier-2 towns? (You don't have to read Sri Krishna Report to answer this question - we know how many cities are there to count as having arrived in AP besides Hyderabad).Is there a good skill migration happening in the state for more and more people escaping the poverty trap and moving into the semi-skilled and skilled and urban modes of employment or is there a disturbing tendency of farmers staying put in farming activities? (which means the  base will never go up and this may be because of free and guaranteed entitlements from the state government keeping farmers anchored to agriculture-related activities). Is the State attracting new talent in Industry and Service sectors? How is the FDI related Equity Inflows into the state? Are they showing an increasing trend or a decreasing trend? For example, between 2008-2011, AP received a mere five percent of the total inflows in terms of FDI in US Dollars compared with 19 per cent for Delhi and NCR Region and 35 per cent for Maharashtra region. Even states like Gujarat and Karnataka have received a tad more FDI commitments compared with AP.
What is the whole point of this excursion in statistics? Do not get misled by sweeping statements or tall claims of IT collections. They do not mean anything or signify a quantum jump in qualitative improvements in overall health/infrastructure/employment/investment/Economic Growth parameters of AP. AP Income Tax circle must be commended for driving the figures but they will be better off assessing  the segments of income tax in detailto guage if there ar e any outlandish collections or seasonal benefits or sheer luck in getting to a figure that still doesn't appear  too flattering. It could be mostly comprising of a few companies here and there, or a a handful of politicians getting the urge to come clean on their assets and liabilities, or  on the back of lagged investment cycle of corporates who are slowly re-locating/reducing footprint to  elsewhere- like Microsoft, Satyam Mahindra, Infosys. One has to also see whether a lot of money is moving out of the country into tax havens or extractive  industries outside India. If taxes are as certain as death, how can the tax man be celebratory at a mere milestone? He or She has miles to go before we sleep?                                                                                                                 

"Dammu" Movie Review (Telugu)

“Dammu” means “stamina” in Telugu. Supposed to be short-hand for the box-office charishma of the short-statured, short-tempered NTR Jr. He ropes in Boyapati Sreenu who delivered monstrous hits for Balakrishna ("Simha") and Venkatesh ("Tulasi"). And two heroines  - the in-form but ageing Diva Trisha who looks glam despite puffy eye-bags and tired looks, and a not so cute but taller than NTR Karthika. Does it all add to the magic of NTR? No, it fails miserably.


Reasons are manifold like root causes for food price inflation. A hackneyed story set in a village with two families who war with each other for generations. A screenplay that’s jerky, sometimes slow, sometimes fast, overall disappointing. Violence that is inescapable and unreasonable – even fans and Karate Kids and youth won’t clap for one scene of too many that gnaw your brain away. This madness has to stop one day and it looks NTR is still in no mood to wish violence away for family audiences who come to see his films. Characterisation that grossly under-utilises talents like Kota, Brahmanandam, Suman and Venu (“Hanuman Junction”). What redeems the film is the string of punchlines written by M.Ratnam - they may regale the fans for few moments but the excessive trappings of Balakrishna become too much to handle for NTR - he is not yet mature enough to handle such roles of "Samarasimha Reddy". Music by MM Keeravani is average. Only one song "Sri Sri Raja Vasireddy" evokes awe.

NTR definitely scores a fine performance with impeccable dialogue delivery, designer moustache and improved looks. But its unlikely this movie will be well-received by fans as there are too many flaws and inconsistencies that make it tortuously long in 165 mins. Almost every other hero – Nagarjuna, Prabhas, Mahesh, Allu Arjun – experiment with makeovers and crossover roles. But NTR still thinks his surname and family fan base will get him far notwithstanding weak scripts and incredulous storylines - which audiences in villages are also tiring of – two heroines, thigh-slapping, sickle head-chops, whatever. He is too talented for doing just Balakrishna remixes at his age – he can go very far with his “Dammu” if he leaves the beaten path of this “Dammu”.

"Ee Rojullo" ("Nowadays") Movie Review (Telugu)

"Ee Rojullo" means "Nowadays" in Telugu. Thats the name of a movie supposedly shot on a boot-strapping budget of just Rs.30 lacs. I went with low expectations thinking it is another "facebook"/friendsbook kind of a movie. Debutant director, a heroine who looks like half Trisha, half Shamitha Shetty and a hero who wears spectacles in even sleep. Unconventional to say the least. And the plot gets t...hicker - a software engineer and his "Bawarchi" buddy hunt down a service apartment. He lies to the landlord that he is married and his wife away, expecting and all that.


Then a sweet romance unfolds between the landlord's daughter and the bespectacled guy. Running the girl's errands, solving her "blues", texting her at odd hours towards a blissful state of mind. In the interim, the director takes the audience on a realistic voyage into the world of today's youth - their mental makeup and their attitudes to love and life, work and wi-fi, warts and all. These guys are there everywhere - girls who don't mind hugging male colleagues for a treat at the Chocolate Room, guys who multi-task in relationships at each turn of the day, guys and gals who transact in love for getting from point A to C.

The movie is amateurish towards the end, but largely achieves the objectiive of the director to clearly show what today's teen-and-early teen crowd live for and live upto - they are shockingly short-term, brutally frank, elegantly flippant, and yet obsessed with getting ahead in life than getting even with the past. Director Maruti has delivered an entertaining script which keeps the audience of probably all generations glued mostly. The humor is embedded in the storyline, the characters played by the lead couple and others look thorough and real, and the pace is good, sometimes fast.

The music is a bit loud and hurried and over the top and despite that, the movie is uproarious and upbeat. The Film Development Corporation usually specifies the length of a feature film to be minimum 14 reels. This film is done with in 75 minutes. Everytime I see a film which twinkles like this with raw talent and above-average entertainment caanned in less than two hours and incredulous costing, I see a glimmer of hope for Tollywood. Future is brighter.

Pulitzer Prizes

There is only one gold standard of writing in English methinks - Pulitzer. You have many literary awards for Writing in English (WiE) like the Man Booker, FT Awards etc. but none come close to the award instituted by the Columbia School of Journalism - for writing in English. I keep throwing my savings to acquire the collection of Puliltizer prize-winning entries. Ever since I got to know there is somebody called Joseph Pulitzer and there is an anthology called Pultizer Prize collection, I have been buying since 1991. Of course, I perfectly agree there is outstanding literary output coming in non-English too every minute but Pulitzer is up there for American Writing in English and their standards are too rigorous. Most of the American writers we revere since 1917 -the legendary Christopher Hitchens, Paul Krugman, Dave Barry, Nicholas Kristoff, Joe Nocera, Mitch Albom, Maureen Dowd, Anna Quindlen, Art Buchwald, William Safire, Russell Baker and Roger Cohen - they were always feted here first and cited and celebrated before they became icons of English Language Writing.



2012 awards have been announced - and their categories are as always varietal and calibrated - Pultizer for Explanatory Reporting (as in explaining "sub prime crisis"), Pulitizer for Breaking News, Puliltzer for local reporting, Pultizer for International Reporting, Pulitzer for writing on music, biography or autobiography, history, drama, commentary, feature writing, criticism, etc. A Pulitizer for poetry also - thats the respect and veneer the Pulitizer committee has for all departments of journalism and writing. If the standards are not met, NO AWARD. Surprise, this year, NO AWARDS for FICTION. (Howzzaat???) and NO AWARD for Editorial Writing. This is truly outstanding - why dilute the standards instead of giving to the undeserved? No other literary award matches these standards. Of course, it is Americana all the way - this is for American journalism/writers who are American Citizens. No wonder, Jhumpa Lahiri got it once - not Naipaul of East Indian origins. Of course, there is criticism that these awards are a jingoistic celebration of American Publishing phenomena - but thats the truth - they are the most literate society. India publishes 80,000 books a year but US publishes probably as many number in a quarter, if not more.


I envision a scenario where we will have over the next quarter century more categories of writing introduced by Columbia School to cover the invasion of web-based writing and the many faces of social media. Right now, Columbia School has a New Media division which has asked the US Library of Congress to archive every tweet that goes out of the 200 million user ids every nanosecond anywhere in the world. But I guess giving awards for tweets and facebook posts is tough and difficult. Good Writing is writing thats edited, as David Ogilvy used to say, atleast 13 times. That kind of luxury is impossible to attend on facebook or twitter or blogs without comprising on the qualities of relevance and immediacy. Anyway, whether or not that happens, Pulitzer will live on as long as American English thrives - and readership for elegant writing exists. Congrats to Pulitzer-prize winners - Surprise, no winners from "The Atlantic", "Harpers" or "The New Yorker". Are we getting there? I mean, shorter.

"Devasthaanam" Movie Review (Telugu)

Devasthanam" is a spiritually awakening film and soul-satisfying. It has a good starcast of actors in their twillight years - K Vishwanath (who directed "Sankarabharanam"), SPBalasubramanyam and Aamani. It is directed by Janardhan Maharshi, a writer who had his share of fame in the 80s; he even essayed a famous role as a living corpse-brother of Brahmanandam in a hit comedy film which I fail to recollect. What's good about "Devasthanam" is despite the religious name, it is not religious and not too preachy. It distils the most basic teachings of Hinduism which are secular in nature - love and live well the human life, live for others if you want to avoid the cycle of birth and death, don't chase money if you want peace and be responsible of the consequences of your actions and love everybody - rich and poor.


The story revolves around K Vishwanath who is a do-gooder and helps all in his circle of living and he bumps into SPB one day to take a promise from the latter that SPB should perform his last rites because he has no family. SPB believes in none of that stuff - he doesn't believe in taking a daily bath, doesn't go to temple wilfully, doesn't care a hoot about anything else except loving his ageing but beautiful wife. He also doesn't mind conning women customers who come to his Saree Shop with psychological tactics. SPB only believes in the theory of instant gratification, his immediate family and his business profits. Until, Vishwanath through his deeds and spiritual intelligence removes the layers of ignorance, attachment to the material things and selfishness to oneself and family. Janardhan Maharishi must be credited with working out a tough subject to explain with amazing clarity and conviction. The subject is so serious yet the treatment given is comical and light-hearted especially some scenes involving Kovai Sarala (the lady customer) and SPB and again mostly with SPB and KVishwanath. Such a story hasn't been on celluloid in recent times - of interweaving complex theories of Karma, Re-incarnation and Siginificance of Human life. Music by debutant Swara Veenapani is outstanding and divine sounding - no complex music arrangements just melodious notes involving raagas and simple percussions.

Ramanachary, the art-patron has done a cameo in the film with an effect that will haunt anybody who is having a roaring career and business without a prickly conscience. It takes guts to release this movie just before the Summer onsalught of movies like "Dammu", "Daruvu" and "Raccha". We went to Screen 5 of Prasads expecting a handful of people aside of the movie projector team - we were pleasantly surprised it was houseful. Towards the end, the movie becomes a bit sententious but thats the only way to end a movie with this character. Telugu used in the movie is quite extra-ordinary - not so simple and not so complex but enough to clear the wax in your ears. "Sasha Bhishalu" and "Nivrutti" are not words you read nowadays even in "Swati" and "Navya" - it will do your mother and mother-tongue immensely proud and happy to see this film. I wish other languages also get to see such films with sub-titles. Catch it soon with your seniors because it will be gone soon from the statistically-calculating multiplexes. Good movie to watch if you want small dosages of practical spirituality and art-of-living advice.

Nassim Nicholas Taleb's "The Book of Procrustes"

Taleb coined the term "Black Swan" and the phrase never ceased to be ringed out of our minds since. From Tsunami to Sub-prime crisis, from freak terrorist attacks to epic catastrophes, anything that's remote and rare to occur is being attributed to a Black Swan event - meaning a tail risk event whose probability is rarest of rarities to occur. A few years ago, apart from writing books such as "Fooled by Randomness" and "Black Swan" and other thick books on exotic hedging derivatives, Taleb assembled his lifetime of observations in a compact volume of aphorisms - both philosophical and practical. "The Book of Procrustes" is a joy and celebration of some funny and many fantastic insights into human behavior and the world at large.

No speculative gyaan, its pure reassuring wisdom - sometimes profane and sometimes profound codified into about 25 chapters. Each chapter is enticingly captioned. "The scandal of Prediction" or "The Implicit and the Explicit" or "Economic Life and Other Very Vulgar Subjects" are few examples of how cryptic and yet endowed with sutble humor they are. As Taleb outlines in the preface, aphorisms lose their beauty and cadence if explained to death. So, he retains the surgical length of an aphorism in its purest form - out of his ingenious mind and vast body of experience- both worldly and otherwise. "What I learned on my own I still remember", as one aphorism goes probably strikes a chord with all of us who remember what we learnt conceptually rather than by rote.

Some are downright emphatic and indisputable ("What I learned on my own I still remember"). Some appear to be uproariously reflective ("We ...amplify commonalities with friends, dissimilarities with strangers, and contrasts with enemies."). Sometimes, he leads you through clear concepts into something that sounds good but abstract. ("Knowledge is subtractive, not additive - what we subtract, not what we add." Taleb has an opinion on everything from Freud and Einstein to Education and Ethics, from stockmarket to banks - on which he makes lot of money for jam, bread and butter. Hear this nugget that seems to tell all without telling it all: "You can be certain that the head of a corporation has a lot to worry about when he announces publicly that "there is nothing to worry about". Or, this one on scams: "It is much easier to scam people for billions than for just millions." (inspired by Madoff episode).

You can make out he has scant respect for ideology, orderliness, equilibrium and prediction abilities of experts. He has a take on too big to fail banks too as well as on Government bailouts. "The main difference between government bailouts and smoking is that in some rare cases the statement - this is my last cigarette - holds true." On banks, he says ,"The difference between banks and the Mafia is that  banks have better legal-regulatory expertise, but the Mafia understands public opinion."

You cannot argue with a man like Taleb - he bares it all, warts and all,  and most of them have such  rhetorical rectitude resting on the fulcrums of logic, wisdom and timeless appeal that it becomes a gospel like a Pythagoras theorem or Aesop's Fables or Panchatantra. Greek Mythology goes that Procrustes used to be a slayer of people invited to sleep on a specially prepared bed - where if the sleeper's body parts are protruding outside the rectangle of the bed - those body parts - be they limbs or head or fingers were ordered to be chopped off. Finally, Procrustes was slain on his own bed by a courageous Theseus who beats Procrustes at his own game. Similarly, the truths and nontruths in this volume are made to fit logic, wisdom and knowledge and the bed actually is the reader. So, instead of fitting the wisdom nuggets in the wrong box, its made like an inverse operation of changing the "wisdom" to the bed-like situation in life.That, friends, that comeuppance or a chance to be proved wrong after what we accept as truth is the essence of what Taleb wants us to imbibe when we see life through our prisms, our paradigms and our ways of seeing. Its a blast of a book something I would like to read and ponder, re-read and wonder. It will keep us anchored to the unfathomable unpredictability of life and appreciate that life cannot be an equation to analyse.