Very soon, Dr. Manmohan Singh will be re-elected the Prime Minister of India. He will be the second prime minister to have completed one full term and then be elected again.

The mild mannered unassuming man who was the prime architect of India’s economic reforms and liberalization process in the 90’s has always been an unlikely politician.

For starters, he is an economist. He went to Cambridge and Oxford and completed his D Phil from the University of Oxford.

He has also worked in the IMF and the UN, and was the Governor of the Reserve Bank of India from 1982 to 1985.

In a landscape that is dominated by caste based polity and politicians with lengthy criminal records – it is hard not to be impressed by Dr. Manmohan Singh.

India’s reforms were started out of necessity, when the country found itself on the verge of a balance of payment default and it had no other option but to turn to the IMF. In exchange of IMF funds, the country slowly opened up its economy and allowed foreign players to come in and compete along-side the local ones.

Since, the beginning of reforms, the country has managed to lift millions of people out of poverty and a there has been the rise of a new wealthy middle class.

Even then, the reforms have failed to be as popular with the masses as one would have hoped. That’s because the reforms process has helped raise the standard of living substantially more in cities, than in rural areas. And a large part of the population still lives in the rural areas.

It is also true that states in southern India have developed much faster than states in other parts of the country. And that is primarily because of state chief ministers, who were willing to focus on economic reforms; instead of going after caste based vote banks.

Another reason has been the intellectual nature of the champions of the reforms process. The champions of reforms in India like the Prime Minister and Finance Minister are mild-mannered individuals who are not ones you associate with rabble rousing and a populist following. They lack the kind of mass – appeal that many other politicians have, and so far, have not been able to sell the idea of reforms to the masses.

Yet another reason has been the coalition of parties that has ruled the country in the past. The left parties have been part of the coalition at the center and their presence in the government has meant that they were able to block a lot of economic reforms taken by the government and stifle the whole process.

This time they won’t be part of the government and I am optimistic about the reforms process in the country finally taking off.

All the best, and congratulations to Dr. Singh, and India.

Photo Credit: Marko Belluci

The Yankees are auctioning off about 1,500 pieces of memorabilia from their old stadium. One of the cheapest things you can buy is dirt. Yes, you can buy a spoonful of dirt for $80 which has been in the stadium. It comes encased in the form of a shiny paperweight. Click here.

Here is the description:

This Yankee Stadium Inaugural Season paper weight is laser engraved on the inside with the inaugural season logo. This piece also includes a coin holder filled with actual dirt from Yankee Stadium. This is a great way to celebrate the new building and commemorate the inaugural season. This piece includes an MLB Authentic Hologram and a Yankees-Steiner Letter of Authenticity. Dirt capsules are not filled to capacity.

Here is a snippet from a related Bloomberg piece:

All Yankee dirt since 1952, including the dirt used in the new $1.5 billion stadium across the street from the old building, has come from Beam Clay in Great Meadows, New Jersey.

Even though a coin-shaped dirt memento at $80 is among the cheapest souvenirs on offer, it still seems like a lot to Beam Clay owner Jim Kelsey.

“It’s nice to know something we made means that much to somebody,” Kelsey said in a telephone interview from his business about 65 miles west of the Bronx. “But I can just go outside and get some myself. They could buy a 50-pound bag for a lot less.”

A few weeks ago, Scott Adams the creator of Dilbert wrote something very interesting on his blog about investing:

Almost everything I ever learned about investing turns out to be wrong. I learned that buying and holding a diversified portfolio of stocks was a sure winning strategy in the long run. So far, my lifetime stock investments are negative.

I learned that the safest investment is real estate, especially in California, because “they aren’t making any more land.” That theory hasn’t worked out too well.

I learned that investing in California municipal bonds was extra safe because they were insured. That’s great until the insurance companies themselves become insolvent.

So if everything that was good is now bad, is there any investment that we all assumed to be bad that is now good? (Other than stuffing cash under the mattress. Too obvious.)

This is the standard, conventional investing advice (or wisdom?) that most of us hold true. Makes me wonder if it’s time to question the answers.

Thoughts?

Image by Silgeo

Recently, someone in the IT Outsourcing business told me that they preferred to keep a bench (people who have no work) instead of working for customers at a lower price.

They have arrived at a minimum hourly rate that helps them keep their net profit margins at 25% and they don’t accept any business at a lower rate.

They have a substantial bench and do not plan any major layoffs. They want to be prepared for the economy, when it eventually rebounds.

Since employee cost is the major cost component (about 70%) and they are not going to cut that – they should ideally want to maximize revenue and get whatever they can. But, what they are presently doing is paying a person and then instead of getting that person to work for $20 (instead of the usual $50) an hour – they are keeping him idle.

The reason for that is simple – you can’t charge $20 from one customer and $50 from another (for long). Eventually, the one who is getting charged $50 will realize what is going on and would want to come down to $20. If you don’t let that happen – he will move to competition.

The price point of $50 has been derived based on certain profitability figures. But, now it’s acting exactly against that.

He said that retailers have come up with an easy way to get rid of excess capacity – discounts! But, you can’t sell excess capacity at a discounted price in the consultancy business. This is primarily because customers who discover this feel cheated and you risk losing them.

So given this scenario and the limitation that you can’t fire people, what do you think is the best way of going about this?