Viswanathan K's Thoughts

Microfinance refers to the providing of financial services to low-income clients, especially those who traditionally lack access to banking and related services. This includes not just loans but also savings and insurance. Those who promote microfinance believe that such access helps people out of poverty. The most famous guy from the world of microfinance is Muhammad Yunus , a Bangladeshi banker, economist and Nobel Peace Prize winner. SKS Microfinance is India’s largest and the world’s fastest growing microfinance organization. Operating in 19 states, it provides collateral-free loans to the poor. 85% of its borrowers are poor women. It made loans worth Rs 20,000+ crores last year. It provides loans for cell phones, local retail shops, housing loans (via a tie up with HDFC) and life insurance (via a tie up with Bajaj Allianz). So where does SKS gets the money to lend? From other banks and financial institutions. Also from private equity investors and venture capitalist...

Everyone knows that Hellenic (Greek) philosophy is the bedrock of Western civilization. By that, most people refer to the Hellenic legacies of democracy, abstractions and generalizations (the “Ideas” of Plato), the clarity generating “Logic” of Aristotle, and the concept of defining all terms. Including defining terms like justice, ethics and morality. You can agree or disagree with their definitions; but at least they were willing to stick their neck out and take a stab at such items. Far less, however, is said about the Greek impact on the idea of God in the West. The Greeks philosophers, be it Socrates or Plato or Aristotle, were all practical men. While they certainly had some idealism in them, they were pragmatic about what was possible in the realm of governance. Plato felt that no ideal society (Utopia) ever comes to be because men are not content with a simple life. That men are acquisitive, ambitious, competitive, and jealous. Aristotle was a bit more cynical (realistic?) and ...

We have a tendency to classify things into categories. It helps organize information and find things easily. Most of us are aware of one or the other classification scheme in areas like music, sciences or literature. One of the most famous classification systems is the Dewey Decimal Classification system (DDC) used in libraries all over the world. But is it “fair”? Look at how it divides the religion space. 70% of the religion space is reserved for Christianity. Islam and Hinduism are clubbed with “associated” religions (like Bahai and Buddhism) and get less than 2% of the religion space (even though, put together, they are followed by more than one third of the world’s population!) So was Dewey biased? Maybe, maybe not. His system was devised to optimize shelf space for books. No prizes for guessing which religion had the most books in the land Dewey lived in… So you realize classification systems are devised with an aim in mind (like optimizing shelf space). If you have a different ...

"Institutions will try to preserve the problem to which they are the solution." - Clay Shirky That sounds cynical. It also sounds true. But ever wondered why things are that way? It’s not only because of the preserve-the-problem-and-keep-making-money mindset at work. Things are a lot more complicated than that. Take the example where a company can eliminate the problem instead of just fixing things when they go wrong. If each and every company goes with this approach (eradicate the problem) then, it will make money only until the problem is eradicated. But what does the company do after the problem is eradicated? They’ll have to find another problem to solve. Will they succeed at finding that next solution? Not necessarily. If they don’t, the company would close down (remember, the older problem they fixed is now eradicated). And then their employees will be without jobs. Which do you prefer? Problem eliminated, but unemployment added? Or jobs retained and cure available, but...

Many Indians were upset with an article in Time magazine criticizing Indians. Apparently, so many Indians voiced their unhappiness with the article that both Time and the author, Joel Stein, posted apologies (You can see them at the end of the article). For a change, it wasn’t about the IT folks who “steal” American jobs. Rather, it was a criticism of Indians who live in the US. Or more specifically, the ones who live in one city: Edison, New Jersey. Most Indians familiar with the US know of Edison for that very reason. But hey, let a white guy say the same thing and we are up in arms! As long as we are spoken (and thought) highly of as the smart doctors and software engineers from India, we are very lapping up the complements. We love it when the Americans “ assumed all Indians were geniuses ”. Then, says Stein, some of those “geniuses” in Edison started bringing in their “ merchant cousins ”. Who in turn brought in their “ even-less-bright cousins ”. And then he says, “ we started...

The decision to deregulate the price of petrol went mostly uncommented on. “Deregulation” means that the Government of India ( GOI ) will not set petrol prices anymore; instead companies will. In other words, petrol prices at the pump will be decided by global crude prices. Before deregulation, GOI set fuel prices to be lower than global prices. Take a look at the chart below. It shows the cost of fuel price subsidies to companies: Source: Petroleum Planning and Analysis Cell By deregulating petrol prices, at least losses on the petrol front get eliminated. (By the way, this explains why Shell’s pumps charge a higher rate: they have been charging unsubsidized rates. And why GOI owned oil companies like HPCL and BPCL are often loss making ). But what’s the problem with continuing the subsidies? Well, someone has to pay for the subsidies eventually. So who pays? People like us. Parts of our taxes are used to bear the subsidy cost. Also, these subsidies show up as GOI debt. High GOI...

Most people in 3 rd World countries (and even the emerging economies of today) don’t observe laws and rules. Is that because the probability of getting caught is negligible? Or are they inherently a “rules are not for us” bunch? Or is there something more to it? Check out this comment by the legal scholar, Bruno Leoni: “The Romans and the English shared the idea that the law is something to be discovered more than to be enacted and nobody is so powerful in his society as to be in a position to identify his own will with the law of the land” Leoni is right. There’s only so much that can be enforced. Unless the majority agrees with the rules, it’s practically impossible to apply them. The rules of most of the “non-law abiding” countries were enacted by their colonial rulers. Had they been discovered , they would have been in sync with the local customs and practices. Could it then be that most people in these countries do not follow the rules because the rules a...