April 19, 2005, www.rediff.com, Co-author-Vivek Kaul
'By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it - a process that has undoubtedly improved national productivity growth and standards of living.' -- Alan Greenspan, Chairman, Board of Governors of the US Federal Reserve System.
Understanding Derivatives
The primary objectives of any investor are to maximise returns and minimise risks. Derivatives are contracts that originated from the need to minimise risk.
The word 'derivative' originates from mathematics and refers to a variable, which has been derived from another variable. Derivatives are so called because they have no value of their own. They derive their value from the value of some other asset, which is known as the underlying.
For example, a derivative of the shares of Infosys (underlying), will derive its value from the share price (value) of Infosys. Similarly, a derivative contract on soybean depends on the price of soybean.
Derivatives are specialised contracts which signify an agreement or an option to buy or sell the underlying asset of the derivate up to a certain time in the future at a prearranged price, the exercise price.
The contract also has a fixed expiry period mostly in the range of 3 to 12 months from the date of commencement of the contract. The value of the contract depends on the expiry period and also on the price of the underlying asset.
For example, a farmer fears that the price of soybean (underlying), when his crop is ready for delivery will be lower than his cost of production.
Let's say the cost of production is Rs 8,000 per ton. In order to overcome this uncertainty in the selling price of his crop, he enters into a contract (derivative) with a merchant, who agrees to buy the crop at a certain price (exercise price), when the crop is ready in three months time (expiry period).
In this case, say the merchant agrees to buy the crop at Rs 9,000 per ton. Now, the value of this derivative contract will increase as the price of soybean decreases and vice-a-versa.
If the selling price of soybean goes down to Rs 7,000 per ton, the derivative contract will be more valuable for the farmer, and if the price of soybean goes down to Rs 6,000, the contract becomes even more valuable.
This is because the farmer can sell the soybean he has produced at Rs .9000 per tonne even though the market price is much less. Thus, the value of the derivative is dependent on the value of the underlying.
If the underlying asset of the derivative contract is coffee, wheat, pepper, cotton, gold, silver, precious stone or for that matter even weather, then the derivative is known as a commodity derivative.
If the underlying is a financial asset like debt instruments, currency, share price index, equity shares, etc, the derivative is known as a financial derivative.
Derivative contracts can be standardized and traded on the stock exchange. Such derivatives are called exchange-traded derivatives. Or they can be customised as per the needs of the user by negotiating with the other party involved.
Such derivatives are called over-the-counter (OTC) derivatives. Continuing with the example of the farmer above, if he thinks that the total production from his land will be around 150 quintals, he can either go to a food merchant and enter into a derivatives contract to sell 150 quintals of soybean in three months time at Rs 9,000 per ton. Or the farmer can go to a commodities exchange, like the National Commodity and Derivatives Exchange Limited, and buy a standard contract on soybean.
The standard contract on soybean has a size of 100 quintals. So the farmer will be left with 50 quintals of soybean uncovered for price fluctuations.
However, exchange traded derivatives have some advantages like low transaction costs and no risk of default by the other party, which may exceed the cost associated with leaving a part of the production uncovered.
Some of the most basic forms of Derivatives are Futures, Forwards and Options.
Futures and Forwards
As the name suggests, futures are derivative contracts that give the holder the opportunity to buy or sell the underlying at a pre-specified price some time in the future.
They come in standardized form with fixed expiry time, contract size and price. Forwards are similar contracts but customisable in terms of contract size, expiry date and price, as per the needs of the user.
Options
Option contracts give the holder the option to buy or sell the underlying at a pre-specified price some time in the future. An option to buy the underlying is known as a Call Option.
On the other hand, an option to sell the underlying at a specified price in the future is known as Put Option.
In the case of an option contract, the buyer of the contract is not obligated to exercise the option contract. Options can be traded on the stock exchange or on the OTC market.
History of derivatives
The history of derivatives is surprisingly longer than what most people think. Some texts even find the existence of the characteristics of derivative contracts in incidents of Mahabharata. Traces of derivative contracts can even be found in incidents that date back to the ages before Jesus Christ.
However, the advent of modern day derivative contracts is attributed to the need for farmers to protect themselves from any decline in the price of their crops due to delayed monsoon, or overproduction.
The first 'futures' contracts can be traced to the Yodoya rice market in Osaka, Japan around 1650. These were evidently standardised contracts, which made them much like today's futures.
The Chicago Board of Trade (CBOT), the largest derivative exchange in the world, was established in 1848 where forward contracts on various commodities were standardised around 1865. From then on, futures contracts have remained more or less in the same form, as we know them today.
Derivatives have had a long presence in India. The commodity derivative market has been functioning in India since the nineteenth century with organized trading in cotton through the establishment of Cotton Trade Association in 1875. Since then contracts on various other commodities have been introduced as well.
Exchange traded financial derivatives were introduced in India in June 2000 at the two major stock exchanges, NSE and BSE. There are various contracts currently traded on these exchanges.
National Commodity & Derivatives Exchange Limited (NCDEX) started its operations in December 2003, to provide a platform for commodities trading.
The derivatives market in India has grown exponentially, especially at NSE. Stock Futures are the most highly traded contracts on NSE accounting for around 55% of the total turnover of derivatives at NSE, as on April 13, 2005.
Risk Management Tools
Derivatives are powerful risk management tools. To illustrate, lets take the example of an investor who holds the stocks of Infosys, which are currently trading at Rs 2,096.
Infosys options are traded on the National Stock Exchange of India, which gives the owner the right to buy (call) shares of Infosys at Rs 2,220 each (exercise price), expiring on 30th June 2005. Now if the share price of Infosys remains less than or equal to Rs 2,200, the contract would be worthless for the owner and he would lose the money he paid to buy the option, known as premium.
However, the premium is the maximum amount that the owner of the contract can lose. Hence he has limited his loss. On the other hand, if the share price of Infosys goes above Rs 2,220, the owner of the call option can exercise the contract, buy the share at Rs 2,220 and make profits by selling the share at the market price of Infosys.
The upward gain can be unlimited. Say the share price of Infosys zooms to Rs .3,000 by June 2005, the owner of the call option can buy the shares at Rs 2,220, the exercise price of the option, and then sell it in the market for Rs 3,000.
Making a profit of Rs 780 less the premium that has been paid. If the premium paid to buy the call option is say Rs 10, the profit would be Rs 770.
Looking Forward
Derivatives are an innovation that has redefined the financial services industry and it has assumed a very significant place in the capital markets.
However, trading in derivatives is complicated and risky. The derivatives have been blamed for the loss of fortunes at many times in history. We will look at derivatives as a vehicle of investment available to investors, risks and returns associated with them, in our next article.
Tuesday, April 19, 2005
Wednesday, April 13, 2005
A guide to right investment
April 13, 2005, www. rediff.com, Co-author-Vivek Kaul
What would you prefer: Rs 10,000 right now or Rs 10,000 five years from now?
Common sense tells us that we should take Rs 10,000 today because we know that there is a certain time value of money.
The Rs 10,000 received now provides us with an opportunity to put it to work immediately and earn a certain return on it.
A single rupee today is worth more than a single rupee a few years down the line. Given this, households that have surplus funds in the form of savings want to invest those funds so that the value of the funds over the years does not go down.
There are various forms of investments at the disposal of individuals. These include real assets like a house, a car, a television, or financial assets like stocks in companies, bonds, units of funds, et cetera.
Traditionally, term deposits in banks, post office savings schemes, bonds and common stocks are the most accessible forms of investments available to the investors. Term deposits, post office savings schemes and bonds give a fixed return over a period of time.
Risk and Return
Investors would typically want to invest in an asset, which gives them maximum return on their investment. However, life is not as simple as that. Different assets come with different risk profiles.
Risk in a practical way can be defined as the chance that the expected outcome may not happen and the actual outcome may not be as good as the expected outcome.
For example, the risk of driving a vehicle too fast may lead the driver getting a speeding ticket or it might even lead to an accident. The New Oxford Dictionary of English defines risk as 'a situation involving exposure to danger.' Thus risk is always looked at in negative terms.
In case of investments the definition of risk is much broader. Risk in case of investment can be defined as the likelihood that the investor will receive a return on his investment that is different from the return he expects to make.
So risk not only includes bad outcomes when the returns are lower than what was expected, but it also includes good outcomes when returns are more than expected.
When investors are making an investment they expect to earn a certain return over the period the investment is made. But their actual returns may be different from the expected return and this is the source of risk.
For example, an investor invests a certain amount in a fixed deposit for a period of one year and expects a return of 5% (i.e. the interest on a one year fixed deposit that the bank gives is 5%). At the end of one year when the investment matures the investor will get a return 5%. So this is a risk less investment.
Instead of investing in the fixed deposit, the investor decides to invest the same amount of money in a particular stock.
The investor having done his research expects say a return of 25% in one year's time (dividend and capital gains).
The actual return over this period might turn out to be greater than 25% or lesser. The company may not pay the dividend on time or the price of the stock may not rise as much as was expected. Herein he carries the risk. The actual return is not guaranteed.
The figure 1 below shows the returns analysis of BSE Sensex over a period of 9 years, from 1997 to 2005. We can clearly see that the returns have varied from a negative 21% to positive 73% over these years. On the other hand, the returns on treasury bills (Treasury bills are securities with maturity period of less than or equal to one year. Issued by the government) just varied from about 13% to around 5% in 2004 (See figure 2).
So, treasury bills give a fixed return over a period of time but common stocks do not. So, investors demand a premium from the common stocks for taking on extra risk.
In India, the investors on an average demand a premium of around 10.5% above the risk free rate. The risk free rate is generally taken to be the rate of return on treasury bills, as they are considered virtually risk free.
Common stocks are riskier because of various reasons. For one, the companies are not obligated to pay a dividend to the common stock holders, and secondly, in the case of liquidation, shareholders are the last to get paid after all the other security holders have been paid.
Thus the decision to invest in an asset with maximum return becomes difficult, as high returns come with high risk. The task of investment becomes formidable for the investors who must balance the returns from and risk involved in an asset.
Alternative investments
A major part of the household savings gets channeled into the so called traditional investments like fixed deposits (FDs), post office saving schemes, Public Provident Fund (PPF), etc.
But since the mid-90s interest rates have come down considerably and investments like FDs have been giving lesser return than the existing rate of inflation, or just a few basis points above the rate of inflation.
For example, the current inflation rate prevailing in India is around 5.1%, whereas the largest bank of India, the State Bank of India offers a return of 5.00% on deposits for more than 182 days but less than 1 year.
The rate for deposits of more than 1 year but less than 3 years is 5.5%. Another disadvantage with such forms of investment is that the lock in period is considerably high.
However, many other forms of investments are available to investors. Exchange traded funds, derivatives, real estate, gold, art, are just a few of the alternatives. With the spread of technology, investing in some of these alternative investments has become comparatively easier than before.
These investments are also good means of diversification. Diversification refers
to the act of reducing risk by spreading the total investment across many different investments.
The idea of diversification is very old. It has even been mentioned by Shakespeare as early as the 16th century in his one of the most celebrated plays, The Merchant of Venice:
'My Ventures are not in one bottom trusted,Nor to one place; nor is my whole estateUpon the fortune of this present year;Therefore, my merchandise makes me not sad.'-- Antonio in Merchant of Venice, Act I, Scene 1
This shows that merchants did realise the importance of not putting all their eggs in one basket early on.
Conclusion
Diversification and investment in alternative forms of investments have become more important in recent times when the stock markets have proven to be more volatile and the government bonds are barely able to match the inflation rate.
Investors are looking to put their money in assets which give decent returns even if the stock markets are tumbling. For example, the value of a piece of art may rise if the inflation is on the rise irrespective of the performance of stock markets.
Similarly, gold does well in time of global tension. In this way, even if the investor loses money in the stock market, it is offset by the gains in his alternative investments.
A lot of these alternative investments have consistently given a higher return than the traditional investment securities.
For example, the real estate investments in the National Capital Region of Delhi have consistently provided a return of more than 10% over the last three years, in both the commercial and residential segments.
This is much more than the 5-6% return provided by government bonds and fixed deposits. At the same time, the returns are not as volatile as that witnessed in the stock markets.
But many of these investment types still remain a mystery to the investors. This is a first in a series of articles through which we hope to explain the nature of various forms of such alternative investments that are available to the investors.
Figure 1: Returns of BSE Sensex over 9 years Source: The graph has been compiled from yearly closing price data on http://www.bseindia.com/ (The returns for 2005 is up to April 8th, 2005) Figure 2: Returns of Government of India Treasury Bills over 9 years Source: The graph has been compiled from the Bloomberg Data Terminal using Government of India Treasury Bills Index (The returns for 2005 is up to April 8th, 2005)
Monday, April 11, 2005
What Indian financial markets need
April 12, 2005, www.rediff.com
The series of financial crises that swept through many parts of the developing world during the 1990s and, more recently, the problems plaguing financial markets in the United States, the European Union and Japan have raised serious questions about the regulatory environment of the financial markets globally.
Background
Unfortunate events of the decade of nineties and the beginning of the 21st century have led us to believe that regulators around the globe have failed to achieve their primary objectives of 'maintaining systemic stability' and 'protecting interests of the retail customer.' Be it the Brazilian, the Argentine or the East Asian crises; be it Enron, WorldCom or US-64; the retail investors have taken the brunt of it all. Economies have been wiped out.
The financial sector plays an important role in the economy of any nation. A well-regulated and well-developed financial sector is vital to achieving the most basic need of efficient allocation of scarce resources.
The main objectives of any regulator are to improve market efficiency, enhance transparency, and prevent unfair practices.
In the financial sector, the achievement of these objectives would mean increase in resource mobilisation, enhanced access to financial products and services, and sustained economic stability. The International Monetary Fund recognises the need for 'resilient, well-regulated financial systems for macroeconomic and financial stability in a world of increased capital flows.'
"The crises that have swept emerging market nations in recent years should have left no-one in any doubt about the importance of a strong and well-regulated financial sector, in dealing with capital flows that can be very large and reverse very quickly." -- IMF Managing Director, Stanley Fisher, June 2000.
I now look at a few events that shook the financial markets and the challenges they pose to the regulators.
The events and the challenges
In the aftermath of the East Asian crisis the regulators in many countries have been engaged in reforming the international financial architecture to deal with dangers facing the financial markets which have been enhanced due to globalisation and liberalisation of economies.
The dynamic growth in capital markets following the liberalization of financial markets in many countries occurred without domestic economy and financial weaknesses as well as the regulatory and supervisory frameworks being taken fully into account.
The events of September 11, 2001 too shook markets across the globe. The main financial market response was a flight to quality as investors' appetite for risks fell. All major stock markets experienced rapid, sharp price declines in the immediate aftermath of the event.
Insuring the investors against terrorism became another challenge for the regulators.
Investor confidence is a critical factor to the growth and success of the capital market, and on a larger scale, critical to economic stability. Confidence in some capital markets has deteriorated, partly because of corporate governance transgressions that have been under global scrutiny.
Accounting controls have been on the top of the mind of regulators since a series of accounting scandals such as ENRON, WorldCom and more recently, HealthSouth, in the USA. The European Union is also looking towards tighter accounting controls after the insolvency of dairy giant Parmalat due to irregular accounting practices.
The point to note here is that the accounting scandals in the US occurred at a time when the disclosure norms in the US were very stringent and well defined. According to Commissioner Paul Atkins of US Securities and Exchange Commission, these accounting scandals have resulted in the erosion of a staggering amount of $5 trillion from the capital markets.
Investors around the globe are asking the question, 'If it can happen in the US, why not elsewhere?' The challenge to the regulator is, therefore, to reassure investors that such abuse of the system will not be allowed to become the norm.
The need to implement and follow the rules not only by the letter, but also by the spirit is evident. Hence, corporate governance has become the most debated topic amongst the regulators recently.
The Indian scenario
The Indian stock markets are now amongst the best in the world in terms of modernisation and the technology. India was among the few countries, which was not badly effected by the contagion effects of the Asian crisis of 1997. Policy makers attribute this to the slow and cautious pace of capital account liberalisation.
However, it has also been a decade marred with scams, which were huge even by international standards, revealing the many gaps in our regulatory regime.
In 1991, a group of stockbrokers, headed by key trader 'Big Bull' Harshad Mehta artificially jacked up prices of worthless securities to rake in Rs 5,000 crore (Rs 50 billion). The Sensex came tumbling down after the scam story broke out on April 23, 1992. Fortunes were lost overnight. As a result, the ambit of the Securities Exchange Board of India, the stock exchanges and regulatory financial institutions was widened.
Nearly a decade later, after a 'dream budget' by Yashwant Sinha, the then finance minister, on February 28 2001, the Bombay Stock Exchange index rose initially but thereafter crashed. Nearly 700 points were lost in eight trading sessions leading to erosion in market capitalisation of Rs 146,000 crore (Rs 1,460 billion).
This erratic behaviour was once again traced to a handful of brokers, wishing to trap a leading 'bull', Ketan Parekh, who had manipulated prices of shares of a few select companies in information technology, communication and entertainment sector.
Units of US-64, the flagship scheme of Unit Trust of India --the largest public sector mutual fund in India, dropped from a peak of Rs 19 to Rs 5.81 in January 2002. Middle class people and retirees were the hardest hit because of the irregularities.
The recurrence of financial 'scams' periodically exhibits the helplessness of regulators, particularly the SEBI and the Reserve Bank of India. "It is easier to build a modern stock exchange from scratch than change century-old trading practices," says Jayanth Varma, a former board member at SEBI. Traders loathe any change in the market because many thrive on its imperfections.
Against this backdrop, the regulatory bodies are making endeavours to bring up the Indian market to international standards. It is working towards making India a global benchmark for capital market development.
The road ahead
Today-- with the 'feel good' factor about India in the global arena rising, increased confidence of the investors in the Indian market, Sensex looking more attractive than ever before, foreign exchange reserves at an all-time high of more than $140 billion -- is the most vulnerable period for the regulators of the Indian financial sector, particularly SEBI and RBI.
Major steps towards reforms, liberalisation and globalisation have been taken in the 1990s, now the hiccups need to be sorted out. Maintaining stability is of prime concern. The time seems ripe to address the gaps in the regulatory framework, when the times are relatively good and peaceful. Prevention is better than cure.
Some of the issues that need the regulators' attention and action in the Indian financial markets are:
Participation and education of retail investors: Encouraging and protecting the rights of retail investors is an important issue. In Indian markets it is a challenge to get these investors to participate in the securities markets.
Also, as new instruments like the derivatives are being introduced in the market, the emphasis on investor education should also be enhanced. Then the issue of providing a level playing field for these investors also remains so that there is continued confidence in the market.
Liquidity: Even though the shares of companies listed on major stock exchanges are fairly liquid, the options market suffers from illiquidity.
Enhancing liquidity in the options markets to facilitate trade at reasonable prices is required to encourage investors to hedge their portfolios and to facilitate companies to manage their risks.
Accounting and financial reporting norms: Financial disclosure requirements in India are not at par with international accounting practices in spite of attempts made by the Institute of Chartered Accountants of India. Good accounting and corporate standards need to be backed up by high moral and ethical standards by accounting and the corporate world.
Corporate governance: With sophistication in the marketplace, the demand for improved corporate governance by public companies will also increase. Ensuring high confidence of the investors in the business so as to improve investment levels through good corporate governance is a must.
Adopting a suitable framework of corporate governance and the extent of observing the framework in practice is an issue that requires to be addressed.
Technology: Regulators must keep up with the sophistication in market technology and new market structure. Enforcement cases will become more complicated as market manipulation and other misconduct are now also conducted on the Internet, making it more difficult to be detected.
A robust system ensuring good surveillance against cyber crime should be updated from time to time. Also, whether a demutualized exchange should be regulated as any other listed company, or as a utility, will be a challenge for the regulators.
Integration with other financial markets: The adoption of international best practices, sharing more information with the regulatory bodies globally and co-operation with international bodies is important. Global benchmarks should be adopted through education, assistance and advisory services to its members.
Organisations such as International Organization of Securities Commissions, the Bank of International Settlement, the Joint Forum and the Financial Stability Forum have led initiatives to introduce best practice or international benchmarks in regulation to counter global vulnerabilities such as weaknesses in market foundations, uncertain growth prospects, difficulties in surveillance and enforcement of financial conglomerates and increased investor risk aversion.
Conclusion
Former prime minister Atal Bihari Vajpayee summed up the requirement of the Indian financial markets, after the Ketan Parekh scam came to light. He told regulators to make markets safer for investors and called for more rigour in the market place.
"We need markets that are known for their safety and integrity. We need knowledgeable investors. And we need to build a sustainable, high-growth economy which will ensure better living conditions for our people, now and in the future," Vajpayee said.
"I urge all of you -- regulators, market intermediaries and investors -- to join hands to make our capital market the safest places to invest in the world," he had said. "While the technology and the regulatory framework of capital markets has improved, I am pained to say the standards of corporate governance have not kept pace. We have come across far too many instances of companies that have raised money from the market by creating hype and then defrauding their investors," he said.
Former finance minister Jaswant Singh added that more teeth recently given to SEBI offered it the legal right to impose sterner penalties on violators of stock market rules.
Investors will be the ultimate beneficiaries of all these changes in the marketplace. Investors will have more choices and information on investment products, easier accessibility to any market they wish to trade on, and better and cheaper services from intermediaries.
The new generation of investors will become increasingly sophisticated as market information becomes widely available. However, the complexity of the new markets also means that investors must know their own risk appetite before entering the market.
The series of financial crises that swept through many parts of the developing world during the 1990s and, more recently, the problems plaguing financial markets in the United States, the European Union and Japan have raised serious questions about the regulatory environment of the financial markets globally.
Background
Unfortunate events of the decade of nineties and the beginning of the 21st century have led us to believe that regulators around the globe have failed to achieve their primary objectives of 'maintaining systemic stability' and 'protecting interests of the retail customer.' Be it the Brazilian, the Argentine or the East Asian crises; be it Enron, WorldCom or US-64; the retail investors have taken the brunt of it all. Economies have been wiped out.
The financial sector plays an important role in the economy of any nation. A well-regulated and well-developed financial sector is vital to achieving the most basic need of efficient allocation of scarce resources.
The main objectives of any regulator are to improve market efficiency, enhance transparency, and prevent unfair practices.
In the financial sector, the achievement of these objectives would mean increase in resource mobilisation, enhanced access to financial products and services, and sustained economic stability. The International Monetary Fund recognises the need for 'resilient, well-regulated financial systems for macroeconomic and financial stability in a world of increased capital flows.'
"The crises that have swept emerging market nations in recent years should have left no-one in any doubt about the importance of a strong and well-regulated financial sector, in dealing with capital flows that can be very large and reverse very quickly." -- IMF Managing Director, Stanley Fisher, June 2000.
I now look at a few events that shook the financial markets and the challenges they pose to the regulators.
The events and the challenges
In the aftermath of the East Asian crisis the regulators in many countries have been engaged in reforming the international financial architecture to deal with dangers facing the financial markets which have been enhanced due to globalisation and liberalisation of economies.
The dynamic growth in capital markets following the liberalization of financial markets in many countries occurred without domestic economy and financial weaknesses as well as the regulatory and supervisory frameworks being taken fully into account.
The events of September 11, 2001 too shook markets across the globe. The main financial market response was a flight to quality as investors' appetite for risks fell. All major stock markets experienced rapid, sharp price declines in the immediate aftermath of the event.
Insuring the investors against terrorism became another challenge for the regulators.
Investor confidence is a critical factor to the growth and success of the capital market, and on a larger scale, critical to economic stability. Confidence in some capital markets has deteriorated, partly because of corporate governance transgressions that have been under global scrutiny.
Accounting controls have been on the top of the mind of regulators since a series of accounting scandals such as ENRON, WorldCom and more recently, HealthSouth, in the USA. The European Union is also looking towards tighter accounting controls after the insolvency of dairy giant Parmalat due to irregular accounting practices.
The point to note here is that the accounting scandals in the US occurred at a time when the disclosure norms in the US were very stringent and well defined. According to Commissioner Paul Atkins of US Securities and Exchange Commission, these accounting scandals have resulted in the erosion of a staggering amount of $5 trillion from the capital markets.
Investors around the globe are asking the question, 'If it can happen in the US, why not elsewhere?' The challenge to the regulator is, therefore, to reassure investors that such abuse of the system will not be allowed to become the norm.
The need to implement and follow the rules not only by the letter, but also by the spirit is evident. Hence, corporate governance has become the most debated topic amongst the regulators recently.
The Indian scenario
The Indian stock markets are now amongst the best in the world in terms of modernisation and the technology. India was among the few countries, which was not badly effected by the contagion effects of the Asian crisis of 1997. Policy makers attribute this to the slow and cautious pace of capital account liberalisation.
However, it has also been a decade marred with scams, which were huge even by international standards, revealing the many gaps in our regulatory regime.
In 1991, a group of stockbrokers, headed by key trader 'Big Bull' Harshad Mehta artificially jacked up prices of worthless securities to rake in Rs 5,000 crore (Rs 50 billion). The Sensex came tumbling down after the scam story broke out on April 23, 1992. Fortunes were lost overnight. As a result, the ambit of the Securities Exchange Board of India, the stock exchanges and regulatory financial institutions was widened.
Nearly a decade later, after a 'dream budget' by Yashwant Sinha, the then finance minister, on February 28 2001, the Bombay Stock Exchange index rose initially but thereafter crashed. Nearly 700 points were lost in eight trading sessions leading to erosion in market capitalisation of Rs 146,000 crore (Rs 1,460 billion).
This erratic behaviour was once again traced to a handful of brokers, wishing to trap a leading 'bull', Ketan Parekh, who had manipulated prices of shares of a few select companies in information technology, communication and entertainment sector.
Units of US-64, the flagship scheme of Unit Trust of India --the largest public sector mutual fund in India, dropped from a peak of Rs 19 to Rs 5.81 in January 2002. Middle class people and retirees were the hardest hit because of the irregularities.
The recurrence of financial 'scams' periodically exhibits the helplessness of regulators, particularly the SEBI and the Reserve Bank of India. "It is easier to build a modern stock exchange from scratch than change century-old trading practices," says Jayanth Varma, a former board member at SEBI. Traders loathe any change in the market because many thrive on its imperfections.
Against this backdrop, the regulatory bodies are making endeavours to bring up the Indian market to international standards. It is working towards making India a global benchmark for capital market development.
The road ahead
Today-- with the 'feel good' factor about India in the global arena rising, increased confidence of the investors in the Indian market, Sensex looking more attractive than ever before, foreign exchange reserves at an all-time high of more than $140 billion -- is the most vulnerable period for the regulators of the Indian financial sector, particularly SEBI and RBI.
Major steps towards reforms, liberalisation and globalisation have been taken in the 1990s, now the hiccups need to be sorted out. Maintaining stability is of prime concern. The time seems ripe to address the gaps in the regulatory framework, when the times are relatively good and peaceful. Prevention is better than cure.
Some of the issues that need the regulators' attention and action in the Indian financial markets are:
Participation and education of retail investors: Encouraging and protecting the rights of retail investors is an important issue. In Indian markets it is a challenge to get these investors to participate in the securities markets.
Also, as new instruments like the derivatives are being introduced in the market, the emphasis on investor education should also be enhanced. Then the issue of providing a level playing field for these investors also remains so that there is continued confidence in the market.
Liquidity: Even though the shares of companies listed on major stock exchanges are fairly liquid, the options market suffers from illiquidity.
Enhancing liquidity in the options markets to facilitate trade at reasonable prices is required to encourage investors to hedge their portfolios and to facilitate companies to manage their risks.
Accounting and financial reporting norms: Financial disclosure requirements in India are not at par with international accounting practices in spite of attempts made by the Institute of Chartered Accountants of India. Good accounting and corporate standards need to be backed up by high moral and ethical standards by accounting and the corporate world.
Corporate governance: With sophistication in the marketplace, the demand for improved corporate governance by public companies will also increase. Ensuring high confidence of the investors in the business so as to improve investment levels through good corporate governance is a must.
Adopting a suitable framework of corporate governance and the extent of observing the framework in practice is an issue that requires to be addressed.
Technology: Regulators must keep up with the sophistication in market technology and new market structure. Enforcement cases will become more complicated as market manipulation and other misconduct are now also conducted on the Internet, making it more difficult to be detected.
A robust system ensuring good surveillance against cyber crime should be updated from time to time. Also, whether a demutualized exchange should be regulated as any other listed company, or as a utility, will be a challenge for the regulators.
Integration with other financial markets: The adoption of international best practices, sharing more information with the regulatory bodies globally and co-operation with international bodies is important. Global benchmarks should be adopted through education, assistance and advisory services to its members.
Organisations such as International Organization of Securities Commissions, the Bank of International Settlement, the Joint Forum and the Financial Stability Forum have led initiatives to introduce best practice or international benchmarks in regulation to counter global vulnerabilities such as weaknesses in market foundations, uncertain growth prospects, difficulties in surveillance and enforcement of financial conglomerates and increased investor risk aversion.
Conclusion
Former prime minister Atal Bihari Vajpayee summed up the requirement of the Indian financial markets, after the Ketan Parekh scam came to light. He told regulators to make markets safer for investors and called for more rigour in the market place.
"We need markets that are known for their safety and integrity. We need knowledgeable investors. And we need to build a sustainable, high-growth economy which will ensure better living conditions for our people, now and in the future," Vajpayee said.
"I urge all of you -- regulators, market intermediaries and investors -- to join hands to make our capital market the safest places to invest in the world," he had said. "While the technology and the regulatory framework of capital markets has improved, I am pained to say the standards of corporate governance have not kept pace. We have come across far too many instances of companies that have raised money from the market by creating hype and then defrauding their investors," he said.
Former finance minister Jaswant Singh added that more teeth recently given to SEBI offered it the legal right to impose sterner penalties on violators of stock market rules.
Investors will be the ultimate beneficiaries of all these changes in the marketplace. Investors will have more choices and information on investment products, easier accessibility to any market they wish to trade on, and better and cheaper services from intermediaries.
The new generation of investors will become increasingly sophisticated as market information becomes widely available. However, the complexity of the new markets also means that investors must know their own risk appetite before entering the market.
Monday, March 21, 2005
Do corporates give back to the society?
March 21, 2005, www.rediff.com, Co-author-Vivek Kaul
Every now and then, some event occurs that makes people sit up and take notice. Regulators start working overtime. Public talks and panics. Media makes money.
Ponzi schemes of the early 20th century, the Barings's debacle, Shell's tryst with North Sea, Union Carbide, Nike, Enron, WorldCom. . . the list can go on; every time there is a fiasco, more rules, more regulations and greater accountability are stressed upon.
But this does not stop corporations from committing frauds, exploiting the environment and eroding billions of dollars of stakeholders' wealth.
As the list of frauds grows, the number of books focussing on values, spirituality and personal development, on the bestsellers lists too rises. This trend makes us ponder over a very fundamental question: 'Do new age managers have their basic values in place?
'
This question is justified because of the increasing number of reports in the media about corporate frauds, excessive executive remuneration, greed leading to loss of shareholders wealth and corporate crime.
Profits, money, share prices are the key words in any company. Keep your eyes on these key words, take decisions to increase them; this is what is told to the future managers and expected from present management.
As long as they achieve this, nobody questions the means. Shareholders are happy and managers are well fed.
But, for how long can this worship of profits and thirst for power go on? Even though the financial statements may remain unblemished, the company will begin to reflect the lack of morals and values.
The rise of a new phenomenon
An organisation receives inputs from the society and environment in the form of workforce and raw materials, and sends output to the society in the form of goods and services. Thus, an organisation exists because of the society.
In order to survive, the business in turn must take care of the society and the environment. This realisation has led to an increasing focus by firms on examining their social responsibilities and the development of a new term in management: Corporate Social Responsibility (CSR).
The World Business Council for Sustainable Development has defined CSR, as 'the ethical behaviour of a company towards society. CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large from top to bottom
CSR can be undertaken with a good blend of ethics, accountability and good governance. Ensuring the verbatim fulfillment of all the codes of corporate governance is not enough. The Enron fraud occurred despite meticulously following all the corporate governance norms advocated by the Securities and Exchange Commission of US. Moral and ethical behavior is important.
This behaviour needs to percolate to the entire organisation, from the top down. The task rests on the shoulders of the chief executive officer of the company. Responsibility is a state of mind. It cannot be enforced upon somebody. It has to be felt. It has to be experienced in the culture of an organisation.
Ethical behavior of the top management, acting in the goodwill of the public at large, keeping greed at bay and results in building a sustainable business, whereas if the management starts worshipping money, the end can be delayed but not avoided.
The benefits
Gone are the days when industry was driven by supply. Raw material was available in plenty. We are witnessing a period where inputs to an organisation are getting more and more scarce. Natural resources have been depleted and labour has become costly. Thus it is in the self-interest of the company to undertake CSR.
If the environment is not taken care of, where will the raw materials come from? If the employees are not taken care of, they will work for someone who does take care of them.
The financial health of a company in the long term depends to a large extent on factors such as environment protection and responsiveness to the society. The other various benefits that may accrue to the company can be in the form of enhanced visibility, reputation and loyalty of employees, customers, suppliers, lenders and investors.
One such example is the initiative by the State Bank of India to allow and encourage commercial sex workers in Sonagachi, Kolkata (one of the largest red light areas in Asia) to open savings account with the bank.
Ashok Dutta, one of the forces behind this initiative, also the general secretary of the bank's staff association, says, "On the one hand, you can call it social service. You can also say that this is an initiative by SBI employees to mobilise deposits."
The beginning
"The wealth gathered by Jamsetji Tata and his sons in half a century of industrial pioneering formed but a minute fraction of the amount by which they enriched the nation. The whole of that wealth is held in trust for the people and used exclusively for their benefit. The cycle is thus complete; what came from the people has gone back to the people many times over." -- JRD Tata
One of the first industrial houses of India, the Tata Group has been involved in philanthropic initiatives in the form of educational institutions, healthcare services, infrastructure and community development, and various other welfare activities through the various trusts endowed by the founders of the group
.
Every year the Tatas spend a substantial sum of money maintaining the city of Jamshedpur. The fact that they have survived when the business houses, which started more or less at the same time, are long dead and gone, speaks volumes of the importance given to CSR by the Tatas.
This is the story of just one such industrial house. Many other industrial houses that set shop early on, like the Birlas, the Godrej Group, etc. have contributed richly to the society.
Going through the bad phase
Then came the sudden wave of industrialisation, which swept the entire nation with the urge to make more, sell more, and earn more. In the post-Independence licensing era, the businesses were more concerned about obtaining licenses and quotas.
This was also an era of very high taxes. As the story goes JRD Tata had to sell some amount of his assets every year to pay taxes. The businessmen could either pay taxes and go bust or operate in the black economy.
The period also saw the politician-businessman nexus develop. Each of them needed the other to survive. The businessman needed licenses to do business and the politician needed money to fight elections. In such a situation the concern for the society at large was lost.
It would not be fair to blame the corporations entirely. We as consumers, the society, the investors, and the government. . . we all failed to question the means by which corporations were achieving their ends.
The decade of nineties saw radical changes in the way the businesses operate in India. With the economy opening up, competition came in.
Established businesses, which had till then operated as monopolies, saw their profits dwindle. The media boom gave information to the consumers. The consumers had choices now and they began making decisions based on the information they had.
And this is when the corporations began to realise the need to take care of all the stakeholders rather than just the shareholders.
The revival: A ray of hope
'We must do something for the community from whose land we generate our wealth.' -- Brijmohan Lall Munjal, CMD, Hero Honda.
Social consciousness is the new leitmotif of the Indian corporations. Greed is no longer good as has been demonstrated by the fall of a few great American corporations.
Some of the family-owned business enterprises (FOBEs) in India have regularly maintained a certain level of expenditure for social and charitable causes. The Tatas lead this list. The Aditya Birla Group comes next.
But what comes as a surprise is the fact over the years Reliance group has upped its spending on corporate philanthropy.
Reliance founder chairman late Dhirubhai Ambani always said that Reliance's primary objective was creating shareholder value, although very late in life he did remark in an interview that he should have done more social work during his lifetime.
The increased spending of Reliance is because of that. A few FOBEs undertake a lot of charitable work but do not divulge the details.
ITC has also been involved with social initiatives. It is been involved with integrated watershed development and farm and social forestry. ITC, working with NGOs, has also tried to organise village women into micro credit groups.
Group members have been encouraged to create savings corpus by making monthly savings and this corpus is then used to give out loans to group members.
What is heart-warming is to see that the new generation of companies is increasingly realising the importance of giving back to the society.
Leading the pack are Infosys, Wipro, Hero Honda and Bharti Enterprises. These companies have taken various initiatives to promote and support the environment, education, health, cultural harmony and welfare in the society.
The Infosys Foundation in the past has provided Rs 38 lakh of financial assistance to war widows in various parts of India. It has also been involved with the construction of a super speciality hospital and reconstruction of schools in Andhra Pradesh and Karnataka.
The Azim Premji Foundation run by the Wipro chairman in his personal capacity is working on the universalisation of elementary education. As the Web site of the Foundation says: 'The Foundation believes that the only way to sustained Universalisation of Elementary Education is to improve the quality of learning in schools. All efforts will therefore be directed at interventions, partnerships and communications towards guaranteeing learning in the school.
''
The road ahead
It is still to be seen whether the concept of CSR develops into a giant or will it fade away as quickly as its rise. One thing is sure that many large corporations have started taking CSR seriously, working with NGOs, government and voluntary workers to look at the problems plaguing the society and environment.
Whether they do so in the days to come remains to be seen. But a good start has been made and one does feel optimistic on this front.
For CSR to be more than a buzzword in the days to come top management support will be essential. Also as of now the best companies of India are serious about CSR, but in the days to come this seriousness needs to spread to other companies as well.
Every now and then, some event occurs that makes people sit up and take notice. Regulators start working overtime. Public talks and panics. Media makes money.
Ponzi schemes of the early 20th century, the Barings's debacle, Shell's tryst with North Sea, Union Carbide, Nike, Enron, WorldCom. . . the list can go on; every time there is a fiasco, more rules, more regulations and greater accountability are stressed upon.
But this does not stop corporations from committing frauds, exploiting the environment and eroding billions of dollars of stakeholders' wealth.
As the list of frauds grows, the number of books focussing on values, spirituality and personal development, on the bestsellers lists too rises. This trend makes us ponder over a very fundamental question: 'Do new age managers have their basic values in place?
'
This question is justified because of the increasing number of reports in the media about corporate frauds, excessive executive remuneration, greed leading to loss of shareholders wealth and corporate crime.
Profits, money, share prices are the key words in any company. Keep your eyes on these key words, take decisions to increase them; this is what is told to the future managers and expected from present management.
As long as they achieve this, nobody questions the means. Shareholders are happy and managers are well fed.
But, for how long can this worship of profits and thirst for power go on? Even though the financial statements may remain unblemished, the company will begin to reflect the lack of morals and values.
The rise of a new phenomenon
An organisation receives inputs from the society and environment in the form of workforce and raw materials, and sends output to the society in the form of goods and services. Thus, an organisation exists because of the society.
In order to survive, the business in turn must take care of the society and the environment. This realisation has led to an increasing focus by firms on examining their social responsibilities and the development of a new term in management: Corporate Social Responsibility (CSR).
The World Business Council for Sustainable Development has defined CSR, as 'the ethical behaviour of a company towards society. CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large from top to bottom
CSR can be undertaken with a good blend of ethics, accountability and good governance. Ensuring the verbatim fulfillment of all the codes of corporate governance is not enough. The Enron fraud occurred despite meticulously following all the corporate governance norms advocated by the Securities and Exchange Commission of US. Moral and ethical behavior is important.
This behaviour needs to percolate to the entire organisation, from the top down. The task rests on the shoulders of the chief executive officer of the company. Responsibility is a state of mind. It cannot be enforced upon somebody. It has to be felt. It has to be experienced in the culture of an organisation.
Ethical behavior of the top management, acting in the goodwill of the public at large, keeping greed at bay and results in building a sustainable business, whereas if the management starts worshipping money, the end can be delayed but not avoided.
The benefits
Gone are the days when industry was driven by supply. Raw material was available in plenty. We are witnessing a period where inputs to an organisation are getting more and more scarce. Natural resources have been depleted and labour has become costly. Thus it is in the self-interest of the company to undertake CSR.
If the environment is not taken care of, where will the raw materials come from? If the employees are not taken care of, they will work for someone who does take care of them.
The financial health of a company in the long term depends to a large extent on factors such as environment protection and responsiveness to the society. The other various benefits that may accrue to the company can be in the form of enhanced visibility, reputation and loyalty of employees, customers, suppliers, lenders and investors.
One such example is the initiative by the State Bank of India to allow and encourage commercial sex workers in Sonagachi, Kolkata (one of the largest red light areas in Asia) to open savings account with the bank.
Ashok Dutta, one of the forces behind this initiative, also the general secretary of the bank's staff association, says, "On the one hand, you can call it social service. You can also say that this is an initiative by SBI employees to mobilise deposits."
The beginning
"The wealth gathered by Jamsetji Tata and his sons in half a century of industrial pioneering formed but a minute fraction of the amount by which they enriched the nation. The whole of that wealth is held in trust for the people and used exclusively for their benefit. The cycle is thus complete; what came from the people has gone back to the people many times over." -- JRD Tata
One of the first industrial houses of India, the Tata Group has been involved in philanthropic initiatives in the form of educational institutions, healthcare services, infrastructure and community development, and various other welfare activities through the various trusts endowed by the founders of the group
.
Every year the Tatas spend a substantial sum of money maintaining the city of Jamshedpur. The fact that they have survived when the business houses, which started more or less at the same time, are long dead and gone, speaks volumes of the importance given to CSR by the Tatas.
This is the story of just one such industrial house. Many other industrial houses that set shop early on, like the Birlas, the Godrej Group, etc. have contributed richly to the society.
Going through the bad phase
Then came the sudden wave of industrialisation, which swept the entire nation with the urge to make more, sell more, and earn more. In the post-Independence licensing era, the businesses were more concerned about obtaining licenses and quotas.
This was also an era of very high taxes. As the story goes JRD Tata had to sell some amount of his assets every year to pay taxes. The businessmen could either pay taxes and go bust or operate in the black economy.
The period also saw the politician-businessman nexus develop. Each of them needed the other to survive. The businessman needed licenses to do business and the politician needed money to fight elections. In such a situation the concern for the society at large was lost.
It would not be fair to blame the corporations entirely. We as consumers, the society, the investors, and the government. . . we all failed to question the means by which corporations were achieving their ends.
The decade of nineties saw radical changes in the way the businesses operate in India. With the economy opening up, competition came in.
Established businesses, which had till then operated as monopolies, saw their profits dwindle. The media boom gave information to the consumers. The consumers had choices now and they began making decisions based on the information they had.
And this is when the corporations began to realise the need to take care of all the stakeholders rather than just the shareholders.
The revival: A ray of hope
'We must do something for the community from whose land we generate our wealth.' -- Brijmohan Lall Munjal, CMD, Hero Honda.
Social consciousness is the new leitmotif of the Indian corporations. Greed is no longer good as has been demonstrated by the fall of a few great American corporations.
Some of the family-owned business enterprises (FOBEs) in India have regularly maintained a certain level of expenditure for social and charitable causes. The Tatas lead this list. The Aditya Birla Group comes next.
But what comes as a surprise is the fact over the years Reliance group has upped its spending on corporate philanthropy.
Reliance founder chairman late Dhirubhai Ambani always said that Reliance's primary objective was creating shareholder value, although very late in life he did remark in an interview that he should have done more social work during his lifetime.
The increased spending of Reliance is because of that. A few FOBEs undertake a lot of charitable work but do not divulge the details.
ITC has also been involved with social initiatives. It is been involved with integrated watershed development and farm and social forestry. ITC, working with NGOs, has also tried to organise village women into micro credit groups.
Group members have been encouraged to create savings corpus by making monthly savings and this corpus is then used to give out loans to group members.
What is heart-warming is to see that the new generation of companies is increasingly realising the importance of giving back to the society.
Leading the pack are Infosys, Wipro, Hero Honda and Bharti Enterprises. These companies have taken various initiatives to promote and support the environment, education, health, cultural harmony and welfare in the society.
The Infosys Foundation in the past has provided Rs 38 lakh of financial assistance to war widows in various parts of India. It has also been involved with the construction of a super speciality hospital and reconstruction of schools in Andhra Pradesh and Karnataka.
The Azim Premji Foundation run by the Wipro chairman in his personal capacity is working on the universalisation of elementary education. As the Web site of the Foundation says: 'The Foundation believes that the only way to sustained Universalisation of Elementary Education is to improve the quality of learning in schools. All efforts will therefore be directed at interventions, partnerships and communications towards guaranteeing learning in the school.
''
The road ahead
It is still to be seen whether the concept of CSR develops into a giant or will it fade away as quickly as its rise. One thing is sure that many large corporations have started taking CSR seriously, working with NGOs, government and voluntary workers to look at the problems plaguing the society and environment.
Whether they do so in the days to come remains to be seen. But a good start has been made and one does feel optimistic on this front.
For CSR to be more than a buzzword in the days to come top management support will be essential. Also as of now the best companies of India are serious about CSR, but in the days to come this seriousness needs to spread to other companies as well.
Tuesday, March 15, 2005
For God's sake, harness forex reserves now!
March 15, 2005, www.rediff.com, Co-author-Vivek Kaul
Foreign Exchange reserves are basically held to achieve a balance between demand for and supply of foreign currencies.
The reserves also help in maintaining confidence in monetary and exchange rate policies and enhancing the capacity of the central bank to intervene in forex markets.
They help build a capacity to absorb shocks in times of crisis and provide the confidence that the economy is well placed to meet all external obligations. Also, reserves provide the security of backing domestic currency through external assets.
Further, it helps the country maintain the investor confidence required to attract the much-needed FDI in crucial sectors of the economy. The country also benefits by using the excess reserves to repay its liabilities.
India's foreign exchange reserves hit a record high in recent years and are currently placed at $137.55 billion as on the week ending March 4, 2005. Since the inception of economic reforms, forex reserves have risen continuously.
However, the forex reserves in the past two years have been rising exponentially.
The swelling of forex reserves has become a macroeconomic issue. Policymakers, independent analysts and politicians have expressed some worry regarding the deluge of dollars into our economy over the past two years.
Nearly 50 per cent of our current forex reserves have been built up in the past 2 years. The question being asked is how have the reserves been built up, and whether they would start dwindling.
Some experts seem to suggest that the quantum of dollar flows is not explained by normal economic activity such as foreign direct investment, portfolio investment in stock markets, money sent by Indian workers abroad and bank deposits made by non-resident Indians.
So where is the forex coming from?
Analysis of components forming the inflows suggest that the upswing is mainly attributable to the resurgence in exports, increase in capital inflows (including foreign investment), stronger rupee and the reduction in the current account deficit.
It is possible that the substantial part of the forex inflows could be funds that have been held abroad over the years by the Indian business class.
Historically, Indian businesses, with some help from public lending institutions, have been known to over-invoice project imports and use it as an instrument to keep some money out of the country. Some of these funds may be coming back into the country, as confidence in the domestic economy, in the medium term has grown stronger.
The persisting weakness in the western economies, primarily the United States, has added to this reverse flow of funds.
Private transfers -- inward remittances by a large number of Indians who live abroad -- to families, into Foreign Currency Non-Resident (FCNR) accounts, and real estate, also represent a large portion of the inflows.
Furthermore, Indian companies today are able to raise debt and equity in foreign markets, and do so far more effectively than they could in the past. This again explains a part of the increasing forex reserves.
All this indicates that a good part of the increased dollar inflows are here to stay. The assessment by some analysts that these dollar inflows are merely in search of the interest rate differential that prevails between the US and India and can exit anytime is not entirely correct.
Although fund managers are parking their money in India due to the advantage they get from the positive interest rate differential, a lot of these funds, just as in other Asian economies, have come seeking a more permanent parking space.
The high reserves have certainly provided the much-required boost to investor confidence and given India a good image abroad.
India's forex reserves have been at a comfortable level for quite some time now, even after the traditional approach of assessing adequacy of foreign exchange reserves in terms of import cover has been broadened to include some important parameters, such as size, composition, risk of capital flows and international uncertainty.
With high reserves, high exports, and increasing foreign direct investment inflows, the economy is all set to ride the trajectory of higher growth. Thus, instead of worrying about the cost of holding such high reserves, the government would be better off capitalising on them to improve the country's image.
Intentions seem to be good. Prime Minister Manmohan Singh and Finance Minister P Chidambaram both send out the right signals about their commitment to development and providing the right environment for development. But, sadly, action seems to be missing.
So, what are the ways in which resources can be utilised in the most effective manner?
For one, there is definitely a case for revisiting and resetting the timetable for capital account convertibility. It is rather unfortunate that the debate has been put on the backburner.
It is time for the Reserve Bank of India to take a stand on whether it wants to follow the example of China and move towards a controlled exchange rate regime or is it ready to let the rupee float and dump its policy of buying the dollars to check the rupee from appreciating.
Being a developing economy with a large and growing manufacturing sector, our import demand is going to be continuously high in the coming years and we will need large forex reserves to meet this demand, especially when export growth may not be able to keep pace with import demand.
Further, if the economy grows at 8 per cent, and there is a revival in investment leading to an increase in import demand, all the excess reserves will stop accumulating.
The high foreign exchange reserves can be used to allow higher import of capital goods and technology to support the growing economy and for development purposes. Another alternative use of the reserves could be to use part of the inflows to replace external commercial borrowings.
Thus, the contradictory situation, where there is more commercial borrowing (large forex inflows) and lack of demand for domestic rupee resources, can be avoided.
A sizeable proportion of resources, taking the stock of forex reserves available, can be used for domestic investment in both the medium and long term.
A great debate on this issue seems to be going on these days and the present government seems to be more than inclined towards this proposal.
The government should also allow Indian residents to open foreign exchange -- say, dollar-denominated -- deposits in domestic banks. At present this is allowed with a lot of restrictions.
Another way to utilise these huge forex reserves would be to follow an aggressive policy in investing overseas, and outward FDI. Recent announcements are definitely steps in the right direction in this regard.
A lot of restrictions on investing in foreign markets have been relaxed. However, further steps need to be taken to further facilitate Indian companies to acquire foreign companies and brands by signing more bilateral investment and double taxation treaties.
While on the one hand so much can be done with the reserves, on the other hand the costs of reserve accumulation are rising, especially when accompanied by sterilisation.
Reserve accumulation means a poor country is lending money very cheaply to the United States and Europe. If the same resources were harnessed for investment, economic growth would accelerate, inflation would diminish, and the welfare gains would increase.
Unfortunately there is not enough happening to create sufficient demand for dollars. This has resulted in an appreciating rupee, which the country does not exactly want.
The reserves may not really be of that much concern if we are aiming for 8 per cent growth. In such a scenario, imports will also increase and we may not be looking at such a big import cover after all.
Therefore, the time has come to think up policy measures that would create greater import demand and widen the current account deficit. The policies must ensure that the piled up reserves are used to attain greater economic growth.
The debate on capital account convertibility should be restarted without any further delay. The government must also initiate aggressive FDI and trade policy reforms, promote exports aggressively and use the India Brand Equity Fund to create the India brand to boost export growth.
All this should be done with various components of the forex reserves in view. Devising an appropriate strategy to make productive use of reserves is as important as providing incentives for larger inflow of forex.
Foreign Exchange reserves are basically held to achieve a balance between demand for and supply of foreign currencies.
The reserves also help in maintaining confidence in monetary and exchange rate policies and enhancing the capacity of the central bank to intervene in forex markets.
They help build a capacity to absorb shocks in times of crisis and provide the confidence that the economy is well placed to meet all external obligations. Also, reserves provide the security of backing domestic currency through external assets.
Further, it helps the country maintain the investor confidence required to attract the much-needed FDI in crucial sectors of the economy. The country also benefits by using the excess reserves to repay its liabilities.
India's foreign exchange reserves hit a record high in recent years and are currently placed at $137.55 billion as on the week ending March 4, 2005. Since the inception of economic reforms, forex reserves have risen continuously.
However, the forex reserves in the past two years have been rising exponentially.
The swelling of forex reserves has become a macroeconomic issue. Policymakers, independent analysts and politicians have expressed some worry regarding the deluge of dollars into our economy over the past two years.
Nearly 50 per cent of our current forex reserves have been built up in the past 2 years. The question being asked is how have the reserves been built up, and whether they would start dwindling.
Some experts seem to suggest that the quantum of dollar flows is not explained by normal economic activity such as foreign direct investment, portfolio investment in stock markets, money sent by Indian workers abroad and bank deposits made by non-resident Indians.
So where is the forex coming from?
Analysis of components forming the inflows suggest that the upswing is mainly attributable to the resurgence in exports, increase in capital inflows (including foreign investment), stronger rupee and the reduction in the current account deficit.
It is possible that the substantial part of the forex inflows could be funds that have been held abroad over the years by the Indian business class.
Historically, Indian businesses, with some help from public lending institutions, have been known to over-invoice project imports and use it as an instrument to keep some money out of the country. Some of these funds may be coming back into the country, as confidence in the domestic economy, in the medium term has grown stronger.
The persisting weakness in the western economies, primarily the United States, has added to this reverse flow of funds.
Private transfers -- inward remittances by a large number of Indians who live abroad -- to families, into Foreign Currency Non-Resident (FCNR) accounts, and real estate, also represent a large portion of the inflows.
Furthermore, Indian companies today are able to raise debt and equity in foreign markets, and do so far more effectively than they could in the past. This again explains a part of the increasing forex reserves.
All this indicates that a good part of the increased dollar inflows are here to stay. The assessment by some analysts that these dollar inflows are merely in search of the interest rate differential that prevails between the US and India and can exit anytime is not entirely correct.
Although fund managers are parking their money in India due to the advantage they get from the positive interest rate differential, a lot of these funds, just as in other Asian economies, have come seeking a more permanent parking space.
The high reserves have certainly provided the much-required boost to investor confidence and given India a good image abroad.
India's forex reserves have been at a comfortable level for quite some time now, even after the traditional approach of assessing adequacy of foreign exchange reserves in terms of import cover has been broadened to include some important parameters, such as size, composition, risk of capital flows and international uncertainty.
With high reserves, high exports, and increasing foreign direct investment inflows, the economy is all set to ride the trajectory of higher growth. Thus, instead of worrying about the cost of holding such high reserves, the government would be better off capitalising on them to improve the country's image.
Intentions seem to be good. Prime Minister Manmohan Singh and Finance Minister P Chidambaram both send out the right signals about their commitment to development and providing the right environment for development. But, sadly, action seems to be missing.
So, what are the ways in which resources can be utilised in the most effective manner?
For one, there is definitely a case for revisiting and resetting the timetable for capital account convertibility. It is rather unfortunate that the debate has been put on the backburner.
It is time for the Reserve Bank of India to take a stand on whether it wants to follow the example of China and move towards a controlled exchange rate regime or is it ready to let the rupee float and dump its policy of buying the dollars to check the rupee from appreciating.
Being a developing economy with a large and growing manufacturing sector, our import demand is going to be continuously high in the coming years and we will need large forex reserves to meet this demand, especially when export growth may not be able to keep pace with import demand.
Further, if the economy grows at 8 per cent, and there is a revival in investment leading to an increase in import demand, all the excess reserves will stop accumulating.
The high foreign exchange reserves can be used to allow higher import of capital goods and technology to support the growing economy and for development purposes. Another alternative use of the reserves could be to use part of the inflows to replace external commercial borrowings.
Thus, the contradictory situation, where there is more commercial borrowing (large forex inflows) and lack of demand for domestic rupee resources, can be avoided.
A sizeable proportion of resources, taking the stock of forex reserves available, can be used for domestic investment in both the medium and long term.
A great debate on this issue seems to be going on these days and the present government seems to be more than inclined towards this proposal.
The government should also allow Indian residents to open foreign exchange -- say, dollar-denominated -- deposits in domestic banks. At present this is allowed with a lot of restrictions.
Another way to utilise these huge forex reserves would be to follow an aggressive policy in investing overseas, and outward FDI. Recent announcements are definitely steps in the right direction in this regard.
A lot of restrictions on investing in foreign markets have been relaxed. However, further steps need to be taken to further facilitate Indian companies to acquire foreign companies and brands by signing more bilateral investment and double taxation treaties.
While on the one hand so much can be done with the reserves, on the other hand the costs of reserve accumulation are rising, especially when accompanied by sterilisation.
Reserve accumulation means a poor country is lending money very cheaply to the United States and Europe. If the same resources were harnessed for investment, economic growth would accelerate, inflation would diminish, and the welfare gains would increase.
Unfortunately there is not enough happening to create sufficient demand for dollars. This has resulted in an appreciating rupee, which the country does not exactly want.
The reserves may not really be of that much concern if we are aiming for 8 per cent growth. In such a scenario, imports will also increase and we may not be looking at such a big import cover after all.
Therefore, the time has come to think up policy measures that would create greater import demand and widen the current account deficit. The policies must ensure that the piled up reserves are used to attain greater economic growth.
The debate on capital account convertibility should be restarted without any further delay. The government must also initiate aggressive FDI and trade policy reforms, promote exports aggressively and use the India Brand Equity Fund to create the India brand to boost export growth.
All this should be done with various components of the forex reserves in view. Devising an appropriate strategy to make productive use of reserves is as important as providing incentives for larger inflow of forex.
Friday, February 11, 2005
Chinese currency: How it hits India
February 11, 2005, www.rediff.com
China has once again proven its mettle. The Bull cannot be bullied.
The Group of Seven industrialised nations might have thought that they can extract a promise from China's minister of finance Jin Renqing to revalue the yuan or let it float freely. But their efforts were in vain.
China is as strong as ever in its conviction to wait till the infrastructure and the brainpower is ready to support a free-floating currency in the country.
What is beyond comprehension is, instead of asking China to revalue yuan, why not take a re-look at the huge current account deficit of the United States, a staggering $164.7 billion in the third quarter of last year, and find ways to solve that issue!
The G7 nations make it sound as though an undervalued Yuan is the only cause for all the woes of their economies. But, as we read on, we see that though it may not be the only cause all their woes, it definitely is a big one.
China has been riding the big waves of growth at an envious 9 per cent plus rate of growth in the last two decades. It is all set to become an economic superpower in the years to come.
The world markets are flooded with China manufactured products, boosting the manufacturing industry in China, hence exports. One reason for this growth in exports has also been the pegged currency of China. China pegged its currency to the dollar in 1994, at 8.24 yuans per dollar.
Analysts claim that now the yuan is as much as 40 per cent undervalued. While the dollar continues to weaken, the Chinese exporters are taking advantage of the peg and growing by leaps and bounds.
On the other hand, the other G7 countries are facing the brunt of the depreciating dollar, making their exports expensive. Adding to the misery is the realisation that poorer countries like China and India are financing their ever-increasing current account deficits.
Central banks of countries like China and India, who are experiencing a huge inflow of dollars in their economies, are buying up the dollars to maintain the demand of dollars, and investing them in US Treasury backed securities like Treasury Bonds and Notes.
This has led to low yields on these assets having an effect on many industrialized nations who hold huge numbers of these assets. Hence the pressure on China to revalue the yuan, so that it will not need to buy back as many dollars, and in turn will not need to invest them in US treasury assets.
This will drive down the demand for these assets, reducing their price and increasing their yield. So much for the Chinese policy on the yuan!
India is another country which is making its presence felt at many of the similar forums like the G7 meet. The fact that it was invited to the G7 meet itself is a proof. Finance Minister P Chidambaram proclaimed his support for flexible exchange rate regimes and India's commitment to globalisation.
This when the Reserve Bank of India has been actively engaged in the sterilisation of dollars to prevent the Rupee from appreciating!
The RBI's policy of buying up the dollars to keep the rupee from appreciating rapidly seems fair enough when looked at from the exporters point of view. India competes with China in many sectors directly; say textiles and steel to name a few.
Now given that the yuan is pegged to the dollar, letting the rupee appreciate will reduce the price competitiveness of the Indian exporters.
But when looked at from the other angle, India being a growing economy, its imports are all poised to increase in the future, with increased investment in technology, infrastructure and development related projects.
Also, a lot of India's exports have a huge import content to it and gains on these imports would cover the loss on the export of the final product to a great extent, if the rupee were allowed to appreciate freely.
One challenge before the government would be to liberalise the imports in such a way so that benefit can be taken of the appreciating rupee without jeopardizing certain sectors, which can be badly hurt from competing imported products.
Liberalising imports can not only create greater demand for dollars, but also boost developmental activities in India.
So far, RBI has chosen to protect exporters over liberalising the imports. Now many exporters in India claim that even if the rupee were to appreciate further -- Chinese exporters claim the same in case of an appreciation of yuan -- their products would still be competitive due to their quality.
If this is the case, then letting the rupee appreciate should not be very damaging to the exporters. Another point in favour of the exporters is the growing derivatives market in India, which gives an avenue to the exporters to manage the risk due to an appreciating rupee.
One thing is for sure: not only are the industrialised nations keeping their fingers crossed that China will revalue the yuan, even India is keenly watching China in this regard.
And it is to India's benefit to support the G7 nations in asking China to revalue the yuan. RBI's move towards further liberalisation of the economy can depend to a large extent on any move by China towards this step.
Chidambaram rightly gave his support to the G7 nations by commenting: "The consensus among economists is that flexible exchange rates are an important factor of strength in the macro policy framework."
The point to be emphasised is that both China and India are growing very fast. There is a feel good factor about both these countries. Governments need to make sure that this growth is matched by right and timely investment in technology and infrastructure or else the countries will not be ready to handle the growth after some point of time.
Foreign investors already complain of the legal and investment environment in the both the countries. The only way to go is up. Any further decline in these aspects could prove too expensive for all the stakeholders.
China has once again proven its mettle. The Bull cannot be bullied.
The Group of Seven industrialised nations might have thought that they can extract a promise from China's minister of finance Jin Renqing to revalue the yuan or let it float freely. But their efforts were in vain.
China is as strong as ever in its conviction to wait till the infrastructure and the brainpower is ready to support a free-floating currency in the country.
What is beyond comprehension is, instead of asking China to revalue yuan, why not take a re-look at the huge current account deficit of the United States, a staggering $164.7 billion in the third quarter of last year, and find ways to solve that issue!
The G7 nations make it sound as though an undervalued Yuan is the only cause for all the woes of their economies. But, as we read on, we see that though it may not be the only cause all their woes, it definitely is a big one.
China has been riding the big waves of growth at an envious 9 per cent plus rate of growth in the last two decades. It is all set to become an economic superpower in the years to come.
The world markets are flooded with China manufactured products, boosting the manufacturing industry in China, hence exports. One reason for this growth in exports has also been the pegged currency of China. China pegged its currency to the dollar in 1994, at 8.24 yuans per dollar.
Analysts claim that now the yuan is as much as 40 per cent undervalued. While the dollar continues to weaken, the Chinese exporters are taking advantage of the peg and growing by leaps and bounds.
On the other hand, the other G7 countries are facing the brunt of the depreciating dollar, making their exports expensive. Adding to the misery is the realisation that poorer countries like China and India are financing their ever-increasing current account deficits.
Central banks of countries like China and India, who are experiencing a huge inflow of dollars in their economies, are buying up the dollars to maintain the demand of dollars, and investing them in US Treasury backed securities like Treasury Bonds and Notes.
This has led to low yields on these assets having an effect on many industrialized nations who hold huge numbers of these assets. Hence the pressure on China to revalue the yuan, so that it will not need to buy back as many dollars, and in turn will not need to invest them in US treasury assets.
This will drive down the demand for these assets, reducing their price and increasing their yield. So much for the Chinese policy on the yuan!
India is another country which is making its presence felt at many of the similar forums like the G7 meet. The fact that it was invited to the G7 meet itself is a proof. Finance Minister P Chidambaram proclaimed his support for flexible exchange rate regimes and India's commitment to globalisation.
This when the Reserve Bank of India has been actively engaged in the sterilisation of dollars to prevent the Rupee from appreciating!
The RBI's policy of buying up the dollars to keep the rupee from appreciating rapidly seems fair enough when looked at from the exporters point of view. India competes with China in many sectors directly; say textiles and steel to name a few.
Now given that the yuan is pegged to the dollar, letting the rupee appreciate will reduce the price competitiveness of the Indian exporters.
But when looked at from the other angle, India being a growing economy, its imports are all poised to increase in the future, with increased investment in technology, infrastructure and development related projects.
Also, a lot of India's exports have a huge import content to it and gains on these imports would cover the loss on the export of the final product to a great extent, if the rupee were allowed to appreciate freely.
One challenge before the government would be to liberalise the imports in such a way so that benefit can be taken of the appreciating rupee without jeopardizing certain sectors, which can be badly hurt from competing imported products.
Liberalising imports can not only create greater demand for dollars, but also boost developmental activities in India.
So far, RBI has chosen to protect exporters over liberalising the imports. Now many exporters in India claim that even if the rupee were to appreciate further -- Chinese exporters claim the same in case of an appreciation of yuan -- their products would still be competitive due to their quality.
If this is the case, then letting the rupee appreciate should not be very damaging to the exporters. Another point in favour of the exporters is the growing derivatives market in India, which gives an avenue to the exporters to manage the risk due to an appreciating rupee.
One thing is for sure: not only are the industrialised nations keeping their fingers crossed that China will revalue the yuan, even India is keenly watching China in this regard.
And it is to India's benefit to support the G7 nations in asking China to revalue the yuan. RBI's move towards further liberalisation of the economy can depend to a large extent on any move by China towards this step.
Chidambaram rightly gave his support to the G7 nations by commenting: "The consensus among economists is that flexible exchange rates are an important factor of strength in the macro policy framework."
The point to be emphasised is that both China and India are growing very fast. There is a feel good factor about both these countries. Governments need to make sure that this growth is matched by right and timely investment in technology and infrastructure or else the countries will not be ready to handle the growth after some point of time.
Foreign investors already complain of the legal and investment environment in the both the countries. The only way to go is up. Any further decline in these aspects could prove too expensive for all the stakeholders.
Sunday, January 16, 2005
Trekamerica
From 6th January 2005 to 15th January 2005, I traveled with a tour group called trekamerica. The group included 12 people (including me). 5 Koreans, 2 Britons, 1 Australian, 1 Estonian, 1 German, 1 Indian (me) and 1 American (tour leader).
More than anything else, interacting with this group for 10 days, made me conscious of my Indian origin, the fact that I do not have white skin (or yellow), my lack of knowledge about my own culture and religion, the fact that I know more about a foreign language than my own language, and that I am different. Though not as different as the others want me to be.
The tour started from a Hotel in Los Angeles early morning on the 6th. The German and the tour leader, being the only guys in the group, had a bad start. They had to load our entire luggage in the van. We tried helping, only to drop our bags on each other's heads. We head straight to San Diego.
******************************
San Diego (6th and 7th)
The Sea World is huge. Pardon me comparing the Sea World to the Underwater world at Singapore. I suppose comparisons become imperative when you have seen two similar places. Even though the Sea World has many more shows, is much bigger, in my opinion the underwater world at Singapore showcases the marine animals in a much better way and has many more species there.
Anyways, let's get back to the Sea World. There are some very good rides and shows. Especially the performances by the killer whales and the dolphins are spectacular. And from the top of the rides, we got a very good view of the entire Sea World.
By the time we finish enjoying the rides and shows at Sea World, its sunset time. So we hurry to the Crystal Pier at Pacific Beach to catch the sunset and the surfers. Not too good. Have had better view in other places. It was cloudy and drizzling. Still, got to see many surfers fighting against the waves.
At night, we did some of the craziest things in my life. Camped at a place called "Campland at Bay". It was cold and wet. Does anybody ever camp in such weather? It was fun putting up the tents and rolling out sleeping bags. The team leader, David, cooked bean burritos for us.
Then the eleven of us got on top of the van, as David drove us to the beach, which was just five minutes from the camp. We had to struggle to avoid getting hit by palm trees on the road. For all of us on top, it was a good experience, with chilled air seeping through our skins. It reminded me of the trucks and buses full of people in Bihar, going to see a mela.
On the beach we burnt woods and sat around it. We were carrying folding chairs! Played beach volleyball and frisby.
The night was extremely cold with rain all through.
The next day was a free day in San Diego. It was a horrible day. There was so much rain that I just wanted to sit in a cafe, read and drink coffee. But forced myself to go to Balboa park, Gas Lamp
Quarters and Horton Plaza. Everything was wet and didn't enjoy anything. The only thing that I enjoyed was watching "Meet the Fockers" at Horton Plaza. Sitting in the theatre for 2 hours was a
relief from the wet weather outside.
San Diego is supposed to be one of the most beautiful places in California. And it is. In spite of the weather.
Went for dinner at the Dick's near Gas Lamp Quarters. Now this was some experience. I have never seen a place like this before. The customer service is known to be really bad. The waiters throw the tissues, menu, food, everything at you. Talk really harshly and rudely. The people keep fighting with each other for food, throwing balls of tissues at each other. I really enjoyed it. There was live music, which was really live. If you don't applaud after a piece, the singers swear at you.
******************************
Cowboy Camp, Sonoran Desert (8th and 9th)
It was a long drive from San Diego to the Cowboy Camp at Sonoran Desert. Spent the whole day in the van, sleeping. I volunteered to make dinner for everyone. Made my usual aloo gobi and tamatar ki chutney. Everybody liked it. The food also brought with it discussion on vegetarianism. And questions like "why are you a vegetarian? is it because of religion?"....Am I a vegetarian because I am a Hindu? As far as I know, even Bengali's are Hindus. But they are not vegetarians. So why am I a vegetarian? Just because my family has always been vegetarian?....I have no satisfactory answer.
It was good sitting by the fire and enjoying the dry weather. Everybody started getting drunk and I went to sleep.
Next day was a beautiful day too. Very sunny. It was a treat to be riding the horse through the hills and the desert, with sunlight on my face and body, after days of rain. It was very scenic too. The
cactuses are huge and high in this place.
Also got a chance to have a tete-a-tete with Betty and Rusty. They are the owners of the cowboy camp at which we were camping. Rusty is one of the oldest cowboy's alive in the area. He is fit as a fiddle at 95. Says he feels like 16. He says that Betty has grown old as she doesnot smoke or drink. So, according to him, she is not able to cope with him. Betty herself must be 80 plus. Though she is very active and even pretty. They have lived in this place all their lives.
They asked me a lot of questions about India. About Hinduism. They had heard about the Tsunami. So were very curious about India. Tsunami has brought India on everybody'd lips for the time being. They also asked me what is the holy scipture for Hindu's called. Just like its Bible for the Christians. Which is our holy scripture? Is it the Bhagvad Gita? Is it the Vedas? Is it the Puranas? Which one is it? I do not know.
The toilets in the camp were a nightmare. The Americans call them pit toilets. There is a huge hole. You just sit on top of it and do whatever you have to. No need to flush. How convenient! And you could have a shower by the well in the open! No hot water!
In the evening, we shooted cans and bottles with real bullets and guns! Gosh! Its tough to shoot. The noise can blow your ear drums. After that- Lassoeing, also called roping. I am bad at it. Very bad.
Could not rope the horse even once.
At night we had a traditional cowboy dinner, cooked by Betty on the wood and coal fire. It was delicious. I especially loved the smell and the taste of smoke in my food. Dessert was once again cooked in the same fire- chocolate cake. Yummy again. After dessert, entertainment provided by Betty and Rusty again. Betty was great on the guitar, and has a very good voice as well. Rusty, I guess, would have been a good singer once upon a time. But I could not understand a word he sang
because of his old age. Overall a great experience.
The next day was traditional cowboy breakfast with homemade bread. As we packed our tents, Betty presented me with an old horseshoe as she was fascinated by my stories about India and kind of liked me.
******************************
Grand Canyon (10th and 11th)
We drive to Montezuma Castle National Monument. Its a fraud. How can they call just pieces of bricks and rocks kept together a national monument? There is nothing to be seen. These are supposed to be the ruins of castles built by Indians. But they are really ruined. Drive some more and reach Grand Canyon. Bad Weather. Its almost dark, so there is no scope of seeing the canyon. We check into the hotel rooms. The rooms are really good. Soak into the bathtub. After spending two
days in the cowboy camp without shower, this feels like heaven. Spent the night talking to friends on the phone and playing cards with the Korean girls.
Next day the bad weather continues. So could not see the sunrise and the sunset on the canyon. But whatever little I could see of the canyon, was breathtaking. We were on the South rim of the Canyon
(Tusayan). Went on a short hike on the Bright Angel Trail. The trail was slippery and washed out in many places because of the rain and the snow.
Probably the best view of the Canyon that I had was in the IMAX Theatre (7 storeyed screen) in Tusayan. The images of the Colorado River and the Canyon looked very different from what we saw. Grand Canyon is certainly the greatest natural phenomenon that I have seen till date. Want to come back here some day in the summers and see the Canyon as was shown in the theatre.
On 12th morning, we were supposed to leave early for Vegas. But, the weather was unexpectedly good. So we decided to have another look at the Canyon, sans the fog. And if yesterday was breathtaking, the view today cannot be described. The sky was clear, no snow, no fog. We got
some great views of the Grand Canyon.
******************************
Las Vegas (13th and 14th)
We reached Las Vegas around 3 in the afternoon, via the historic route 66. You have to experience Vegas to know what it is. The place has a totally different feel to it. Its different from any other city that I have seen, or heard about.
We did Vegas in style. Starting with a buffet at Luxor, which had more than 200 dishes. I myself tried more than 20 of them. It included all the different cuisine that you can think of....not exactly though. Sadly, there was no Indian food! Then a Limo was waiting to drive us through the strip and downtown Vegas. My first ride in a limo. It makes you feel grand. Watched the Fremont Street Experience show in downtown Vegas. Then hopped on to the Limo and off to Rio to catch the Masquerade in the sky show. Not only did we watch the show, we also participated in the show.
I participated in a live Vegas show, dancing on a decorated trolley in the sky! Amazing experience. Hop on to the limo again and now to Bellagio hotel and casino. We watched the water fountain shows there. Its certainly the best water fountain show in the world! I was so enchanted by it that I watched three shows in a row. And I watched it from the arcade where the Ocean's eleven team had stood towards the end of the movie.
Then to MGM Grand. Nothing much. Then to New York New York. We danced till early morning hours in the Coyote Ugly Club and then off to our hotel where I gambled off $10, playing various stupid games and lost all the money!
Walked on the strip the whole of next day. Absorbing the grandeur of Las Vegas. From Bellagio to Flamingo, Luxor to Excalibur, New York New York to Mandalay Bay, MGM Grand to Stratosphere, Circus Circus to Treasure Island. On foot for more than six hours. Came to the hotel and now is the time to go Bungy jumping. Nervous. Excited. Go there. The tower from which I had to jump was 171 ft high. Saw the others jump. I can't do it. I just can't do it. I'll have a heart attack if I do. Back out. Didn't have the courage to jump inspite of everyone else trying to coax me into doing it.
Come back to the hotel. Gamble some more. Lose some more money. I am broke. Living on the edge again. Had Mexican dinner. Very good and different from anything I have had earlier.
******************************
Death Valley National Park (14th Jan)
Desert can be so beautiful? I didn't know till I saw the Death Valley! We went from point to point, seeing different faces of the desert. Badwater Basin- The lowest point below sea level in the Western
Hemisphere. 85m below sea level. It had Sodium Chloride crusts formed on the sand, which shone like crystals in the sun.
The Golden Canyon. As the name suggests, canyons formed due to the flow of the river. And Golden in colour. Shines like newly polished gold in the sun.
Camped at Stovepipe Wells Campground. Dave cooked brownie for us in the fire. And the Korean girls made special Korean food. Both were good.
And yes, there were so many stars in the sky. I was seeing stars in the US for the first time!
Sitting by the fire, watching the stars, eating brownie and drinking coffee, Enelie and I started talking about our countries. She definitely did not know much about Estonia. But I was surprised at how
little I myself know about India! It was an eye opener. Will try to read more about India in the future!
Next day we spent the whole day in the van, travelling from Death Valley to Los Angeles. Dave dropped me at Anaheim, from where Micky picked me up. And my trip came to an end. Back to Irvine and then back to Syracuse. The End.
More than anything else, interacting with this group for 10 days, made me conscious of my Indian origin, the fact that I do not have white skin (or yellow), my lack of knowledge about my own culture and religion, the fact that I know more about a foreign language than my own language, and that I am different. Though not as different as the others want me to be.
The tour started from a Hotel in Los Angeles early morning on the 6th. The German and the tour leader, being the only guys in the group, had a bad start. They had to load our entire luggage in the van. We tried helping, only to drop our bags on each other's heads. We head straight to San Diego.
******************************
San Diego (6th and 7th)
The Sea World is huge. Pardon me comparing the Sea World to the Underwater world at Singapore. I suppose comparisons become imperative when you have seen two similar places. Even though the Sea World has many more shows, is much bigger, in my opinion the underwater world at Singapore showcases the marine animals in a much better way and has many more species there.
Anyways, let's get back to the Sea World. There are some very good rides and shows. Especially the performances by the killer whales and the dolphins are spectacular. And from the top of the rides, we got a very good view of the entire Sea World.
By the time we finish enjoying the rides and shows at Sea World, its sunset time. So we hurry to the Crystal Pier at Pacific Beach to catch the sunset and the surfers. Not too good. Have had better view in other places. It was cloudy and drizzling. Still, got to see many surfers fighting against the waves.
At night, we did some of the craziest things in my life. Camped at a place called "Campland at Bay". It was cold and wet. Does anybody ever camp in such weather? It was fun putting up the tents and rolling out sleeping bags. The team leader, David, cooked bean burritos for us.
Then the eleven of us got on top of the van, as David drove us to the beach, which was just five minutes from the camp. We had to struggle to avoid getting hit by palm trees on the road. For all of us on top, it was a good experience, with chilled air seeping through our skins. It reminded me of the trucks and buses full of people in Bihar, going to see a mela.
On the beach we burnt woods and sat around it. We were carrying folding chairs! Played beach volleyball and frisby.
The night was extremely cold with rain all through.
The next day was a free day in San Diego. It was a horrible day. There was so much rain that I just wanted to sit in a cafe, read and drink coffee. But forced myself to go to Balboa park, Gas Lamp
Quarters and Horton Plaza. Everything was wet and didn't enjoy anything. The only thing that I enjoyed was watching "Meet the Fockers" at Horton Plaza. Sitting in the theatre for 2 hours was a
relief from the wet weather outside.
San Diego is supposed to be one of the most beautiful places in California. And it is. In spite of the weather.
Went for dinner at the Dick's near Gas Lamp Quarters. Now this was some experience. I have never seen a place like this before. The customer service is known to be really bad. The waiters throw the tissues, menu, food, everything at you. Talk really harshly and rudely. The people keep fighting with each other for food, throwing balls of tissues at each other. I really enjoyed it. There was live music, which was really live. If you don't applaud after a piece, the singers swear at you.
******************************
Cowboy Camp, Sonoran Desert (8th and 9th)
It was a long drive from San Diego to the Cowboy Camp at Sonoran Desert. Spent the whole day in the van, sleeping. I volunteered to make dinner for everyone. Made my usual aloo gobi and tamatar ki chutney. Everybody liked it. The food also brought with it discussion on vegetarianism. And questions like "why are you a vegetarian? is it because of religion?"....Am I a vegetarian because I am a Hindu? As far as I know, even Bengali's are Hindus. But they are not vegetarians. So why am I a vegetarian? Just because my family has always been vegetarian?....I have no satisfactory answer.
It was good sitting by the fire and enjoying the dry weather. Everybody started getting drunk and I went to sleep.
Next day was a beautiful day too. Very sunny. It was a treat to be riding the horse through the hills and the desert, with sunlight on my face and body, after days of rain. It was very scenic too. The
cactuses are huge and high in this place.
Also got a chance to have a tete-a-tete with Betty and Rusty. They are the owners of the cowboy camp at which we were camping. Rusty is one of the oldest cowboy's alive in the area. He is fit as a fiddle at 95. Says he feels like 16. He says that Betty has grown old as she doesnot smoke or drink. So, according to him, she is not able to cope with him. Betty herself must be 80 plus. Though she is very active and even pretty. They have lived in this place all their lives.
They asked me a lot of questions about India. About Hinduism. They had heard about the Tsunami. So were very curious about India. Tsunami has brought India on everybody'd lips for the time being. They also asked me what is the holy scipture for Hindu's called. Just like its Bible for the Christians. Which is our holy scripture? Is it the Bhagvad Gita? Is it the Vedas? Is it the Puranas? Which one is it? I do not know.
The toilets in the camp were a nightmare. The Americans call them pit toilets. There is a huge hole. You just sit on top of it and do whatever you have to. No need to flush. How convenient! And you could have a shower by the well in the open! No hot water!
In the evening, we shooted cans and bottles with real bullets and guns! Gosh! Its tough to shoot. The noise can blow your ear drums. After that- Lassoeing, also called roping. I am bad at it. Very bad.
Could not rope the horse even once.
At night we had a traditional cowboy dinner, cooked by Betty on the wood and coal fire. It was delicious. I especially loved the smell and the taste of smoke in my food. Dessert was once again cooked in the same fire- chocolate cake. Yummy again. After dessert, entertainment provided by Betty and Rusty again. Betty was great on the guitar, and has a very good voice as well. Rusty, I guess, would have been a good singer once upon a time. But I could not understand a word he sang
because of his old age. Overall a great experience.
The next day was traditional cowboy breakfast with homemade bread. As we packed our tents, Betty presented me with an old horseshoe as she was fascinated by my stories about India and kind of liked me.
******************************
Grand Canyon (10th and 11th)
We drive to Montezuma Castle National Monument. Its a fraud. How can they call just pieces of bricks and rocks kept together a national monument? There is nothing to be seen. These are supposed to be the ruins of castles built by Indians. But they are really ruined. Drive some more and reach Grand Canyon. Bad Weather. Its almost dark, so there is no scope of seeing the canyon. We check into the hotel rooms. The rooms are really good. Soak into the bathtub. After spending two
days in the cowboy camp without shower, this feels like heaven. Spent the night talking to friends on the phone and playing cards with the Korean girls.
Next day the bad weather continues. So could not see the sunrise and the sunset on the canyon. But whatever little I could see of the canyon, was breathtaking. We were on the South rim of the Canyon
(Tusayan). Went on a short hike on the Bright Angel Trail. The trail was slippery and washed out in many places because of the rain and the snow.
Probably the best view of the Canyon that I had was in the IMAX Theatre (7 storeyed screen) in Tusayan. The images of the Colorado River and the Canyon looked very different from what we saw. Grand Canyon is certainly the greatest natural phenomenon that I have seen till date. Want to come back here some day in the summers and see the Canyon as was shown in the theatre.
On 12th morning, we were supposed to leave early for Vegas. But, the weather was unexpectedly good. So we decided to have another look at the Canyon, sans the fog. And if yesterday was breathtaking, the view today cannot be described. The sky was clear, no snow, no fog. We got
some great views of the Grand Canyon.
******************************
Las Vegas (13th and 14th)
We reached Las Vegas around 3 in the afternoon, via the historic route 66. You have to experience Vegas to know what it is. The place has a totally different feel to it. Its different from any other city that I have seen, or heard about.
We did Vegas in style. Starting with a buffet at Luxor, which had more than 200 dishes. I myself tried more than 20 of them. It included all the different cuisine that you can think of....not exactly though. Sadly, there was no Indian food! Then a Limo was waiting to drive us through the strip and downtown Vegas. My first ride in a limo. It makes you feel grand. Watched the Fremont Street Experience show in downtown Vegas. Then hopped on to the Limo and off to Rio to catch the Masquerade in the sky show. Not only did we watch the show, we also participated in the show.
I participated in a live Vegas show, dancing on a decorated trolley in the sky! Amazing experience. Hop on to the limo again and now to Bellagio hotel and casino. We watched the water fountain shows there. Its certainly the best water fountain show in the world! I was so enchanted by it that I watched three shows in a row. And I watched it from the arcade where the Ocean's eleven team had stood towards the end of the movie.
Then to MGM Grand. Nothing much. Then to New York New York. We danced till early morning hours in the Coyote Ugly Club and then off to our hotel where I gambled off $10, playing various stupid games and lost all the money!
Walked on the strip the whole of next day. Absorbing the grandeur of Las Vegas. From Bellagio to Flamingo, Luxor to Excalibur, New York New York to Mandalay Bay, MGM Grand to Stratosphere, Circus Circus to Treasure Island. On foot for more than six hours. Came to the hotel and now is the time to go Bungy jumping. Nervous. Excited. Go there. The tower from which I had to jump was 171 ft high. Saw the others jump. I can't do it. I just can't do it. I'll have a heart attack if I do. Back out. Didn't have the courage to jump inspite of everyone else trying to coax me into doing it.
Come back to the hotel. Gamble some more. Lose some more money. I am broke. Living on the edge again. Had Mexican dinner. Very good and different from anything I have had earlier.
******************************
Death Valley National Park (14th Jan)
Desert can be so beautiful? I didn't know till I saw the Death Valley! We went from point to point, seeing different faces of the desert. Badwater Basin- The lowest point below sea level in the Western
Hemisphere. 85m below sea level. It had Sodium Chloride crusts formed on the sand, which shone like crystals in the sun.
The Golden Canyon. As the name suggests, canyons formed due to the flow of the river. And Golden in colour. Shines like newly polished gold in the sun.
Camped at Stovepipe Wells Campground. Dave cooked brownie for us in the fire. And the Korean girls made special Korean food. Both were good.
And yes, there were so many stars in the sky. I was seeing stars in the US for the first time!
Sitting by the fire, watching the stars, eating brownie and drinking coffee, Enelie and I started talking about our countries. She definitely did not know much about Estonia. But I was surprised at how
little I myself know about India! It was an eye opener. Will try to read more about India in the future!
Next day we spent the whole day in the van, travelling from Death Valley to Los Angeles. Dave dropped me at Anaheim, from where Micky picked me up. And my trip came to an end. Back to Irvine and then back to Syracuse. The End.
Thursday, January 6, 2005
My Journey through 3 States and 14 cities of the USA
December 24th, 2004, Syracuse to Irvine
Let me start from the beginning. Syracuse Airport in retrospect, seemed like a very small town railway station where hardly one or two trains stop in a day. When I reached the airport, there was total chaos at the NorthWest counter. Only one attendant was present to issue boarding passes to what seemed like a mile long passengers, all in a hurry to get home to their loved ones for Christmas.
People were worried that they would miss their flights at this rate. Luckily I had taken an electronic boarding pass so did not need to go through the ordeal of standing in the endless queue.
I had the time to explore the Detroit Airport, unlike the first time I was there on my way from India to Syracuse. Detroit Airport is huge and well maintained. I will not say very good or exceptionally good as I have seen the Changi Airport (Singapore) and also the John F. Kennedy Airport (New York). Nevertheless, Detroit Airport can boast of some good shopping and Eating places. Some good book stores too!
The flight to Irvine was boring. Too long. Longer than it takes to go from Singapore to India. Tried to sleep. Could not. Tried to read. Could not. Tried to look out. Dark. Tried to look right.
Neighbors kissing. Tried to look in front. All heads. No flight entertainment. Can't get up and go out. Sitting at the window seat and how could I disturb the love birds. Overall, very boring.
Once in a while, when the plane is probably going over some city, the surface below looks like a huge chip with criss-cross of orange and green. I had noticed the same thing on my flight from Newark to Syracuse in August this year. The cities in US are well planned with parallel and perpendicular roads and arrays of houses and buildings. Giving it the look of a chip when viewed from top.
******************************
December 25th, Irvine
Got a mini round of the University of California, Irvine, on foot. The campus is beautiful. Very green. And the weather today was so sunny and pleasant. Its a treat to be walking around in such a weather after the snowy and dark days of Syracuse.
Lunch was at a Korean restaurant called Kaya. Micky recommended the only vegetarian dish that was available...Bibimbab...sounds like some African dance! Anyways, it was just a bowl full of raw salad vegetables like lettuce, onions, carrots, cabbage, etc....and plain rice to be eaten with it. Managed to eat the whole thing as was very hungry after the long walk around the campus and also there were some pretty neat side dishes like Kimchi salad, tofu fried and spiced (for the first time I liked something made of tofu), and the best was cucumber pieces, again spiced with some sauces. There were many more side dishes but I don't know or remember the names. Overall, the lunch was okay.
Evening was spent looking for some Hindi movies, couldn't find any that I had not already seen. So we ended up watching Monsters Ball....starring Halle Berry and Billy Bob Thornton. Liked the movie.
******************************
December 26th, Irvine
Got up early in the morning and went to a Swap Meet. It is just like the Sanichar Bazaar I know of in Ramgarh. Lot of vendors selling things real cheap. A lot things seem to be either from the chor bazaar or second hand. The only difference is that this being America, the vendors have a fundu way of putting up the stalls and the market looks much cleaner.
Had breakfast at IKEA. The only vegetarian thing available was a pancake- just like atta ka chilla!
Went to a Gurudwara for lunch. Free lunch. Langar. The food was very homely and tasty. Dal Makhani, Chole, Aloo Paneer, Rice, Roti and Kheer.
Went shopping for groceries and then to a huge mall called South Coast plaza. Window shopping. No money. I am fascinated by something called a Papasan chair. Its a round cane huge chair with a comforter on top. It looks very funky and cool. I would like something like it in my home one day!
Ate Persimmon. Its an orange fruit, really good. I am hooked on to it now and can eat 7-8 pieces in a day.
Went for a Christmas Party at Micky's friends place. The couple Roop and Srilaja are good and interesting people. The small gathering was also interesting with a Japanese couple, a guy from Palestine, and a few other Indians. The best thing I liked about the house was the huge collection of artifacts that Roop and Srilaja had, all from their various treks and hikes across the globe. They also had a good collection of CD's, DVD's and books and good taste too.
Barbecue was an experience. We had corns, capsicums, brinjals, pita breads....and some non-veg. Most of the people were drunk after about two-three hours. After everyone left, Micky, Srilaja
and I started watching a Hindi movie...Diksha. But left soon as we were all sleepy by then. Borrowed the DVD.
******************************
December 27th, Irvine
I am going to sleep, eat, watch TV, and movies today. No going out till the evening. Micky has gone to attend a wedding. Watched three movies. One is Dharavi. Its based on the life of a taxi driver in
Dharavi. His aspirations and struggle. I especially like the end. He loses everything in the end but continues to aspire and hope for a better life. Great performances by Shabana Azmi and Om Puri.
Next, completed Diksha. Its actually a very old movie by Doordarshan. Its about untouchability, life of a widow, the life of a young boy taking diksha from a famous pandit. Nana Patekar and a small boy (who is taking Diksha) have give superb performances. And the movie is very well made.
The last one is the one I like the most. Salim Langde Par Mat Ro. I was a bit skeptical about the movie after reading the title. But its a very good movie. And Pawan Malhotra has done a great job. It has a sad but very realistic ending. Its about the life of this guy on the streets of Bombay who wants to make it big. His journey through his aspirations, his search for his identity...I like the movie a lot.
Asha, Mukund and Juggi came at around 11 in the night. Chatted with them for sometime and slept with the program of going to Universal Studios the next day early in the morning.
******************************
December 28th, Los Angeles, Santa Monica
When I got up in the morning, it was pouring. Mukund got up at around the same time and after some soch vichar, we decided to drop the idea of going to Universal Studios. We played Carrom for sometime. With weather getting a bit better, decided to leave for Los Angeles by noon.
Griffith Park, the Hollywood Observatory was closed. However, we were lucky to see the Hollywood sign from a location at Hollywood Boulevard. Then we went around the Hollywood Boulevard, checking out the various houses. Beautiful houses. Great cars. Rich People. However, we were not fortunate enough to see any movie stars!
Then we went to the Kodak Theatre where the Oscars are held every year. Next to it was the Chinese theatre. Walked on the Hollywood's Walk of Fame. It is the world's most famous sidewalk. Then drove through the Sunset boulevard (where Richard Gere picks up Julia Roberts in the movie Pretty Woman) and Rodeo Drive (where Julia Roberts walks her famous walk in the song Pretty Woman Walking ...). Rodeo Drive seems familiar! Is Orchard Road in Singapore a replica or inspired by the Rodeo Drive?
Our drive continues through Bel Air and Beverly Hills areas. These are basically the very rich LA localities again, with residences of the rich and famous. Very posh. Very beautiful. Then went to the
University of California, LA (UCLA) hangout places. Had ice cream at a place called Diddy Reise. It was actually an Ice cream Sandwich. A dollop of ice cream between two cookies. The best cookies I have ever had. And all for just One Dollar!
Wait....the day is not over yet! Now we go to Santa Monica. Third Street. Its just an upscale shopping area. Very well decorated as its the New year's time. However, I always feel that nothing can beat the
Mall decorations during Christmas and New years in Singapore. They used to be just amazing! Had dinner at third street at a place called Thai Brothers. Very good food. After dinner, just walked over to the Laguna beach. Its in Santa Monica. Its night so didn't see much.
Then we head to the Balboa Island. Where we go on an auto ferry. The whole car goes on top of a ferry and the ferry then gives a ride in the ocean cool wind on tired bodies. Chilling in fact. But good. Liked it.
Long Day!
******************************
December 29th, Universal Studios, LA
Now what do I say about the Universal Studios? Its a theme park. Have seen numerous theme parks before. But must admit that this is the original! Ramoji Film City does have many similarities but Universal Studios is a class apart in terms of quality and its shows. The Shrek Experience is worth mentioning with its 4D effects. Other shows like the Mummy returns and the journey to the future were very good too. But I am scared of rides and my eyes were mostly closed.
******************************
December 30th, Pacific Coast Highway (Santa Barbara, Solvang, San Jose, San Francisco)
Very scenic drive. Beaches, Mountains, vineyards, orchards (strawberry and oranges mainly), and rain!
Breakfast at a French Bistro in Santa Barbara. The best french toasts I have eaten till date, with cinnamon syrup. Danish cookies and chocolates for lunch at a Danish village called Solvang. The whole village has Danish architecture, with wood paneling across the whole house.
We kept stopping at various vista points to take in the great view and also pictures. Came across lakes, seals on the beaches, hidden bridges, waterfalls. The view was breathtaking in a few places.
Crossed through San Jose, where we had to stay for the next couple of days, to go to San Francisco. Dinner at an Indo-Pak place called Chutney, in San Francisco. Good, spicy and cheap food. What else does one want in life?
******************************
December 31st, Stanford, San Francisco
We go to Stanford University at Stanford early morning. Huge campus. Drive ways lined with Palm trees. Very good bookstore. Bought a t-shirt from there which I wear a lot of times now just to show off!
Lunch at the House of NanKing in China town, San Francisco. Best Chinese food I have ever had. So far the food has been the best that I have ever had, throughout the trip.
Now starts our journey through San Francisco. Its a very hilly city. We went on the crookedest street. As the name suggests....the street is very crooked. See the photos to know what I mean! Golden Gate
Bridge....the famous Golden Gate bridge....didn't look too impressive. And it was raining too much to spend time standing and trying to figure out what's so special about it. No body was interested in going and seeing the Alcatraz. So just saw it from far instead of taking a ferry and going all the way to the island.
Then we went to Muir Woods. Its a Red Wood forest. It was raining but I loved the very short hike through the forest. The trees are hundreds of years old, with very-very thick branches, very tall. Difficult to see the peak of most of them. It was my first visit to a red wood forest. And the trees looked imposing and grand.
Next stop was the Fishermen's Wharf. Again a lot of shops. And again it was raining so we could not go around much but all of us decided to have coffee in a coffee shop. Much needed after the long day and all that rain and wind chill.
At night we went to an Indian place called clay oven. And for the first time in the entire trip, that too on the New years eve, the food was really bad! At midnight, saw fireworks at the Fishermen's Wharf.
Beautiful fireworks.
Went home and watched the movie DON, while all the others slept.
******************************
Jan 1st, 2005, San Francisco, Mountain View
Asha, Mukund, Juggi, Micky....they all opened a bottle of Champagne in the morning to welcome the new year. I obviously did not drink. Watched Kill Bill part 2. Went for Italian Lunch at Stanford. Watched Sholay. Asha and Mukund left for New York. Ritu came to pick me up. Went to her place in Mountainview.
Chef Motilal was ready with special dinner for me. Italian again. But ghar ka khana is always special. And I must say that he did a very good job, while Ritu pretended to help him! Yapped yapped and yapped. Although Ritu enjoyed all that I was saying, but pretended to get bored....Ritu hope you are reading this! They have a nice house and Ritu has done a good job of decorating it.
Watched Swades at night. I am sick of watching downloaded movies on the laptop. When will I get to watch hindi movies in the theatre? Guess six more months....seems like ages away!
******************************
Jan 2nd, Mountainview, San Jose
Ritu took me to Shoreline lake and park in Mountainview. It was good but as has been the case throughout the trip, it was raining. So we did not get out of the car. The lake had a lot of ducks. Good view.
Saw the Google headoffice which is located in Mountainview too.
Ritu made superb uttapams. Haven't had such good uttapams earlier.
She dropped me back at Micky's friend's place at around two. We left for Irvine at around 3.30p.m. Long drive, seven hours!
******************************
Jan 3rd, 4th, 5th, Irvine
Rest days. Decided to do nothing. Just watch movies, eat, sleep and relax before beginning the next round of my tour. Watched Teen Deviyaan-Dev Anand, Simi Garewal, Kalpana and Nanda. Nice movie. Good songs. Watched Hulchul and Kaante. Both were just okay okay. Watched Jerry Macguire (Tom Cruise).
5th was a day for beaches, as the sun was bright after a long time. Laguna Beach, Dana Point Beach and Corona Del Mar beach. All beautiful, all clean. And then time for movies again. The End of the
Affair was the first one. Starring Ralph Fiennes. The next one in line was a Shelock Holmes thriller.
******************************
Let me start from the beginning. Syracuse Airport in retrospect, seemed like a very small town railway station where hardly one or two trains stop in a day. When I reached the airport, there was total chaos at the NorthWest counter. Only one attendant was present to issue boarding passes to what seemed like a mile long passengers, all in a hurry to get home to their loved ones for Christmas.
People were worried that they would miss their flights at this rate. Luckily I had taken an electronic boarding pass so did not need to go through the ordeal of standing in the endless queue.
I had the time to explore the Detroit Airport, unlike the first time I was there on my way from India to Syracuse. Detroit Airport is huge and well maintained. I will not say very good or exceptionally good as I have seen the Changi Airport (Singapore) and also the John F. Kennedy Airport (New York). Nevertheless, Detroit Airport can boast of some good shopping and Eating places. Some good book stores too!
The flight to Irvine was boring. Too long. Longer than it takes to go from Singapore to India. Tried to sleep. Could not. Tried to read. Could not. Tried to look out. Dark. Tried to look right.
Neighbors kissing. Tried to look in front. All heads. No flight entertainment. Can't get up and go out. Sitting at the window seat and how could I disturb the love birds. Overall, very boring.
Once in a while, when the plane is probably going over some city, the surface below looks like a huge chip with criss-cross of orange and green. I had noticed the same thing on my flight from Newark to Syracuse in August this year. The cities in US are well planned with parallel and perpendicular roads and arrays of houses and buildings. Giving it the look of a chip when viewed from top.
******************************
December 25th, Irvine
Got a mini round of the University of California, Irvine, on foot. The campus is beautiful. Very green. And the weather today was so sunny and pleasant. Its a treat to be walking around in such a weather after the snowy and dark days of Syracuse.
Lunch was at a Korean restaurant called Kaya. Micky recommended the only vegetarian dish that was available...Bibimbab...sounds like some African dance! Anyways, it was just a bowl full of raw salad vegetables like lettuce, onions, carrots, cabbage, etc....and plain rice to be eaten with it. Managed to eat the whole thing as was very hungry after the long walk around the campus and also there were some pretty neat side dishes like Kimchi salad, tofu fried and spiced (for the first time I liked something made of tofu), and the best was cucumber pieces, again spiced with some sauces. There were many more side dishes but I don't know or remember the names. Overall, the lunch was okay.
Evening was spent looking for some Hindi movies, couldn't find any that I had not already seen. So we ended up watching Monsters Ball....starring Halle Berry and Billy Bob Thornton. Liked the movie.
******************************
December 26th, Irvine
Got up early in the morning and went to a Swap Meet. It is just like the Sanichar Bazaar I know of in Ramgarh. Lot of vendors selling things real cheap. A lot things seem to be either from the chor bazaar or second hand. The only difference is that this being America, the vendors have a fundu way of putting up the stalls and the market looks much cleaner.
Had breakfast at IKEA. The only vegetarian thing available was a pancake- just like atta ka chilla!
Went to a Gurudwara for lunch. Free lunch. Langar. The food was very homely and tasty. Dal Makhani, Chole, Aloo Paneer, Rice, Roti and Kheer.
Went shopping for groceries and then to a huge mall called South Coast plaza. Window shopping. No money. I am fascinated by something called a Papasan chair. Its a round cane huge chair with a comforter on top. It looks very funky and cool. I would like something like it in my home one day!
Ate Persimmon. Its an orange fruit, really good. I am hooked on to it now and can eat 7-8 pieces in a day.
Went for a Christmas Party at Micky's friends place. The couple Roop and Srilaja are good and interesting people. The small gathering was also interesting with a Japanese couple, a guy from Palestine, and a few other Indians. The best thing I liked about the house was the huge collection of artifacts that Roop and Srilaja had, all from their various treks and hikes across the globe. They also had a good collection of CD's, DVD's and books and good taste too.
Barbecue was an experience. We had corns, capsicums, brinjals, pita breads....and some non-veg. Most of the people were drunk after about two-three hours. After everyone left, Micky, Srilaja
and I started watching a Hindi movie...Diksha. But left soon as we were all sleepy by then. Borrowed the DVD.
******************************
December 27th, Irvine
I am going to sleep, eat, watch TV, and movies today. No going out till the evening. Micky has gone to attend a wedding. Watched three movies. One is Dharavi. Its based on the life of a taxi driver in
Dharavi. His aspirations and struggle. I especially like the end. He loses everything in the end but continues to aspire and hope for a better life. Great performances by Shabana Azmi and Om Puri.
Next, completed Diksha. Its actually a very old movie by Doordarshan. Its about untouchability, life of a widow, the life of a young boy taking diksha from a famous pandit. Nana Patekar and a small boy (who is taking Diksha) have give superb performances. And the movie is very well made.
The last one is the one I like the most. Salim Langde Par Mat Ro. I was a bit skeptical about the movie after reading the title. But its a very good movie. And Pawan Malhotra has done a great job. It has a sad but very realistic ending. Its about the life of this guy on the streets of Bombay who wants to make it big. His journey through his aspirations, his search for his identity...I like the movie a lot.
Asha, Mukund and Juggi came at around 11 in the night. Chatted with them for sometime and slept with the program of going to Universal Studios the next day early in the morning.
******************************
December 28th, Los Angeles, Santa Monica
When I got up in the morning, it was pouring. Mukund got up at around the same time and after some soch vichar, we decided to drop the idea of going to Universal Studios. We played Carrom for sometime. With weather getting a bit better, decided to leave for Los Angeles by noon.
Griffith Park, the Hollywood Observatory was closed. However, we were lucky to see the Hollywood sign from a location at Hollywood Boulevard. Then we went around the Hollywood Boulevard, checking out the various houses. Beautiful houses. Great cars. Rich People. However, we were not fortunate enough to see any movie stars!
Then we went to the Kodak Theatre where the Oscars are held every year. Next to it was the Chinese theatre. Walked on the Hollywood's Walk of Fame. It is the world's most famous sidewalk. Then drove through the Sunset boulevard (where Richard Gere picks up Julia Roberts in the movie Pretty Woman) and Rodeo Drive (where Julia Roberts walks her famous walk in the song Pretty Woman Walking ...). Rodeo Drive seems familiar! Is Orchard Road in Singapore a replica or inspired by the Rodeo Drive?
Our drive continues through Bel Air and Beverly Hills areas. These are basically the very rich LA localities again, with residences of the rich and famous. Very posh. Very beautiful. Then went to the
University of California, LA (UCLA) hangout places. Had ice cream at a place called Diddy Reise. It was actually an Ice cream Sandwich. A dollop of ice cream between two cookies. The best cookies I have ever had. And all for just One Dollar!
Wait....the day is not over yet! Now we go to Santa Monica. Third Street. Its just an upscale shopping area. Very well decorated as its the New year's time. However, I always feel that nothing can beat the
Mall decorations during Christmas and New years in Singapore. They used to be just amazing! Had dinner at third street at a place called Thai Brothers. Very good food. After dinner, just walked over to the Laguna beach. Its in Santa Monica. Its night so didn't see much.
Then we head to the Balboa Island. Where we go on an auto ferry. The whole car goes on top of a ferry and the ferry then gives a ride in the ocean cool wind on tired bodies. Chilling in fact. But good. Liked it.
Long Day!
******************************
December 29th, Universal Studios, LA
Now what do I say about the Universal Studios? Its a theme park. Have seen numerous theme parks before. But must admit that this is the original! Ramoji Film City does have many similarities but Universal Studios is a class apart in terms of quality and its shows. The Shrek Experience is worth mentioning with its 4D effects. Other shows like the Mummy returns and the journey to the future were very good too. But I am scared of rides and my eyes were mostly closed.
******************************
December 30th, Pacific Coast Highway (Santa Barbara, Solvang, San Jose, San Francisco)
Very scenic drive. Beaches, Mountains, vineyards, orchards (strawberry and oranges mainly), and rain!
Breakfast at a French Bistro in Santa Barbara. The best french toasts I have eaten till date, with cinnamon syrup. Danish cookies and chocolates for lunch at a Danish village called Solvang. The whole village has Danish architecture, with wood paneling across the whole house.
We kept stopping at various vista points to take in the great view and also pictures. Came across lakes, seals on the beaches, hidden bridges, waterfalls. The view was breathtaking in a few places.
Crossed through San Jose, where we had to stay for the next couple of days, to go to San Francisco. Dinner at an Indo-Pak place called Chutney, in San Francisco. Good, spicy and cheap food. What else does one want in life?
******************************
December 31st, Stanford, San Francisco
We go to Stanford University at Stanford early morning. Huge campus. Drive ways lined with Palm trees. Very good bookstore. Bought a t-shirt from there which I wear a lot of times now just to show off!
Lunch at the House of NanKing in China town, San Francisco. Best Chinese food I have ever had. So far the food has been the best that I have ever had, throughout the trip.
Now starts our journey through San Francisco. Its a very hilly city. We went on the crookedest street. As the name suggests....the street is very crooked. See the photos to know what I mean! Golden Gate
Bridge....the famous Golden Gate bridge....didn't look too impressive. And it was raining too much to spend time standing and trying to figure out what's so special about it. No body was interested in going and seeing the Alcatraz. So just saw it from far instead of taking a ferry and going all the way to the island.
Then we went to Muir Woods. Its a Red Wood forest. It was raining but I loved the very short hike through the forest. The trees are hundreds of years old, with very-very thick branches, very tall. Difficult to see the peak of most of them. It was my first visit to a red wood forest. And the trees looked imposing and grand.
Next stop was the Fishermen's Wharf. Again a lot of shops. And again it was raining so we could not go around much but all of us decided to have coffee in a coffee shop. Much needed after the long day and all that rain and wind chill.
At night we went to an Indian place called clay oven. And for the first time in the entire trip, that too on the New years eve, the food was really bad! At midnight, saw fireworks at the Fishermen's Wharf.
Beautiful fireworks.
Went home and watched the movie DON, while all the others slept.
******************************
Jan 1st, 2005, San Francisco, Mountain View
Asha, Mukund, Juggi, Micky....they all opened a bottle of Champagne in the morning to welcome the new year. I obviously did not drink. Watched Kill Bill part 2. Went for Italian Lunch at Stanford. Watched Sholay. Asha and Mukund left for New York. Ritu came to pick me up. Went to her place in Mountainview.
Chef Motilal was ready with special dinner for me. Italian again. But ghar ka khana is always special. And I must say that he did a very good job, while Ritu pretended to help him! Yapped yapped and yapped. Although Ritu enjoyed all that I was saying, but pretended to get bored....Ritu hope you are reading this! They have a nice house and Ritu has done a good job of decorating it.
Watched Swades at night. I am sick of watching downloaded movies on the laptop. When will I get to watch hindi movies in the theatre? Guess six more months....seems like ages away!
******************************
Jan 2nd, Mountainview, San Jose
Ritu took me to Shoreline lake and park in Mountainview. It was good but as has been the case throughout the trip, it was raining. So we did not get out of the car. The lake had a lot of ducks. Good view.
Saw the Google headoffice which is located in Mountainview too.
Ritu made superb uttapams. Haven't had such good uttapams earlier.
She dropped me back at Micky's friend's place at around two. We left for Irvine at around 3.30p.m. Long drive, seven hours!
******************************
Jan 3rd, 4th, 5th, Irvine
Rest days. Decided to do nothing. Just watch movies, eat, sleep and relax before beginning the next round of my tour. Watched Teen Deviyaan-Dev Anand, Simi Garewal, Kalpana and Nanda. Nice movie. Good songs. Watched Hulchul and Kaante. Both were just okay okay. Watched Jerry Macguire (Tom Cruise).
5th was a day for beaches, as the sun was bright after a long time. Laguna Beach, Dana Point Beach and Corona Del Mar beach. All beautiful, all clean. And then time for movies again. The End of the
Affair was the first one. Starring Ralph Fiennes. The next one in line was a Shelock Holmes thriller.
******************************
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