To rule India -- with her huge size and population -- the British hit upon a simple yet brilliant idea: divide and rule, with the State playing the crucial role of an arbitrator between various warring groups.
The government of Independent India is largely a remnant of the British Raj with one crucial addition: the ruling elite, comprising Marxists and pseudo-Marxists, largely understands the collective psyche of Indians far better than our colonial oppressors. After all, poverty of ideas invariably leads to politics of poverty.
Accordingly, subsequent governments in India have first ensured shortages, and then played Santa by rationing the insufficient. Quotas fall in this genre.
OBCs: No discussion, please
Having adopted this paradigm of governance, it was necessary for the Government of India to turn the majority against the minority, Muslims and Christians were to be pitched against Hindus, the 'higher' castes against 'lower' castes, the OBCs against the MBCs (Most Backward Classes), the BCs against the Dalits, the Hindi-speaking against the non-Hindi speaking and so on and so forth.
Else, a system that was predominantly modelled on the lines of the British style of governance -- highly centralised, with little accountability -- would be unworkable in India. And given this broad idea of dividing Indians, the caste system in India was an obvious candidate.
It may be noted that by the early twentieth century the British had already begun dividing the nation on these lines -- forwards and backwards. The governments in independent India merely carried the British agenda forward.
One of the popular assumptions built by the British and nurtured subsequently by Marxists about castes is that it is hierarchical and creates a rigid and vertical social structure. And that justified reservations, first for the Dalits (who are not the subject matter of this discussion) and subsequently extended to the backward castes -- OBCs.
The nature of competitive populism in contemporary politics makes it extremely difficult even for a cursory discussion on backward castes, their composition and genesis of their backwardness. On the contrary, every government aided and abetted by a pliable media, biased intellectuals and an indifferent public have repeatedly suppressed, distorted or de-legitimised scholarly studies about OBCs.
The truth needs to be told, facts debated and our assumptions re-calibrated.
Backward castes: What's that?
Whether caste is associated with vertical hierarchy or not has been the subject of great study by many historians, analysts and sociologists. 'Interrogating Castes,' a study of Dipankar Gupta, an eminent scholar and historian of great repute, shows that no caste considers itself to be lower in status, when compared with other castes.
In his essay, Gupta recalls an encounter with 'low caste' women who claimed that her caste was really Rajput -- a higher caste -- and was turned into a lower caste after a defeat in war.
Gupta further adds, "This encounter nearly twenty years ago led me to wonder how many low castes have elevated opinions about their caste origins. A new world was revealed to me as I read account after account of those who are customarily called low castes denying their lowly pedigree. Sometimes they said that were Brahmins of a certain kind, on many occasions they claimed Kshatriya status."
Stumped? Read on.
Arun Shourie, in his latest book -- Falling Over Backwards -- reveals something sensational. He quotes two Census Superintendents of the 1931 census who state, 'The feature of interest is that the claim is always for a more dignified title, for admission to a higher caste or exclusion from a caste which is considered low in the social scale.' Shourie further goes on enumerate repeatedly all through this book as to how Sainis and Malis wanted to be classified as Saini Rajputs, Gabits as Marathas, Bedas as Naiks, Blacksmiths as Panch Brahmans, Barias as Kshatriyas, Talpadas as Padhiar Rajputs, Devalis and Bhavins as Naik Marathas. . . the list seems endless, and Shourie's scholarly attempt is replete with such examples of the so-called lower castes seeking a higher caste appellation.
Surprised? Read on.
Lower castes or elite of the ruling class?
The late Gandhian, Dharampalji through a painstaking study spread over several decades in India, England and Germany established that before the British rule in India, over two-thirds -- yes, two-thirds! -- of the Indian rulers belonged to what is today known as the OBCs and conclusively proved that it was the British and not the upper castes who robbed the OBCs of their power, wealth and status.
Dharampalji also exploded the popularly held belief that most of those attending schools must have belonged to the upper castes and again with reference to the British records, proved that the truth was other way round. For instance, during 1822-25 the share of the Brahmin students in indigenous schools in Tamil-speaking areas accounted for 13 per cent in South Arcot to some 23 per cent in Madras, while the OBCs accounted for 70 per cent in Salem and Tirunelveli and 84 per cent in South Arcot.
Shocked? Another study by Christophe Jaffrelot, a French scholar -- India's silent revolution: the Rise of the Low Castes in North Indian Politics -- corroborates the findings of late Dharampalji.
While the subject of the book may be out of context to the discussion on hand, the matter of interest to the extant debate is the historical perspective provided on the status of OBCs in nineteenth and early twentieth century. Some of the important factors highlighted in the book with respect to OBCs are:
All available historical evidence shows that almost none of the OBCs considered themselves to be backward, in any sense of the term, at least till the beginning of the 20th century.
Most of the rulers, both at the local as well as larger regional levels in different regions of India during 16-18th centuries, seem to have come from these OBCs.
Further, most of the professions that sustained the vibrant economy of India, which was considered a great agricultural and industrial nation till early 19th century, were peopled and managed mostly by these communities.
The de-industrialisation of India by the British and the subsequent suspension of all local support systems led to widespread deprivation among all sections of Indian society, notably the OBCs.
Four scholars, perhaps with differing ideologies have arrived at similar conclusions. Yet, look at the specious arguments that have fashioned our debate on this issue.
Look what have we done to ourselves.
The net impact of the above is that we have turned OBCs -- the supplicants in the eighteenth and nineteenth centuries -- into applicants for posts of clerks in government offices, thanks to the reservation policy.
This would be perhaps true of earlier historical periods also. And most of them -- from Lord Rama to Krishna, from Maharana Ranjit Singh to Chhatrapati Shivaji to Veerapandia Kattabomman -- would in the scheme of our government invariably fall in one of the two categories: OBCs or MBCs!
Due to a conspiracy of coincidences, OBCs seem to have forgotten their glorious past. What else would explain their behaviour of being on all fours before successive governments -- and to curry favours? Today they are so used to the standard arguments of being exploited by forward castes (FCs), leave alone OBCs, even the FCs are loathe to buy contrary arguments.
The net result is that OBCs on the one hand are overwhelmed with an inferiority complex and thus find psychological comfort only in reservations. On the other hand, the upper castes, tutored through tortured history, live constantly in a guilt complex of having wronged their OBC brethren.
In short, our population comprises people who live either on guilt or on an inferiority complex -- what a wonderful combination to challenge the world!
Significantly, this is a perfect setting for our politicians, especially the Marxists, to exploit.
If there were 1,000 IIMs, IITs and AIIMS. . .
All these are pointers to a crucial issue -- the manner in which we are governed and the sinister idea of dividing Indians to rule Indians continue in the same manner as the British did to us till Independence.
The Indian politician perfectly understands the system and the Indian psyche. Leveraging the power of the government, our politicians prefer rationing a few thousand seats by constricting demand rather than considering the grand idea of increasing its supply.
For sixty years since Independence, we have one AIIMS, seven IITs and six IIMs for a billion-plus population. Even that tiny speck in the Indian Ocean called Singapore would have more educational institutions for its 4 million population.
Obviously, the idea is to constrict supply and play on the pent up demand. And in the process if history has to be distorted, so be it.
It may be noted that the Marxists would be at hand to lend credibility to any such distortions of history -- our silence would be their next ally. Needless to emphasise, it is these distortions of history that rationalise reservations, not the 'historical backwardness' of any castes. But if supply were increased as suggested here, what would our politicians -- Marxists and pseudo Marxists -- do? They would simply be jobless, as it would mean end of their brand of politics!
And precisely for these reasons, the current policy of reservations and with it dividing people through castes would continue.
Moral of the story: Without the powerful incentive of reservation every caste in India would be a forward caste.
Mkt Cap: Rs15bn; US$361mSasken's Q4FY07 results were disappointing. Revenues grew 3.3% qoq (+5.7% in $ terms) to Rs1.35bn lower than our expectation of Rs1.43bn. Services revenues (93.6% of total) remained broadly flat at Rs1.27bn (+2.1% qoq in $ terms) – we expected 6.1% qoq growth – while recently acquired Botnia (~25% of services revenues) witnessed 18% qoq growth in $ terms, revenues ex Botnia declined sequentially. The margins in services business declined sharply by 220bp to 20.7% due to rupee appreciation, lower utilization and higher proportion of revenues from Botnia, having lower margins. The company expects slower growth in network infrastructure business (40-50% of services revenues), while Botnia and terminal devices business are witnessing good growth. During FY07 services business reported a strong organic growth of 33.5%yoy in $ terms. Products revenues at Rs87m were in line with our expectations, but the royalty component was below street expectations. Developments on product side during the quarter include two new Design Ins (Lenovo being one of them) and launch of new handsets by NTT DoCoMo carrying Sasken's Multimedia Solution. We have downgraded both revenue and earning estimates for FY08 and FY09 by ~10% to account for rupee appreciation and slower growth in services business. The stock price has gone up by ~10% in April 07 till date. We expect stock to Outperform over 12-18 month horizon as the outlook on growth potential in product business remain intact - Outperformer.
NIFTY (4085) SUP 4061 RES 4101
BUY BHARATFORG (327)
SL 322 T 336, 339
BUY VSNL (448.95)
SL 442 T 458, 461
SELL TVTODAY (139.7)
@ 141 SL 145 T 130, 128
SELL ORCHIDCHEM (261.85)
@ 264 SL 268 T 252, 250
SELL ERACONS (352)
@ 256 SL 260 T 244, 241
Blame it on Reddy
Things that are done, it is needless to speak about...things that are past, it is needless to blame.
The bulls and bears will have one man to 'blame.' As we mentioned yesterday RBI Governor Dr. Y.V. Reddy will hold sway over the markets this week, particularly today . That may have sounded alarm bells ringing for some on the street. But, the good news is that Dr. Reddy is most likely to hold key short-term rates steady having already unleashed a slew of tightening steps in the past few months. The central bank is expected to examine its latest set of measures - the hike in repo rate as well as the CRR in March - to take full effect before deciding on its next move. In any case, Dr. Reddy has announced rate hikes and CRR increases in between the scheduled meetings. So, the RBI is likely to treat the scheduled policy meetings more for its communication to the markets and the banks rather than unveiling any revision in rates.
Though the RBI may decided to take a breather for a while, there is one certainty that the tone of its remarks will remain hawkish. There will be no let up in the efforts by the Government and the central bank in curbing prices even if it comes about at the cost of lower GDP growth. One of the offshoots of this strategy has been the recent spike in the rupee, which touched a nine-year peak against the dollar on Monday. There is a growing view that the Government and the RBI are working in tandem to let the currency appreciate to take some of the pressure off in containing inflation and the high credit growth. Exporters like the IT and Textile firms may not be happy, but that won't deter the 'powers that be' from adopting a pro-rupee stance.
In news just coming in Vedanta is to buy Mitsui's 51% stake in Sesa Goa at a 17% premium to the current market price.
Coming to today's session, things are looking a bit weak, with markets in the US and Asia in the red and crude oil crossing the $65 per barrel mark. But, the bulls need not despair as the quarterly results have been pretty strong, barring an odd surprise like Siemens yesterday. FII inflows have been strong as well. FIIs poured in Rs7.49bn on Friday, taking their net investment this month close to the billion dollar mark. Overall fund flows into the emerging markets too have been good over the past four weeks. In the third week of April, emerging markets equity funds saw net inflows to the tune of $1.1bn, according to the Emerging Portfolio Funds Research (EPFR). The F&O expiry on Thursday is also likely to pass off smoothly.
On Wall Street overnight, the Dow Jones Industrial Average slipped on Monday after closing at record highs the last three sessions, as remained cautious amid higher oil prices, weakness in GM and anxiety over this week's economic and earnings news. Stocks also declined after Moody's increased its loss estimates on sub-prime mortgages.
The Dow posted its first drop in eight days, slipping 42.58 points, or 0.3%, to 12,919.40. The blue chip benchmark had earlier risen within 17 points of reaching 13,000 for the first time. The S&P 500 fell by 3.42 points, or 0.2%, to 1480.93. The Nasdaq Composite Index dropped 2.72 points, or 0.1%, to 2523.67.
Barclays said it will buy ABN Amro for $91bn. As part of the deal, ABN would sell its US unit LaSalle Bank to Bank of America for $21bn in cash. However, ABN said it will hear a counter bid from a group led by Royal Bank of Scotland.
Separately, AstraZeneca said it will buy US biotech firm MedImmune for $15.6bn all-cash deal.
US light crude oil for June delivery rose $1.78 to settle at $65.89 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 15 cents lower at $65.74 a barrel.
COMEX gold for June delivery fell $1.60 to $694.20 an ounce on reports of violence in oil-exporting Nigeria. Treasury prices rose, lowering the yield on the 10-year note to 4.65% from 4.67% late on Friday. In currency trading, the dollar rose versus the euro and inched lower versus the yen.
European shares hovered near six-and-a-half-year highs. The pan-European Dow Jones Stoxx 600 index fell 0.1% to 389.00, after hitting a high not seen since November 2000 of 390.18 early in the session. The German DAX Xetra 30 shed 0.1% to 7,335.62, while the UK's FTSE 100 dipped 0.1% to 6,479.70.
Asian stocks fell for the first time in three days on Tuesday. The Nikkei in Tokyo was down 140 points at 17,315 while the Hang Seng in Hong Kong was down 69 points at 20,486. The Kospi in Seoul was flat at 1544 and the Straits Times in Singapore declined 18 points to 3369.
RBI holds the key
Markets witnessed a flattish end as announcement of the Credit Policy tomorrow kept the bulls on guard. BSE Benchmark Sensex after breaching the 14kmark and NSE Nifty crossing the 4100 mark the key indices pared its early gains as profit booking emerged on the bourses in the later half of the trading session dragging the key indices from its days high. The mid-Cap and the small cap stocks also ended on the receiving end on back of selling pressure. Finally, the 30-share benchmark Sensex gained 31 points to close at 13928. NSE Nifty was flat at 4085.
Era Construction dropped by over 3% to Rs352. The Company secured orders worth Rs1.89bn from NTPC. The scrip touched an intra-day high of Rs375 and a low of Rs349 and recorded volumes of over 4,00,000 shares on NSE.
Bharati Shipyard slipped 1% to Rs403. The Company announced that they have has signed a contract with UP OFFSHORE (BAHAMAS) LTD, for construction and supply of two Platform Supply Vessels. The Contract is value approximately at Rs.1.8bn. The scrip touched an intra-day high of Rs425 and a low of Rs396 and recorded volumes of over 24,000 shares on NSE.
Wockhardt Pharma edged lower by 0.4% to Rs419. The company announced that they have signed its first in-licensing agreement in the anti-wrinkle arena with Milan-based Syrio Pharma S.P.A. to market their B-Lift range of dermatology products. The scrip touched an intra-day high of Rs422 and a low of Rs399 and recorded volumes of over 54,000 shares on NSE.
Sun Pharmaceutical declined by over 11% to Rs1047. The company announced that it has separated its research division. The scrip touched an intra-day high of Rs1111 and a low of Rs985 and recorded volumes of over 9,00,000 shares on NSE.
Bank of India fell 2.3% to Rs183. The company announced its Q4 result with net profit at Rs4.47bn (up 75.9%) and declared to pay Rs1.5 per share as Final Dividend. The scrip touched an intra-day high of Rs191 and a low of Rs182 and recorded volumes of over 33,00,000 shares on NSE.
Auto stocks were on the receiving end. Bajaj Auto fell 1.5% to Rs2402, Maruti was down 1.6% to Rs766, M&M dropped 1.7% to Rs731 and Tata Motors edged lower 0.7% to Rs718. However, Hero Honda gained by 1% to Rs655.
FMCG stocks slipped the most as the stocks witnessed profit booking. Index heavy weight ITC dropped by 3% to Rs156, HLL was down by 1.7% to Rs202 and Colgate slipped 0.9% to Rs342 and Dabur edged lower 0.6% to Rs96.
Pharma stocks were in bad health. Cipla edged lower by 0.5% to Rs234, Ranbaxy was down by 0.2% to Rs343 and Cadila dropped 1% to Rs327.
Technology stocks were a mixed bag. Mid-Cap stocks were the major losers, Mphasis BFL fell over 4% to Rs306, i-Flex was down by 2.1% to Rs2362 and Polaris dropped 2.2% to Rs198. However, heavy weight Infosys and Satyam Computer gained over 0.5% each
The turnover on NSE was down by 13% to Rs76.95bn. BSE Capital Good index was the major loser and lost 2.36%. BSE FMCG index (down 1.62%), BSE Pharma index (down 1.40%) and BSE auto index (down 0.59%) were among the other major losers. However, BSE Metal index gained 2.01%.
RNRL, TTML, SAIL, FSL, Tata Steel, PFC, R Com, Ashok Leyland, Unitech, Satyam Computer, IDFC, GTL, Bank of India, Hanung Toys, Dish TV and Voltas.
Sujana Metal, Shree Precoated, Ansal Infrastructure, Tele data Informatics, Atlanta, Tanla, Nirlon and BF Utilities.
All Cargo, Bajaj Hindusthan, Essar Oil, HDFC Bank, Hexaware, MTNL, Maruti and Sun TV.
Century Textiles, CESC, EXIDE Industries, Hero Honda Motors, HCC, Nagarjuna Construction, Reliance Industries, Tata Power, TVS Motor and VSNL.
Balrampur Chini Mills Ltd, India Cements, Gujarat Ambuja Cements, Raymond, Corporation Bank, Tata Chemicals, Bharat Forge and Ranbaxy Laboratories.
Stock Futures with Largest Increases in OI:
M&M, Crompton Greaves, IDFC, Jindal Stainless, J&K Bank, Indian Bank, Tata Chem, Hero Honda and Patni.
Stock Futures with Largest Decreases in OI:
Sun Pharma, Aban Offshore, Alok Industries, Indian Hotels, IFCI, Amtek Auto, ACC, Nagarjuna Const and Triveni Eng & Ind.
Rolta Q3 profit at Rs469.4mn (up 42%), total income at Rs1.53bn (up 29%)
PFC Q4 profit at Rs3.68bn (up 71%), revenue at Rs11.32bn (up 44.9%)
Indian Bank Q4 profit at Rs2.35bn (up 69%) and total income at Rs15.64bn (up 43%)
Bank of India Q4 profit at Rs4.47bn (up 75.9%) and to pay Rs1.5 per share as Final Dividend
REL – Overweight from Morgan Stanley with target 609
Zee Telefilms – Buy from CLSA with target of Rs309.
Long Term investment:
FIPB refuses to take call on Vodafone-Hutch deal
Siemens to acquire 77% stake in iMetrex Technologies
CEAT board approves plan to separate Finance Business and to pay Rs1.8 per share as dividend
Punj Lloyd gets Contract by Reliance Gas Transportation Infra Ltd
Era Const gets Rs1.89bn from NTPC
JSW Steel to consider expansion, Fund raising plan on 30th April
OrbitCorp buys land from Ambuja Cements for Rs3.33bn
Tata Power buys Coastal Gujarat Power Ltd
Kale Consultants gets contract from SAS Group
ACC to buy 14.5mn shares of Shiva Cement at Rs11 apiece
IB Real Estate board to consider dividend on 30th April.
The other day I met someone who claimed to have doubled his investments every month for more than a year now. If I do the maths it turns out that this man must have multiplied his money to more than 4,000 times what it was. That's 4,000 times, not 4,000 per cent. The interesting part is that not only do such people expect to be believed, there are those who believe them. If you ask a random collection of people whether they think it possible that somewhere in the world there exist investors who can go on doubling money every month, then you'll get a surprising number of yeses. It's like believing in Harry Potter.
No one who invests in the stock markets ever loses any money. Or at least, that's what I will have to believe if I take at face value whatever someone says about their personal performance in managing their investments. I'm serious. Because of my profession, a lot of people talk to me about their investments and I can hardly remember anyone saying for months now that they lost money. It's amazing, actually. The markets fall. Dubious stocks shoot up and people keep buying them and then when the markets fall and stagnate no one admits to having lost any actual money.
To be fair, there are some who admit to holding investments that are way under water from their purchase price, but claim that this is not a loss but a temporary dip.
That's a point of view, I suppose. Not only does this undying faith in the existence of supernatural rates of return persists, it does a lot of real harm.
The refusal to admit to wrong investing decisions means that we miss the opportunity to learn from them. I know this sounds like a slogan from one of those motivational posters that are sold on footpaths, but failure really is a very good teacher. Provided one makes the effort to learn from it.
And at least in the case of investments, it isn't all that difficult to learn from bad investments.
What one has to do is to honestly think of the reasons why one bought that investment and then resolve not to repeat that reason without any further refinements.
Let me illustrate with a couple of examples.
Let's say you put a chunk of money into a new mutual fund because the fund salesman said other funds of that fund company had a great track record. Now that this new fund has done worse than the older ones, you only need to think back carefully at your reasons for the investment and the cure is self-evident.