Shrikant’s Blog

Of a total 178 countries surveyed, for ease of payment of taxes, India ranks an abysmal 165th in ease of paying taxes, while the island nation of Maldives has topped the list. Ease and efficiency is measured by 3 indicators, the number of tax payments, time taken to comply with tax obligations and the actual burden of tax.

An average Indian company, makes a total of 60 payments, and spends roughly 271 hours to comply with tax obligations. In India tax payment is very complex, where there are innumerable forms, that need to be first demystified and then submitted.

In Hong Kong, I used to spend a total of 10 minutes to fille my income tax form. In Sweden taxes are paid online and all taxes that include corporate income tax, value added tax, labour contributions and property tax are filled on a single form.

If laws are simple, compliance would go up drastically and enforcement becomes easier.

(via Prayag Joshi) The article below was printed in the Hindu. Prayag is brother of my close childhood friend, Samya. A brilliant student, chartered accountant, worked for various CA firms that included an international auditing firm. He went to work for an international NGO, then at a school near Pune and now works with tribals in Madhya Pradesh. He argues, that we should apply the red face test to our work and do it before than we make a lot of money.

The article …. I started questioning the morality of many of my actions only in my mid-thirties, which I think was quite late in life. I found myself confronting among others the question of whether what I did to earn a living was morally right. I knew that it was not right to rob people to eke a living, but I had never thought beyond.

I soon gave up my consulting career because I was disillusioned with its ethics. I was lobbying for changes in Indian regulations to enable foeign businesses to get a foothold in India. Thus I was facilitating the closure of several Indian businesses like my friendly next-door provision store. In exchange for fee hikes or lucrative consulting work, our firm gave companies a clean chit in their audit reports knowing that all was not well with their financials. We referred our clients routinely to other consultants for doing dirty work but were not counselling them to follow straighter (painful) paths.

Naiive Thinking

I then worked for a big International NGO that lobbied for the cause of the environment, thinking rather naiively that I was firmly on the ethical path. But I soon found myself jetting around, sipping coke and wiping greasy hands on paper napkins at off site meetings, putting the lid on past legal violations by the organisation and drawing a fat salary financed by donations from the common man who felt he was contributing his hard earned money for the environment! I did not last there for more than a few months.

Recently, I attended a session for parents organised as a part of the career-conselling programme at my daughter’s school. The consellor waxed eloquent, among other matters, about the great salaries that NGOs paid nowadays (for implementing poverty alleviation and other social programmes). I found that morally questionable advice.

I am currently debating with my brother-in-law whether it is right to work for a company that undertakes research projects for the military establishment if one believes in ahimsa . He is finding it difficult to appreciate that there could be moral issues there.

I decided to write this piece because I am pained to see within and around me unwillingness to consider the morality of our actions beyond a comfortable superficial level, especially when it involves sources of our livelihood.

I believe it is especially important to examine our work related decisions with a fine ethical toothcomb because we spend more than half our waking lives in such activity. Such work becomes a way of life for many of us. It is therefore important that we are convinced about its morality.

Many of us advise our children nowadays to follow their heart while making career choices. We tell them there is opportunity in every field. But do we teach them to merge their passions with work that is socially beneficial, relevant, and important?

Stretching it a bit too far ?

How deep should we delve, if we must, while confronting our vocations with the tests of morality? Should one apply the test to the work done by the individual, or broaden its scope to the work of his or her organisation, or further stretch it to the areas of application of the work by the customers of the organisation or even beyond?

For example should a kitchen knife maker stop making knives because he knows that a few of them would be used in domestic violence? Would it be morally right to buy the shares of automobile companies if one supports the cause of the environment or to argue that my brother-in-law should resign his job at the firm that undertakes research projects on materials to be used in military applications if he truly believes in ahimsa ? Or is that stretching the moral argument a bit too far?

How early in life should one think about the morality of one’s career choice — while embarking on one’s career, or mid career, or after one has made enough money? Is it right to give up a cushy job or close down a running business on moral grounds when family or employees depend on them? What should get precedence — morality of the work that one is doing or one’s responsibilities towards one’s dependents?

I am inclined to put the morality of my work over my passions and responsibilities in the decision matrix. I think it is important to look beyond one’s desk as further as possible to ensure that one’s work does not have an undesirable social or environmental impact, even if that means sacrificing one’s passion or financial stability. It is also necessary to continuously apply ethical tests to one’s practices, however noble the cause. As Gandhiji said, the means to the end are as important as the end itself. I am guilty of having applied moral tests to my work when I had made my money. But I do not believe that is the way to go.

As the Rupee has started hovering below the Rs 40 mark, lot of export based industries, IT, garments are coming under a lot of stress. The government is trying to give some sops to boost the morale of these exporters. It is time the government and people should start asking some real tough questions and sincere introspection to explore the truth.

This was a recent Diwali greeting sent by sms by the CEO of a company, that had severe labour problems last year. His factory was under lockout for many months and when production resumed, his principle had created alternate sources for their own security. The Diwali SMS greeting goes as, ” Daily Prayer :- O GOD, Give us Strength and Capacity to pay, Income Tax, VAT, Service Tax, Excise Duty, Octroi, TDS, ESI, FBT, Property Tax, Stamp Duty, Water Tax, Professional Tax, Road Tax, Educational Cess, Congestion Levy and many more. Besides don’t forget, Gunda Hafta, Bribes, Donations, Chanda, Beggars etc. We have some time and money left after that we will do some business… Cheers to the booming Indian Economy.”

The above is the absolute truth about doing any business in India. What is not captured above, is that each department mentioned above will come for random audits and a certain amount has to be paid irrespective of whether the books are in order or not. So when the management of a company is busy fighting these issues, a lot of time is lost in governance rather than focusing of the product, customer, new markets etc. Our economy is not as sophisticated as it is perceived.

So why is Industry doing so well in India or is it ? In the export markets the arbitrage of US$1 to 45 Indian rupees helped most companies across vertical conceal their inefficiencies. In India lower interest rates and lenient consumer lending has created a flood of cheap money in the market. But these good times are coming to an end with the dollar becoming weaker and banks raising their CRR ratio.

Q. Does our Infrastructure support the cost structure and lifestyle of the economy ? Our co-passenger, while returning from our Diwali vacations in Hyderabad, dreaded her daily commute of 16 kms in the city of Pune, which can vary from 45 minutes to 1 and half hour. It is the most agonizing part of her job and life, she remarked. At the same time the government talks about introducing the 1 lakh car. I would be surprised if she made the commute in 2 hours in a couple of years. The price of oil has gone up 4X in the last 5 years, but the revenue per employee has pretty much remained the same.

Q. Do Indians aspire to be productive. ? “Prolixity is not alien to us” admit Amrtya Sen. We do like to speak. The average owner of a mobile handset spends 471 minutes and sends 39 sms messages. India adds more mobile phone users (8.3m) in a month than it adds PCs (6m) in a year. Indians do not buy much software only US$1.6 billion last year. But we are very proud that the market cap of the stock market is reaching US$ 1 trillion. It is scary that we are in the midst of such dichotomies. A CEO of an Indian manufacturing company told me that critical skills in the production line have to be backed up twice, because of bad work ethics and commitment. Indian garment manufactures have discovered an average Indian worker churns out 40% less garments than his or her counterparts in Sri Lanka, China or Vietnam.

Q. Is the Indian education System delivering trained manpower for this booming Indian economy or even better the Global super power ? The skills demanded by its Indian industries which are of the much richer countries since they are export based. So what do companies that are focussed on the Indian market do ? Most HR managers in private admit that only 10% of the available manpower is suitable for employment. It is a know fact, that most employees who struggled to perform in smaller lean and mean companies, found jobs with glorious titles and 3X salaries in the larger software companies like Infosys, Wipro etc. It is for you to decide, the amount of muck that is residing there and the amount of cleaning required in case of a down turn. An expat manager, finds hiring the biggest challenge in India because 40% of the candidates don’t even turn up for an interview. You can imagine that job sites sites like naukri.com encourage employees to find out more how much they are worth than finding a new job. This kind of spam makes finding experienced candidates very difficult.

The curses are converging. I think we have a serious issue if it is not tackled immediately. The high cost of real estate, driven high by corruption and artificial shortages of land, will ultimately make many business models irrelevant. The quality of roads, public transport, power and water shortages, will make prices of products and services uncompetitive in the global market. These were concealed because of the dollar arbitrage and now exporters are not able to cope at the rupee breaking the 40 mark.

Everybody has a vision in India, including our last President Mr Kalam with his 2020 vision. But every Vision needs an equally committed mission and missionaries who execute the mission to make the vision a reality. Does India have the systems, processes, governance and people with the required skills and character to build a nation that is great and fair place to stay and globally competitive. Not sure if I will see it in my lifetime.

If you agree or disagree would appreciate your views, please send email at shrikant.patil@gmail.com

I have been using the Treo smartphone from Palm for the last 6 years. The last model, I used, the Treo 650, has been a great disappointment. I have a group of about 6 friends, that bought one around 2 years ago, plus minus, couple of months. Mine started packing up a couple of months ago, constant automatic reboots, cracking voice qaulity, the data sync interface for computer backup, packed up after a year itself, I felt lonely and just unlucky. Gradually I was in company, one by one, all the 6, started giving up, with some kink or the other setting in. Having 6 Treos, all bought at the same time, break down around the same time, seems to be a plan by design and manufacturing, so that users will upgrade themselves to the next model. Now, none of us are Treo fans anymore, and await for the iPhone to arrive in India. Citibank has just sent an offer to all their credit card customers, for an open, unlocked iPhone, for Rs 24,599/- For those considering a Treo please avoid it and consider other options.

Was told this small gem by Atul Alurkar, CEO of Eilysys software. A successful businessman was being interviewed. He was asked what is the secret of your success ?, “good decisions”, he replied. The next question, what was the basis for these good decisions?, “experience”, was the answers. How did you manage to get all this experience ?, was the next obvious question, “bad decisions” was the answer.

We all try to find the recipe of many success stories, they all got started, made mistakes, which was ultimately the foundation of their success.