Many may not be aware, especially in our part of the world, that back in the year 1933, on April 5, US President Franklin D Roosevelt signed one of the most controversial orders in American economic history. The Executive Order No. 6102 criminalized the possession of gold by individuals and corporations and forbid “the hoarding of gold coins, gold bullion, and gold certificates within the continental United States.” This order was an extension of the Presidential Proclamation No. 2039 that criminalized the hoarding, possession and ownership of gold or bullion, and imposed a monetary penalty of $10,000 (equal to more $170,000 in today’s value) and imprisonment for as long as ten years on individuals falling foul of the law.

Obviously, such laws on hindsight look very undemocratic and politically suicidal; but then, if one were to explore it and go beneath the surface, the big picture may gradually get vivider. In tough economic times, gold and similar forms of monetary elements can become a key source of increasing money flow in the market. One should remember that most nations (including ours) have at one time or the other even printed money based on the amount of gold kept in the federal bank (Reserve Bank of India, in the case of India). In other words, hoarding of gold by communities, corporations and individuals not only decreases the flow of money (given the unproductive capital locked within such hoarded gold) but also to a large extent disturbs the supply-demand equilibrium of gold and bullion. Before I reach India, let me in brief discuss the way Uncle Sam tapped (or as many critics would say, exploited) the Executive Order No 6102. The order forced every American citizen to surrender all their gold, leave 160 gms, to the Federal Reserve in exchange of a fixed amount of money. After receiving most of the gold, the US government increased gold prices manifold, thus churning out a huge amount of profit, which was used for the Exchange Stabilization Fund (ESF), a fund that enables the American government to control currency exchange rates. In 1964, the previous laws were modified and the ownership of ‘gold certificates’ was legalized, followed by the legalising of gold trade in 1974 – after almost three and a half decades.

The importance of and aspiration for gold ownership in India requires no introduction. Despite economic turmoil, the consumer demand for gold is up by 51 per cent in Q2 2013 while the demand for gold bars and coins is up by 116 per cent. As per various unofficial estimates, more than 60,000 tonnes of gold are lying idle in the form of jewellery and ornaments all across the nation. Going by the current price of gold at the rate of Rs.35,000 for ten grams, this unaccounted reserves could create a possibility of reaping about Rs.2,10,00,000 crores in money supply! Going by World Gold Council figures, Indians hold 20,000 tonnes of gold (which is an absurdly less figure, as a single temple in South India holds more than 1000 tonnes of gold); even considering this reduced figure of 20,000 tonnes (which is 33% of the unofficial estimates), the amount we’re talking about would be nothing less than Rs.70,00,000 crores!
Against these jaw-dropping numbers, what looks hilariously minuscule is the state of RBI. Despite such huge national deposits of gold, RBI has an official reserve of a mere 550 tonnes of gold, compared to 1000 tonnes of China (which is again debatable) and 9000 tonnes of US.

The Government of India should immediately draft and announce a Central Gold Bond scheme, where it should ask people to deposit their gold with the government in lieu of Central Gold bonds at a fixed rate of interest of around 9%. One reason I mention this percentage is because in my calculations, I have realised that despite the huge surge in gold price, in the last 65 years the same has increased by only around 9% per annum compounded. With respect to the government’s gold bond scheme, people should of course be allowed to take back their gold after say a period of 15 years. The same will be applicable for temples, trusts and other similar institutions; for them, the government could even make it compulsory to deposit all gold and make hoarding beyond a limit illegal. These institutions should be thankful that the government is not nationalizing their gold hoardings, given the immense employment generation potential this money can have. Thus, a huge percentage of gold in physical form would be directed to the Reserve Bank, which, in turn, would utilise the same to increase the money flow and to adjust the exchange rates of our currency.  Similar schemes have been in the past practiced by many European and African nations, with the latest being Venezuela. Read More....

An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Natural resources have always been the moot point for many a conflict and have tempted Kings and kingdoms into conflicts and wars since ages. A quick journey across our history would be enough to realise that the mightiest regimes have made planned moves to conquer natural resources – be it precious minerals, radioactive elements, energy resources, drugs, water or even human power. Talking about modern history, countries like US, UK and other Western powers have invaded nations in search of human slaves to natural gas.

Amidst all this, the bad news is that the era of cheap natural resources is definitely far gone. Natural resources and illegal occupation are very closely linked together; yet the correlation is largely ignored. The one time champion and monopolist nation of natural resources today is finding it expensive to explore its own natural wealth and is rather depending on imports. As per the US Geological Survey, 2011, United States imports 93 per cent of its antimony and 100 per cent of its bauxite and indium, 50 per cent of its lithium, and astonishingly, 100 percent of its rare earth metals. In just two decades, the tables seem to have turned completely. Two decades ago, China was the largest oil exporter, and today it’s one of the largest importers. So much so that China’s consumption of essential metals has doubled in the last 10 years and is expected to double again in the next few years. Today, against all the odds, China has made its presence unshakeable in most of the Latin American and African nations. I have, in some of my previous editorials, written on how China is completely into Africa in all economic and non-economic sectors. And why not! Latin America and Africa are precisely the two continents, which still have enough natural resources to meet the global demands for years to come, and to make any country controlling these resources economically powerful for years to come. For instance, in 2007, China bought a 15,000 feet mountain in Peru for a whopping $3 billion. Mount Toromocho, which is spread across 138 km, has proved to be one of the most productive copper mines in the world and is reaping a profit that is almost 2000 per cent of the initial investment.

China is not leaving out promising opportunities even outside these two continents. China has recently signed a “laptops for pork” deal with Canada which will allow China to become a prominent player in the meat industry in no time. Simultaneously, China is exploring opportunities to make it big in the fertilizer industry. China, a few years ago, mobilised its state-owned enterprises to bid for PotashCorp (POT), the Canadian fertilizer giant which is the largest producer of potash and third largest producer of phosphate and nitrogen.

On a closer look, the entire resource-grab spree would reveal a couple of interesting and economically-intelligent strategies. China is tapping into the resources of those nations that are relatively weaker. In other words, they are entering nations that are politically weak and have poor governance (including India).

Moreover, these are precisely those nations where the West had never paid heed and had left them to their own fate. Various nations of Latin America, which were subjugated by the West through sanctions and regular invasions, and Africa where the West only went with an objective of plundering and looting, are the prime-interest areas of China. The dragon nation is offering countries in these geographies trade offers that are more than lucrative. Not only is China commercialising their dead industries but is also allowing them to develop support infrastructure. In any case, it’s a win-win situation for China from both the ends! Such deals give them free access to hinterlands and hidden resources and the support infrastructure removes the transportation bottlenecks too. Read More....

An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

SC slams AICTE's illicit control on MBA courses
MBA, MCA courses no longer under AICTE
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Ranked 6th Overall

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Prof. Arindam Chaudhuri’s Session at IMA Indore
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If in the world one needs to locate a string of pearls and a ring of fire at the same point, it has to be, without any doubt, India. For almost the last six decades or so, our neighbours have been attacking us on all fronts and as a nation we have been consistently acting as a sitting duck. It’s obviously a matter of immense pride that India, in its history of existence, has neither invaded any foreign land nor attacked any nation with an intention of occupying foreign territory. But then, against such a strong principle, a country also needs to develop similar strong counter-principles. It should have had a mandate that it should be treated the way it treats others. This is where we fell flat. On the one hand, we do everything possible to make sure we as a nation treat geographical borders with the utmost respect and righteousness; but then, on the other, we have failed to sprinkle the same feeling among others. Unfortunately, we largely failed to protect our borders and give it the same respect that we give to others... and this happened probably due to the lack of our own political will. This is where and when our neighbours, who are eyeing our sovereign land since decades, encroached upon our lands.

There is no point digging into the past and writing about the acts of atrocities by our neighbours since years and the number of jawans killed in the process and the number of civilians who die every year and the loss of property as an aftermath and the feeling of insecurity that gets installed in the society as a result. In the last couple of months, almost all possible fronts of defense were broken, or I should say, insulted. I have written repeatedly in my previous editorials how China habitually, strategically and illegally enters foreign lands and eventually adds those encroachments to their map. Reiterating the same modus operandi, China has already stepped inside our territory and has installed army camps and a military base too, which was realised and acknowledged by our ‘sleeper-cell’ ministry weeks after the event. But then, what comes as a shocker is the recent move by the Chinese army, a move which is beyond diplomacy and even beyond the definition of audacity.

A week and a half ago, the Chinese PLA (People’s Liberation Army) troops stopped the Indian army from patrolling in the Indian territory. After illegally occupying a large chunk of our land and illegally setting up a military camp, PLA troops have now gone to the extent of preventing the Indian Army from patrolling along the Indian border, a border which is within our territory. PLA troops came with heavily armed vehicles and displayed a banner stating that the land was theirs, and thus stopped the Indian army from patrolling (in the Ladakh region) in the area surrounding two posts. Unlike our system, which leads to such demeaning results, the PLA has also built an observation post to keep an eye on the movements of Indian army.  Read More....

An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

SC slams AICTE's illicit control on MBA courses
MBA, MCA courses no longer under AICTE
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
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In a recent comment, the Gujarat Chief Minister Narendra Modi expressed grave concerns on the outcome of a little known Free Trade Agreement (FTA) that the Indian government is hastily attempting to sign with the the European Union. His concern was that the impact of this proposed EU FTA on the domestic dairy and animal husbandry industry in India would be debilitating if cheap European dairy products supported heavily by EU subsidies get inroads to Indian consumers. His fears are not unfounded. Indeed, if top European multinational dairy brands like Lactalis, Friesland Campina or Arla Foods with turnovers of $12.7 billion, $11.2 billion and $8.7 billion respectively get access to the Indian market on the backs of zero or minimal import duties, India’s biggest dairy brand Amul (Gujarat Cooperative Milk Marketing Federation) providing livelihood to more than 1.5 crore dairy farmers in rural India might not survive for long. True, Nestle, one of the world’s biggest food products companies, has definitive footholds in India – but Nestle India has entered India through the FDI route than the FTA route, it purchases products significantly produced within India, provides massive employment in and around production plants built in India, even though its holding company is the Nestle S.A. Of course, Nestle too would be advantaged by the proposed EU-India FTA, but it’s a different ballgame when EU-government subsidised products are imported directly from Europe with little entry barriers. Digest this figure. In February this year, the EU 2014-20 budget was announced. Of the 960 billion euros budget, a mammoth 38%, or 363 billion euros, was allocated purely for farm subsidies, which will without doubt make EU farm and dairy products ridiculously cheap compared to Indian products which any way suffer from massive cost additions due to various infrastructure issues. If these are the things to come, then the so-called ‘Free’ Trade Agreement could well turn out to be our costliest trade agreement.

The EU-India FTA discussions caught steam back in 2008. However, because of the sensitivity of the issue, the progress had been shrouded in utmost secrecy with little or no data available. Of late, the discussions progressed more, so much so that the Prime Minister, Dr. Manmohan Singh, even came out with a surprisingly strong statement in July 2013, “We have entered into Comprehensive Economic Partnership Agreements with the ASEAN countries as well as the Republic of Korea. We are hoping to conclude a similar agreement with the European Union soon”. Most political parties are silent on the issue despite the fact that the implication of such an agreement is enormous. An FTA generally means the lifting of trade barriers and an unhindered flow of goods and services with minimum import duties, intellectual property rights, government procurement, and competition policies between the nations bound by the agreement. So, if the EU-India FTA gets signed, then one could well imagine world class corporations like IKEA and Carrefour competing with domestic brands at prices that are cheaper than those of domestic products! Can our indigenous brands compete with these behemoths? Since any FTA encourages direct imports, it is not a natural builder of employment, rather a reducer of the same, as over time, domestic industries shut down giving way to cheaper imports. Thus, it is ridiculous to tom tom the point that FTAs eliminate poverty and help the destitute with a better living; they clearly don’t do that.  Read More....

An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

SC slams AICTE's illicit control on MBA courses
MBA, MCA courses no longer under AICTE
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
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In April this year, I had written on how various points in a 2012 Supreme Court judgement against the Sahara Group on the basis of an earlier SEBI order were clearly erroneous and went against even Constitutional Acts. (Read the article here http://www.thesundayindian.com/en/story/the-unputdownable/25/47189/). I had titled the article ‘The Unputdownable!’ as an appreciative sobriquet for Subrata Roy Sahara, the Sahara Group Managing Worker, who, despite various attempts by external entities to pull him down – the English media in India included – has come back with exemplary credentials.

First the background to this case and on the face-off that Subrata Roy Sahara has had with SEBI, and in this I liberally refer to my previous article. The Sahara group, which has issued OFCDs (Optionally Fully Convertible Debentures) since the year 2001 with all relevant government permissions, and which has regularly submitted all details as required by the concerned government authorities, suddenly got a prohibitory order from SEBI in November 2010 against the OFCDs issued by two unlisted group companies (Sahara Housing Investment Corporation Ltd. and Sahara India Real Estate Corporation Ltd.) – and this despite the fact that just seven months before that, SEBI had, through its own communication to Ministry of Corporate Affairs, commented that as these were unlisted companies and had not filed a draft red herring prospectus with SEBI, any complaint with respect to these two companies should be handled by the Ministry of Corporate Affairs.

Of importance is the fact that the Ministry of Corporate Affairs, in its written submission to the Allahabad High Court in 2010, mentioned, “The issuance of OFCD [by] the petitioner company after the registration with the Registrar of Companies has been permissible under law. The Central Government remains the regulating authority for the company.” Similar were the notings of the Additional Solicitor General, Mohan Parasaran (who is now Solicitor General), and of the Minister of Corporate Affairs, Veerappa Moily.
Read More....


An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

SC slams AICTE's illicit control on MBA courses
MBA, MCA courses no longer under AICTE
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page

IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail

IIPM Links
IIPM : The B-School with a Human Face
------------------------------------------------------------------------