If you want to kill an industry or market, flood it with fakes and make it impossible for the customers to differentiate. The fakes will drive down the price that the customers are willing to pay forcing the quality producers to quit. This is the essence of 1970 paper by George Akerlof. Currently the exotic local produce is facing the same state of neglect and dying out.
Although almost all the saffron grown in the region is from Pampore, the GI labeling is not being used. So there is no way for the consumers to gauge the authenticity for this spice. Silver sells for 35-40/- per gram but saffron sells for 250-350/-. Yet something that sells for almost 8-10 times more is not packaged, branded, tested or certified? There is an ISO 3632 mark that is widely used in Iran & other middle east, but rarely for any Indian saffron. Government has also not been able to come up a viable alternative. So there is no way to gauge if I am buying a worthless twig that is dyed with harmful chemicals or the genuine product. Even if it is genuine, the loose nature of packing makes quality & moisture control difficult. High moisture content punishes the buyers twice. Firstly, it adds up to the weight of the product making the deal expensive for you. Secondly it drastically reduces the shelf life from 2-5 years to less than a season. As a simple test: dry filament should be brittle and snaps when folded, but a moist one that is typically sold in Srinagar markets is pliable, indicating high moisture content. Then amount of foreign materials/debris is a matter of concern when one does the trade. Lastly, one should not forget that buying products that has a history of employing underage/child laborers and is expensive enough to fund militants/extremist movement needs to have a certified, verifiable declaration stating that this is an ethical produce and not blood saffron.
Earlier the weight and size of the fiber were indicators used to test the authenticity of Pashmina. Today, man made fibers esp. micro-fibers can easily be processed to give the same look & feel. Some of them are peptide based which will give the same hair-burning smell if you do a quick flame test. Hence the need of GI marks & lab tested marks are needed to demonstrate the authenticity of these products. Woolmark, for Merino wool & silkmark-India solved these problems for these natural fibers. Egyptian cotton also suffers a similar fate, which was highlighted in the recent controversy where the total volume of fabrics marked as “Giza 45” Egyptian cotton in USA alone exceeded the total annual production in Egypt. Then comes a second problem, a genuine pashmina has to be grown in Kashmir valley and sheared from only the underbelly of the Cashmere goat. However natural fibers from rabbit also look similar. Unable to differentiate, consumers are willing to pay only for the utility and workmanship rather than for the pride & luxury of owning a genuine product.
There are some ethical ways of farming Shahtoosh (made from the hair of Tibetan antelope) which allows shearing live animals that are tranquilized (as opposed to traditional mode of hunting) but nobody can ever tell the difference between the two modes. Hence the whole industry that could easily be regulated is banned all together.
When the China glass imports threatened the Murano hand-blown glass industry they took corrective steps to brand, differentiate & market their produce appropriately and won the battle. Can we indians not follow them? The tourism, handicrafts or the trade council could easily establish some low cost testing facility to assure the customers of the authenticity of their purchase, but lack of it we see the industry slowly dying out. The Nepalese & Chinese have taken over the fine wool trade, the Iran has taken the leadership in the Saffron and the people in the valley are left high & dry. I could have discounted it as a transient problem that could be solved once the peace is restored in the valley and social media ban is removed. However after 70 years of occupation, its high time that the locals organize themselves.
Month: May 2017
I am not able to understand is India is more unhappy about 29+ countries collaborating n this OBOR network or creation of CPEC (China-Pakistan economic corridor)? The way I see it, there are three kinds of actors in the art of international diplomacy: the heavyweights, that can lean and change the world balance; the opportunist, who are able to make the most of the situation and the whiners, who can make the worst of any situation. The Indo-Pak-China diplomacy is able to capture the best of these three worlds. Indian myopic minds do not have ability to comprehend beyond cows & Pakistan. This is probably the reason why our international clout is small compared to the country’s size & might. India has more than a dozen neighbors but unfortunately, we do not have warm relationships with any.
Indians have already been mute bystanders when America & China made it realize that “Indian Ocean is not India’s Ocean.” China & America have larger navy stationed there and control more ports than we do. While Indian coast guard is busy imprisoning a few fishermen gone astray, the bulk of the piracy & drug trade is tackled by these foreign countries who are thousands of miles away. India is closer geographically, culturally & linguistically to Central Asia than any other super-power. It has been repeatedly offered to play an active role in the Central Asia but except for exporting a few able bodies citizens we have not been able to scale up. Silk Road or OBOR project is already taken off and the trillion-dollar question is how we can benefit from this opportunity?
OBOR is an economic corridor that links Beijing with London costing China 150 billion dollars a year. Critics claiming that this is an economic folly because of the fact that the freight through this train is going to be more expensive than sea and 18 days is too long for a passenger train ride. However, the bulk of the trillion dollars is through loans & direct investment is in the Central Asia and connecting it with the rest of the world. This project is like an adrenaline shot for the China economy fearing slowdown in construction & export led boom. It hopes to repeat the success of the Hoover and other engineering marvels undertaken by governments to change the fate of the world.
Hoover Dam construction helped America greatly during depression. It directly absorbed thousands of unemployed workforce during the period 1931 to 1936 and created even greater indirect unemployment in steel mills, concrete factories, capital goods & machinery industry that were hit hard due to the economic slowdown. The $49 million that US government spent in 1931, helped create billions of dollars for the US economy. Today, 80 years after its commissioning, it still generates about 4.3 billion (KVH) annually in clean & cheap electricity, irrigates 400,000 hectares of land and serves 18 million people. All this wealth created in a region that was hot (120 degree Fahrenheit in summer) with less than 5 inches of rainfall and riddled with rattlesnakes & scorpions. The conditions were so harsh that the original surveyor, J. G. Tierney drowned and died during the scouting of ideal spot and today millions are able to live there because of the water & electricity it created.
Today China is facing a similar crisis. In 2016, it produced 2.35 billion metric tons of cement and 808million tons of steel which is more than half of the world’s productions. This is 5X more steel than whole of EU and 10X more cement that India (the world’s second largest producer). Hence there is no cheap exports that can help China absorb the excess due to slowdown of the China construction boom. Its 3.5 trillion of foreign currency is primarily in USA where it is barely yielding any returns. In addition, the growth in the traditional markets has slowed down with 2016 showing the most sluggish growth (8%) in this decade. The strong yuan, rising standard of living and demand for luxury & imported items is putting pressure on balance of trade (exports less imports).
Central Asia is an untapped territory ripe for investments & exploitation through linkages. Russia which traditionally dominated the region does not have the resources or the focus to develop the region. Its history of imperialist domination and occupation has not left it with much goodwill. China can easily export materials for the infrastructure, machinery & equipment for the various factories, refineries & processing plant to widen its resources supply base. Tap the local population (which has been witnessing declining wages & standard of living) to combat its own ageing population & decline in workforce participation (a problem witnessed by all countries when they transition to the develop nations league). Essentially with most of Africa & Asia politically & economically aligned to it, it will be able to create barriers for anybody trying to displace its position as the world’s second largest super-power.
EU whose key nations are still debating the issue of stay-vs-exit, controlling the flux of refugees & bailing out its own members are unlikely to invest heavily beyond the member states. Post the cold war, Europe invested heavily in Eastern Europe, but Turkey seems to be the border of its economic influence. America has huge influence in the Middle East & North Africa because of its thirst of oil. It did develop strong ties in the region esp. Pakistan & Afghanistan to combat cold war but not able to exploit the region fully. The new western political leadership are inward looking and are unlikely to invest in anything other than walls higher than skyscrapers.
Being land-locked & difficult terrain further adds to the cost of the economic corridor being opened between Central Asia and the west. After decades of neglect in infrastructure and exploitation from the communist the local governments are welcoming China with open arms. So many local jobs are being created by soft loans, infrastructure projects which is linking them to the global markets. India might not be able to replicate the long term strategy & planning required to match the international clout that China hopes to gain. However it needs to evaluate what is more advantageous for it. Non-alignment to any of the three power blocks America, China & Europe is a good strategy if you believe that the three will fight & annihilate themselves, but in all other cases its plain stupidity & arrogance to allow one to be isolated.
Home cooked food banned in hospitals
You don’t need to attend a medical school to understand the importance of diet for a recovering patient. The cocktail of medicines, the discomfort after surgery & actual illness already takes a heavy toll on one’s appetite and restricting the patient to bland hospital mess food is no relief. There is a huge difference between the taste of simple things like chapatti/breads and rice, which no matter how hi-tech the hospital kitchen is, cannot replicate. No wonder a patient consumes twice the amount of mummy/biwi (mother & wife) ki roti, curries, vegetables & pulses compared to what concortion is fixed in an industrial kitchen.
Papad, deserts or sweets are not normally a part of the typical home cooked food esp. when served to the patients in tiffins. However they are the centerpoint of the hospital thali which needs these savories to supplement its lack of taste. So contrary to what hospital authorities make you believe, home cooked meals are much more balanced, hygienic, nutritious and fulling. Then one must not undermine the personal touch of being fed by the loved ones. The emotional bonding it provides cures half the ailments.
If these homemade food was so toxic, we would have a billion hospital beds in India alone. Most patients are mature enough to understand the need to limit the chilli, spices, oil etc. in their meals. In addition, I am sure it is easier to emphasize the need of properly cleaning the ingredients & cook them than to a semi-literate mess staff worker. The family members already know and fully understand the patient’s food allergies and dietary preferences. So there is no need to over-complicate the matter by serving them a wrong meal and then scrambling for making it compliant with the restrictions. Ask anybody who has spent more than a few days in the hospital bed; their number one complaint would be on the food. Yet, unless the patient skips a minimum of two meals (and deteriorates their health because of that), the doctors/dieticians would not issue a pass for home cooked meals. I do not understand why for a problem that is completely unrelated to healing, they would still proscribe home meals.
The way I see it, these restrictions only helps the self-serving mission of the private hospitals by enabling them to rake up huge bills. They charge you an exorbitant price for the food & beverages and then slap you an additional fee for dietitian consultation. (A person who for most practical purposes is a glorified steward who jots down your menu.) If hospital were so worried about the patient’s diet, they would have stopped the cakes, pastries, sweets etc. served in the coffee shops & lobbies. If you insisted on healthy food, they might give you a sugar free version cooked in olive oil, but it will still be junk food and cannot satiate the taste buds that one morsel of “mummi ki roti” can.
E-commerce & Credit card kiting
I recently realized that consumers are at a significant advantage for their online transactions in the 2-3 week period from the generation of previous month statement to the payment due date. Not only benefits you with the long interest free credit but it also reduces your previous month amount payable if the transactions fails.
Weather it is the merchant, product quality or because of consumers, most platforms will promptly refund the money to the original source of payment. Seems benign, but most banks treat credit reversals as payments rather than reversal of the original charge. Therefore, if this reversal happen before the payment due date of the last statement, your will benefit from an additional interest free 30 day credit period equal to the transaction value.
There is also a small loophole in the credit card point’s accrual mechanism. Some card systems do not have a provision to show negative credit card points balance. So, if you happen to spend the points after the transaction is complete, but before it is reversed, then there is a high likelihood that your next month’s statement will show zero points balance (rather than negative) which effectively gives you free points. Yay! The banks have tried hard to delink the points with its value, so that you see 2X points of a particular store/scheme as attractive and not a measly 0.2-0.5% additional cash discount. Therefore, they do not charge your account for this technicality.
Banks have some technological challenges as their system was designed for swiping where the frequency & timing of reversals was much slower. Probably this is the reason this loophole does not come in the radar and people can benefit from them.
This apparently seem like a victim-less crime. The merchants, esp. in India prefer pre-paid orders as compared to Cash on delivery so they do not complain. In addition, payment gateway usually reverses all charges to them, making cancellation as a benign nuisance. The short time window and the 3-5 days it takes for a transaction to get reflected in the account limits it applicability. Also a customer who issues checks or gives payment instructions promptly rather than waiting for the last minute will not be able to benefit from the loophole.
PS: I have never had a need for credit kiting and nor have any intentions to break the law. I happened to discover this when Amazon India cancelled my pre-paid order of a cellphone and my Citibank did not debit my bank account for my previous month’s credit card statement. But as the recent example of Paytm has proven, consumers can alter their behavior for a benefit of few basis points.