Sunday, November 25, 2012

Rajeev Dubey's book 'Bullshit Quotient'-a great read

Bullshit Quotient: Decoding India's Corporate, Social And Legal Fineprint

This blog has been inactive for quite some time, given my workload and the risk of treading on bloated egos/scared cows. Its mostly the former though, because truth is an absolute defence under Indian libel laws, and I make sure to differentiate fact and opinion. Recently, I stumbled upon Rajeev Dubey's book 'Bullshit Quotient' while browsing for books at a Landmark store. The book title caught my attention, and I picked up a copy. It was a great read, though covering many areas familiar(corporate and legal stuff) and unfamiliar(social part). If there was ever a book which combines critical thinking, connecting the dots and wide range of topics, this is it. Your bullshit quotient will indeed go up after reading this book, as would your economic/political understanding. 

The book costs hardly 2 McD supervalue veg combos at a current price of just around Rs 235( Ok that was a random comparison, but better than many of the analogies in print,

Sunday, October 28, 2012

Financial reporting and taxation a zero sum game?

As a qualified chartered accountant, the above may sound heresy when I'm questioning the two pillars of the profession(atleast in India!). However, I am NOT saying that they do not have any utility, just that the utility to the overall economic system might be doubtful-this is not the fault of the people involved, but just a consequence of the rules of the game.

For example, information asymmetry and stewardship are the two main theories for providing historical financial(and other) information to outsiders, which are usually audited as well. Now, auditors play a watchdog(but not a bloodhound!)'s role in ensuring that there are no material errors in the information. The auditor's role adds value to the extent financial reporting becomes reliable/internal controls become stronger. But for the financial reports themselves, lets think a bit. Usually, the recipient of those reports-be it investors, lenders, regulators, NGOs etc-have certain set expectations from the provider in terms of dividend/earnings expectations, lending covennants, fees/taxes and not earning beyond a reasonable profits. Some of these expectations can be met by reporting higher earnings, other by reporting lower earnings. Now, what many non accountants do not know is that most accounting numbers are estimates/approximations, best expressed as a range. Now, though global accounting standards are converging in form of IFRS which aims at eliminating choice to the extent possible, that elimination happens usually only when a particular choice has been overtly abused(merger accounting, leasing etc) and hardly proactively. Otherwise, principles based accounting gives management a wide discretion to report numbers aggressively, with only the auditors or alert active investors to rein them in. In this scenario, the financial reporting function may see its role as reducing tax payouts, meeting the earnings expectations etc. Those fringe benefits justify hours/days of detailed discussions on which accounting treatment to adopt for a transaction-the treatment per se does not add economic value to the decision once taken, but due to those other benefits like earnings management, time may be spent on this rather than on BP&A/other economically productive work like reporting fair numbers.

However, financial reporting does have consequences on a huge scale when messed up-value transferred to those to fudge their books-both in corporate sector(Enron, Worldcom, Satyam) and the public sector as exemplified in this (in)famous IMF working paper on public sector accounting.
* “Accounting Devices and Fiscal Illusions”, by Timothy Irwin, IMF Staff Discussion Note, March 2012

About taxation, one of India's most famous jurists(said to be the best Finance Minister India never had) Nani Palkiwala once deplored that thanks to India's complex tax code, the best brains in the country were wasting their talent working out loopholes in the code. This was said decades back, but the tax laws have become more complex since then, both in India and even in "developled" nations like the USA. In fact, this zero sum nature of taxation was what persuaded me not to take this up as a full time career, despite having topped the tax paper at the Chartered Accountancy exams, and loving the subject. I was not convinced on the value addition to society as a whole, in this.

 This has been a long blogpost/(rant?) and so I conclude by saying that besides financial reporting and taxation, there are plenty of overall zero sum games like 'active fund management'. The reason I singled out those two was lack of searchable writing on Google, and my own experience in the field. These fields are full of market imperfections, and can divide value between parties like Company-Investor, Tax Payer-Tax Officer etc-but does not create it in the long run. Hence, I described it as a zero sum game, in that sense, especially if done wrongly.

Wednesday, May 30, 2012

TCI sues Coal India-morally and legally flawed

For the past few months, one of the UK activist hedge funds TCI(The children's investment fund) and Coal India have been locked in a tussle, with TCI objecting to the Central Government directives to Coal India on pricing, fuel supply agreements and the like. Following standard corporate governance principles, TCI feels that a third party(the government) should not interfere in the commercial matters that are in the domain of the board. However, as my IIM Ahmedabad Professor Dr TT Rammohan commented while lambasting TCI on his blog investors cannot expect a PSU to follow a private business model. Investors were well aware of this while investing in Coal India, and indeed the issue was considered underpriced by global benchmarks for many reasons including this one. Legally, the government plays the triple role of the sector regulator, majority owner of Coal India and the sovereign. These roles are often contradictory and lead to conflict of interest when 'populist' decisions/'national interest decisions' taken as a soverign/regulator conflict with the interest as a shareholder. In the prospectus risk factors(who really reads that but still its here, there were multiple warning points including on the very topic(public interest versus company interest) as below

  • Risk factor 14- Our business, operations and prospects may therefore be affected by various policies and statutory and regulatory requirements and developments that affect the thermalpower industry in India in general or public sector power utilities in particular, including those introduced oradministered by the Ministry of Power, GoI and the Central Electricity Authority ("CEA"). 
  • Risk factor 17- The price of raw coal sold under our FSAs does not fully reflect market prices for coal in India or in international coal markets. Inaddition, in the event that our production costs or other costs associated with the purchase of our coal that arepayable by our customers, such as transportation cost and statutory levies, were to increase, there can be noassurances that we would be able to increase the price of coal to offset any such increases. For policy or other reasons, we may not price our coal at levels that would adversely impact the power sector or the Indianeconomy. 
  • Risk factor 55- The interests of the GoI may be different from our interests or the interests of our other shareholders. As a result, the GoI may take actions with respect to our business and the businesses of our peers and competitors that may not be in our or our other shareholders' bestinterests. The GoI could, by exercising its powers of control, delay or defer or initiate a change of control of ourCompany or a change in our capital structure, delay or defer a merger, consolidation, or discourage a mergerwith another public sector undertaking.In particular, given the importance of the coal industry to the economy, the GoI has historically played a keyrole, and is expected to continue to play a key role, in regulating, reforming and restructuring the Indian coalmining industry. The GoI also exercises substantial control over the growth of the power industry in India which is dependent on the coal we produce and could require us to take actions designed to serve the public interestand not necessarily to maximize our profits.
 The above risk factors made it explicit(especially risk factor 55) that the Government of India could, had and intended to act like a robber baron(as perceived by private investors). If TCI had any concerns, it should have raised it before purchasing the shares. I'm sure the Goverrnment would have been much more receptive to concerns raised during the road shows. But instead, like the anecdotal eternally optimistic wife who marries a man hoping to change him, TCI purchased Coal India shares, took the high risk approach of moral suasion/persuading the Government to change its policy, and when it failed hired its top legal gun Luthra & Luthra to try recouping its losses! One who plays with fire should not complain of getting burnt. And that is the moral side of the issue-of all people, an activist hedge fund cannot take the plea of ignorance of law/not having read the prospectus! And as Prof Rammohan points out, Coal India's high ROE shows that perhaps the customers are getting gouged not the shareholders!!!

As an aside, as pointed out in the economic survey Chapter II, In a market where all dominant players are public-sector companies, ‘market price’ is not a very meaningful concept. It is easy for government to control state-owned companies through nods and winks. Hence, even if TCI wins an injunction for stopping such actions(very unlikely), the Government can still get its way. Hence, Luthra & Luthra will laugh its way to the bank, but TCI is not likely to see a single rupee of compensation.

Thursday, March 15, 2012

Indian Legal System-root of all political and economic evils

In an era where the Supreme Court is the 'last man standing' when it comes to institutional integrity, this post may seem weird. But the Supreme Court does not reflect system at large. There are other reasons for the evils like police being under State control etc but this post focusses on the legal reasons.
  1. Law is too complex for laypersons to understand. While one cannot simplify the law beyond a point and that is why we need experts, there is a case for legal inclusion(demystifying the law) similar to financial inclusions
  2. Too many procedures make subordinate courts hot bed of corruption-this is true for getting certified copies, hearing dates and other small things. 
  3. Criminals are our elected legislators and pending cases take time-this is a root cause for criminalization of politics. While one must admit that people are presumed innocent unless proven guilty, there should be a self censorship for serial offenders. 
  4. Senior Advocates rarely take probono cases/PILs and milk the title for charging higher fees. Nothing wrong with that from business standpoint, but why should someone use a public office(like Senior Advocate) for private benefit in terms of fees? But if someone uses a lesser known advocate, judicial officers may not give them a fair hearing in the era of uncle judges.
  5. Our worst functioning and scam ridden markets like real estate, mining are because of legal imperfections in land registry, government regulation etc.
  6. Our judges work quite hard(in any terms, hours worked/judgements passed etc) compared to international standards and for much lower pay, but this is not showing up in the backlog. 
  7. Thanks to multiple adjournments and other dilatory tactics causing the backlog to pile up even more,  lawyers can rack up their per hearing fee(since the Bar Council does not permit contingency fees that would give incentive to finish the case fast). While tax laws have the 3 adjournment limit, this is yet to be applied for other laws. Sunny Deol's famous 3min monologue in the film Damini 'Tareekh pe Tareekh' is still relevant today.
  8. Courts still interpret laws assuming that the legislature knows the law/acts in the interest of the public etc, but in an era where laws are passed without debate and with little scrutiny even by House Committees, where Opposition views are steamrollered, should not the principles of interpretation be thought over again?

Sunday, March 11, 2012

Call yourself an involved citizen? Try this before posting on Facebook

Facebook and other social networks are an excellent way to spread awareness about an issue
  1. Register yourself as a voter so that you can cast your vote in the next civic/state/national elections. Often, the victory margins(especially in Mumbai civic elections) are wafer thin, and with elections increasingly becoming free of fear(even if not 'fair' due to monetary power..), individual votes do matter now. 
  2. Register yourself to vote in the nearest graduate's constituency, for electing a person to the legislative council(if any)-these exist in Maharashtra and Karnataka besides others states. This registration is in addition to the above voter's registration, and needs filling out a simple Form18, besides submitting attested copies of your ID/residence and graduation proof. 
  3. Be financially literate when it comes to public budgets of Centre and State, instead of just looking for revision in income tax slabs! Publications of the ICAI like that on state deficits( and that on the oil subsidy( are eye openers for those who take the time to read them in detail
  4. Join a political party and reward transparency/clean politics with your funding/support whether you like it or not, you participate in politics and your not casting a vote means interests opposed to yours win because in a democracy, only the 'crying baby'(those casting votes) 'gets milk'(government handouts etc). Therefore, join a party whose interests are most closely aligned to yours(there is NO shame in participating in the system) and the national interest. Parties like Loksatta are a good example, as while their electoral successes are limited, they are quite vociferous in Parliament and contribute constructively to political debate like that on the Lokpal Bill.
  5. Subscribe to good quality critical media:-The Hindu-TOI ad-war in Chennai amused the whole nation but should have got us thinking. Should we pay more to read a Mint/Tehelka/Money Life/Hindu or read a TOI/ET/India Today just because it is 'inexpensive'? Why don't we read good book like Do we value our time/knowledge gained so little?
  6. Know your duties:- The Constitution lists fundamental duties, but since they are non mandatory, they are glossed over in favour of 'mandatory' fundamental rights. Things like scientific temper(how many of us still go to astrologers..), respect for heritage/nature etc are listed in the fundamental duties list, but are rarely practiced. So next time, before demanding fundamental rights expansion like 'right to work' etc, think whether you practice the fundamental duties or not. 
  7. Ignorance of rights is no excuse to pay a bribe:-With tools like RTI forcing governments to put out information on the web/public domain, and with a multitude of websites out there explaining the rights in plain english, there is little excuse for stuff like paying a bribe/'middleman fee' to claim a tax refund when that would come automatically in this online processing era. For more complicated issues, a RTI application does help as press reports show. 
  8. Civic sense is essential, stuff like not breaking Q system, not causing trouble to your co passengers, avoiding speed money/bribes. Doing that weakens social capital, gives public servants a chance to ask for bribes.
  9. And lastly, read/understand before you share:-I've lost count of the factually incorrect Facebook shares I've seen like the 'bring back XXbn blackmoney to India', 'Sonia Gandhi citizenship theory','Singapore public services being cheaper than India' etc. Do a basic Google if something is too good to be true, else you are equally responsible for perpetuating a lie. And even if we all support the Lokpal Bill, that is no excuse for avoiding reading the pros and cons of the debate instead of being seduced by the pros only.

Tuesday, February 28, 2012

Where the Supreme Court covered itself with shame

While legal luminaries will doubtless have many more incidents to recall, the recency effect limits me only to cases I've stumbled across. To avoid any contempt of court action(!), let me just say that this is a critique of the judgements, not of the institution itself which has delivered several landmark verdicts over its lifespam, especially in the last few years. The reason I'm stating this is to show that nobody is infalliable
  1. SDM Jabalpur Case:- This was an Emergency era case which dealt with the rights of the Government to subject a person to preventive detention. And contrary to its stand before and after Emergency, the Supreme Court then sided with the Government in curtailing individual liberties.
  2. RTI appeal before the Supreme Court:-A petitioner had sought information from the Supreme Court via RTI. The Chief Administrative official of the Supreme Court('Registrar') opposed that, lost the battle before the chief RTI authority(CIC), and then took up the case before the Delhi High Court, fully aware that even if he lost, it would come up before the Supreme Court. The fact that the judges even allowed this to happen, does not reflect well on them.
  3. Delhi 'illegal premises' sealing case:-While the Supreme Court took the moral high ground of taking a stance against illegal realty development, that order came as a shocker, and later it was revealed that the sons of the Chief Justice gained substantially in their realty holdings because of the sudden supply constraint. Again, this was a case where appearances mattered, and the least the judge could have done was to have excused himself from the case. 
  4. Raj Narain vs State of UP(the election fraud case): The UP HC judge had held Indira Gandhi guilty of misusing government machinery(therefore 'election fraud') and debarred her from contesting elections for 6 years. The following furore partly stoked unrest and Emergency was declared in June, 1975, with Indira Gandhi still the Prime Minister. Yet, the Supreme Court did not seek an independent atmosphere/status quo before reversing the verdict and confirming Indira Gandhi's prime ministership. Without going into the legal merits, it is doubtful how a verdict against the incubent prime minister under Emergency conditions, could have been 'free and fair'.
These are just 4 stray cases in 60yrs, so I guess we should consider ourselves lucky compared to other countries. 

Monday, February 27, 2012

Where speed money is legal/regularized-examples from India

When Kaushik Basu(then Economic Advisor to the Prime Minister) suggested that small bribes could be legalized, those remarks caught a lot of flak and invited adverse editorial comments. But as Ms Sreemati Remnath, a guest lecturer for the Inter Cultural Communication Course(ICC) pointed out, there are quite a few instances where speed money is actually regularized in India. When I refer to 'speed money', I define it as paying a fee to have your service delivered in a manner other than first come first serve.  The first two examples were suggested by her, the remaining examples and analysis are mine. Purists may quibble that changing the time dimension alone makes the service different for which a different fee is appropriate. While that argument is logical, not everyone sees it as fair/equitable since we do feel in some places that money has no right to displace FIFO in the merit hierarchy. 
  1. Tatkal for railway tickets:-Instead of bribing the clerk/TTE to bump up the person in the waiting list(it still happens but much more difficult), tatkal fee is a legal way to charge people in a hurry, akin to the fare buckets in airlines/buses/cinema tickets and other perishable inventory cases
  2. Special darshans in temples:-Though all devotees are supposed to be equal in the eyes of most religions, many Indian temples have the practice of special darshan(paid for)/VIP darshan(where the custodian may get non monetary benefits/donations) for those in a hurry
  3. Fee for publishing patent application earlier:- For those in a hurry to get their patent application published and scrutinized faster, the Indian Patent Office charges an extra fee for that.
  4. Officially Higher fee for management/NRI quota students in colleges:-Management Quota students find it harder to get loans(not having got it on academic merit) while NRI students pay more fees. Often, both do not get scholarships/subsidies/soft loans or grants, maybe on the presumption that they got in other than the regular way. This is not really speed money, but can be analogized to that.
I'm sure the reader can think of many more such examples. This post is not to critique any of the above time honored practices, which are often 'international practices' too,but just to connect the dots.  

Sunday, February 26, 2012

Do a top MBA abroad for a better chance of marrying an Indian tycoon heir

Firstly, let me clarify that this blog post does not imply that people(either male or female) do MBA for the sole purpose(or even an explicit purpose) of finding their life partner. However, it does happen, be it at Indian campuses or foreign campuses. The reason for this blog post is that I'm yet to read/come across any example of an Indian business scion meeting their life partner at an Indian college. Maybe the tough admission standards(only academic merit not your surname/personal attributes/social savviness) are to blame for this, but whatever the reason, India's heirs tend to pursue their post graduation abroad rather than in India. This is anecdotal and not supported by detailed statistics, but rather the best data I have. That said, the below examples are insightful
  1. Nandini Piramal(Stanford Business School 2004-06)-Tim:-Ms Piramal married her Stanford classmate a few years back, and now they are proud parents. He even left Blackstone to join the family firm Piramal Healthcare(this is an example where family managers can be better than even any other 'professional' managers in terms of pedigree.
  2. Aditya Mittal-Megha(Wharton)-They met during the MBA program there, and are now proud parents to 2 daughters.
  3. Vanisha Mittal-Amit Bhatia(Cornell)-One of the most lavish weddings, held in Paris.
  4. Akshata Murthy-Rishi Sunak(Stanford Business School);-Narayan Murthy's daughter met her husband when they were at Stanford.
Maybe I'm making a mountain out of a molehill by connecting non existent dots. But given that many of the Indian families are quite reclusive, the above was the best examples I had. Readers may add examples/counter examples below. 

Sunday, February 5, 2012

Greed is good because the journey itself is the reward

“The journey not the arrival matters.” – T. S. Eliot 
Ever since Gordon Gecko's famous words 'Greed is Good', that phrase is used as a club to accuse bankers and other high paid finance professionals of being greedy, and putting their self interest ahead of society. Indeed, reading the articles on that theme, you would think that to aspire to earn money for the sake of it('greed') instead of just for fulfilling needs, is a crime. But in this post, I argue that for many of those money, greed is good because they see the process of earning money(trading, closing deals etc) as the reward in itself. It is like a game which you play for the fun of it, and get your high from winning certainly, but also from the game itself. To use the Olympic motto, the game is more important than winning! That may explain why billionaires/others work even when they have no monetary need to do so. While even other professionals can do so,  mostly only finance professionals can earn plenty early on to be able to afford to retire early on-hence this post focus on finance.

Without the greed, people would not compete actively in markets and may instead choose the easy way out of remaining small, setting up ventures in SME reserved areas etc. While the idealistic perspective would take the view that social service motto/greater good fuels entrepreneurs, the fact is that economic security is necessary before any such larger good. And to reach economic security, that is where a rational amount of greed works.

Thursday, February 2, 2012

Competition is great for others-not for oneself and rarely for business!

Listening to regulators, lawyers, CEOs sing the praises of competition, and that it is the holy grail of business. But, what they really mean is that their raw material suppliers should sell cheap, they should benefit from subsidized state utilities, that the distributors should be barred from defecting, that intellectual property rights should preserve monopoly etc. In other words, competition is fine as long as protective mantle available of labour/IPR/pricing/export cartels etc that allow making super profits.

The source of this thinking is not hard to phantom. Right from bschool strategy classes onwards, aspiring leaders are taught the importance of keeping the competition out(brand, IPR, legal battles, competitive moats, entry barriers etc). Depending on the state of evolution of society/cultural mores, the State may circumscribe these methods by insisting on open access, infrastructure sharing, arms length dealings between vertically integrated units, term limits for IPR, competition laws etc. In response, the incubents push back via lobbying, using special interest groups etc and trying to take the moral high ground. And as often happens, the voice of a concentrated few losers is heard louder than the diffused voices of a mass of new/potential entrants, and that is why regulation globally rarely favours new entrants. While legitimate grounds like consumer safety, economic stability etc inform some of those regulations, it is often irrational why many regulations(India or abroad) and business practices(bank lending margins, leading conditions, credit ratings) directly disadvantage new entrants. Business lobbying can explain some of these reasons. However, the rare instance where business welcomes new competition is when a nascent business needs scale/building awareness which it cannot do itself. Hence, market expansion is a rational argument for incubents to proactively seek out new entrants, so that they can piggyback on the efforts of the latter. 

But lest we individuals bash Big Business for its oligopoly conspiracy against the laity, lets take a hard honest look at ourselves. As Adam Smith once said, all professions are a conspiracy against the laity' in the sense that at some point, they lose the sense of public purpose and seek to enrich themselves at the cost of public good. For example, the public service motto of law/medicine/accounting is increasingly difficult to identify, and many professions are more concerned with increasing the variety(and fees) of their credentials, and carving out exclusive niches/posts for their members, while couching those efforts under the moral high ground standpoint of improving governance/health etc.  Any labour union(including by definition professional association) routinely lobbies to keep others out(immigration checks, making pass rates harder, opposing titles of similar named organizations etc).

So while competition DOES make those exposed to it tougher, few genuinely wish for competition. While students/new graduates may aspire to selective/competitive schools/employers, that is also more from the aspect of personal gain/branding rather than the desire to be whipped by their peers! So the next time anyone signs the virtues of competition, take a hard look at the knowing-doing-saying gap.

Saturday, January 21, 2012

Bad facts make bad law-case of retrospective tax law and anti tax evasionary measures

During his elective on Securities Regulation at IIM Ahmedabad, Prof Sandeep Parekh made an interesting point that bad facts make for bad law. In other terms, where the conduct of the parties to the case warrants a decision which is just yet contrary to the express provisions of law. In securities law, he gave examples of this from India and abroad. In criminal law also, the Nanavati case(where Captain Nanavati shot dead his wife's lover in a 'fit of anger' yet walked free due to jury sympathy and eventual Presidential pardon) was a classic case of this in my view, which lead to abolition of jury trial.

But what relevance to this post? Read the prebudget memorandums of industry associations/professional associations, and one thing often stands out-the plaint against retrospective tax amendments nullifying hard won court rulings, and also measures against tax evasion, that impose procedural burden and excessive withholding taxes. While one can sympathize with the affected parties, the fact remains that it is precisely the egregious conduct of the taxpayers/professionals, that leads to stringent law. The Statement of revenue foregone(presented annually in the Union Budget) proves conclusively that larger firms(as measured by pretax income) pay lower rates of tax. Whether this is the base effect or just effective tax planning is not clear, but one inference that can be drawn is that larger tax payers have the resources to engage the best hired guns to 'optimize' their tax liability, take aggressive tax positions, benefit from every loophole etc. And with the Supreme Court sanctioned tax planning(a position sought to to reversed in the proposed Direct Tax Code 2011), corporates can go about this with aplomb, and can even escape penalties as their issue is inevitably admitted by tribunals(which itself implies that IS debatable, thus no penalty under 271(1)(c)).  

So what does the revenue do? While they DO expose the draft tax law to comments at times, professionals do not have an incentive to report loopholes for plugging at that stage, rather they would want to benefit from the new business importunity therein of helping their clients. So when unintended tax benefits are taken, retrospective amendments are the only way out, especially for artful structuring and all. And while tax evasion measures may punish law abiding tax payers, the fact remains that left to their own devices, tax payers will have the incentive to bend the law just a tiny bit(especially given the new limits for tax effect below which appeal will  NOT be filed by Revenue in administrative/civil forums). Expecting taxpayers to be law abiding by choice AND having a self assessment regime, implies that penalties must be stringent to ensure compliance.

While this may not be the most optimal economic outcome in terms of compliance costs, such measures are necessary in an environment where taxbase is already very low. Else, we may end up in Greece like scenario where the number of luxury car owners far exceeds the relevant tax base!

Thursday, January 19, 2012

Hippocratic oath or Hypocratic oath-where has medical ethics died

Though I'm not a medical professional(that's why I could write this bold title), I've quite a few relatives, friends and others in the medical profession. To them, I say that this is a general article not targeted towards any class, but that what I noticed reflects a non-significant proportion of doctors. The Hippocratic oath( is not free from controversy, with even doctors questioning some aspects of it. But it is still largely accepted. Below, I reproduce a modern version of the oath in Italics, with my comments in normal print.Given the modern issues of high cost healthcare/medical insurance overcharging/reluctance to admit mistakes/cosy nexus with pharma companies marketing staff/low continuing education etc, it would seem at times that the hippocratic oath is practiced by hypocrites. Civil comments welcome below.

I swear to fulfill, to the best of my ability and judgment, this covenant:
  1. I will respect the hard-won scientific gains of those physicians in whose steps I walk, and gladly share such knowledge as is mine with those who are to follow.  Doctors do teach and avoid plagiarism(atleast not much more than other professionals). So there, they escape censure.But seeing the very small number of multi doctor practices in India(as compared to USA), it is doubtful whether doctors care about sharing knowledge with non relatives. Also, while continuing professional education is implicit in this, it is an open question about how many doctors rely on industry funded seminars/sales representatives to educate them, rather than take the pain to subscribe to and read authoritative journals/attend study circles etc.
  2.  I will apply, for the benefit of the sick, all measures [that] are required, avoiding those twin traps of overtreatment and therapeutic nihilism. Afraid of being sued and mindful of the revenue generation obligation, doctors tend to prescribe unnecessary tests. Also, simple remedies like those of homeopathy are not advised-either the doctor does not know them, or prefer allopathy. While the doctor has the right to his professional judgement to reject alternative medicine, the patient should have an informed choice to that extent. And that is what is often missing today.
  3.  I will remember that there is art to medicine as well as science, and that warmth, sympathy, and understanding may outweigh the surgeon's knife or the chemist's drug. In the corporate approach of quick turnaround times, cold clinical approach and preferring standardized jargon/self education, this is easy to forget. And for those not so literate/tech savvy/assertive, the chance of being misdiagnosed/not receiving optimal treatment is there. Not all hospitals are as sensitive like say Sankara Netralaya, which despite being in the South, set up a Bengali speaking reception counter catering to its patients from that region. Doctors IMO prefer jargon to explaining in Plain English to the patient/those accompanying him.
  4.  I will not be ashamed to say "I know not," nor will I fail to call in my colleagues when the skills of another are needed for a patient's recovery. While second opinions and referrals are taken, I doubt whether this is done on a old-friends basis, or purely on the basis of competence. 
  5.  I will respect the privacy of my patients, for their problems are not disclosed to me that the world may know. Most especially must I tread with care in matters of life and death. If it is given me to save a life, all thanks. But it may also be within my power to take a life; this awesome responsibility must be faced with great humbleness and awareness of my own frailty. Above all, I must not play at God.  Abroad, the topic of doctor assisted enthusania is still being debated, but undoubtedly it is against the classical version of the oath.
  6. I will remember that I do not treat a fever chart, a cancerous growth, but a sick human being, whose illness may affect the person's family and economic stability. My responsibility includes these related problems, if I am to care adequately for the sick.  This is the closest that the oath gets to advising the holistic approach embedded in Eastern medicine approaches like homeopathy. However, I'm yet to see allopathic doctors follow that approach in practice..
  7.  I will prevent disease whenever I can, for prevention is preferable to cure. The family doctors(conversant with their patients and their family history) are likelier to do this. But for corporate hospitals/others, while they do have the data, they are likelier to use it for cross selling insurance/other services like checkup than use it for diagnostic purposes.
  8.  I will remember that I remain a member of society, with special obligations to all my fellow human beings, those sound of mind and body as well as the infirm. This is violated to the greatest extent in my opinion. Hospitals are reluctant to admit accident victims, render probono services etc. While this behaviour is rationally understandable in a supply constrained situation like India, shirking one's obligation of public service, undermines the right to be called a professional. And for practices like not reserving the agreed proportion of hospital beds/services for the poor, there is no excuse.  
If I do not violate this oath, may I enjoy life and art, respected while I live and remembered with affection thereafter. May I always act so as to preserve the finest traditions of my calling and may I long experience the joy of healing those who seek my help.

Monday, January 16, 2012

Prebudget memorandums sometimes blatantly demand the moon-the case of ICSI Budget 2012

Come Dec-Jan, and industry associations/professionals etc are all busy giving their 2 bits on what the finance minister should dole out as sops during the ensuing Budget. While some like the ICAI now also focus on measures to plug tax loopholes/help the Government, many of these memorandums read like lobbyist's propoganda. Quite a few don't even make a pretense of being objective/reasoning out the demand properly, but just demand the moon. My critique below is not politically correct because this approach is such a widespread practice today!

While reading the ICSI's prebudget memorandum(,  I did see some novel points like giving weighted deduction to CSR expenditure(naturally certified by a company secretary!), but otherwise many points bordered on the absurd, or had very narrow outlook/ill reasoned. Some examples are given below
  1. Abolishing MAT on LLPs;-The logic is that The Finance Act, 2011 introduced Alternate Minimum Tax on Limited Liability Partnerships which challenges  the main advantage of formation of LLP over the companies. But, LLPs have sound business reasons like that of limited liability and large size, for which MAT seems a fair bargain. 
  2. Deducting of STT under Capital Gains head:-  Suggestion is that The STT paid may be allowed as deduction by including it in the cost of acquisition and selling expenses under the Capital Gains. It will help in strengthen the capital market. However, it overlooks the fact that concessional capital gains treatment was possibly partly due to the additional revenue given from STT. Giving away some of this tax benefit without commensurate revenue benefits, does not make sense at all from revenue perspective. 
Other general cases are the usual demanding of additional professional certifications/recognitions like compliance certificate, authorized representative etc. While some points are revenue positive like hiking TDS(when no PAN supplied) rate to 30% in some cases, CESTAT benches etc, the overall tone/intent still does not change. I pointed out the ICSI one specifically as it had the maximum breaches but even other associations are guilty in this regard.