Thursday, 23 May 2019

Modiji aa gye hai❣️But will our strategy be right for our children's future?


Congratulations if you wanted him to win. I too wanted him to win and he won. This makes me happy.



Let's recap this election briefly in one or two line. We loved Modiji and wanted him to win. For this we voted anyone and everyone who was contesting on the seat of BJP.  Re look this relevant joke trending on social media:

Political science में पढ़ा  था की सारे MP मिलकर  PM  बना￰ते है। 2019 चुनाव में एक PM ने सारे  MP बनाये।

We adopted this strategy because we badly wanted him not to loose given the great (in numbers only) alliance by opposition.
But in longer run if we continue this strategy, how harmful it would be just think once. 



If you vote in the name of PM, no party would care much for quality of candidate in your constituency. Not saying that all candidate were bad this time but consider what if that becomes the case in future in any of the party. Because parties too have their incentives and they respond according to the incentives only.


If we follow the spirit of constitution then the system set up by constitution is beneficial. Otherwise what is the benefit of getting popular outside of country but you are still facing very basic problems like no 24 hours electricity and broken road in your area. PM will not develop all constituency but only your MP will. And if we follow the spirit of constitution, then only parties will be bound to give tickets to best of the candidates. Thus automatically less and less of criminals. Also by this many new Modi will be born.

Let's keep that in mind and make parties aware for future that the strategy may not work everytime in upcoming elections rather it may turn bad. 

Wednesday, 22 May 2019

Politics and Economics: Why you - did not vote or should not have voted?


You must have voted. If not you should have if crossed 18 years of life. If you have not voted, what was the reason other than geographical reason? Read this. You may find your soulmate reason. 



There are multiple reasons about why not to vote. What they can be? Let's find out through Economics and general sense:


1. Lack of lalach (incentive): If you are directly getting benefit from Govt then you are incentivized to vote. But that happens with very few special interest groups e.g. If One party declares that tax rates would be brought to 20% instead of 25/30%, than only those falling in that slab rate and who would care about the money saved in taxes will be incentivized to vote. If all parties talk about farmers, only and only farmers, won’t you think that nobody is caring for me, why should I vote? It won’t matter to me then anyway whoever comes to rule. I believe you agree here. Now, stop and think what is the thing that you would be benefitted personally if party B or party C comes to power. Other than very general benefit (If any) (Be rational, not emotional) there is nothing specific which appeal you to go and vote for that party. You may get benefit but that's unseen and thats why equivalent to zero. There is seen-unseen effect working here

2. Rational Ignorance: We should vote. But somehow we all feel somewhere that our single vote is not going to influence an election. We might go for vote anyway but we know that single vote is highly unlikely to affect an election. Therefore since benefit of single vote is so little, it is rational not to incurr cost or spend any money or time on it.
You might say that this theory is wrong.
Okay. Read on.

Did you really spend time on your candidate  whom you voted? Frankly speaking, I didn't know more than his name when I voted this election. (Ye to Modi ji the jinke liye I voted.) We don’t spend too much time understanding process of govt or different policies all parties have or past record of candidate or his nature or his possible concern about you if any. It does not make sense for us to devote time and understand all the things because benefit is too little as one vote is not going to do much. So it is rational for us to be ignorant which is called Rational Ignorance in economics. In fact there is one philosopher, who in one of his book examines the ethics of voting and he makes an argument that it is immoral to vote if you don’t know enough about candidates. If you are ignorant than your vote could do more harm than good and so that is the normative reason to not to vote.
To summarize, You don't know much about the candidate because not cost effective. And because you don't know much, you should not vote to prevent the potential harm.

3. Scale of the impact / Free Rider problem: If electricity goes off in your house, you instantly try to find out what happened or where is the problem. However, if you are told immefiatelt that electricity is off for whole building/society, you will just sit and wait for your TV screen to lit. Note that if you are wrongly informed and in reality electricity problem is at your house only even then you will sit for a long time until frustration/suspicion comes to your mind. This is scale of impact. If everyone is suffering, you would think why should I go (till the time you are not frustrated), let others go and find out.  So similarly until you are frustrated from current govt, you have reason not to vote. This can also be called Free Rider problem/effect.

4. Do the “Ishara”:  This reason only applies when all the option are more or less equally bad. Which for many of Indians is the case in current politics. Now imagine, you are going to the market to choose a car, lets say. You go and very soon find out that they all are of very bad quality and you wont even be able to use them for five years. So whats the point? You will not settle with least worst car (no emergency) instead you will exit from market and wait for better option. Supporting the lesser of two evils is still supporting evil. This way by coming to market and not purchasing anything, you send a signal which is same signal sent from NOTA button in EVM. And even if with experience you know that no car available in market is good enough for you so whats the point of even going there. This way you are sending a signal by low voter turnout. Both signal are important for market and political entrepreneur to bring in new product or new party / candidate in such fractured market place. As a citizen of country it is also our duty to declare that none of representatives are good enough and thus we indirectly appeal to political entrepreneur. 

This was what can be attributed as one of the reason why AAP won the Delhi LA Election in 2015. Mr Kejriwal analysed the gap and gave public third option. And this is the reason that in Rajasthan, Congress and BJP comes in power every alternate 5 years because there is no third option and they are frustrated too. They keep changing between the two only. Can this be a reason why local parties are in power in saouthern states aspeople know how congress and BJP are in center and so keep them away from state? Let me know in comments.

5. Indifferent choice: Now this situation is opposite of above point. Imagine (can imagine only, never a reality in recent future) there are two candidates equally good in all relevant aspects. You are indifferent between them for whom to choose. Now you know that whoever comes, he is going to do good only. What’s the point of electing one of them? Let others decide. I will agree with what they elect. So again, no vote.

6. Misc:
a.    Parties prepare manifestos and makes promises. You see the promises and vote for the ones whose promises appealed to you. But no politician cares about their promises. They may have done other work other than stated in manifesto but not done the promised ones. So whats the point of voting when the base of promise on which you voted is not fulfilled? Let anyone get elected and do whatever he feels like. 

b.   Participation in the system (i.e., voting) implies that the majority knows what’s best for everyone. And when majority's favour is applied to everyone, you can't do anything because you participated in the system and thus agreed to it. Not that not voting will solve this problem but you have a point to make.



So, these are the few reasons I came across, edited and could thought of. I am being just an enthusiast here. Inspiration and some excerpts from Mr Amit Varma in discussion with Mr Pawan Srinath in Pragati Podcast and The Seen Unseen Podcast. 

Even after reading this, let's continue to believe in the concept of Democracy and Vote until we have another proven better mechanism. Reason to vote may be much more than these.

Let me know your views if any or if you have similar interest.


Monday, 20 May 2019

Your Chartered Friend-Part 1 : What exactly to do with your monthly salary?

I came across many incidents where my friends in job from non-commerce background struggle to understand the financial world and terms. So much so that it become a hindrance in taking good and important decision and increases their dependability. 

Fair enough given existing educational system. But never mind, your Chartered friend is at your help.

With this first part of the series, we are going to discuss one topic in one blog. Frequency I will try to keep weekly but won't assure. You know about sundays 😂.

So here we kickoff with first topic: What exactly to do with your monthly salary?




Assuming you have consistent / near consistent monthly income. Now you have three things to consider:

1. Your monthly necessary expenditure (Needs): We are born to pay the bills (and to eat too). Find out how much average amount of money you need for your monthly basic necessary expenditure. I repeat basic necessary expenditure. Ignore Movies, outing and party for a while. Don't forget to include the monthly average of annual charges like pest control / bonus to your maid/ taxes like property tax etc.
This amount is the amount you have to keep in your saving bank account (if credit card is there, even then approximately 75% of the amount, because you are gonna need it next month).

2. Investment (Future Needs): Define your future major needs first. Like expenditure for marriage (no your family won't agree for court marriage+world tour), expenditure for pilgrimage or any other purpose. Your may need money say after 2 years or after 7 years or 20 years or retirement so accordingly choose the investment type where you can liquidate (bring amount in saving account) the invested amount when needed. You can put 60-70% of remaining amount (after point no 1's necessary expenses) in Investments. Important is to keep 5-10% of this investable amount in most liquidate fund (e.g. Flexible Recurring RD) so that it comes handy in emergency.
Investment should mean monthly installment of your SIP, ELSS/ULIP etc. This part of percentage also covers your health insurance and term insurance premium which you have to pay annually. You may (or may not, up-to you) put average monthly amount in flexible bank recurring deposit. (Don't worry, will explain many more such terms/topics in upcoming blogs).

3. Party time (Wants): Now this balance amount that you arrive at is your blanket. And you already have legs eager to roam (Movie, solo/group trips, drinks, party etc). You know what I am going to say. If legs are going out of blanket then either get bigger/another source of blanket or fold your legs.
Btw It's not necessary that you have to spend all remaining amount in party. You can keep a piggy bank at home and inspire your family/future kids to save for bigger party/purpose.

So This is basic Idea of using the salary amount. Some have the rule of 50:30:20 in abovesaid order. You can modify at your discretion but should analyse periodically and  follow the decision.




Any doubt/suggestion/query? Let me know in comments or reach me at raghav.kalyani@hotmail.com.
Next topic would be on types of Insurances and which one and why you must have them. Hit subscribe button or keep checking this source.

Mazboori vala Disclaimer: This is not your personal financial advice. It is just for your knowledge and food for thought and action. Plz consult your financial advisor before taking any decision on the basis of this blog.

Your chartered friend is always at maximum possible help.