Remove Hunger to Boost the Indian Economy - The 5 Minute WrapUp by Equitymaster
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Remove Hunger to Boost the Indian Economy

Jun 21, 2016
In this issue:
» The Link Between the Repo Rate and Market Movements
» Has GST Reached the Final Lap?
» ...and more!
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Rohan Pinto, Research analyst

When every citizen of the country stops expecting one person to change the nation - be it Modi or Rajan - and takes on social responsibility upon themselves, the nation will see quantum growth.

Former CFO of Infosys and founder-trustee of The Akshaya Patra Foundation, Mohandas Pai at a recent talk in the city outlined the gravest issues facing the country and how every Indian can play a role in the nation's development.

In this feature, Ritika Bajaj, writer and editor at Common Sense Living, captures the passion and dedication of Pai's efforts in the social sector. Ritika has been a keen follower of social enterprise and startups, and her writing seeks to bring out the main trends and challenges of these sectors. To read more of her stories, click here.

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As investors you may be wondering what hunger has to do with the economy...

Let's join the dots quickly - a well-fed mouth leads to a more alert mind, which can attend school regularly, achieve better results, graduate from higher studies, and enter the workforce... When this happens, the nation builds a more vibrant economy.


Highlighting this fact was Mohandas Pai, former CFO of Infosys and a member of the founding team and board of trustees of The Akshaya Patra Foundation.

At an event organised by HelpYourNGO - a not-for-profit that helps donors evaluate the transparency and efficiency of their chosen charity before donating - Pai brought to light the fact that not only corporates but individuals need to step up and take action to improve the state of the economy.

In his keynote address, Pai gave the audience a 'real' picture of today's India and the grave problems we are facing. True entrepreneur that he is, he provided solutions too.Pai rattled off many numbers, characteristic of a man with a finance background. He's positive about the economy on many fronts:

  • India has seen a lot of growth in recent years... It is a 2.2 trillion dollar economy, the population has stabilised largely... Majority of the population is under 30... The number of entrepreneurs have increased and aspiration levels have soared... 70% of the Indian economy will grow from consumption, while 28-30% will come from savings and investments.

On the other hand, he feels the social situation has deteriorated largely:

  • We are facing the ills of a society that has been divided. Population is growing at uneven levels across the country... China treated its women better. Hence, they participate more actively in the workforce.

Pai believes that the three major areas of concern in India are hunger, health, and education.

Hi own efforts to alleviate the hunger of children in government schools are well-known. He took the audience down memory lane and recounted the conceptualisation of The Akshaya Patra Foundation, one of the largest mid-day meal programs in the world:

  • In 1999, I was 41 years old, we had just finished listing Infosys on NASDAQ, and I was wondering what I was going to do with my life. I woke up one day and went to the ISCKON temple in Bangalore. From that day onward I started doing what is called Sudama seva and began donating Rs 5 per day to the temple.

The next time he went to the temple, he met Madhu Pandit Dasa, the president of ISCKON Bangalore, and together they zeroed-in on feeding hungry children as the need of the hour.

  • Hunger is the main problem. When students are malnourished, their mental capabilities don't develop to their fullest... The poor don't have purchasing power for food... But the irony is that the country has enough food, enough arable land, and can grow food in abundance...

Dasa told Pai he would need two buses to dispatch the food; they were arranged, and thus began the mission of The Akshaya Patra Foundation. The name 'Akshaya Patra' was derived from the Mahabharata denoting a vessel of unlimited food.

The idea saw immediate traction and the Foundation got more enquiries, with requests to feed 1.5 lakh children from day one... Pai was surprised to realise the extent of hunger in one city alone...a city that he had worked and lived in. He never imagined 1.5 lakh children didn't have access to a decent meal.

The movement has since spread... The Foundation is now feeding 15 lakh beneficiaries in schools across the country every day. And its impact has been huge and visible:

  • We've now got 25 kitchens and are present in schools across 11 states. Our goal is to reach 50 lakh children... From our program, we've seen that attrition levels in schools have gone down, scholastic achievements have gone up, and health and nutrition of the students have improved.

His final appeal was for individuals and corporates to start using their surplus funds for philanthropy:

  • Corpus is capitalisation of misery. Misery is today, hunger is now... We need to deploy money now to alleviate problems... Don't create more NGOs. There are already three million in the country. Instead, help the existing ones work better... India doesn't lack fund; it lacks delivery mechanisms.

Pai's own philanthropic philosophy is to do something for his country, state, city, and small community of Konkanis. His ultimate dream is to have a national scholarship program where anyone who dreams of higher education would be able to pursue it.

  • When you work on something bigger than you, it gives you purpose, a passion. And you see small changes take place every day... Your personal contribution is what you do for your country... Giving is paying your debt to society. It's your obligation to the country. If you give, you create a better world.

As Indian investors, if we expand our portfolios to include some individual social responsibility, we may just create a nation that reaps higher 'dividends' year on year... Whether financially profitable or not, you will be rewarded with the knowledge that you have made a difference to the nation.

How would you discharge your social responsibility to the nation? Let us know your comments or share your views on the Equitymaster Club.


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02:35 Chart of the Day

The popular belief amongst market participants is that, there is an inverse relation between interest rates and market movements. The logic behind this belief is that as interest rates fall, investments and consumption gets a boost. Corporate profits increase which in turn drives the markets.

While in theory, this sounds right, one look at the above graph shows, this isn't necessarily so. The global crisis in 2008 resulted in a stock market meltdown. During this entire period, the RBI began to cut rates from late 2008 through entire 2009 i.e. from 9.0% to 4.75%. The markets however continued to fall and were almost flat over the period.

Markets remained range bound over the two years in 2011-13 period, while repo rates were cut from a high of 8.5% to 7.25%. Interestingly, the markets rose almost 36% in the period in 2013-15 while the rates were increased to 8.0%.

The rates since 2015 have been declining, while the markets have gone nowhere. Why so? While the rate cuts are beneficial for us on the whole. There can be situations where the market is anticipating a sluggish growth in the future due to which there are rate cuts. The markets thus anticipate a slowdown and falls.

Whatever said and done, don't believe blindly when someone tells you, markets are headed up when the repo rates fall.

Do Markets Rise When Rates Fall?


03.50

This monsoon session of the parliament might finally result in the passage of the GST bill. The government, which faced bitter opposition from the congress regarding the bill, seems to be on a final lap to get the bill passed finally.

The Upper house requires a two third majority to clear the bill. Recently, AIADMK, CPM and CPI have expressed their indirect support to the government. Which means that even if they don't support the bill, they would abstain which will help the BJP in getting the requisite majority to clear the bill. At present, the BJP has 81 members in the upper house. It is counting on the support of other members who will support the bill or will not oppose the bill.

The Finance minister has already put it out in the open, the BJP will clear the new GST bill this fiscal year with or without the support of the congress. The congress party on the other hand, wants certain amendments to be made to the bill before it is considered in the Rajya Sabha. With the biennial elections that were held in June, there is a glimmer of hope that the government would finally be able to keep its promise and pass the bill.

The GST bill touted as a game changer and extremely positive for the Indian economy is just one of the many steps that the present government has taken since it has come to power. Will the government be able to push through this much needed reform? We continue to remain positive on this front.

04.40

After opening the day in the red, the Indian stock markets drifted downwards and were trading below the dotted line at the time of writing. The BSE-Sensex was trading lower by about 83 points (down 0.3%), while the NSE Nifty is trading down by 25 points up (down 0.3%). Most sectoral indices were trading on a weak note with stocks from the software and banking sectors leading the losers.

04.50 Today's Investing Mantra

"Behind every stock is a company. Find out what it's doing." - Peter Lynch

This edition of The 5 Minute WrapUp is authored by Rohan Pinto (Research Analyst).

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1 Responses to "Remove Hunger to Boost the Indian Economy"

Dr. K. S. Ananda Kumar

Jun 21, 2016

I am surprised to note that there are 3 million registered NGOs in the country.If all of them are genuinely functioning many problems wold have been solved at national level. Many times I felt that the poor are responsible for giving birth to more than one child,and they don't care even if their kids go for loans, go on feeding the poor throughout our lives and our successors? Having a single child is the Best. If not, our Govt. should openly put up a policy that only the first child will be given all supports like scholarships, low interest etc. At the time of independence, something free from Govt. was considered anathema.Nowadays, no such guilty feeling is observed. Let me know what people like Mr. Pai and great people suggest the Govt. to proceed and make the country prosper. There must a definite policy for prosperity. It is certainly impossible for any Govt. to find jobs or self-employment for such large numbers - one million per month. The only step is to encourage brain-drain and emigration. One can see how China is sending its citizens all over globe for their prosperity at individual and national level also. Our Govt. itself should encourage specific charities. A midday meal programs is an example. This must be streamlined. Only when we can tackle the basic issues, there will be results. It is also better to formulate a policy that only one child is given scholarship in a family. How can the public go on helping one and all, which is practically impossible?

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