The Yuppies Return

April 21, 2009

I am in grave danger of becoming as obsessed about my hippie-yuppie-lala theory as much as Skimpy is about his studs-and-fighters theory. But there’s now a new Madhavan/ Vidya Balan Airtel ad, and considering the original set of ads was one of the original inspirations for the theory, I can’t resist. Especially considering the new ad unleashes yuppieness far more than the original set did. It’s not on YouTube yet, but the Airtel website has a low-res flash version – click the My Airtel My Offer link. I’m thrilled about this – there had been no yuppie ads by Airtel for almost a year – only ones featuring Kareena Kapoor and Saif Ali Khan as themselves, therefore hippies.

In addition to all the yuppieness that was there earlier – the contemporary furniture and the clean haircuts – Vidya Balan is reading a pink newspaper (I can’t make out if it’s the Economic Times or Business Standard), and talking about slowdowns and cutbacks. As we know, hippies inhabit a non-cash economy and lalas inhabit a black-money economy, so slowdowns and cutbacks hardly register.

The new ad also raises a question – if yuppies are back on advertising, does it indicate that the recession is drawing to a close?

Devangshu Datta of Business Standard has a theory that RK Laxman notices the state of the stock market only when valuations are so unrealistic that the market can’t get any higher or lower. So whenever there’s a Common Man cartoon that has a punchline about the stock market, it means that it’s hit a peak or a valley and has to change direction – that’s when you buy or sell. Leading on from this, I naturally want to know if a similar pattern exists with advertising. Do ads that mention a recession get aired only when the recession is about to change course? Are they as exact as the Common Man, or do they lead or lag the actual turning point by some amount of time? Or is it just completely random? I appeal to the current batch of MBA students to run the regression analysis as a term paper.


More on Finance and Inclusive Growth

June 17, 2008

Suddenly, the idea that financial sophistication leads to inclusive growth seems to have caught on (well, except with the Ministry of Finance, which is actually in a position to do something about it). First there was my Pragati piece. Yesterday, Nivirkar Singh’s column in Mint also touched on this:

Petia Topalova of the International Monetary Fund has recently examined the links between policy and inclusiveness of growth. In particular, she uses variation across states as well as three time periods, spanning 1983 to 2005, to examine these links. Inclusiveness is defined as the difference between the consumption growth rate of the poorest and richest 30% Indians.

First, higher financial development, measured either by real credit per capita or by a larger initial share of agricultural labourers with loans from formal financial institutions, is significantly associated with more inclusive growth.

(Mint)

OK, this is interesting. One of the points the Raghuram Rajan report raises is that access to credit is actually only one leg of financial inclusion, and is the most overused one. The other two legs – access to savings instruments and access to risk management instruments like insurance – have traditionally been missing. So there are two ways to read this:

  1. The correlation between credit and inclusive growth doesn’t mean anything. It’s just a coincidence that this turned up, and might be caused by something else – more urbanisation, say, or might even run in the opposite direction – financial inclusion leads to more demand for credit (though I personally think it’s a positive feedback loop – they cause each other)
  2. The research is right. Credit might be only one leg, but it still has an impact. And we haven’t even seen what would happen once savings and insurance also get taken up. In that case, the gap could close in a stunning way.

Moving on. After Nivirkar Singh’s column, there’s also the cover story in today’s Business Standard the Strategist. It’s about FabIndia, and how they’re encouraging artisan communities to set up private limited companies where the shareholding is split between the artisans themselves, their employees, FabIndia, and outside private investors.

The concept, now a Harvard Business School case study, is simple. A fully-owned subsidiary of FabIndia, Artisans Micro Finance, a venture fund, facilitates the setting up of these companies, which are owned 49 per cent by the fund, 26 per cent by the artisans, 15 per cent by private investors and 10 per cent by the employees of the community-owned company.

The artisans gain in many ways. The value of their shares goes up. They earn dividends when the company is in a position to declare them.

The shares offer the artisans a divisible asset class (land can be divided but its divisions are often disputed and jewellery is largely indivisible) and community-owned companies help convert FabIndia’s artisan base into an asset.

“If he wants to get his daughter married and needs money, he can sell his shares and realise the appreciation. He can also take a loan by offering his shares as collateral,” says Bissell.

(the Strategist)

The article is worth reading even if you aren’t interested in finance, and you’re more interested in social entrepreneurship or marketing or traditional handicrafts. Axshully it is worth reading even if you are a metrosexual and only buy organic muesli as you will get to know about new and exciting opportunities to buy it as FabIndia expands.

By the way, William Bissel mentions in the article that the co-operative system imposes too many restrictions on the artisan and the private limited company makes more sense. This is a massive understatement. The legal and accounting procedures for co-operatives in India are so totally broken that co-ops inevitably end up in the hands of regional politicians. That, however, is the subject of another post, and by someone else.