Make using cash expensive

Event one: I’m buying something from an Apple store for a favourite nephew. I’ve just used my credit card to make the payment. I’m asked to show an identity proof, which is then photocopied and the paper kept. Why, I ask. The card companies want us to do this so that stolen cards are not used. At the other check-out station, a man slaps a thick wad of cash on the counter. He has just bought something that costs almost Rs.1 lakh. The cash is counted. A receipt is issued and the man walks out. Why did you not take his identification, I ask. Mild titter of mirth—not needed, ma’am; many people pay cash. Unfair, isn’t it? I’m paying by card; so it is obviously tax paid money. That guy is paying by cash. We know who carries so much cash, right? Nods all around. And then we all move on. That is how it is in India. Cash gets the fast lane.

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Avoiding death by paperwork

The kid calls. As usual, it is a last minute panic call. We’re visiting the nuclear facility and I need a valid identity (ID) proof—passport will do. When do you want this sweetie? Now. Ummm… but you are far away in boarding school and the passports are at home and I am at work. Sort it out, mum.

Luckily for all of us, this ends well. I remind the kid that I had attached a copy of the passport in a mail I sent her some months back—download, print and get your school head to sign off and then go, get radioactive. Click.

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When Econs need a shrink

As a student of Economics from when I was in grade eight, I’ve heard the famous Adam Smith words, that the invisible hand of the market will sort everything out. We’re not exactly encouraged to think beyond the text in the Indian education system and it took a postgraduate degree in Economics to understand that what I’d read was so far from reality that it put me off the subject for a long while. My understanding of Smith’s famous phrase is this: when sellers and buyers maximize their own benefit freely, the market is in equilibrium or that prices will rise and fall so that demand and supply meet. This individual maximization of “utility” will benefit the whole community. Therefore, free markets mean good for all.

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So, real estate wasn’t such a great idea

The excited real estate multi-bagger story exchange in the investing classes heard over the past few years in Delhi and Mumbai has given way to a grimace and a despondent shrug. I know from anecdotal evidence that people are down as much as 50% on their properties in select locations in Gurgaon and Noida. The volume of conversation is only growing—I’m increasingly accosted in public places to give my views on the future of real estate. Kuchh hoga kya? I’ll come to that in a minute (and will try very hard to take the I-told-you-so tone out of the column, but…) but first, a look at how deep the bleed has been. I looked at the Residex, a real estate price index across 23 Indian cities constructed by the Reserve Bank of India-owned National Housing Bank (www.nhb.org.in/Residex/Data&Graphs.php ).

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