Wednesday 6 March 2024

Lessons on Leadership Series: Julius Caeser

Perusing the biographies of great achievers in history often offers distilled knowledge not only on “what to do” but also on “what not to do”. After all, as John Maxwell, the best-selling American author on Leadership once averred “It is said that a wise person learns from his mistakes. A wiser one learns from others’ mistakes. But the wisest person of all learns from others’ successes”.

Julius Caeser is one such magnificent historical figure whose life is a story of great resilience, fulfilled ambition, despite suffering from epileptic attacks & finally a tragic death on the ides of March. 


“Veni, Vidi, Vici; I Came, I Saw, I Conquered”                                    Julius Caeser 


Brief History of Caeser:

Setback 1: Born in 100 BC, Julius as a kid was stripped of nobility as his father ended up supporting the wrong side in a civil war & hence was forced to start his career as a lowly soldier. A brave soldier & a good leader of men, he rose through the ranks to become a key lieutenant of Crassus – the richest man in Rome - & helped him suppress the revolt of the slave army led by Spartacus.

Lesson 1:

(a) Effectiveness on job accords upward mobility, even if denied / withdrawn a silver spoon.

(b) Emerging an inspiring leader of people & making self, indispensable to one’s boss generally assures success.

Crassus returns to Rome, triumphantly, hoping to be made Consul – the powerful Chief Executive of the Republican Government & the Senate and Commander in Chief of the Armed Forces – only to find his opponent Pompey claim credit for the suppression of revolt.

Post the successful campaign, Crassus wanted tax breaks for his businesses while Pompey wanted lands for his legionnaires & with each undercutting the other led to a stalemate in the Senate. Preservation of self-interest & taking care of one’s support base is not a new occurrence after all.

Caeser took advantage of the stalemate & offered to have both the proposals passed by the Senate, if made Consul. He also offers his daughter in marriage to Pompey to cement the alliance. Starting off as a frontline soldier he had by now, in 59 BC, manoeuvred to become part of a Triumvirate, ruling Rome – alongside Crassus & Pompey.

Lesson 2: Life offers opportunities to all but only the successful seize them to fulfil their destiny.

That Caeser uses local goons to silence the intransigent Senate into passing the proposals is indicative of his dictatorial tendencies – a precursor to what he was to eventually become. He uses the profits from the businesses run by the triumvirate to buys a palace. Ergo, power leading to upward mobility & property acquisition is not a modern phenomenon.

Setback 2: By 58 BC Crassus & Pompey strike back, strip him of his position & reduce him to the status of a Governor of a distant province Hispania (Spain). Undeterred, Caeser, creates a fresh opening, attacking Gaul – present day France, Belgium, Switzerland & parts of Germany - albeit without the Senate consent & occupies a territory that had always eluded Rome. He reckons that a Military success & consequent land & treasure conquest, shall bring him back into the reckoning.

Lesson 3: Success awaits those who convert adversity into an opportunity

Caeser’s campaign in Gaul is the stuff of a legend cementing him as one of the greatest strategists the world has ever seen. His surprise attack on Gaul, as part of his “Divide & Rule” policy prevented unification of different tribes under a single leadership. Spurred on by the success, he cuts himself off from the Roman Logistics chain & marches forward towards further conquests till he meets his match in Vercingetorix, who initiates the “scorched earth policy” to deny him food supplies, even while issuing a clarion call to the other Gaul tribes to unite. Even the best, encounter, at least once in life, competition that makes one a better & sharper version of self.

Caeser, along with his Lieutenant Mark Antony, return the favour by building a 11-mile-long wall around the town of Alesia - where Vercingetorix & his troops were stationed. Hearing of Gaul reinforcements coming in, Caeser builds another wall around the first one, with his troops protected between the two walls. He does not think like most Generals would have opted for a retreat, especially, when the opposition enjoyed a more than a 2: 1 numeric advantage. Caeser led a pincer movement vide an outer wall breach & disintegrated the invading Gauls’, forcing their retreat, before taking Vercingetorix captive.

Lesson 4: Out of the box thinking, calculated risk taking as part of strategic leadership key ingredients of success.

Caeser, now focusses on image building, dispatching the “Gallic Commentaries” describing his victories in a neutral third person to create an image of a “hero” back home. Treasure is dispatched to be spent on free food to the Roman people, gladiatorial games & festivities – akin to bribery – to enhance his popularity & he succeeds only to create unease amongst his opponents.

Crassus, not a great military strategist, in a search for competitive relevance, tries to replicate Caeser’s success in the Eastern sphere, only to die in Parthia (Persia). It is important for leaders to be self-aware of their strengths & weaknesses. Not sticking to one’s core competence & indulging in delusional campaigns only leads to sorrow.

On the contrary, Pompey, the new Counsel, a great general & a consummate politician, slyly influences the Senate to applaud Roman soldiers’ success in Gaul but order stripping Caeser of his command & instructing him to stand trial.

Lesson 5: Unbridled Marketing of self always risks creating avoidable powerful enemies.

As Caeser “crosses the Rubicon” – a river in northern Italy, in 49 BC, Pompey & the Senate abandon Rome & flee towards Brundisium, a port in South-East Italy, where ships take them to Pharsalus, Greece - where Pompey’s legions spread across the Republic - & not in Rome - had been ordered to converge to take on Caeser.

Instead of taking over Rome & announcing a pyrrhic victory, Caeser changes course towards Brundisium to cut off Pompey – to finish the challenge once & for all - but fails by a whisker. Undeterred, he orders his troops to make boats, lands in Greece & defeats Pompey, forcing him to flees to Egypt.

Brutus, a senator & son of Caeser’s mistress, Servilia, is however pardoned despite siding with Pompey. Ironically, much later, Brutus is part of the cabal that assassinates Caeser. No wonder, leaders prefer flawed followers who are loyal, to honest people with questionable loyalty.

Asking Mark Antony to return to Rome & maintain order, Caeser pursues Pompey.

Lesson 6: Focus on goal & tenacity often attracts success.

Setback 3: On reaching Egypt, Caeser is presented with Pompey’s head by the Pharoah Ptolemy, wanting to endear himself with Caeser & seeking his support in his war against his estranged wife Cleopatra. Caeser refuses & is imprisoned.

Cleopatra releases Caeser & with his support wins the war against Ptolemy. An intellectual & a linguist, Cleopatra attracts Caeser’s interest & they marry.

In 46 BC, on hearing that Mark Antony, a valiant soldier, but not an able administrator, was unable to control food riots, Caeser returns to Rome. He offers clemency to the Senate - to secure some noble Romans to his side to run an efficient administration – with his appointment as a dictator for 10 years, as a quid pro quo, in contravention of the Roman constitution that had a provision for 6 months only. He appoints Brutus as Governor of Gaul & Rome & leans on him for legislation & governance, leading many to believe that he was the chosen successor.

He restores order to the Senate, sets in place a good Public Distribution System & keeps the public engaged in gladiatorial games. He creates jobs by building Temples, Libraries, & a New Harbour, initiates reforms by introducing the solar calendar & offers an inclusive outreach program of citizenship for the people of Gaul - not treating them as prisoners of war.

Lesson 7: Great Leaders are not only brilliant strategists but able & inclusive administrators too.

Cleopatra, meanwhile, arrives in Rome, with Caeser’s son Caesarion & likely plants, in his mind, the seeds of monarchy, nipping in the bud Brutus’ political ambitions. Caeser, thereafter, exhibits narcissistic traits, building statues of himself alongside Roman Gods, declaring his birthday as a public holiday, wearing a Purple Robe, once reserved for Roman kings & declaring himself dictator for life. That sets for his assassination & the famous “Et Tu Brute” on 15th Mar 44 BC.

Conclusion

Despite, suffering the consequences of the wrong choices made by his father, Caeser’s rise was predicated on his relentlessly pursuit of his ambition to become Counsel for Rome. It is not surprising, therefore, that success embraced him not once but twice. A brave soldier, a still greater leader of his men, a brilliant military strategist with an ability to think out of the box solutions & an able administrator he definitely was, but his propensity for unilateral action marked him out as a person with a dictatorial tendency – a trait acceptable for the military field, but not while running a civil administration. In his later years, he descended more into narcissism even while suffering from epilepsy. It was Rome’s tragedy that the civil war that followed Caeser’s assassination led to the destruction of the very Republic that people like Brutus tried to protect. Caeser’s nephew, Octavius Caeser, became emperor, in 27 BC.

Lesson 8: The road to hell is often paved with good intentions

Friday 2 February 2024

Interim Budget of FY 2024-25: Financially Prudent, Poll Ready sans Fireworks

 

Finance Minister, Nirmala Sitharaman, presented a surprisingly austere, fiscally prudent, political budget, a vote on account, before the impending general Elections. The less than 1 hour speech, was bereft of big bang announcements, unlike the last interim budget of FY 2019-20, presented by Piyush Goyal, that had the PM Kisan Scheme of Rs 6000 each, benefitting around 12 Crore Indian Farmers & a Tax rebate of Rs 12,500 for the salaried class, earning under Rs 5 lakhs, helping them become “tax Free”. Write off of pending taxes up to Rs 25000, per head, for cases between 1962-2010 & Rs 10,000 for the period 2011-14 was announced, through its impact on polls is difficult to predict; it will help clean the Income Tax books though.

Some announcements for the segments identified by the PM under the Acronym GYAN (Garib, Yuva, Annadata, Nari) - as the focus of this government, as a counter to the caste census demanded by the opposition – was expected but the FM merely reiterated the existing schemes, without adding any new pronouncements.  

It was a “political budget” that promised a White Paper on the mismanagement of the economy prior to 2014, & listed the achievements of the BJP, over the last decade. Expect the white paper to be weaponized during the elections.

A financially prudent budget it definitely was. The Revised Estimate (RE) for the Fiscal Deficit for FY 24 was lower at 5.8% Vs the Budget Estimate (BE) of 5.9% & pegged at a still lower 5.1% for FY 25, in line with achieving the glide path of 4.5% by FY 26 – a prudent macroeconomic strategy against the backdrop of a volatile global environment. The drop in Gross Borrowings, therefore, to 14.1 Lakh crore & Net to 11.75 Lakh crore, to “crowd-in” Private investment, was rewarded by the bond Market, with yields dropping by 10 basis points, akin to a Rate cut & Banks gaining, expecting a Marked to Market (MTM) Treasury gains.  A sovereign ratings upside is not expected, though, as the govt. believes that the International Rating agencies continue to remain biased.

The Govt. may still surprise with off budget announcements:

·         The free food grain scheme for the 80 cr. Garib populace has been extended, for another 5 years, pre-budget - to aid the marginalized suffering from a K shaped recovery.

 ·       In Sept 2023, the Women's Reservation Bill, granting 33% reservation for Nari (Women), in Lok Sabha & State Legislatures was passed by Parliament.

·         Expectation of an inflation adjusted upside announcement for the Annadata (Farmers) from Rs 6000 to Rs 8000 was belied though.

An increase in the capex budget, to a perceived auspicious number of 11.11 lakh cr. (3.4% of GDP), is however welcome ­ - as public expenditures multiples are large - as is the Tax to GDP ratio rise to 18%.  A 1 lakh cr. scheme for rooftop solar, for 1 crore households, to enjoy 300 units of free power per month & sell the excess, thereafter, to the grid, & earn a potential Rs 15000 per annum, which the Secretary TV Somanathan, claimed has a potential to create 1 crore installation & maintenance jobs in principle sounds good in the absence of details, as do the Long-term interest free loans with a corpus of 1 Lakh cr. for funding R&D Budgets. Interest free long term capex loans to states of 1.3 Lakh crores – - an extension of an existing scheme - is, however, welcome, as is the extension of certain sunset clauses. The preferential 15% Manufacturing tax rate, ending on Mar 31st2024 & has, rightly, not been extended, as corporates too cannot seek unending timelines.

The Numbers



 Takeaways:

·         Nominal GDP Growth from 273 Lakh Crores in FY 23 to 297 Lakh crores in FY 24 - a growth of  8.8% & real GDP growth of 7.3% projected - indicates presence of a low inflation deflator. A higher inflation deflator would reduce Real GDP & challenge the "Fastest Growing Large Economy" tag. Tax Revenue grew by 10.7% (1.22 Multiple of Nominal GDP Growth of 8.8%) 

·        A Nominal Growth of 10.5% from 297 lakh crores in FY 24 to 328 Lakh cr. in FY 25 & Tax Revenue growth at 12% - a multiple of 1.15 projected, close to the 1.22 multiple of the previous year - a rational no. against the backdrop of a likely drop in Excise Revenues. In May 2022, Excise Duties on Petrol & Diesel were reduced by Rs 8 & Rs 6 per liter respectively & a further drop as a poll sop, masquerading as an attempt to tame inflation, is not unlikely.  

·         Capital Expenditure as a % of the Budget goes up from 17.6% in FY 23 to 23.6% (Rs 11.11 Lakh Crore) in FY 25 which is welcome.

·         Effective Capital Expenditure has increased to around 31% in FY 25 - about Rs 15 Lakh Crore (11.11 + 3.85 Lakh cr. as Grant in aid for creation of capital). Add the likely 3.5 - 4 lakh crore PSU capital expenditure loads up to an impressive figure of around 18.5 Lakh cr. which is impressive.  

·         Primary Deficit which used to near zero, pre-Pandemic, has moved into positive territory which needs to be addressed.  This could also be since off-balance items have been included in the budget since, leading to more transparency though.

The Concerns


·         India spends 25% of its total Budget of 47.65 Lakh Crores on Interest payments, 16% on Security - 13% on Defense & 3% on Home Ministry - & 2.4% of communications, which are central subjects. While One Rank One Pension (OROP) increased the Defense Pension outgo, the Agni Path scheme, launched in 2022, is an attempt to rationalize the pension payout & lower the median age of the armed forces. Reduction in Central debt, as a % of GDP, & hence interest outgo should be the prime aim of the government, going forward.

·   About 2% of the Budget goes towards civil pensions & 8% towards subsidy. The New Pension Scheme NPS 2004 was an attempt at reducing civil pensions apart coupled with the steady decrease in central government & PSU employment since 1996.

·      With around 31% of Budget as Effective Capital Expenditure & with 53% across the aforementioned items, leaves only around 16% for all other Ministries, nullifying the oft repeated argument that the size of Govt. is large.  In fact, India needs greater state capacity even as we refrain from creating white elephants.  The example set by Government of Singapore is a good template to follow.

Furthermore:


 ·         In a volatile Northern & Western border scenario & with China’s India encirclement encompassing Maldives too, the dip in the Defense Expenditure is inexplicable.

·         While weeding out bogus beneficiaries to rationalize subsidy is always welcome, the steep drop in nos. for 2 consecutive years, is troubling, as rural distress is palpable with the ill effects of El Nino & the increase in the no. of people dependent in Farming increasing from 20 cr. in 2019 to 24 cr. in 2021 due to the pandemic, impacting incomes.

Conclusion:

Nirmala Sitharaman, equaled Morarji Desai’s record of presenting 6 consecutive budgets & shall be remembered for launching the 15% preferential Tax on Manufacturing & reducing corporate taxes to a competitive 22%, in 2019. Both were off Budget announcements & those who aver that her interim budget lacks “fireworks” should not be surprised if the aforementioned trend continues.

Launch of the Production Linked Incentive (PLI) Scheme in 2020 & bringing in off budget items into the General Budget, during the Pandemic Times, when Fiscal Deficits of all countries worldwide were rising - and Rating Agencies were looking away - timed in greater transparency. Her latest Interim Budget sans fireworks is definitely “financially prudent” as a “Vote on Account” ought to be.