From one Kejriwal to another Kejriwal.
My dear Sir Arvind Kejriwal,
Hope you are doing well.
My name is Alok Kejriwal, and I am a humble digital entrepreneur based out of Mumbai.
Sir, I have been struggling for the past 13 years to make a mark for myself in my industry and while I have certainly not achieved the size and scale of success and fame that you have, I do enjoy my own small universe of friends and supporters.
This mail is not to obviously compare my popularity vs yours' (silly comparison) BUT to ASK you a question about your philosophy of creating such amazing and effective agitation against CORRUPTION.
My Question - Instead of fighting tooth and nail (and losing yesterday's battle) against corruption, have you Dear Sir considered fighting and agitating for INCREASED GDP??
Sir, allow me to explain...
In my Company, let's assume I do a business turnover of Rs 100.00
Also let's assume that my profit margin is 10%
Therefore, I SPEND Rs 90.00 in generating my business turnover.
Obviously this expenditure of Rs 90 is towards salaries, cost of buying services, electricity, rent etc paid to OTHER Indian companies and individuals.
Since you are a very smart man, you will quickly understand that IF a man starts a business of Rs 100 in India, then this is what happens when the people who receive my Rs 90.00 further retain 10% margin and SPEND the rest in making THEIR business run:
| Turnover | Profit | Expenditure |
| 100.0 | 10.00% | 90.0 |
| 90.0 | 10.00% | 81.0 |
| 81.0 | 10.00% | 72.9 |
| 72.9 | 10.00% | 65.6 |
| 65.6 | 10.00% | 59.0 |
| 59.0 | 10.00% | 53.1 |
| 53.1 | 10.00% | 47.8 |
| 47.8 | 10.00% | 43.0 |
| 43.0 | 10.00% | 38.7 |
| 38.7 | 10.00% | 34.9 |
| 34.9 | 10.00% | 31.4 |
| 31.4 | 10.00% | 28.2 |
| 28.2 | 10.00% | 25.4 |
| 25.4 | 10.00% | 22.9 |
| 22.9 | 10.00% | 20.6 |
| 20.6 | 10.00% | 18.5 |
| 18.5 | 10.00% | 16.7 |
| 16.7 | 10.00% | 15.0 |
| 15.0 | 10.00% | 13.5 |
| 13.5 | 10.00% | 12.2 |
| 12.2 | 10.00% | 10.9 |
| 10.9 | 10.00% | 9.8 |
| 9.8 | 10.00% | 8.9 |
| 8.9 | 10.00% | 8.0 |
| 8.0 | 10.00% | 7.2 |
| 7.2 | 10.00% | 6.5 |
| 6.5 | 10.00% | 5.8 |
| 5.8 | 10.00% | 5.2 |
| 5.2 | 10.00% | 4.7 |
| 4.7 | 10.00% | 4.2 |
| 4.2 | 10.00% | 3.8 |
| 3.8 | 10.00% | 3.4 |
| 3.4 | 10.00% | 3.1 |
| 3.1 | 10.00% | 2.8 |
| TOTAL 875.00 |
Sir, if you notice, the TRICKLE DOWN EFFECT of starting a business with Rs 100.00 turnover results in Rs 875.00 turnover generated by other people down the value chain as they run their business/service.
NOW, coming to a topic closer to you:
LET'S ASSUME THAT THE PERCENTAGE of BRIBE IN EACH BUSINESS TRANSACTION IS 10%
So, of the first Rs 90 I spend, I will have spent Rs 9 in bribes.
AND
In the Rs 875.00 turnover achieved above, the other players in the VALUE chain will also have spent 10% of 875.00 or Rs 87.50 AS BRIBES.
In short, Rs 100.00 turnover GENERATES Rs 875 more turnover, with Rs 87.50 being spent as bribes.
MY QUESTION TO YOU IS - what is MORE IMPORTANT?
Encouraging me to START A BUSINESS of Rs 100.00 that GENERATES further business of Rs 875.00 OR SAVING Rs 9.00 ????
Bear with me for one more minute:
Let's ask ourselves, what stops people from starting businesses (that grows GDP) in India in the first place??
It's the lack of EDUCATION.
So, let's take the case of my Driver.
His son is studying in an English medium school and is quite a bright guy.
I hope that one day he will NOT become another driver BUT someone, like say, an Auto Parts Dealer with a SHOP that sells parts and runs a BUSINESS.
NOW COMES THE QUESTION:
If he HAS TO PAY A SMALL BRIBE TO START HIS SHOP - ISN'T THAT OK - CONSIDERING THAT HE WILL CREATE 8.75 TIMES MORE BUSINESS FOR THE COUNTRY EACH YEAR???
BRIBES ARE PAID ONCE. BUSINESSES RUN FOR EVER!
If my driver asks me for a LOAN to help start his son's business - should I NOT GIVE IT - KNOWING that Rs 9.00 WILL GO IN BRIBES, BUT EACH year he will generate a 8.75 MULTIPLE effect for the country??
Sir, I am businessman, and just using elementary math, note THAT RS 875.00 is BIGGER than Rs 87.50!!
My plea with you is:
Agitate to get more people to START businesses.
TO INCREASE THE GDP OF INDIA
TO CREATE ENTERPRISES
TO CREATE AN ARMY OF ENTREPRENEURS
TO NOT JAIL BHARO
BUT
BANK BHARO WITH ENTREPRENEURS!!!
I have tears in my eyes as I write this Sir.
Simply because the biggest and most powerful agitators ever born in this great country... which would be you and Shri Annaji... seem to have MISSED THE REALLY, REALLY, BIG PICTURE.
A troubled,
Alok Kejriwal
alok@rodinhood.com
*****
Ps - special thanks to Asha for her speed editing of this one!
*****
This comment exchange between me and a fellow rodinhooder (part of comments) may also help understand my article:
Comment by Darshan Mujumdar
Hi Alok,
First of all, very creative attempt to solve the problem at hand than keep beating around the bush. I, however, see a fundamental flaw in your argument. The number Rs. 875 is a notional number, as you are summing the "revenues" while you move down the value chain of your product/service. In effect your model is proving that if our country's earning is Rs. 100 (the revenue generated in your example), then Rs. 87.5 goes in bribe. Note that at each level in the value chain, the REAL earnings are only 10% of the service/product that you sell, so effectively your model depicts that at each level of the value chain, as the money trickles down, 90% goes in the form of bribe, while 10% of the profit or 1% of the revenue remains with the actual producer of the service or goods.
Regards,
Darshan
My reply:
Darshan,
You really need some basic tutoring in economics.
Let me contribute:
- Lets assume I run a Paav Bhaji stall in Mumbai.
I SELL Rs 100 worth of paav bahji to customers PER DAY
FIRST - who pays me? Nearby employees of office buildings etc - who have EARNED SALARY and spend small moneys to eat every day. So that is where I get Rs. 100 from. ( not important in this discussion).
Now, from the Rs 100 I earn, I SPEND RS 90 per day.
Where does the Rs 90 get spent per day?
Assume:
- Vegetables & Food vendors - Rs 70
- Helper - Plates, disposables etc - Rs 11
- HAFTA - BRIBE TO POLICE WALA - Rs 9 (10%)
- TOTAL = Rs 90
- Profit retained = Rs 10
GROSS TOTAL = Rs 100 = Original sales.
Now, lets look at ONE OF THE ELEMENTS of my Rs 90 spent - the Rs 70 spent on the vegetable and food vendor.
The Rs 70 I SPEND is EARNED by Wholesale vegetable guys who have small shops that BUY from the Village market suppliers etc. So get this right - My Rs 70 spend is Rs 70 Sales for this guy.
This person in turns spend Rs 63 (90% of his cost) daily on:
Lets assume - Rs 50 - paid to village agent who gets him vegetables, Rs 7 to a Hamaal (coolie) who carries the goods for him and Rs 6 (10%) BRIBES - to the police wala who lets the vegetable seller conduct his business.
As per the economic model I have maintained, the Vegetable vendor keeps 10% of his sale or Rs 7 as profit for himself.
Now, lets do totals for JUST ALOK and Vegetable Vendor
Alok's sales - Rs 100, Bribe paid - Rs 9
Vegetable sales wala - Sales - Rs 70 - bribe paid - Rs 7
(The same could be calculate for plate supplier, hamaal etc)
TOTAL SALES just between 2 people = Rs 100+ Rs 70 = Rs 170
BRIBES PAID - Rs 9 + Rs 6 = Rs 15 ( less than 10% here)
Therefore, as the Original 100 trickles down, it creates momentum value since what I spend is someone's earning etc etc
IF I REFUSE TO SPEND RS 9 on the first Bribe - I DONT SELL Rs 100 of Paav Bhaji, the Vegetable Vendor doesn't get Rs 70 etc etc etc....
DOES THIS MAKE SENSE???
Now comes the FUN!!
The 2 police walas who take bribes - Rs 9 and Rs 6 = Rs 15 ACTUALLY FURTHER SPEND MONEY ON EATING PAAV BHAJI FROM MY NEIGHBOR, thereby again increasing the cash circulation!!! (source of money which I did not care to cover because if I ever said that bribes are good for the economy, then I would be killed).
FINALLY:
I would like you to look up a famous man called Keynes and what he said about 'digging holes in the ground'.... that will really strike a point.
Your friendly, neighborhood economist:
Rodinhood
******
Update - 30-8-2012
I just cant help smiling to myself.
In the post above, just below the maths, this is what I had written:
"Sir, if you notice, the TRICKLE DOWN EFFECT of starting a business with Rs 100.00 turnover results in Rs 875.00 turnover generated by other people down the value chain as they run their business/service. "
YES!!!
Just read this in the Times of India Today:
:-))))
******
Some blessings from a Senior Economist!
*****
Prof. Pinaki was not quoted by me 'randomly' - he was quoted by me to prove that corruption INDEED DECREASES AUTOMATICALLY when GDP increases - something that i been screaming in my post.
Check the PPT and Prof. Pinaki's graph as under:
Tags: Alok Kejriwal, Anna Hazare, Arvind Kejriwal, Business, GDP, Kejriwal vs. Kejriwal
Views: 14172
Replies to This Discussion
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Permalink Reply by Pavan Kumar Ponnaganti on -
Agreed sir :)
Unlike an enterprise, a revolution cannot succeed with the leader trying to gather supporters. It can only work in the other way.
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Permalink Reply by Deepak Sharma on -
For Better or For Worse. You can't beat corruption, it's like a nanomites in your blood, you would have to drain yourself/economy before you can get throw it out. besides what about corruption that leads to opportunity.
We are not corrupt or selfish. We are the John Galt's of this world, the crazy one's besides I love Corruption.
Summary:- “Saheb will meet you tomorrow, I like you guys normally we would take a cut of 10% but since you are new guys we will only take 8& from you” He demanded. “OK, when do we get the WO {Work Order}”. I asked. “As soon as you submit money” He said. That’s insane, the project value is 2.5cr+ how do a son of farmer come up with that kind of money to pay to Saheb I thought to myself. “We will arrange the commission in a week, are you sure we will get the work” My friend said suddenly. Sure but he would need to pay something in Advance as Saheb is going to meet some other parties during the week. If someone pays before than you, I can’t do anything, I will try to hold since I like you but Saheb has his own mind. You see he is very Big. our new found friend said in confidence.
Corruption is a moral problem, let's not make it a economical one.
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Permalink Reply by Kuldeep Sharma on
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Dear Alok,
you wrote well. Good to read a different angle about contribution of Bribes. You have addressed it to another Kejriwal but when somebody tries to ask a question (think another Kejriwal is asking) like Pawan Khatri, You just brush it aside....!!
Have courage to answer the questions...!!
I think u will have more following than now. Being Aggressive like another Kejriwal will put people off. Giving a quantitative model just like Mutual Fund seller ( who makes u feel rich in just few year to come) doesn't come handy. There are so many qualitative issues which affect life even to business people. Don't they suffer..!!
Anyway its a good article to amuse and ofcouse to think differently.
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Permalink Reply by Alok 'Rodinhood' Kejriwal on -
nope. i propose economic argument.
it must be countered such.
no hoky poky, ram leela stuff here please!
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Permalink Reply by Gautam on
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Interesting points but you failed to point out what the other Kejriwal needs to do?Alok the point you are clearly missing is that why should the 9 bucks be a cost of doing business in the first place? The key to a successful entrepreneurial ecosystem is simple understandable regulation. Complex regulation leads to monopolistic businesses thriving because they dont care about business ethics and are happy to pay the bribe that you described in your somewhat simplistic flawed calculation. I call it illogical because it fails to ascribe any value to social and innovation opportunity cost of paying bribes. My point is that Entrepreneurs are so busy beating the system that they dint get to focus on innovation and building world class products .
Another cost you ignored in your calculation is the cost of raising capital. Absent a corruption free environment you will never have venture capital making its way to new ideas because everyone will be in it for the short term gain. So you will create a brand of businessmen who succeed despite the system and not because of it. Think about it. I dont support Jail Bharo but maybe it is the road to fixing the structural constraints of doing business.
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Permalink Reply by jitendra.satwik on
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Very nice article Alok, really liked it !!!
@ Alok / Asha Only one comment from my end : You guys have mentioned : My name is Alok Kejriwal, and I am a humble digital entrepreneur based out of Mumbai. It shd be My name is Alok Kejriwal, and I am a humble serial digital entrepreneur based out of Mumbai.
Alok you really know how to create successful products. E.g chk out popularity of http://therodinhoods.com
Good show.
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Permalink Reply by asha chaudhry on -
@jitendra: i completely agree with you!!!!! noted for good... many thanks :)
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Permalink Reply by NEERAJ KAYATHWAL on
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One Kejriwal is talking about how to eradicate corruption and the other Kejriwal is talking about how to make corruption a way of life. One Kejriwal gave up his cushy job to bring awareness about our rights and the other Kejriwal is speaking like a money making bania. Totally opposite. What a waste!
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Permalink Reply by Alok 'Rodinhood' Kejriwal on
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hahahahaha !!!
2win has paid 100 crores in salary.
Now, using my wonderful formulae - thats CREATED 8,750 CRORES IN VALUE for India.
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Permalink Reply by NEERAJ KAYATHWAL on
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And has your wonderful formula which has created 8,750 crores in value been able to eradicate poverty in our country? Has it been able to provide with basic education to the millions of children in our country? Has your wonderful formula provided for basic infrastructure in our country?? This list can go on and on..... The reality is that your wonderful formula has only created more corruption and corrupt people who want to live life only for themselves. Lets applaud the other Kejriwal for what he is doing for all of us and our future generations. Its easy to give gyaan but gyaan should have some basis. Not for the sake of talking.....
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Permalink Reply by Alok 'Rodinhood' Kejriwal on
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thats exactly my point to arvind!!
A small silly digital entrepreneur called alok can generate 870 crores
what happens when 1000 infosys are born each year in india??
is it difficult to see that GDP creates wealth that creates education and sanitation?
Have you heard of countries called USA/UK/Sweden?Germany etc?
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Permalink Reply by arupkumar on
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same Germany that killed millions of innocent ppl?same uk that made us their slave for 200 years? same US wher one president did "watergate" and another did "chakkargate" with monica in his office? yes, sabke bare me suna hai. aap iname se kisako follow karate hain?
by the way, aapane Bihar ke "super 30" ke baare me suna hai yaa sirf firng logo ko jaanate hain?
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