Swan Song of the Fab Four

At the end of the disastrous tour of Australia, it is heartening to note that three of the Fab Four have shown remarkable improvement in consistency.

Statistics offers a wonderful tool for measuring relative consistency of batsmen’s performances – the Standard Deviation of their scores. Standard Deviation is a measure of  the variance of their scores around their average. The lower the standard Deviation the less the variance and hence the higher the consistency.

Consider the following chart which plots the Fab Four’s Standard Deviation over their entire career vs. their Standard Deviation over the eight matches they played in the recent England and Australia away tours (Sehwag sat out two of them in England because he was too tired):

Sehwag displayed the most dramatic improvement in consistency with his Standard Deviation dropping from from 60 to a jaw dropping 23! He caught up with Tendulkar and the ever dependable Laxman in terms of consistency! Strangely, the ever studious Dravid shows precious little improvement in consistency. Further investigation revealed that the three centuries he scored in England marred his consistency figures badly. “If only I had not scored those centuries” rued Dravid, “not only my consistency figures would have improved, I would also have got lots more time for shopping”.

“We are very happy to see  that such outstanding consistency from our seniors. The improvement of Standard Deviation from 40s and 50s down to 20s is simply fantastic Di. They have fully justified our faith in them Di. Except for Dravid. We surely have to drop him to make way for a deserving youngster Di” said the Chairman of the Selection Committee Krishnamachari Srikant from Chennai.

When queried about the other statistical measure that is often used to measure a batsman’s performance, Srikant enigmatically replied ‘Baalu kalaru redu redu; redu kalaru blacku”.

Ravi Shastri, on the other hand, had the following to say “It is not correct to measure great batsmen like Tendulkar, Dravid, Sehwag and Laxman on the basis of a single statistics such as batting average. One has to take a wholistic view which is provided by their superior Standard Deviation. Only when the younger players display such consistency can the seniors’ position in the team be challenged”.

Sunil Gavaskat reportedly fell off his chair when he saw the consistency  figures  until he saw the averages chart. He then remarked “Hell, I have to stop talking about the Glorious Uncertainties of Cricket from now onwards”.

To which Srikanth replied “Dingu Dongu Dongu Dingu; Dongu Dingu Bongu”. At which point Ganguly slapped him.

Did the CAG overstep its mandate in its 2G spectrum allocation report?

With the CAG Mr. Vinod Rai going before the JPC today, it is interesting to examine if the 2G report produced by the CAG is indeed within the CAG’s mandate or did it exceed the CAG’s mandate.

The CAG’s own guidelines define “performance audit” as follows:

Performance audit is concerned with the audit of economy, efficiency and effectiveness and embraces:
(a) audit of the economy of administrative activities in accordance with sound administrative principles and practices and management policies;
(b) audit of the efficiency of utilisation of human, financial and other resources, including examination of information systems, performance measures and monitoring arrangements and procedures followed by audited entities for remedying identified deficiencies; and
(c) audit of the effectiveness of performance in relation to the achievement of the objectives of the audited entity and audit of the actual impact of activities compared with the intended impact.

Note that none of the Three “E”s mentioned above relate to the revenue of a department / program. All three relate to how a department / program is administered and how its resources (human, financial and other resources) are utilized. The 2G report had an entire section devoted to calculation of presumptive loss due to not auctioning spectrum, i.e. it focused on revenue generation of the telecom department. Hence, that section is clearly beyond the mandate as defined above.

The CAG guidelines further defines each of the three “E”s as follows:

The 2G Spectrum Non-Scam

In Apr, when the trial by media on the 2G spectrum pricing was in full swing, I had written that the CAG was up to no good. That the CAG report was specious, and downright silly in some aspects.

Now, six months later, the media has finally woken up. India Today has announced that the CAG report inflated the loss to exchequer, and the Rs. 1.76 Lakh Crore loss figure had little backing within the CAG itself!

Why this volte-face by the media? Most likely because of judicial intervention. Justice O. P. Saini’s court allowed the accused to defend themselves and they, of course, tore into the CAG report. As the CBI case started crumbling, the media is shifting its stand now.

Justice Saini has not framed charges yet (I am hoping he will throw away the frivolous charges such as causing loss to exchequer and making money by reselling spectrum, and retain only the out of turn allotment charge). Yet I feel I can say two things with confidence:

The media is a bunch of nitwits. But the Judiciary works.

Bangalore Green Still Intact

A year and half back (Sep 2009) I had captured a Goole Maps snapshot of the green cover over Nanda Talkies Road, Jayanagar.

Now that Namma Metro work is well advanced, I took a second snapshot today:
Things could have been worse. The Metro consturction has opened up two gashes in the gree canopy over that road for two Metro stations on this stretch. Also, the tree branches that used to join overhead have been pruned ,opening up the entire stretch to the sky (you can see the thining of the gree in the middle of the road). But, by and large, all the trees still stand. Whew!

Click here to see the two snapshots side by side.

The 2G Scam – 1.76 Lakh Crores my foot

The real sensation in the saga is the number 1.76 lakh crores. How did Mr. Rai come up with this figure? Let is analyze the CAG report and see how it arrived at the above figure.

The CAG reports starts off rather cautiously:

5.1.2 What could be the value of the spectrum which was allocated to 122 licensees in 2008 at the price discovered through bidding for licences way back in 2001?

Any loss ascertained while attempting to value the spectrum in hindsight can only be ‘presumptive’, given the fact that there are varied determinants like its scarcity value, the nature of competition, business plans envisaged, time of entry, purchasing power of the people, growth of economy etc., which, in a market condition, would throw up the actual price at a given time.

It then proceeds to apply three different methodologies to arrive at the “presumptive” value of the loss to the exchequer:

The 2G Scam – Loss to Exchequer my foot

This whole 2G scam broke thanks to a report published by the Comptroller and Auditor General of India, one Mr. Vinod Rai. Here’s what Wikipedia has to say about Mr. Rai:

As Comptroller and Auditor General of India, Vinod Rai has consistently hit the headlines for his unforgiving audits, ranging from the scathing report on the shoddy preparation for the 2010 Commonwealth Games to the latest on spectrum allocations for second generation (2G) telecom services. Bureaucratic grapevine suggests there was quite a bit of pressure on Rai to dilute the 2G report but he held fast, merely asking his people to check for unnecessarily harsh or unfair language. The report ripped apart the government, even pointing a finger at the prime minister for arbitrarily giving away spectrum, a valuable and limited national resource. The CAG report said the ultimate loss to the exchequer could be as high as Rs 1.76 lakh crore.

That figure of Rs. 1.76 lakh crore got the media all excited. This was a fantastic opportunity for sensational journalism which every magazine, newspaper and TV channel capitalized to the hilt. Thanks to the Internet, the CAG report is available to all. I downloaded the report and read through it with a view to forming my own opinion. Here is what I found.

The 2G Scam – Myth and Reality

The media has been going nuts over the 2G scam for the past few months and that is an understatement. Whenever the media acts as accuser, judge and jury all rolled into one, and condemns someone, I get very perturbed. In a democracy it is expected that the media will educate and inform not condemn, but the Indian media cares little about educating and informing. So, one has to rely on oneself for information.

There are two primary accusations against Raja:

1. Raja chose not to auction spectrum in 2007. He decided to fix spectrum price at 2001 levels. This resulted in a loss to exchequer to the tune of Rs. 1,76,000 Cr.
2. Raja gamed the first-come-first-served process to favor a few select businesses, in return for unspecified bribes.

On both counts, the media insinuates that Raja made a lot of money. The perception created by the media is that the exchequer’s loss is Raja’s gain.

What is the reality?

To obtain a balanced perspective, one has to listen to the accused’s side of the story. In this case, Raja’s defense for Accusation #1 came from Kapil Sibal.While the media did their best to tar him black, to his credit, Sibal did put his point across pretty clearly – the loss to exchequer was intentional; it has to be balanced against the public good that accrues due to increased mobile penetration. In other word, the decision not to auction spectrum and fix the price at 2001 levels was a conscious policy decision by the Congress Govt.

As for Accusation #2, there has been no defense so far.

Here is my perspective. Accusation #1 was indeed a policy decision for which the Congress need not be ashamed. The media got it all wrong, and simply sensationalized the humongous Rs. 1.76 lakh crore figure conjured by the Comptroller and Auditor General. Accusation #2, in all probability, guilty as charged, but the actual kick-back is likely to be 15 – 20% of spectrum license charges.

In subsequent posts, I will examine Accusation #1 from multiple angles and explain why I believe it was a media red herring, and also explain the huge disservice the media is doing to Indian democracy.

The Trouble with Metrics-Based Management

I was reading the transcripts of the US Congressional grilling of BP CEO Tony Hayward, and this passage caught my attention:

Dr. Burgess: Let me ask you another question. You said in response to some information that came up that there was no evidence that BP was focusing on the cost of drilling. And, yet, March 2010 strategy presentation, you stated, “We have added exploration resources efficiently. Our discovery cost was $1.40 per barrel in 2009. This is consistent with our track record over the last 5 years of having the lowest discovery costs in the industry.”

Now, certainly, that would be enviable, except, in a culture of safety, I mean, I might even spend $1.45 or $1.47, instead of just $1.40, if it meant that it was a safe procedure.

So was maintaining the lowest‐cost discovery in the industry possibly a factor in the decision‐making on this well?

Mr. Hayward: None whatsoever.

But that metric is created by dividing the volume of barrels discovered by the costs. And what it talks to is the success of our exploration program and the scale of the volume that we have discovered, not anything to do with costs.

Dr. Burgess: Well, but it does have something to do with cost. Now, it has been reported that completion of the Macondo well was running behind schedule. Is this accurate?

Mr. Hayward: I believe it was running behind schedule, that is correct.

Dr. Burgess: How far behind schedule?

Mr. Hayward: I don’t know the precise number.

Dr. Burgess: What does it cost today to run a rig like that?

Mr. Hayward: That sort of rig, fully built up, the cost is probably a million dollars a day or thereabouts.

Dr. Burgess: So, even a couple of days over is a significant cost driver on that $1.40‐a‐barrel minimal discovery cost in the industry.

Mr. Hayward: Well, with respect, Congressman, the most important thing was that actually we had made a discovery, and we wanted to secure it in the proper way. And that was going to be a far bigger driver of any value that the company was going to create than the cost of the operation.

Dr. Burgess: I don’t disagree with that. But, oh, how I wish that that had been the case, as we are investing hearing after hearing after hearing on this thing case and the darned thing is still bubbling down at the bottom of the gulf. That doesn’t seem to be accurate.

Beware what metrics you use in your strategy meetings! Big Brother is always watching!

Eyjafjallajökull

A Journey to the Center of the Earth is an all-time favorite of mine. This delightful book by Jules Verne describes a mad attempt by a nearly mad scientist to reach the center of the earth by descending a volcano. What is interesting at the present moment is that Jules Verne picked a volcano in Iceland as the starting point of his journey!

Jules Verne’s volcano is on the left and the current ash-spewing bane-of-air-travel is south-center.

Here is Jules Verne’s description of the formation of this whole Iceland island:

This Happens Only in India

This page of the Times of India 9 Apr 2010 epitomizes the dichotomy that is India.

Talk of using high-tech drones to fight the Naxals. And in the same breath admit we cannot provide basics like drinking water to the low-tech Jawans who are actually fighting the Naxals on the ground!