Jamal Mecklai: May a thousand barbershops bloom

MARKET MANIAC

Most readers of this (and other) newspaper columns probably give little thought to how difficult it is to come up with an idea, a thought, a concept that is both relevant and meaningful, and then, put together 800 words or so on the subject""which recalls one of my favorite sayings by Mark Twain"""I'm sorry I wrote you such a long letter; I didn't have the time to write a shorter one."

And then""death by deadline""get the article in to the editor by a particular time.

Of course, it's all worth it, because when you are able to write something that pleases you, it puts a smile in your heart; you open the paper on the day it is published and eagerly read through your piece, worrying about typos and editorial mistakes (almost none so far from Biz Standard, thank you guys); and, if you get some comments on the article from associates, friends, people you never met""boy, that sends the smile dancing from your heart to your face. So, there, that's nearly 200 words.

As I was trying to say, this fortnight it's been really difficult to come up with an idea. We are in the midst of a corporate restructuring (but then, like most, our company is constantly in a state of flux), it's the holiday season and, umar ke hisab se, any number of my friend's kids and kid's friends are getting married (of course, it's always party-time at the Mecklai house, so that's not a good excuse), and, to top it all, markets seem calm, and, in any case, I wrote about the upcoming crisis a couple of weeks ago. So, what to write about?

With this as a constant hum in the back of my mind, I went for a haircut last Saturday""had to clean up for all the weddings and tamasha""and, sitting at A-1 hairdressers in Colaba, it came to me. Actually, it came to me just after I stepped out of the barbershop, running my fingers through my now-handsome-though-still-thin(ning) hair. A-1, where I usually have my hair cut, is more or less in the middle of a row of commercial establishments in the mixed commercial/residential building where I live. I have lived there for nearly 15 years, so I know the mood and energy of that pavement pretty well. And last Saturday, it was like I had just walked into a party.

There were dozens of people milling around, hanging around""there usually are quite a few, but not like this and there was a real buzz""like everyone was having a great time. It was Saturday evening, around 8 o' clock, but I had never seen it like this before. It was like walking into the Indigo around 10:30 on a Saturday night. The crowd was different, to be sure""these were middle to lower middle class folk. But, the scene was happening, they were happening, it was a party.

And, then it hit me. I have felt for some time now that the consumer-driven economic boom has pushed deeply into the economy""I recognise that this is Mumbai, the outer layer of the economy, but the fact remains that the boom has reached A-1 hairdressers. Interestingly, the prices haven't gone up that much""it was only 40 rupees for a cut, but somehow, this time I added 20 rather than 10 as a tip. More and more people have credit cards. I asked Richard, my driver""he has one, as do most of his friends. Welcome to the next-layer-of-consumers-are-here India.

As a result, growth is going to be higher than the most optimistic estimate. Even, the RBI moved its forecast up to 7-7.5 per cent (from its earlier 7 per cent); the finance minister is saying that we can break 8 per cent quite easily. Well, gents, wait for the number""I'll bet we're ahead of 8 per cent already.

The markets know it. Higher growth, driven""hallelujah""by domestic demand means higher imports, and the rupee's been telling that tale for some weeks now. Of course, many are seeing the rupee weakness as really a reflection of dollar strength, and are wondering how the rupee will react when the dollar turns. Will it go back to 45? Or will it get even stronger? And, pray tell, when is the dollar going to turn?

A fortnight ago, I was""and am""pitching for a collapse in the Dow in February 2006""I've even (using part of my $25,000 entitlement) bought some puts at 9,000. Now, it is conceivable that such a major move could trigger the long-awaited dollar collapse. If so, what would happen to the rupee? And, importantly, what will happen to the rupee between now and then?

Well, I don't know, of course. But I am beginning to get a sense""as I run my hand over my elegantly cropped hair""that we could see a 46.50 break before too long, and the rupee could well be peering into a deeper hole by February. Now, I want to state before I finish that this is not a bad thing. A weaker rupee as a reflection of increasing domestic demand is just what the doctor ordered""however, it needs to be paralleled with an increase in domestic investment. The RBI's continuing efforts to bolster liquidity suggest that they understand this.

May a thousand barbershops bloom.