Tuesday, 30 October 2012

General Speak

Retired Army Chief General V K Singh has invited another controversy with his statement on Monday in a public stage he shared with social activist Anna Hazare. General Singh as we are aware was involved in a very public row over his age with the government when he was heading the Army. The age controversy as per General Singh was raised by none other than the dismissed officer Lt. General Awdhesh Prakash who was found guilty in the Sukhna land scam by an Army court of inquiry.

The statement made by him blames the current government of being silent to corruption issues, of bending to corporate interests, of being anti people. He also blamed the Prime Minister of pushing though FDI in retail when the government as per him was a minority in parliament. He mentioned that the farmers land was being taken from them by the government and 'gifted' to private companies and policies are being made under foreign pressure especially American. None of the issues he has raised are new. They have been alleged by many in past and are not without substance. 

There is a lot that has happened in the last few years that has upset many in India. But when these words come from a retired Army chief some people cry foul. General V K Singh is being accused of bringing the morale of the Army down, of setting an unwanted precedent, of mixing politics with Army service. I do not agree with that assessment. He may be accused of saying these things only because he was asked to leave office prematurely because of the controversy of his true age, but there is no doubt that he has fought corruption within the Army head on when he was the Army Chief. Three particular incidents that come to mind are the Sukhna land scam with Lt General Awdhesh Prakash and Lt-Gen P. K. Rath being dismissed, the TATRA-BEML corruption scam with Lt General Tejinder Singh being currently investigated and the issue around Lt. General Dalbir Suhag.

Apart from being named in TATRA scam Lt General Tenjinder Singh was also the general officers commanding Maharashtra, Gujarat and  Goa region during the Adarsh Scam.General Suhag was served a notice by the then Army Chief General V K Singh for alleged indiscipline in the Army intelligence unit under him. After General Bikram Singh took over as the current Army chief the censure against Lt. General Suhag was lifter by him and his was given a promotion to command the Eastern Army Command. Lt. General Prakash was of course dismissed. It should also be recalled at this stage that the predecessor of General V K Singh, General Deepak Kapoor was one of the allottees in the Adarsh building. So the players involved in slighting Gerneral V K Singh on the age issue are many including his predecessor who made him accept an incorrect age for the sake of a promotion which otherwise may have been denied to him. It needs to be recalled that the year of birth 1950 which he was made to accept was mentioned as such in only one document which was his NDA form and his matriculation certification, his passport, his Army ID card etc were also carrying the year which he claimed 1951. So if General Deepak Kapoor had to be fair he should have got the correct date 1951 accepted in the records but he did not do so. Later on the government and Supreme court on account of his previous acceptance denied him any reprieve. 

But that story is past now. Not only is Retd. General V K Singh now a free citizen of this country with every right that we enjoy, he also has a duty to speak on issue of corruption in the Army and the government because he has held the top post in the Army. We should welcome every voice against corruption specially that of retired bureaucrats, retired senior Army officers and retired judges because they are aware of exactly what happens in the institutions they are part of. I don't see any merit in his critics argument that he has brought dishonour to the service or that his statements affect the moral of the forces. He is merely raising his voice against corruption which he as a responsible citizen of this country has an obligation to do.

Monday, 29 October 2012

The Jaipal Reddy Craze

Media has been going crazy about Mr Jaipal Reddy's shift from oil ministry all day today. A story first appeared in The Hindu yesterday about a possible shift of Mr Reddy out of the ministry because of his possible opposition to Reliance Industries to its demand of increase in the Natural Gas prices even before their existing contract with the government expires.  They had also demanded that the CAG audit which was required by the ministry of their operations in the Krishna Godavari basin should be limited to audit of financial books and not be extended to performance audit. The second point about performance audit is significant because there has been a decline in production of gas compared to the estimated levels of a Directorate General of Hydrocarbon's report in march 2011.

In my post yesterday I had briefly mentioned about this move. Mr Reddy's removal from the government has to be seen in the context of all what has happened in UPA II starting with the CWG scam and the complete lack of confidence people today have in the functioning of the government. There is a worry about the crony capitalism being promoted but what can really be expected after all it is the ministry headed by the Prime Minister himself which has come under the coal scam. I don't think may of us have witnessed a similar lack of confidence in the government of the day that only a day after a major cabinet reshuffle so many questions are being asked about the motives behind an exercise which is in the end the Prime Minister's prerogative. So there is no denying that this decision is squarely his responsibility and only he would be able to answer this question.

Sunday, 28 October 2012

Salman beats Anand to the post

My post yesterday turned out to be a bit of a foot in mouth situation for me. I jumped the gun but then in my defence it was based on the talk of the town at the time of my publishing that article. I also stand by my assessment of Industry's influence on the government which was seen in this rejig.

So we know now that Mr Anand Sharma stays in his post as the commerce minister while the surprise elevation of Mr Salman Khurshid to the post of external affairs minister is the confirmed news now. This means that the Rs 71 lakh scam was too  small to be of any bearing on the decision of his elevation after all. More interesting news doing rounds was about the possible exit of Mr Jaipal Reddy from the oil and gas ministry after his showdown with Reliance Industries. The influence of big business on the decisions of the central government looks quite ominous. All this does send a bad signal to those who perform honest discharge of their duties but never the less this is just the fact of the day.

It was interesting to note the oath that the cabinet ministers take during the swearing in ceremony which President Pranab Mukharjee presided on. It remains to be seen how well they keep the oath to perform their duty faithfully and conscientiously, without favour or fear, affection or ill will, in accordance with law, upholding the constitution of India, without revealing the secrets of their office to any person with exception for the due discharge of their duty. An oath they have taken in the name of God hopefully with full knowledge of the responsibility of the posts they are going to hold. Except for the shaky hands of Mr Harish Rawat signing the oath I did not see anyone else being overwhelmed by the occasion at least. But then a lot goes on behind the scenes.

Saturday, 27 October 2012

The Performer gets a Promotion?

Mr SM Krishna's exit from the cabinet today, and the news that Mr Anand Sharma's name was going to figure in the latest cabinet changes expected to be announced tomorrow had made it amply clear to me that he was likely to be the next foreign minister of India. Even though it hadn't been reported until yesterday that he was likely to take over the foreign affairs portfolio, I was suspecting that this might be the case. After all he had been the primary character behind the multibrand retail FDI 'reforms' and deserved a 'reward' for having 'delivered'.

Anand Sharma - World Economic Forum Annual Meeting 2012
As I had written in a previous post there had been considerable corporate and US government lobbying to get a fovourable result in mulitbrand retail FDI policy. Earlier The Hindu had  published a news story based on certain Wikileaks exposed diplomatic cables where Mrs Hilary Clinton was  very interested in knowing what was the position of Commerce Minister Anand Sharma on Multi-brand retail. I had also quoted Mr P Sainath's article which was critical of the decision making process in the present government and it susceptibility to foreign influence. I had also written  how Mr Pranab Mukharjee's presidency had the effect of paving the path to the FDI reforms, and also helped in stalling GAAR, and reversing the retrospective amendments to Income Tax act which had been brought about by him in his capacity as finance minister, to remove a loophole in the tax code which was being used by foreign companies to avoid paying capital gains tax in India.

Please be reminded that I had also written about mainstream Indian media's partisan role in this affair. It is evident that particularly the media company which owns the The Times Of India and Economic Times also has investment via 'private treaties' in the Future group companies which will benefit from the policy changes of allowing 51% foreign investment in multibrand retail.

The affair gets even murkier when a reader is reminded about another event which has occurred parallel to all this which was about  a possible breach of the previous FDI policy by Wal-Mart and the Bharti group. Ms Vandana Shiva had filed a PIL in Delhi high court questioning how Wal-Mart had used a circuitous route to invest in Multi-brand retail when the policy at that time did not allow foreign investment. Delhi High Court had asked the government to respond but alas before the date of response the policy itself  was changed to allow FDI in retail. When the time to appear in court came the government responded that in the light of recent policy changes this PIL should not be entertained any more and Ms Siva also obliged by withdrawing the case. Recently CNN-IBN reported a story on this. Later PM Manmohan Singh asked Commerce Minister Anand Sharma to investigate any possible wrong doing by Wal-Mart. This is very curious and very murky indeed. I have written extensively about this in a previous post tiled 'Wal-Mart something's not right'.

But the end result never the less is that Mr Anand Sharma has delivered to the benefit of the lobby which wanted FDI in multibrand retail and Mrs Hilary Clinton would have been delighted, as is also evident from the the visit by Mr Ben Bernanke and Mr Geithner. Promotion is due and what better role to play than that of Foreign Minister. We have to wait until tomorrow when it is formally announced but Mr Sharma is the right man who can surely deliver and  is an appropriate person to lead the New Order. A 'reform' in the foreign policy is perhaps long over due. Iran anyone?

Tuesday, 23 October 2012

Ravana and his many heads

India slays the ten headed Ravana tomorrow, in the culmination of the annual recital of the story which has been told in the subcontinent for millennia. Tomorrow India and Hindus the world over celebrate 'Dussehra'

The story of victory of good over evil is the greatest story ever told in human history. Every culture has its own version of this story. The plot varies, the struggle of the protagonists varies, the strength and character of the evil varies but what is common amongst these stories  is the determination of the protagonist to achieve the eventual glorious victory over 'Evil'. This is a story of hope, a story of justice. It is also the most appealing story of all because fight against injustice comes instinctively to every human. A hero has to emerge, evil has to be slayed and justice has to be delivered.

The annual recital of this story is also a reminder to us that evil always resurfaces. It is ever present among us, and so should determination to slay it always exist. The slaying of Ravana may only be symbolic, but it is the most important symbolism of all Hindu religious symbols.  Because if religion is not about good then what is religion about, and if evil cannot be slayed then how can good survive? It has to be slayed every year and the slaying has to be celebrated every year. The continuum of evil will exist as long as humans exist, there is no escaping from it. Yet the determination of human society to fight it must not cease, for when it ceases, so will everything worth caring for.

On this day it cannot be escaped to draw a link between this millennia old story and the present human condition. Surely we have to be able to identify the Ravana and his many heads in our lives. Which is the greatest evil of them all that needs to be slayed?

For me the greatest evil of them all is 'Human Greed'. It has many heads and slaying it requires a determination and courage only the best amongst us can muster. Some may argue that greed has been the driving force for human progress. Isn't it true that without want for more we would not have created more? When the desire for better life ends so does better life.  But it is difficult to tell, where urge for progress ends and the evil of unhindered greed begins.

Ravana British MuseumAll the challenges that threaten our very existence on this planet today are man made. They are a result of our greed. In one form it shows up as the ever present evil of 'public corruption'. The stealing of common wealth by individuals entrusted to use that wealth justly for common good; that is the definition of public corruption, and the cause of it is greed. In other forms it shows up as the threat of environmental degradation, of extinction of life forms, of global warming, of threat of our own extinction in the long run. All are a result of human greed. The problem of cyclic repetition of economic crisis in human history, of famines, of human genocides, of ethnic strife, of economic crimes, of human suffering, of poverty and hunger all are a result of human greed. What could be a greater evil than human greed?

Monday, 22 October 2012

The Oracle Speaks on Reforms and GDP - Mr Joseph Stiglitz

Mr Joseph Stiglitz was in India to speak in the 4th OECD world forum. It provided an opportunity to the Indian media to seek his views on Indian economy. I was pleasantly surprisingly when I found that ET reporter Ms Shobhana Saxena in an interview with Mr Stiglitz asked him the kind of questions which I would have wanted to be asked from him. When I read this interview I was delighted.

Two questions in particular about our focus on GDP growth and on the September 14th 'reforms' were the best in my opinion and the answer was well what you would expect from Mr Stiglitz. This is what Mr Stiglitz replied in that interview:-
  • On GDP growth he said that when counting growth you need to look at environment degradation and resource depletion. We have per capita highest number of billionaires but at the same time many in poverty. essentially he is saying that our GDP growth is adding more wealth to the rich than it is to the poor.
  • On Retail FDI and Walmart he was quite critical and does not believe that jobs will be created. He believes that Walmart will use its power to bring in Chinese good and adversely affect Indian production. He also does not believe that Walmart's of the world are good employers in terms of quality of jobs.
If you read the interview which I am sharing here then do spend some time reading the comments and you will realize how some people have seen through the 'reform' bogey.

Sunday, 21 October 2012

Of Cotton Shirts and Canvas Shoes

October marks the 50th anniversary of the 1962 Indo-China war. This was a war in which the Indian army suffered a complete defeat in the erstwhile NEFA region and the extent to which the Chinese Army was able to invade in the Indian territory can be gauged from the fact that the city of Tezpur in Assam was ordered to be evacuated. The accounts of the events leading to the war, the dispatches from the war as it happened have all been extensively written about. Many commentators complain about the Handerson-Brooks report which was the Army's own official account of the war not being declassified by the defense ministry.

When I read these accounts what I see are the glaring similarities between the high altitude war of 1962 with China and the Kargil conflict of 1999. While the build up to 1962 and the actual war was for a longer duration than the Kargil war and with completely different outcomes, in both cases India was left unaware of extent of enemy incursions, enemy's strengths and was completely unprepared to fight the war. A reader may not agree with me on this and might say that we were not as unprepared for the Kargil war as we were for the 1962 war, but the fact is that in both these wars the soldiers on the ground were woefully ill equipped for the kind of conditions in which they had to fight and that is what is revealed in the repeated citing of the kind of clothes and equipment that the solders were supplied with during both these conflicts. In 1962 while the enemy infantry units were acclimatized to the harsh Himalayan conditions and were equipped with state of the art AK-47 assault weapons, the Indian soldiers were recently deployed in the region and the standard issue equipment they had was the Lee-Enfield .303 rifle which had already become obsolete after the second world war. They were sent to guard posts in difficult terrain with no road infrastructure to support their deployment and when the enemy attacked they were left to fight them off with only limited supply of ammunition with them.

The accounts of both the Kargil war and the 1962 war cite the bravery of the soldiers who fought against great odds but the fact remains that if bravery was the the only criterion for winning a war then why spend so much in training the top brass of the military in war strategy and why even have an elite top brass in the services with all the privileges it enjoys. Neville Maxwell's book 'India's China War' paints a very negative picture about the leadership of the Army and the civilian Indian government of the time. Although he has been criticized in India of being 'biased' against India, I find it completely plausible for the kind of disregard for sound military strategy, the nepotism in appointing the Army leadership of the time and the failure of diplomacy with China as has been cited in the book to have occurred. Please also be reminded that before Kargil came the Lahore bus diplomacy just as before 1962 came the Panchsheel accord. The Indian military and civilian leadership was lulled into a false sense of security on both occasions and were caught sleeping when the road in Aksai Chin or the Sanghads in Kargil built by the enemy were discovered.

I frankly do not want to write too much about the war preparedness or war strategy of the leadership of that time. I do not have the credentials to write about it either. It is best left to the experts, but what I want to mention is that condition of the Indian solders comes out as appalling in every account of both these wars which one reads. They were fighting a high altitude war in canvass shoes and cotton shirts. Half the Indian casualties in the Sino-India war were weather related. The soldiers who went up the hills of Kargil were also not prepared for the mountain warfare.The condition was poor 50 years ago and it remained poor 13 years ago. The question is whether it is acceptable today or will we continue to demand bravery from our solders against all odds to get us out of the situations which are a creation of our failure of leadership in the first place, while at the same time giving them barely sufficient in return.

Thursday, 18 October 2012

Justice, Laws and The Normal

In any society there is a common understanding of what is just. That definition may not always be written down in law. But it is understood to be the way it is. That common understanding of delivering justice, the way things have been accepted to be is what I am calling The Normal. The normal is different for different societies. What is acceptable in one society is not acceptable in another. The same society also evolves (or devolves?) and then establishes a new normal.

What is written down in law may have been debated and discussed and with application of mind and what is called jurisprudence may have been incorporated in the law. But the society will change. Depending on how well the law is honoured or how well it is implemented the law will have an effect on the society or it will loose its effect on the society and become irrelevant. But the society will always have a normal, it will establish a new normal. This is what is explained in the scriptures when the scripture define the Yugs,  Sat-Yug, Treta Yug, Dwapar-Yug, and the Kal-Yug. Every Yug had its own normal. What is acceptable in one Yug was not acceptable in a previous Yug. The Sat-Yug was supposed to be an ideal, something that is always aspired but can never be achieved again, every subsequent Yug is a result of devolution of values.

In modern society, law is supposed to have evolved and got better with time. The murderous society of a war torn African country with people living in an environment of ethnic strife, or the country of Afghanistan, has a different normal from the normal of a peaceful society. To an outsider it does not have a rule of law. But is always has a normal of how to get justice in the day to day life of the people. Because justice is separate from law. Law is supposed to deliver justice but law is not justice. Law comes from outside from deliberation, from application of mind, from conventions, from an understanding of justice which people writing the law have. Justice comes from within. Each one of us is born with inherent sense of what is just and a sense of victim hood comes from being denied that justice. Individual seeks justice despite what is the rule of law. 

Even a child has a sense of just and unjust what changes is his acceptance of just and unjust and that acceptance comes from the understanding of the normal. The child as he grows comes to know the normal. What is the normal is taught to the child. The society teaches it. Many a times the child sees a contradiction between what is being taught and what he sees really exists as the normal. The child also has his sense of justice within. That inherent sense evolves as the child grows.That leads to conflict and confusion. The child chooses his convictions as the child discovers the world. To progress like a river the child chooses his contours. But the child always has to work within the normal. Child grows into a man with a full understanding of what is the normal in the society he is part of.

The written law is separate, its effect on society is varied, the normal is the reality, justice is separate. When man faces injustice then man will seek justice within the normal. If the normal follows the written law the man will follow the written law if normal is different from written law man will still follow the normal. Justice is sought within the normal. It is a separate matter that justice may not be achieved by someone because seeking justice within the normal is beyond his means and so the person lives with injustice. But if justice has to be sought in that society then it has to be sought within the normal else there will be no justice received because the laws if they exist may be separate from the normal. So in Afghanistan if normal is to use gun violence and justice has to be sought then gun violence has to be used there is no rule of another law.

Question arises what is the normal in our country? What is the effect of written law on the country's normal? If the normal is to pay bribes as a matter of convention to get things done then the normal will have to be followed. Justice here involves exploitation as bribes. This is the normal and this normal will be followed. It is not deniable that the limit of justice served is defined by the limit of the justice that exists in the normal. A person's possession is stolen the normal is to pay some bribe to get the possession back then justice here within the normal is the stolen possession minus the bribe. That justice may not be perfect but that is the justice as best it can be. Let me remind again normal is separate from law.

Is the normal just is a question for individual, because let me repeat justice is separate from the normal which is separate from the law. How can normal change? Society can evolve or society can devolve. Devolving is easy, if simply let be it will weather and devolve. When power accumulates within sections and individuals the society devolves because the justice is denied to the weak and a new normal is formed. Or when unjust convention replaces law and widespread agencies implementing law fail then societies devolve and form a new normal. How do societies evolve? When laws are written and improved and the improved laws are delivered and implemented then the normal evolves. The normal also changes when there is disruption. The disruption by definition is abrupt, evolution by definition is gradual. The disruption can be peaceful or the disruption can be violent. But when to change the normal evolution is not working may be disruption is required. 

What is our current normal in India? How just is it? Justice will be sought by an individual, because sense of justice is inherent to an individual. Justice will be sought, either within the normal or if normal is still unjust then the normal will be disrupted. In order to achieve a better normal the process of evolution should deliver. That process is the legislature. The effectiveness of the implementation by the law enforcement (police and judiciary) is how best the normal emulates the written law. Improvement in enforcement evolves the new normal, corrosion in enforcement devolves the normal. Openness in a society raises red flags when the normal is devolving. Openness in society shows the gap that exists between the normal and the written laws. 

If the usual process of evolution fails then disruption of the normal has to be achieved through a different path. Peaceful we hope in the Indian context because, justice comes from within, and every person seeks justice.

Wednesday, 17 October 2012

AK 47 and His Guerrilla Tactics

A post that starts with such a wacky title should have some justification for it. But this is not my own invention I have merely borrowed what I have heard being spoken about one Mr Arvind Kejriwal. Today India Against Corruption came out all guns blazing against the BJP. It must be remembered that Ms Kiran Bedi separated from Mr Kejriwal on his decision to target all parties not just the ruling Congress on their corruption record. Ms Bedi's difference may have been that of tactics rather than any particular favouritism but that just proves the fact that while Ms Bedi wanted to snipe at the ruling Congress for the time being Mr Kejriwal had made the decision to assault everyone who was suspect across the political spectrum.

The assault has so far been successful in hitting anyone who hasn't been adequately protected. But then who could possibly be adequately protected? The only protection that existed was the unwritten rule that goes "you scratch my back and I will scratch yours". Mr Kejriwal is an outsider who perhaps did not receive favours from anyone in particular and so can shoot whoever he wishes whenever he wishes and  at whatever pace he wishes. The pace can be fast because the targets are many and the evidence is probably ready pickings with so many disgruntled individuals willing to provide them. This makes him as deadly as the famous 'Avtomat Kalashnikova' assault weapon.

Now with the question of his lethality settled lets visit the aspect of his tactics. He has been employing what has been widely described as a 'shoot and scoot' or 'hit and run' tactics. With the limited resources he has at his possession he cannot be expected to organize large rallies in the hinterland of the country. He cannot fly his members cross country in helicopters, distribute printed material or use any of the traditional means of spreading political message that the political parties use. He had to reinvent his tactics to suit the size of the problem he is facing and keeping in mind the limited resources he has at his disposal. IAC is incapable of getting hold of one issue and taking it to its logical conclusion. Conventional methods did not work for them. They tried to get lokpal bill implemented but they failed at that. Now he need not take anything to its logical conclusion. He simply has to fight a war of attrition with the established players by using the guerrilla tactics which are at the least cost to him and IAC, and cause discomfort to his political opponents which are in fact, the entire political establishment.

The medium of his attacks is the news media. Sensational exposures are the bullet he fires. His target of choice are the public figures with questionable records of probity and that explains the title of this post.

PS: Here is an interesting cartoon that appeared in the Hindu on 18th/Oct just a day after I wrote this post. It is very much on the lines of what some people are saying about Mr Kejriwal: AK-47

Tuesday, 16 October 2012

The Hindu : News / National : Senior official probing Vadra-DLF land deal shunted out

The Hindu : News / National : Senior official probing Vadra-DLF land deal shunted out

I was of the opinion that raising issue of corruption in the media or by political parties alone would not solve the problem. What was needed was for our administrative institutions to act. Here is an example of what happens when some upright officer does what is essentially his duty. When an officer starts a suo motu inquiry into a wrong doing he is transferred out.

Monday, 15 October 2012

Felix Baumgartner - It's a touch down from the Edge of Space

Felix Baumgartner the Austrian dare devil thanks to his sky diving jump from the altitude of  128,097 feet became the first man to break the sound barrier in free fall and new world record holder of the highest altitude sky jump from what is literally the edge of space and hence aptly called a space jump. In this mission called Redbull Stratos he also created a new world record of the highest balloon flight.

The time it took for him to jump from the edge of the universe to touch down back to mother earth were undoubtedly the most exiting and also the most challenging 10 minutes of his life. An experienced sky diver that he is he managed to accomplish it perfectly. He is a holder of many records in past and rest assured this is not his last record attempt at a world record in sky diving and base jumping either.

He managed to reach the super sonic speed which was his most important mission but no I am wrong his most important mission was to complete his touch down successfully to the delight of his waiting family and he was successful in that. I saw this entire telecast live on the BBC and I was extremely worried for him when I saw him tumbling down the sky. But I was also very relieved to see him regain the control of his fall and achieve the delta position once again.

I salute his courage and skydiving skills and also the technical and project management skills of his team which made this mission a success. He has managed to register his name in history. It is quite unfortunate that the Indian media has not covered this story. Hopefully someone will wake up and file a story on him tomorrow.

Sunday, 14 October 2012

Salman Khurshid's Saviour Rangi Mistry

Law Minister Mr Salman Khurshid on his return from his trip to London held a close to 100 minute press conference to explain his side of the story on the allegations of impropriety in the business conducted by an NGO run by him and his wife Mrs Louise Khurshid. The NGO named after Mr Khurshid's grand father and former president of India Mr Zakir Husaain gets grants from the government and distributes aids to poor handicaps in several districts of Uttar Pradesh including his home district.

During the press conference in his defence Mr Khurshid tried to prove that the aid distribution camps which were supposed to have taken place and were being suggested did not take place, indeed did take place. He gave some photographic evidence that camps were held. Some other documents were shared with the media like the utilization certificate and certain bills of the equipment purchased by the trust. Regarding the CAG inspection report he mentioned that since the auditor never reached him or his wife he had not been able to share the accounts of the trust with the auditor, but will do so now. He ignored all attempts to get him to make a statement against India Against Corruption or to reply to the questions raised by group. One was also witness to the repeated annoyance Mr Khurshid had with his aids since the most important participants of the press conference had not yet arrived. They were part of Mr Khurshid's 'Counter Sting' on the India Today group.

When the press conference was opened for questions it was essentially reduced to a slanging match between Mr Khurshid and the India Today Editor Mr Deepak Sharma who had conducted the investigative news story named 'Operation Dhritarashtra' by Aaj Tak and other reporters of the same group. At a point in the conference Mr Salman Khurshid even lost his temper with the journalist Mr Deepak Sharma and asked him to leave. He later resumed the press conference repeatedly asking the other journalist present that he would speak if the India Today journalist shuts up. For anyone who has witnessed the press conference it is quite clear that most of the other journalist present in the press conference were either not ready with questions to ask to the law minister or never got chance.

But the 'Hero' of Mr Khurshid's press conference made a dramatic entry at the very end of the press conference and seemingly left some in the media quite speechless with his one liner that came after repeated probing by Khurshid and his workers. This was Mr Rangi Mistry a seemingly destitute old man who was wearing a white hearing aid and looked overwhelmed by the occasion initially. It was clear that he could not hear very well. When he was asked by Mr Khurshid that 'these people are saying that you never got any thing', he replied 'I had got, two years back I had got, but it was not working properly so I said I had not got, hoping that I will get another. ' The statement was greeted with clapping from Mr Khurshid's supporters and Mr Khurshid himself while Ms Louise Khurshid held her hand to her head.

Whether or not Mr Khurshid has managed to prove his innocence or the guilt of India Today group in trying to 'frame' him as he claims is another matter, what he has indeed managed to do is that like an accomplished lawyer in the court of the media he has managed to turn at least one witness hostile and that witness his saviour is Mr Rangi Mistry whose credibility now is in question thanks to his own contradictory statements, one in front of the Aaj tak camera and the other in front of many more TV camera's. Whether the two statements made by Mr Mistry was under some influence or his own independent display of somersault we will perhaps never know. But we all know now that the star of Mr Khurshid press conference Mr Rangi Mistry is now a spent bullet, although strangely a bullet that has been fired twice once at Mr Khurshid and then again by Mr Khurshid at the India Today Media Group.

Saturday, 13 October 2012

Joseph Stiglitz Interview about his book "The Price Of Inequality"

I saw this interview of renowned economist Joseph Stiglitz. He was interviewed by Charlie Rose discussing the aspects covered in his new book "The Price Of Inequality". These are the kind of people we should be listening to. We need people like him advising the Indian government on how to have sustainable economic growth rather than adopt the failed American models of the past.


Mr Stiglitz makes an argument about raising capital gains tax. Contrast it to Shome committee which argues in favour of abolishing capital gains tax.

Mr Stiglitz sees growing inequality in the USA, our policy experts argue on television channels that the poor in our country do not care if Mr Ambani is getting very rich, they care that they are themselves doing better in absolute terms.

Mr Stiglitz mentions that the USA had an unsustainable model of development of zero savings, high consumption and real estate bubble. We in India hear about reviving the real estate market by reducing interest rate on home loans and providing lending to real estate companies, at time when real
estate companies are not selling their stockpile and keeping prices artificially low thanks to their 'holding capacity'.

Mr Stiglitz feels that America has a third world infrastructure. Where does that leave Indian infrastructure? In an alternate world!!

He believes that America should spend more on education.

He says in the interview that the Federal Reserve in the US did not do enough to check predatory, abusive credit card practices, excessive risk taking of bank's lending and deflating the housing bubble.

He says that if you spend too much time talking to bankers then you start to think like them. He is hinting at keeping an arms length relationship between government and private industry. Is our government getting too much influenced by industry bodies? Are they keeping arms length relationship.

He says the America should follow the European  health care model. In India we are moving towards the American model of more private sector participation and dependence on private Indian and Foreign medical insurance companies.

Another talk by Mr Joseph Stiglitz in which he speaks about the issues covered in his latest book is below:

Luxury Market - Follow up to Single Brand FDI Retail

I don't have the time to follow this story much, there are bigger issues I want to write about but since this story appeared on Mint and these issues were being covered by news channels I cannot help but draw a connection between the recent policy changes to allow 100% FDI in single brand retail and the media stories covering luxury retailers coupled with publicizing their demand for lower taxes to make luxury affordable.

It is interesting how the media machinery kicks in for what is essentially publicity for Luxury Brand retailers.
The story as it appeared on MINT is "India to overtake China on luxury market growth".

"Driven by an explosion in number of rich people" India will overtake China in luxury market growth. After getting the FDI approval and the local sourcing norms changed the 'Luxury Industry' now wants the tariffs to be reduced. I heard a luxury retailer say in a panel discussion on a news channel that they need more "government support". Even a secretary to a banker or corporations in China wears brands from  'head to toe'.

Another point of note in this story is that for the foreign retailers in India it is all about the middle class. How to get them to consume all they have to offer. Of course the government can always make us believe that all the reforms will benefit the poor in the long run. After all luxury goods producers employ the poor, don't they deserve lower taxes?

WAL-MART - Something's Not Right

The day following Thanksgiving Day which is popularly called Black Friday is the day on which retailers in USA log there biggest single day sales. Huge discounts are customary, shops open in the wee hours of the day and shopper queue up all night in front of the stores for them to open in order to be the first to take advantage of the limited stock available on discounts.

Having witnessed the craze first hand myself, I know how packed the stores can be on this day and how difficult it becomes for the staff to cope up with the rush of customers. Living in India I would have never imagined that people could queue up all night simply to shop but then USA is not India. But guess what who is potentially likely to be a big looser on this shopping festival come November 23rd this year. It is the biggest retail of the world of our times and human history. WAL-MART has been threatened with a nation wide strike on November 23rd by its workers protesting low wages and questionable labour practices.

Labour unrest against WAL-MART has been brewing in the USA for a long time now. I had earlier written on my post about the public protests that WAL-MART's business practices have invited even in the developed countries where WAL-MART has a big presence. The latest episode of unrest has the potential to cutoff WAL-MART from the years biggest single day shopping festival in the USA. 

Both The Hindu and The Economic times carried stories on this threat issued by the workers of WAL-MART. The story was released by PTI but guess what caught my eye. The same PTI story had also appeared else where ad verbatim on NDTV website but the economic times article which never appeared on the print version at least I could not find it. My apologies if it appeared but I missed it. It may have been an honest mistake but let me reproduce the portion missing from ET report.

"Hector Sanchez, executive director of the Labour Council for Latin American Advancement alleged that as the largest employer of African Americans, women and Latinos, Walmart, through its low wages, lack of benefits, and discriminatory employment policies, is eroding the foundation that the middle class was built upon.

In another statement, “Our Walmart” said that workers from stores throughout the Dallas area, went on strike on Tuesday in the first-ever Walmart Associate walk-out in Dallas, protesting attempts to silence, and retaliate against workers for speaking out for improvements in the job.

Walmart workers from stores in Miami, the DC-area, Sacramento, Southern California and the Bay-area are also walking off the job, it added."

So the report is saying that a labour council head is alleging discrimination against the economically weaker sections of the society by employing them on such low wages that it denies them economic progress. WAL-MART does not recognize labour unions of its employees in the USA and has been accused of using hard tactics to prevent unionization of its labour force. There is also a statement from "Our Walmart" a Walmart workers group not recognized by WAL-MART that worker had already gone on strike in Dallas area against attempts to block them from raising working condition issues.

So that's the story of note about WAL-MART as it is unfolding in the USA. In India meanwhile a different story is emerging, one which potentially involves the government. Let me give you some back ground on it. I had written in a previous post about the Delhi High court notice to the government in July this year in response to a PIL filed by Ms Vandana Shiva a noted environmental activist alleging FDI norm violations by WAL-MART. FDI in multi-brand retail was allowed only subsequently in September this year. After the union government's decision to allow FDI Ms Vandana Shiva withdrew the PIL on 3rd October. Recently CNN IBN has reported on the same story on 10th October raising a question whether WAL-MART and Bharti violated the FDI norms as they existed then.

The alleged violation is that Cedar Support Services(earlier known as Bharti Holding Ltd) which operates multibrand retail for Bharti under Easy Day brand changed its charter of operation in 2009 to enable it to provide real estate consultancy services. Since consultancy services businesses are allowed foreign investment up to 100% via the automatic route the CNN IBN report alleges that roughly USD 100 million were invested by WAL-MART in Ceder Support Services in the form of debenture convertible to equity. The conversion date was earlier Sep 2011 and it was extended to Sep 2012 i.e. the same month and year when multi-brand retail FDI policy was changed by the government. On conversion WAL-MART will as per the report own 49% stake in the company. Figures of interest to note here as per the CNN report USD 100 million which is about same as the GOI policy on Multi brand FDI, it may be a mere coincidence but WAL-MART looks like got the figures just right . Ceder is also reported to have invested the entire proceeds in Bharti Retail.

CNN report raises suspicion that WAL-MART and Bharti have used circuitous route to get around the policy as it existed then and only ex post facto policy changes have made it legal for them to have done so. That begs the question whether companies can use questionable business practices to get an edge on their competition by flouting legal norms in anticipation of a subsequent change in law which will allow their business competitors to enter the market. 

Yesterday I raised an email query to Ms Vandana Shiva as to what prompted here to withdraw the PIL I got a reply from her stating "Our case was based on FDI in retail not being allowed. Now it is allowed. And we need to reframe the case for the new policy context.". As a concerned citizen I hope she is able to 're frame' her PIL and submit it, although I doubt it will happen. Today ET reported that PMO has asked DIPP under the commerce ministry to probe into the alleged violations. This appears like a clear case of passing the buck by the Prime Minister; if he was really serious of a probe then he should have ordered it when the PIL was filed and the issue was brought to his attention by his parliament colleague M P Achuthan, not after the FDI norms were already changed in favor of WAL-MART. The same commerce ministry which is probably involved in the murky affair will now probe its own dealings. 

In the same article ET mentions "According to its balance sheet for the year ended December 2011, Cedar Support had a capital of Rs 899.15 crore that included share capital of Rs 443.15 crore from Bharti Ventures and a Rs 455.80-crore CCD investment by Walmart. Almost the entire amount (approx Rs 862 crore) had been invested in the Bharti Retail through investments and loans, the documents show."

The same company has been recently caught red handed trying to hush up a bribery scandal involving its officials in Mexico. Something is really very fishy here and I doubt if we will have any closure on this. WAL-MART it appears has successfully managed to impose itself on the people of this country when there was no popular support to Retail FDI and by manipulating the system it appears to have beaten its competition in the race to enter the country. This whole affair gives me another reason why I don't support Retail FDI.

Tuesday, 9 October 2012

Naya Kayda - New Order

Presidential duty keeping Mukharjee busy
Mamta Ji ki dosti was never very easy

Mehnga Roti Kapda Makaan
Petrol Diesel ke bhi Badhe daam

Mamta Utri Train Se
Stock Uchla Prem Se

Mulayam ho ya Maya
CBI ka dar barsaya

Montek ho ya Raghu
Shome ho ya Basu
IMF ki coteri
Ne bhardi desi kothri

GAAR ki maar se bach gaye hazaar
Montek ke iraadon se uchla fir baazaar

Geithner aur Bernanke
Ne Chidabaram se yaari ki

Media ki Rai 
Sabse Accha FDI

Nahin chahiye choti dukan
Wall-mart ki saji dukan

Bade Business ka fayda
Yeh hai Naya Kayda

-- That was my attempt on a political poetry.

Mr Robert Vadra

Being born in a political family makes you a politician yourself, that is a great truism of Indian Politics. It is obvious that people will approach such a person for favors whether he or she obliges such approach is another matter. Being married into a political family is also not too far off. Mrs Sonia Gandhi's first credibility as a politician was that she was married into the most powerful political family in India. Can some wrongdoing be conclusively proved? I do not know but the suspicion that sweetheart deal from DLF to Mr Vadra is on the only grounds that he is related to Mrs Sonia Gandhi and was likely to enter politics himself just like her, is not just a suspicion it is a truism. As Mr Chidambaram has insisted on a quid pro quo he has obviously raised a question which cannot easily be answered. May be it cannot be proved easily, otherwise it would have already been proved. But it is universally understood that a sweetheart deal involving a public person hints at the presence of corruption.

In many countries when you open a bank account you have to disclose if you are related to a public figure. I do not know what the disclosure norms are in India. If we don't have these norms then we should. The debate regarding DLF-Vadra deal should not be limited to Mr Vadra and Congress Party. What can be proved in Mr Vadra's case is a separate issue. If a wrong doing has possibly happened but it cannot be proved, or was not brought to the attention the appropriate institutions well in time and with enough evidence to be acted upon, due to a lack of proper disclosure norms and tracking of earnings and assets of people related to public figures, then that is the moot question. The raising of this issue by India Against Corruption against the first family of Indian politics is just one of the many questions that can possibly be raised about the assets and dealings of many other individuals related to powerful public figures. But nothing can possibly be done as Mr Chidambaram has highlighted if a wrong doing cannot be proved or quid pro quo established. The job of proving an alleged wrong doing is not with a whistle blower it is the job of the agencies responsible for tracing financial impropriety. Do they have the laws, the resources and the freedom to do this?

Monday, 8 October 2012

Cost of Pranab Mukharjee’s presidency - FDI and Tax Avoidance

The exit of President Pranab Mukharjee from the Finance Ministry had wider implications that just making sure that Congress could get its own candidate installed in the Rashtrapati Bhawan. We have a situation now that government finds itself in a position to bring about a change in several proposal brought about by the Finance Ministry under Mr Mukharjee since he is out of the picture and Mr Chidambaram is on the helm.

The relation between Mr Mukharjee's exit and the push for reforms, and the push to revert some of the Tax Law changes that the same government had introduced in the first place is not lost on anyone. This points to the fact that the economic policies which are made in our country are not made simply based on logic and are not made just with the best interest of the country in mind, but there is a constant tug of war between various lobbies and interests groups which drive their creation and implementation. Is it the case that we are being governed by an immature polity that does not deliberate the implication of any government policy in a non partisan manner without the influence of self interest? Are we not making policies which are the 'common good' of the citizen of this country? That is what a democracy should be about.

One of the changes to Tax Laws which Mr Pranab Mukharjee had introduced was the retrospective amendment to India's Tax Laws to plug a loop hole which had allowed foreign companies avoid paying capital gains tax on sale of Indian assets. This was introduced to ensure that foreign tax havens cannot be used the avoid paying tax in India. A lot of hue and cry was raised by Vodafone, foreign investors, Indian industry and foreign governments. It seems there would be attempts made by the new dispensation in the government to make further amendments in the next parliament session to address the concerns of these bodies.

For me the question is not whether tax laws were amended retrospectively to increase the tax liability of a foreign entity which would be termed unfair and hence 'hurt' the investment sentiment. The question to me is whether loop holes in tax laws were deliberately exploited for tax avoidance in past. Then the question is whether tax laws should have been amended retroactively to correct a past wrong. If a wrong has been committed in the past and parliament has power to correct it then it sends a signal that unintended loop holes should not be exploited to avoid tax. If it leads to discouraging investment from entities which will only invest if such exploitation is possible then so be it. We are not a tax haven. We are a welfare state with duties towards our citizens. We have a policy to tax the rich more than we tax the economically weaker sections of our society. So was a past wrong done, that is the question, not 'sentiment' of investors who want to avoid  tax which is due, a sentiment which is only short term anyway. What is the length to which we are willing to go for FDI?

The second issue is about General Anti Avoidance Rules that were introduced in the Direct Tax Code by Mr Mukharjee. The new dispensation has managed to change that also. A committee was established by Prime Minister Manmohan Singh to look at the GAAR provisions since the investors were not satisfied with it.The committee headed by Mr Pathasarthi Shome has recommended in September this year that GAAR be deferred by 3 years as against the deferment which was already provided by Mr Mukharjee till 2013 to allow for 'training of tax officers'. The fact that GAAR is necessary to weed out the tax evasion which is being perpetrated via Mauritius and other tax havens is not lost on anyone. The tiny country of Mauritius is the single largest investor in India. It has been reported in past that many companies which invest in India from Mauritius have only nominal presence there. Hence the recommendation of the committee to remove the 'genuineness of residency' guideline from GAAR will only lead to continued exploitation of Mauritius root simply for tax avoidance. The committee even recommended abolishing capital gains tax in listed securities and replacing the loss of tax income by increasing STT. In my understanding this will clearly lead to passing the burden to smaller investors and short term traders while providing a great way for existing investors to avoid paying any tax.

Inviting FDI in sectors we need it in is well justified, but encouraging tax havens not only means that foreign investors will avoid tax when it is genuinely due, but in many cases black money earned in India itself would be invested back in India via these havens. At least  that is my understanding about these issues. But then the current dispensation seems to be driven by different motives than the previous dispensation. The policies in our country are personality driven and affected by pressures from self interest groups rather than driven by other nobler motives. I read a scathing criticism of these Shome committee recommendation in the Hindu editorial of 2nd September 2012.

The Hindu : News / National : Behind Robert Vadra’s fortune, a maze of questions

One had to just wait for the Hindu to write about this issue. One of the comments on this article was interesting

"Mr Vadra should not allow his name and reputation to be tarnished. He should request
the government to insitutean inquiry with 3 retired supreme court judges headed by
Justice Ganguly. That would put an end this libelous charge against a very innocent
from:  P.N.Shreeniwas

Justice Ganguly was the 2G Judge
The Hindu : News / National : Behind Robert Vadra’s fortune, a maze of questions

The Many Theories of Economics

I have encountered a dilemma. Over a period of almost a month I have been writing about the suspicions I have about the recent economic reforms that have been announced. If you have been reading my posts then you would be well aware that I am questioning the real intent of these changes, the manner in which these changes have been introduced i.e. in my opinion in an undemocratic way. The more I think and write about it I find myself heading down the path of questioning the validity of the very theory of neo-liberalism which is the guiding principle for these reforms. I am not an expert in economic theories and political science to be able to authoritatively comment on the validity of this theory. Yet even with this impediment I cannot possibly sit silent on this issue because of the very injustice I saw in the implementation of this change recently in our country.

I can see the euphoria of the very vocal 'experts' and also the disdain for the very democratic opposition political parties in the mainstream media. The opposition is being termed as obstructionist. Yet I am perplexed as to why I have missed the entire debate on the merits and demerits of the policies in any meaningful way? Why for the last 20 years I have not heard what used to be an often repeated jargon describing India in the 1980's, the grand old concept of a 'Mixed Economy'. We hear all the new jargons from the globalization school of thought, and only those. Am I living in a world cutoff from this debate or has everyone in the general population been cutoff from this debate? Is it that the need for a debate is not required because the 'success' of the 1991 reforms imposed by IMF under neo-liberal framework have made any debate unnecessary?

Here in lies my dilemma. If I continue this path of writing about this issues I am faced with the impediment of my lack of in depth knowledge of the many theories of economics to be able to comment authoritatively on this subject, and yet if I sit silent on this then I am well aware that I am not hearing in the media from any expert who is currently vocal and making an argument of any other alternative, at least not in India. To break this dilemma I have to search what is the debate in the home countries of the neo-liberal school of thought.

When I embark upon my study of what is being argued in the west about these principals I find that there are a plethora of arguments being made on both sides of the debate. I am also made aware that these debates are not new. These are old debates that have gone on for several decades and are even today being carried out in the west, for instance on the back of occupy wall street protests that happened earlier this year. There is also a resurgence in the USA for a search for an alternative to the current model of economic development post the 2008 financial crisis. These debates are happening everywhere I am sure even in our country but not so visibly. Economists like Joseph Stiglitz, Paul Krugman or Amartya Sen for example do not fall in the neo liberal school of thought. There is even a resurgence of study of Marx and the use of cooperative model in agriculture. The difference for us is that these debates are not visible to us in our mainstream media.

These are hard subjects. It is not easy for a public opinion to be formed on these issues. It is difficult to engage in these debates with the masses being involved. They seem to require a certain level of knowledge and understanding, which unless we get someone like Amartya Sen explaining us, will remain limited to the elite circles. To write about these issues with any authority I will have to dive into the world of economics and political science and I will have to start with one of the many schools of thoughts and complete the full circle to be able to come to a conclusion on which theory appears most viable to me. A daunting task indeed for a layman to undertake.

There have been many economic policy thinkers in the western world who have influenced the government policies around the world, Adam Smith, Karl Marx and John Maynard Keynes are described as the most important. Since I had mentioned Kar Marx earlier let me start with Das Kapital(Capital). There is a resurgence of the study of Capital in the west. Prof. David Harvey from the City University of New York has been teaching Capital for the last 40 years. He has made his video lectures public and that was a good place for me to start. Prof. Harvey describes Capital as one of the great studies of capitalism. He also mentioned in one of his lectures that this was only an incomplete work of what Karl Marx actually wanted to do. Had he finished his work we would have been left with a body of work of epic proportions. But even the three volumes of Capital are a great source of understanding capitalism. I must set aside the fears of my capitalist friends that I am not a Marxist just as Karl Marx himself had said when questioned that he cannot be described a 'Marxist', as the meaning that word had become to be.

To a patient  reader who has followed me to this point in the article I would give an example of what I found was of relevance in Capital. A couple of views that I could immediately relate to and which you would also have come across as a criticism of some of the neo-liberal policies without necessarily being classified as 'Marxist' are following:

1) A thing can be a use value, without having value. This is the case whenever its utility to man is 
not due to labour. Such are air, virgin soil, natural meadows, &c
My Interpretation> Commoditization of water and some other natural resources which should be free is against this principal that not everything of use value should be treated as a commodity of capitalism. So the neo-liberal theory of privatize every thing including our water resources is fraught with danger. We should not set a price tag on everything some things are gift of nature.

2) The use values, coat, linen, &c.,  i.e., the bodies of commodities, are combinations of two 
elements – matter and labour. If we take away the useful labour expended upon them, a material 
substratum is always left, which is furnished by Nature without the help of man. The latter can 
work only as Nature does, that is by changing the form of matter.
Nay more, in this work of changing the form he is constantly helped by natural forces. We see, then, that labour is not the only source of material wealth, of use values produced by labour. As William Petty puts it, labour is its father and the earth its mother.
My Interpretation> One understanding of this can be the we sometimes justify the pollution and destruction of nature for economic progress(material wealth) but the fact is that without mother earth, material wealth cannot be created. Thus economic growth at the cost of global warming will ultimately lead to reduction of material wealth. There can be no child without the mother. So this is one issue, on which the scientists and the economists should be together, not against each other. The neo-liberal theory that requirement of environmental clearances from government are an impediment to growth and that we cannot take a hit on economic growth due to environmental concerns miss one of the basic premise of economics.

One can go on writing about these issues. But a single post can have only so much information so as to keep the reader involved. All I would like to leave the reader with is that economic policies which we are following under great corporate and foreign government influence, in this push for reforms, at the cost of due democratic process, are not the only policies that have been proposed by economic theorists. There is lot to learn even from a supposed anti capitalist like Karl Marx on how to run a capitalist economy. There isn't a case for us to blindly rush to seemingly transformation changes based on some of the economic policies pushed by the west, which are being questioned in the west itself. I meanwhile have the task of understanding economics as best I can, to come to a conclusion as to which policies I should support myself. Since the debate between experts on this subject is missing from the mainstream media, I have no other way of knowing.

Saturday, 6 October 2012

Why GDP growth alone does not make a nation better

I wouldn't be wrong if I make an assertion that very few of us have at best only a basic education in economics. We leave it to the experts to understand economics and the elite group of economists set the policies which our nation follows. But I would also not be wrong by a very great margin when I say that thanks to the media coverage on economic issues, most of us who are even remotely aware on current affairs know quite well what this thing called Gross Domestic Product(GDP) is. I am not going to go into the detailed definition of GDP, briefly as we all know it is the total value of goods and services produced.

We are all aware that the GDP growth percentage of China is more than India's and we are all witness to the euphoria  that existed in media when we were seen to be growing at 8 to 9%.  Not a day goes by when we don't have policy experts and business Czars(Maharaja's would be more appropriate) and financial analysts telling us how we had lost the plot when the growth rate fell, and how we can still reach that 9% target if we get our policies right. Readers would be aware of another jargon that has been often reported in media which goes as the 'Hindu Rate of Growth' describing the pre-reform period in India's economic growth. Prime Minister Manmohan Singh had mentioned in August this year that GDP growth is a matter of national security.

The argument in support of GDP growth is made that growth has lifted millions out of poverty and has the potential to lift millions more. Lifting people out of poverty is a compelling argument, but the fact is that the current poverty line set by the government itself is disputed by many. There are many criticism of the Below Poverty Line and the poverty figures that I have read and I can make an argument about that. But I don't want to make criticism of governments BPL the main premise of my argument in this article. But I would like the reader to keep in mind that by our own estimate on the basis of our own poverty line, there are still 30% of the population who are poor. Now I would like to draw the reader's attention to the curious case of a nation which has these figures(est. as of 2011) of economic development.


  • GDP growth rate - 7.1% 
  • GDP per-capita  -  $19,600(PPP)
  • Industry's contribution to GDP  -  89.7%
  • Agriculture's contribution to GDP - 3.6%
  • Capital Investment - 49% of GDP
  • Budget Surplus - 1.7% of GDP
  • Public Debt - 4.6% of GDP
Compare these with the figures of India in the same period:
  • GDP growth rate - 7.2% 
  • GDP per-capita  -  $3,700(PPP)
  • Industry's contribution to GDP  -  26.4%
  • Agriculture's contribution to GDP - 17.2%
  • Capital Investment - 32.8% of GDP
  • Budget Surplus - -6.7% of GDP(deficit)
  • Public Debt - 48.5% of GDP
I have deliberately limited myself to the figures related to GDP(per capita), GDP growth, industry and agriculture's contribution to GDP so as to stick to the popular metrics that the policy makers and the media usually use while selling current economic policies to the citizens. A quick comparison with India's numbers should make us almost certain that an average citizen of Utopia must be much more prosperous than the average citizen in India. The most important factor being the per capita GDP figure which is a whopping $19,600(PPP) which is comparable to some of the European nations and more than 5 times that of India.We would be convinced even more if I were to tell you that the GDP growth figures in this nation have been double digit in the 90's. That must surely be the reason for this high per capital GDP number, and that must surely be the way to go in order to achieve prosperity i.e. high GDP growth. If you believe this argument then I agree with you that per capita GDP numbers are more important that absolute GDP numbers, and I agree that this number should surely rise if GDP growth rate is high. But shouldn't that mean prosperity?

Before I come to that and before I reveal which country this mystery Utopia really is, let me tackle some more aspects of our national discourse. So what are the problems that Indian economy faces currently which we are all aware of thanks to the communication from the experts that media delivers us? It is lowering GDP growth rate, high budget deficit, increasing current account deficit and high public debt. Solution we are told as per the current policy makers, experts on the subject and the media is 'Foreign Direct Investment' related 'economic reforms'. Incidentally we are also being told by the media at present, as has often been repeated in past, that the reason why we are not able to implement reforms as well as China is because well, we are a democracy. So chaotic democracy which we have, is an impediment to FDI reforms and FDI reforms is a solution for growth and growth (at all costs?) is the solution to poverty. Those are the broad contours of the national discourse on growth. 

Since two economies we are comparing are of different sizes, let me talk in terms of percentage when tacking the issue of FDI.


Average FDI as a percentage of GDP in 1990's - 38.34%
Average FDI as a percentage of GDP in 2000's - 14.46%

Average FDI as a percentage of GDP in 1990's - 0.39%
Average FDI as a percentage of GDP in 2000's - 1.58%

That is it! The figures speak for themselves, surely the Indian policy makers and the business channels are right. FDI is the answer! More FDI means more growth rate and more growth means more per-capita GDP. Surely this country in question has got its policies right and surely it does not have the same problems of policy paralysis and difficulty in decision making that India faces because of its 'chaotic democracy'. India's democratic decision making was a problem as the Economist article argued "Some reformers pray for a financial crisis that will shake the politicians from their stupor, as happened in 1991, allowing Mr Singh to sneak through his changes". I have managed to write an article in great defense of the current policies sneaked through by Mr Manmohan Singh despite 'chaotic democratic' opposition by 'rabble rousing' opposition parties and I have managed to use all the prevalent cliche'. 

Until of course when I tell you that the mystery country in question is none other than the great African Republic of Equatorial Guinnea, and then suddenly my entire argument begins to fall apart. The figures I shared are not wrong they are estimated figures from the CIA world fact book, other sources may quote sightly different figures, but yes I admit I have selectively lifted the figures. The figure I had not mentioned until now is that the poverty rate in Equatorial Guinnea is a whopping 75%. The per-capita GDP figures mean nothing,  the industry's contribution to GDP means nothing, the lower budget deficit(or surplus) means nothing, the GDP growth rate means nothing, the FDI means nothing to the vast majority of the country's population. Spectacular GDP growth rate alone has not been able to lift a population of 700,000 out of poverty in that country, but we in in India are being fed the notion that a single minded pursuit of GDP growth rate is what will bring millions out of poverty in India.

Question arises what is the problem in Equitorial Guinnea? Why has the magic potion of GDP growth not worked for them? The problem my dear readers is that Equitorial Guinnea is only a nominal democracy, where the current President Obiang has ruled for last 30 years and will continue to do so for a foreseeable future, the problem is of concentration of political power and corruption, the problem is of concentration of  economic wealth in only a few hands, the problem is of unequal distribution of wealth. This is why the High Income per capital GDP figures are worthless when compared to the poverty figures.

Surely I must be out of my mind comparing the next world super power with Equitorial Guinnea. I need to get more of my facts right to come to the conclusion why India will not be the next Equitorial Guinnea. We are a democracy where free and fair elections are held every 5 years, chaotic but free and fair. So the chaotic democracy with 'rabble rousing' opposition which was until now an impediment to our growth will prevent us from going down the path of Utopia. Our democracy and a free and fair(?) media will prevent corruption and crony capitalism to cause concentration of wealth in only a few hands. The top 70% of our  population cares about the bottom 30%. Our rich are better than their rich. Our billionaires are ethical and moral so are our businesses. Our politicians are aware of their obligation towards the poor, they are not hand in glove with the big Indian and foreign businesses. Our policy maker are educated in the elite institutions of the world and know what is good economics. They have the cause of the country at heart. Our large and growing middle class is educated and it will always make the right choice about who should be leading us and who should be making policies and what policies it will support.

Well if these facts are true especially about the middle class then I concede. After all the middle class is quite vocal in support of reforms. I will write more about the middle class some other day. In the meanwhile let us do all we can to invite FDI. Because FDI leads to growth and growth leads to higher per capita GDP and that leads to lifting millions out of poverty. Really? Is that so?

PS: There was no disrespect intended to the people of Equitorial Guinnea. I was sarcastic in my assessment of the democracy and development record there because in an interview to CNN I heard Mr Obiang describe the country as not a dictatorship but a Republic and described himself democratically elected.He even mentioned that he will remain in power as long as the people wanted him to.
           It has been alleged that the oil wealth of the nation was siphoned off to the notorious Riggs Bank by the corrupt politicians and administrators in Equitorial Guinnea. I had to make this comparison because many middle class Indians thanks to the recent boom in our economy appear to have forgotten that the poor in India are in many aspects poorer than sub-saharan Africa despite the recent boom in our economy. The effects of corruption and concentration of wealth on the poor are not lost on us. Equitorial Guinnes to me is a typical case of failure of the 'trickle down' theory. I need not be an expert on the subject to make this assertion.


Friday, 5 October 2012

Reforms II Over Back to Corruption

Yesterday the government has announced the second round of 'reforms' and perhaps we were expecting more, but looks like the issue of public corruption was just waiting in the background for the media's euphoria  over 'economic reforms' to subside. There was the resignation of Mr Ajit Pawar(NCP) on 25th/Sep over the irrigation scam in Maharashra, along with allegations of involvement of Mr Nitin Gadkari(BJP), Mr Sancheti(BJP),  Mr Mitesh Bhangdia(BJP) and Mr Prakash Javdekar(BJP); the list goes on. The media was back reporting, investigating and disclosing names of politicians who have been suspected of involvement.

Today we have the allegation of Arvind Kejriwal of India Against Corruption, about how as per him, there is reason to believe that Mr Robert Vadra, the son-in-law of Mrs Sonia Gandhi was beneficiary of a generous business transaction by DLF Properties, perhaps in return for favourable land allotments to DLF by Congress state governments of Haryana, Delhi and Rajasthan. The allegations, which were backed by some documents released by IAC were lapped up by the media, and all news channels were broadcasting the corruption story all evening. It was also being pointed out that there was a news story published in economic times in March this year that Robert Vadra had entered into business transactions with DLF. No allegations were made during that time that there was any kind of quid pro quo involved. But the IAC allegation today has brought the old story back to the headlines. It seems that for today and this weekend at least, 'reforms' will not be attracting any media coverage.

India Against Corruption is now a political party, so their allegation on the verge of state elections in Gujarat and Himachal Pradesh are to hurt the Congress party in the elections. The ghost of corruption still haunts Indian politics, and Anna's movement last year has managed to make it the most important issue in the minds of the citizen of our country. However it also leaves the age old question unanswered as to which political leader or political party can we safely say is above board on the issue of political corruption. Many Indian voters have in past either resigned to the fact, that some amount of public money will be looted no matter which party or politician we elect, and hence corruption, never was a big issue in elections; or they were so dismayed, that they did not participate in the voting process itself. The present discourse does not seem to  be helping solve the issue of corruption, it is merely revealing the fact to the voters that any party or politician will not spare a chance to point finger at their political opponents, while leaving their friends unchallenged.

Unrelenting media focus on corruption will certainly keep the issue alive for the voter, but this monster cannot be tamed by exposure alone. What needs to be followed is that the CBI, the police and the courts get the guilty to book. I don't see any reason why an independent minded police officer cannot register a complaint on these issues of corruption, investigate them and let the judiciary punish the guilty. Courage and independence is needed from the people within an institution which is meant to fight crime in this country. If they take an initiative they will get support from the people, if not from the governments. Without their initiative this issue will remain just an issue used by politicians to detract voters from their opponents.