Unnecessary Shortage Psychosis In Netaland

Painting by RAQIB SHAW, London-based Kashmiri painter

Unnecessary Shortage Psychosis In Netaland


In the Biblical vision, Adam and Eve frolic naked in the idyllic Garden of Eden in a state of innocence before the consumption of a certain Satanic apple cause them to develop a sense of “modesty”. Likewise, we behold the blameless beatitude of our politicians brandishing their stock excuses for a perennial shortage of bijli, pani, sadak etc..

Adam and Eve did take to bikinis and micro-briefs fashioned out of fig leaves once they developed the concept of shame, thanks to that devilish “apple of knowledge”; but this maturing has routinely eluded our netas, over all the years of their ascendancy.

Our politicians, feel no shame whatsoever when they sanctimoniously advise the public to save water and electricity, use one bucket to bathe instead of two, huddle under one fan and so on, while living in colonial splendour themselves. They even threaten punishment for those who have the temerity to “waste scarce water and electricity”.

And when confronted by ordinary people enduring ten-hour power cuts, year in and year out, they have the gall to blame the weather too. But then, they probably wouldn’t blink even if the Biblical serpent of all evil bit them in the eye.

But every politician does take the wily precaution of never naming the disease lest they find it to be contagious. So never, not even once, do they admit that their planning on practically every infrastructural matter has been hopelessly inadequate, and implementation, via a legion of unsackable babus, unspeakably abysmal.

Nor will they admit that this rank incompetence has been, is, and probably always will be, the biggest obstacle to the progress of India in the world.

Our politicians never talk of the sorry state of our electricity boards, the worn out and inadequate generation equipment labouring on from the thirties, when our population was a third of what it is, and the country itself was little more than a peasant-farming backwater.

They say nothing about the lack of updation over generations, the pathetic maintenance, the shocking break-down statistics, the underperformance, the corruption and unpaid bills, the transmission and distribution leakages, the absence of commissioning of new facilities. The tale is just too horrific for any self-preserving politician to take responsibility for.

But any progress made, however tardily, can be taken credit for though; with no mention of the losses endured, the inconvenience and suffering caused, the cost overruns, the growth blocked, the huge amount of work as yet undone.
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But step away from Indian shores where God has apparently ordained that nothing should ever be simple and uncomplicated and proceed in a linear fashion; and you see transformations that seem to be using magic wands by comparison.

There is no earthly reason why India should be so woefully short of electricity when even thumb-nail sized countries such as Singapore, an insignificant flea-bitten promontory on the tip of the Malay peninsula before a visionary like former President Lee Kuan Yew took it in hand; does not have such a problem.

The Gulf nations, favoured by large reserves of oil in several instances, but little else, and subject to scorching hot weather around the year, are awash in desalinated water and blazing electricity.

They routinely generate surpluses from multiple power stations, each designed to deliver double or three times the wildest estimates of projected power requirements. These once Bedouin nations with the most rudimentary economic notions, are now busy building steel and glass Xanadus, inviting the Louvre to open branches amongst their date palms, greening the desert, and experimentally growing wheat therein!

The West, massively consumerist, borne out by the global “carbon emission” debate, are however, never short of electricity and water, items considered to be basic deliverables for any civilised nation.

But in India, the situation is grim and will remain dire for the foreseeable future. This is because of the sheer backlog. Future demand will perpetually outstrip supply, unless we drop our present assumptions and tackle electricity generation, transmission and distribution as a national imperative.

It would mean getting away from the endless obsession with containing unit costs of electricity and creating a glut instead, with its natural effect on prices going forward.

As things stand, we will be lucky to generate an additional 25 per cent of the 11th Plan (2007-2012), five-year target of 78,577 MW over the entire plan period. Meanwhile, the minimum shortfall in demand nationally is officially admitted to be 11 per cent but is closer to 20 per cent already.

In rural India, some 105,000 villages of the total 593,732 (17.8 per cent), still need to be electrified as of March 2008. The ones that have electricity endure “power cuts” of about 14 hours daily and uneven voltage to boot. Besides, there are also millions of people waiting for a power connection in the electrified towns, cities and villages.

Even the most favoured states in terms of electricity such as Chhattisgarh, Himachal Pradesh and Uttarakhand, largely devoid of industry, endure regular power outages.

Only 10,700 MW of the 11th Plan target capacity-addition (14 per cent of the total), is to come from the private sector, even though the Government has never managed to deliver on its power plans.

And we seem unable to speed up efficiencies on our existing and proposed coal-based plants. Coal is appropriate, because we do have an abundance of low quality coal.

Today this is no “smoke stack” style disadvantage because coal can now be scrubbed of pollutants, even liquefied. But mining it, getting it to the power plants on time, controlling the coal mafias and loutish unions etc. remain intractable issues that call for firm handling.

And, even after winning through a hornet’s nest of political noise, we are still proceeding at a snail’s pace on implementing the possibilities made available by the Civil Nuclear Power Agreement signed with the US and the NSG (Nuclear Supplier’s Group) in 2008.

We need to approach these basic, enabling, issues with a sense of strategic urgency. There will be no double-digit growth without it. If we cannot build political consensus on something so self-evident, then the case for draconian provisions under the constitution should be invoked in the national interest. Either way, it calls for a different type of accountable netagiri beyond the blatant hypocrisy and obtuseness on display at present.

(1,051 words)

30th June 2009

Gautam Mukherjee

Education Reform Needs Quantity Plus Quality

Painting by RAQIB SHAW

Education Reform Needs Quantity Plus Quality


Goldman Sachs, the Investment Bank that did not collapse in the rout of 2008, has once again produced a report on India which says India could grow 40 times bigger than it is today, by 2050. It is indeed hard to imagine this, but perhaps the suave new HRD Minister might not find it so.

There are ten challenges outlined in the new Goldman Sachs report; things that need reforming, to make this potential become a reality. The key points are all weighty, and include one on Education Reform.

In 2009, the surprising thing is that India’s Secondary Education budgets are the lowest among all emerging market countries, let alone amongst BRIC. This, even as the National Knowledge Commission wants to increase the proportion of the 18-24 year olds educated to university level, from the present pathetic 7%, to a modest 15%. Of course, this means huge absolute numbers in a population of at least 1.1 billion.

And in higher education, the Commission has proposed an increase in the number of universities from 350 today to 1,500 by 2016. The target, as usual, is unlikely to be met.

And even if it was, the corruption of capitation fees at private medical colleges, the confusion of AICTE recognition, and the bottlenecks of hardly any new universities set up by the Government since independence, tells its own story.

This is compounded by dismal quality issues across the educational spectrum and then there is the hot potato of land, which needs to be acquired at market rates, if the setting up of university campuses is not a source of controversy and strife.

But assuming these hurdles can be overcome with enlightened handling, we don’t seem to know very much about quality in secondary or higher education. The IITs and IIMs are collaborations, but they are ridiculously short on seats, and no amount of hiding behind the merit argument can actually justify the shocking bottlenecks.

But in the main, all we can provide is education that resembles the processing of herds through the rickety gates of higher learning, and that too for those who score in the nineties at their school board exams. Or those who get degrees by never going to college.

It is, in this global age, clearly a much degraded form of higher education that turns out graduates who cannot think or innovate, till they are given their heads in a foreign shore. So as we stand, more of the same will not meet the needs of our future.

And Education Reform is, after all, just one plank out of ten that Goldman Sachs has outlined. But judging from our track record, it may be necessary, and practical, to import the quality education in the form of good foreign universities encouraged to open branches in this country on a FDI basis.

This may also let us meet a proportion of the Knowledge Commission target of 2016 in a qualitative manner. At present, not even one Indian university features even in the Global 300! China has only 6 universities that feature in the top 300, and all of them are collaborations with the West.

Indeed, despite our shortcomings, we have much to thank Goldman Sachs for. Because it was a Goldman Sachs economist of Irish extraction, (Jim O’Neill), that coined the term BRIC, in 2001. And suddenly India was included alongside Brazil, Russia and China, as the shape of the future power structure. This has, over the last eight years changed the global perception of India’s potential.

And gradually, the term has gained traction and though very different in themselves, the BRIC countries have decided to pull together of late. There is even a new hotline being put in between India and China at the highest levels of Government.

And this month, BRIC was referred to, only half in jest, as: “The Gang of Four” by a commentator on BBC, as its leaders were photographed executing a four-way handshake at Yekaterinburg in Russia.

The BBC commentator may have inadvertently upped the ante. Because BRIC, discussed some weighty matters at the Yekaterinburg Summit on the 15-16 June 2009, without waiting for permission, or participation, from the West.

Matters such as BRIC ambitions on developing an alternative global reserve currency, beyond the US dollar. After all, China has lent the US over $1 trillion and is very concerned about the declining value of the US currency. India, Russia and Brazil have also parked some of their dollar holdings in US Treasuries, and are also worried, if not to the same extent.

BRIC also wants a greater say in the disbursement of global development funds via the IMF and the World Bank, to reflect the shifting balance of power.

And perhaps, there was some unintended symbolism at work beyond the “gang” remark, because these deliberations took place at Yekaterinburg. And it was Yekaterinburg too that saw the end of one era and the consolidation of another. For it was there that Tsar Nicholas II and his entire family was executed by the Bolsheviks on the night of July 16th 1918.

Contemporary symbolism was equally evident, not just because of the presence of BRIC piggybacking on the Shanghai Cooperation Organisation (SCO) Summit at Yekaterinburg. The SCO even gave President Mahmoud Ahmadinejad of Iran, fresh from a controversial election victory, a prominent forum to fire a vituperous, if predictable broadside against US and Western imperialism.

Mr. Ahmadinejad sounded off against US hegemony and imperialism; to wit: "The international capitalist order is retreating," and "It is absolutely obvious that the age of empires has ended and its revival will not take place", egged on, as if he needed the encouragement, by Russian President Dmitry Medvedev and China's Hu Jintao. Ironically, both are decidedly capitalist and active hegemons in their own spheres of influence.

These are still early days for big ticket Indian reform, even though it has been nearly 20 years since 1991. But even at our slow pace, the world has seen us implement a large part of the Golden Quadrilateral roads Project, and surge on to an impressive telecom revolution. They, on their part, don’t think we will fail to reform our education systems as well. What we probably need is a booster dose of self-confidence and policy dynamism of our own to get it going.

(1,050 words)

19th June 2009
Gautam Mukherjee


Published as Leader Edit on Edit Page of The Pioneer as "Best fuel for India's growth" on June 30th, 2009 and Online at www.dailypioneer.com. Also archived online at dailypioneer under Columnists.

Poverty Alleviation Through A Sieve

Poverty Alleviation Through A Sieve


In the eighties, Prime Minister Rajiv Gandhi rued the bitter fact that only fifteen rupees out of every hundred, earmarked for any poverty alleviation programme in India, actually got through to the “real poor”, the intended recipients. The rest went without a trace, presumably into the pockets of various facilitators.

Even at the time, the more cynical set the effective percentage at nearer 5 than 15, with inflated bills and sub-standard deliveries added in. This is obviously unacceptable in a country where the bulk of the people are poor, earn less than $450 a year, even 62 years after independence, with nearly a quarter of our billion plus population below the Poverty Line; defined by the World Bank at an income of $1 or less a day or $365 a year.

The Indian Government defines the Poverty Line much lower, at an income of just Rs. 10 a day, stating that it is enough to buy food that can deliver 2,000 calories of nutrition. It is difficult to see how this is feasible in 2009 unless the presumption is that multiple family members will beg, borrow or steal at least Rs.10 daily. Over 300 million eligible for work Indians are both unemployed and languish below the Poverty Line.

Internationally, also in the eighties, Irish rock-star-activist Bob Geldof of the Boomtown Rats organised the Band-Aid (Song: Do they know It’s Christmas), and Live Aid concerts in 1984 and 1985, respectively, watched live on TV by over 400 million people in 60 countries.

Live Aid in particular, raised nearly $300 million, right in the first flush, for the starving in Ethiopia, while advancing the capabilities of global satellite television, the so called “global jukebox”, with simultaneous live concerts on different continents, hooked up and broadcast in real time.

Geldof persisted with the serious work of getting the succour to the needy after the razzle dazzle of the concert was over. And unhappy with the chronic leakages in disbursement, he set up a parallel administration to reduce the waste, profligacy and corruption endemic in a great deal of charity work, as even more money poured in; but with predictably mixed results.

Much of the funding or the relief material was siphoned off by NGOs and Ethiopian government agencies, even the carefully vetted ones, not above profiteering on the misery of the helpless. Black markets prospered on Live Aid largesse. This even as the entire effort benefited from the sympathy of the world, provoked by the massive publicity generated – not the least of which were from the harrowing, prize-winning, images of the starving and dying shot by highly acclaimed photo-journalists.

The subsequently knighted Sir Geldof’s moral successor in the Irish rocker cum economic activism stakes, Sir Bono of U2, is more philosophical about the actual good that concerned people are able to do, choosing to persist regardless.
Initiated into the charity arena by Bob Geldof, Bono helped organize Amnesty International’s Conspiracy Of Hope global tour in 1986 alongside rock-star Sting. Bono subsequently organised Live 8 in 2005 and remains committed to his fund and awareness raising efforts for a host of global issues to this day.

Viewed in broader terms, celebrities and charities, ranging from causes such as Aids to global warming, and the vanilla, if vital, universal needs of education and health, have been enjoying a mutually beneficial relationship for quite some time now. The protagonists feature the stars of Hollywood, the international sporting world, entertainers of various hues, senior Western politicians and ex-presidents of the US, Nobel laureates and so forth, in its fold.

But here in India, or internationally, in all the global distress spots, the rate of disbursement of relief to the most needy continues to be badly afflicted.

The United Nations and its agencies, less headline-grabbing, perhaps less glamorous, definitely less self-serving, but with demonstrably long-term commitment and steadiness of purpose; also ploughs on with dogged determination. It is realistically attuned to doing as much as it can. It carries out authentic and formidable research on its subject areas before acting, despite the corruption and the thicket of political pressures applied to it under the guise of nationalism.

Meanwhile, over twenty years after, Congress Party General Secretary Rahul Gandhi is famously focussed on the trials and tribulations of the poor in rural India, seeing in their betterance, the panacea to most of India’s ills.

He is allegedly the prime mover in many of the UPA government’s recent rural upliftment initiatives which have been riddled with delays, sluggish implementation, and rampant corruption. Rahul Gandhi on the campaign trail recently, put the figure, actually of benefit to the target audience, at just one rupee out of ten.

Clearly therefore, something needs to be done to overhaul the popular models of poverty alleviation. The United Nations, no fair-weather friend to the task, privately bemoans the lack of strategic thinking in this regard, the near non-involvement of academics and thinkers, who might be able to fashion plugs for the loopholes.

But perhaps the answer lies in buying something to show for your money, creating rural and poverty alleviating infrastructure, instead of targeting the minimum guaranteed employment programmes with their on paper progress and their dig-a-ditch- and-fill-it-back-up dynamics.

By this reasoning, the rural roads programme, initiated by the earlier UPA government, has/will probably yield better results than yet another “rozgar” programme. Infrastructure development also possesses a bottom, budget overruns notwithstanding, unlike hand-out style poverty alleviation which gives new meaning to the term “bottomless abyss”.

The United Nations set itself some millennium goals for “all United Nations Member States”. In 2000 it wanted to “eradicate extreme poverty and hunger” by 2015, amongst a host of other objectives such as “universal primary education” and “environmental sustainability”. Peopled by highly skilled professionals, it is nevertheless used to revising its time-lines.

But, perhaps if it developed a consensus with the Indian Government, and those of other countries, that it will only fund poverty alleviation infrastructure, instead of intangibles, more than the disgraceful five to ten per cent of the funding may yet turn out to the benefit of the poor.

It is not everyone’s case, but those less concerned with the exigencies of creating compliant vote banks, may see merit in encouraging the abject poor to help themselves via decent and plentiful facilities placed within their reach.

(1,049 words)

Friday 12th June 2009
Gautam Mukherjee


Published as the Leader Edit on 17th June 2009 in The Pioneer under the title"Wrong strategy to fight poverty". Also online at www.dailypioneer.com and archived there under Columnists.

While you were gone fishing...

While you were gone fishing…

It’s the influx of almost $ 4 billion in Foreign Institutional Investor (FII) money in May 2009, both before and after the election results, that resulted in the best May in the history of our bourses.

The $ 4 billion needs to be seen in the context of a total inflow of $ 17.23 billion, in boom-time 2007. That is when the Sensex hit its peak at just a whisker below 21,000.

And that inflow was preceded by the previous high of $10.5 billion in fiscal 2005. The next year, 2006, proved turbulent. It was when the FII and volatile Hedge Fund dollars via the Participatory Note (PN) route both came in and went out in great gushes.

The all-daring Hedge Funds did crack their winning streak in 2006, but got a second wind on the back of a Commodity boom, culminating, in 2007, in $140 plus barrels of oil and record metal prices. But whatever did come in, launched us, in 2006, on our upward trajectory again from the savage dip in summer which took out the lower circuit at least once.

From the Western perspective, sums like 10 or 20 billion dollars may seem palpably modest, but for us in India, it is enough to take the Sensex from a paltry 3000 in 2004 to the aforementioned 21,000 in 2007.

And in 2007, for a brief and shining moment, the market capitalisation of the Indian stock market mirrored the real economy at $ 1 trillion each! Of course, in comparison, the Chinese real economy is valued at over $ 3 trillion and the American economy at over $ 13 trillion.

This diminutive size of the Indian stock market is the reason why a little goes a long way. But it also leads to volatility when global causes turn into local effects irrespective of the merits we may possess in an individual sense, growing as we are at 6.7 per cent still. “Decoupling” as a concept didn’t come to our rescue in the down-turn but we may receive a vote of confidence earlier than the rest after all.

Once again, we may be on the threshold of a “secular bull market” rather than a “bear market rally”. Out there, the US economy is signaling a recovery in the second half of the year and so every country in Europe will likely follow suit too.

In India, the emerging market allocation is coming in, encouraged by the news flow. President Pratibha Patil’s address to Parliament was quite robust in terms of the Government’s intentions. There is news that infrastructure spending will be doubled to 9 per cent of GDP. There’s news that PSU’s will divest some of their equity while retaining majority stake at 51 per cent. And news that banks will lower interest rates; and that the government may increase the limits of foreign holdings allowed in insurance. And that they may liberalise the deployment of pension funds so that a proportion can flow into the equity markets.

We are also informed that manufacturing is picking up at last, even if exports are still badly hit. And the good augury that the GDP rate for fiscal 2008 is going to end at nearly 7 per cent after all. So, in June 2009 also, in the very first week, India has witnessed the highest ever weekly inflow of FII money at $ 199 million!

The domestic market is still shaky though, after the severe drubbing of 2008. Retail interest is muted, and institutional trading is hedging by concentrating on the badly-beaten down mid-cap and small-cap space, with very few mutual funds willing to go “long” even in these.

So the market is rising on foreign money. Over 3,000 FIIs are registered to trade in India, and have been responsible, over the years, for bringing in a cumulative investment of $ 88 billion till 2008; of which some $ 60 billion has never been withdrawn. Not even when they have taken profits, or liquidated at a loss, sometimes at a big loss, when pressures from elsewhere have forced them to do so. So most of this money is decidedly not “Hot money” and seems to have more conviction than we ourselves can muster.

The market is up 80 per cent from its lows last year, and up 27 per cent in the merry month of May alone. Of course, we are now climbing from just 500 billion worth of stock market capitalisation, made doubly attractive by at least 15 per cent decline in the value of the rupee vis a vis the US dollar, compared to 2007.

As for the domestic scenario, the surprise election results did make the locals ecstatic, but only for a day, in which for the first time ever, the Indian stock market hit two upper circuits to soar 20 per cent. But that was it. It is the FII’s that have been buying away through the work-a-day week, turning the stock market adage: “Sell in May and go away” …mostly fishing, on its deaf ear.

The adage stems from the generalised belief that the period from November to April has significantly stronger growth, on average, than the other months. The tradition grew around selling stocks at the start of May, holding the proceeds in debt market instruments, including bonds or bank deposits, to be deployed in equities afresh around the “festive season” or, in America, around Halloween (October 31st). But obviously, it is seen, strange times call for postponement of that peaceful fishing expedition to Sleepy Hollow.

If this level of FII cash flow persists for the remaining months of this year, all fundamental stock analysis including price/earning (PE) multiples will go out of the window, and the twin horses of momentum and liquidity will sweep all before it.

The only caveat must perhaps be the price of oil, already up to $70 a barrel. It is likely to surge on and up as the world economy recovers and may have to be factored in at a three digit price for the foreseeable future. This will put us back on an inflationary spiral, with our overwhelming dependence on foreign oil and increase our subsidy bill drastically once more.

Adages apart, we may have to go fishing again after all, if not in May, then perhaps in December.

(1,051 words)

Saturday, 6th June, 2009
Gautam Mukherjee


Appeared in The Pioneer as "A hot May for bourses" on the Op-Ed Page (side bar) and online at www.dailypioneer.com on June 12th 2009. also archived online at www.dailypioneer.com under Columnists.