a CHeESY sToRY

A Cheesy Story


Tough times extract change from all who don’t necessarily favour it. Most people are not like the prescient mice in the best-selling management parable of a few years ago: Who moved my cheese by Spencer Johnson, incidentally a medical doctor. Most of us, in keeping with the parable, are slow mice, resting on our laurels and trying to maintain the status quo. We keep expecting to repeat our formulaic successes, preferably with less and less effort as the time goes on. And we are baffled when diminishing return gives way to total cessation of cheese one fine day. We are then, and only then, forced to change in order to survive, feeling aggrieved all the while, and foolish too, like we are bolting the barn door after the horses have bolted.

And, as in the maze so in the real world. So, over the last six decades, freedom movements in a seemingly impervious imperialist world gave way to a largely socialist dawn of independence. And then they evolved into capitalism, one party rule, or dictatorship, with varying results. But gradually, the political lost ascendancy in a largely peaceful world not so much ruled by security concerns, and started ceding space to economics, till it eventually assumed centre-stage.

Of late, with the 21st century readjustments in the power structure taking place, more than six decades after World War II, country after country finds itself compelled to undertake the painful process of transition and transformation.

Despite the agonies of current economic difficulties and the scourge of Islamic terrorism; there is indeed a multi-polar world emerging, like it or not. And the North-South Divide is breaking down. America is being openly confronted by China in various fora, and loose coalitions of the have-nots and have-somes are taking on the erstwhile all-powerful West.

There are more and more calls to replace the Bretton Woods Global Monetary System established in now distant 1944, despite several modifications since. And calls to get away from the US dollar as the global reserve currency, even though there is no alternative clearly in sight.

Meanwhile, the G-7 has given way to G-8, and now to the G-20.The old rivalry between Communism/Socialism and Capitalism has truly run its course and is receding into 20th century history. Today, we can see both basic systems being modified, both within their own changing terms of reference, and by taking from each other.

Besides, the geographical imperatives of distance and global commerce have been drastically altered by communication technology, interdependence and speed. There is literally nowhere to run, nowhere to hide.

Noted editor, journalist and author Prem Shankar Jha writes in his new book on China Managed Chaos-the fragility of the Chinese miracle, that China’s growth story may not be sustainable. He cites the political time bomb of lack of democracy and underdeveloped “regulatory and market institutions”. But, explains Jha in counterpoint, holding out little hope of Chinese democracy: “From the Han dynasty onwards, the Confucian State has dealt with political unrest and dissent by reforming itself and its practice of statecraft and not by ceding power to the populace.” But then, is this necessarily a bad thing?

Has the Chinese miracle perhaps succeeded, unbeknown to us, in simultaneously transforming the old Communist Party apparatus? Has it not delivered double digit or near double digit growth for thirty years now? And this, without the turbulence and frustrating two-steps-forward-one-step-back chaos of vote-in-vote-out democracy.

After all, look at the flak President Obama is catching in his attempts at reforming laisser-faire capitalism. But after just a year in office, in which his government has successfully stemmed the recession and prevented the US economy from going into a thirties style Great Depression; there is a lot of carping about the wisdom of many of his measures and proposals. The Americans seem to dislike the very interventionist government that has come to their rescue.

Besides, vested interest is not a monopoly of absolutist regimes. The American financial system, as also in its healthcare system, and its armaments industry, amongst other lobbies and power centres, are more than willing to take on the reformist President and his administration to prevent radical change. And the rank and file public is not amused with over 10 per cent joblessness either.

The sad thing for President Obama is that he has not carried the people with him to counterbalance the powerful establishment forces ranged against his initiatives. As president, he seems to have forgotten the wildly successful “yes we can” sloganeering of candidate Obama.

But substantively, despite the shrinkage of American prestige in the world; like former President Gorbachev of USSR in his time, Barack Obama may be the first American president to recognise, with his policies, the new realities of the 21st century.

He may be demonstrating the guts, despite seeming timidity, to signal that there are limits to American influence and power in a world where America and the West have lost much of their political, military and economic traction. But this de facto response to the new reality will naturally take some time to sink in with the American public. Ironically, America has heretofore won in the global sweepstakes by playing beggar thy neighbour, outclassing the USSR military spends with such aggression that it finally resulted in an implosion of that Communist empire. But today, the same America has neither the money nor the stomach to be globocop, anymore than Britain could sustain its empire after the two devastating world wars.

For India, the cheese has also been in motion. These geopolitical changes are altering our possibilities. We are no longer poor but we have a third or more of our people living in dire poverty. We are capable but inefficient. We are democratic but narrow in our vision and insincere in our resolutions. We are not used as yet to the corollaries of growth and sustenance that will ensure our future supplies of cheese. But the good news is that we probably know how to stay amused in the meantime. Bread and circuses become subsidies and tamasha in our adept hands. But we can be timeless with our expectations as a consequence of both our fatalism and faith. We know that our train will surely come in, and a little wait is not the end of the world.


(1,049 words)


January 31st, 2010
Gautam Mukherjee


Published in The Pioneer as Op-Ed Leader on February 2nd, 2010, print and online under title: "Of mice and reforms". Read it also under Columnists at www.dailypioneer.com where it is archived.

Hand-Pumps & Highways

Hand-Pumps & Highways



With the departure of Comrade Jyoti Basu, a person that may have better merited Nirad Chaudhuri’s description of The Great Anarch; it brings to mind, partly in reflection of the spew of commentary on the subject, that there is a tiresome and pointless dichotomy between broadly Leftist and Rightist world views. It hogs public debate and reams of newsprint with its either/or dichotomy without once embracing both. And without once coming the slightest bit closer towards convergence.

All practitioners of ideology prefer to leave the matter of practical resolution to those who don’t possess, or perhaps refuse to wear on their sleeve, their own invigorating blunderbuss of idealism and ideology. The Left/Right badge-wearers give these doers no marks for their usefulness. Instead, they look down on them for their pedestrian preference for the expedient and the practicable. They are considered to be craven opportunists without principle, mainly for their flexibility, with scant regard for their solid contribution to all that works and is accomplished in our lives.

Meanwhile the pointless debate amongst the mandarins of ideology rages on. The Left-leaning ask what is the point of jobless growth? The Rightist says all growth contributes, and a richer polity can provide better facilities, even for its jobless. The Leftist asks what is the use of young, malnourished, and uneducated youth? The other points out that it is better than the same number of old, unhealthy and ignorant people, typically lacking in focus or interest about anything beyond their own navels.

The Left/Right armchair debate cliché indeed runs the gamut. Why should the rich indulge in paroxysms of conspicuous consumption- arguing just one big fat Indian wedding could pay for a thousand hand-pumps, or is it a lakh of them, to provide drinking water to the rural poor. The other face of the same cliché is depicted in the celebrated Mira Nair film Monsoon Wedding- the beneficiaries of a big fat Indian wedding are also many both near and far.

The paradox though, in failing to recognise the contribution of both leanings to the progress of the nation, is beyond sensibility and preference. It is as if the moral victory is intertwined somehow with its ideological underpinnings in whichever distorted or diluted form may ultimately obtain. And without this ideology to give a matter its tone, the suggestion is that it is somehow not worth having.

It’s especially interesting and not a little comic when the Left and Right seem to swap positions. Take the Nano versus BMW debate for example. Because, now suddenly, it cuts both ways. It is the Left that says the Nano will choke the roads and their own poor- loving breathing; with scant regard for its dramatic affordability for the many towards the bottom of the pyramid. And to justify their selfishness in this regard, they call for better public transport instead, including more like the bewildering BRT corridors in New Delhi, because the elitist traffic in cars be damned!

The Right, on the face of it, couldn’t care less, as long as there are enough highways being put in for it to glide around in said BMWs; and there are no Nanos clogging up the fast lane. There is also no Right-leaning guilt about paying the cost of which set of wheels could, theoretically, provide infrastructure for a small village. After all, one has to earn one’s BMWs.

One could go on with the examples on both sides of the fence, but in the interests of synthesis, it’s best to recognise that there is no case for a country on the way to prosperity with millions of poor people living in misery. But then, by the same token, there should be no debate on the righteousness of poverty alleviation. While theoretically and ideologically the Left and Right can agree on this, the irony of the process is that poverty reduces via the acquisition of riches involving a number of non-populist moves.

A no-growth poverty alleviation programme is impossible. An attempt to do so turns one into the Marxist ruled state of West Bengal; where the state has preserved its power edifice despite its general decrepitude, by looking after its thugs, those cadres of on-street and hands-on enforcers.

But then Stalinism and Maoism both resemble the Fascist Right. And no kudos for fascism Hitler and Mussolini style, despite the former’s autobahns and volkswagens, and the latter’s emphasis on running the trains on time. But sometimes, one professes the one while being the other. Take Zimbabwe’s Robert Mugabe, a good example of a “Socialist” right winger, and you should see pictures of his palace.

In the interests of resolution therefore, there may be great merit in seeing things the other fellow’s way. Because then, hand-pumps and highways don’t seem so mutually exclusive. Besides, all practitioners of power are not as easily bamboozled by the contradictions and paradoxes of deviating from ideologically pure moorings.

It is therefore all the more necessary for the theoretical debaters to puncture their own ideological balloons. Otherwise, the gap widens between how it ought to be and how it really is, without enough effort going in to update, and thus narrow this divide.

We albeit get the Government, indeed the country that we deserve. So if nothing seems to be working like it should, the answer may lie in large doses of pragmatism and efficiency rather than in the arcana of ideology.

But while we split hairs, India’s politicians have been feeding off the dividing line between so-called communal parties and those which are purportedly secularist. But the fact is, neither are quite what the other side says they are, nor are they quite what they themselves profess to be.

To move on, it is necessary to rededicate ourselves to a new work ethic that judges efficacy by the results. Otherwise, like Jyoti Basu’s Bengal, we are in for an ideologically induced twilight that does not protect or satisfy even as it strangles progress. All that takes its place is a cynical calculation of raw power of absolutely no benefit to the masses.

At the end, we should come away with something better than the pointless mantra of Bihar born George Orwell’s satirical novella Animal Farm, in which the celebrated “Four legs good, two legs bad” commandment was not quite enough to plough the field of the proletariat’s dreams.

(1,055 words)

21st January 2010
Gautam Mukherjee


Published as "Ideology is irrelevant" in The Pioneer on 27th January 2010 in Op-Ed Leader slot. Also published online at www.dailypioneer.com and is archived there under Columnists.

Fiscal Debt & Divestment

Fiscal Debt & Divestment



One is the Damsel in Distress (deficit and debt), and the other is the White Knight to the rescue (divestment). It is indeed good and exciting to see early in 2010 that the Government is willing to unlock a little, or (gasp), even a lot, of the tremendous value locked up in the assets and activities of the public sector!

And this, while using a methodology that can’t be faulted for its even-handedness, care for the ordinary investor, the high-net worth investor (HNI) etc….

Forsooth it is a divestment policy that has emerged quietly, mindful of political banana peels arrayed all along its path. But it is both bold and clear-cut. It will make the soon to be partly privatised entities more efficient, lucrative, better funded and globally competitive. And give the most patient foreign investor reason to cheer the increased solidity of our ongoing valuations and future prospects. It will also deepen and widen the market capitalisation of our stock markets.

Watch the unfolding NTPC road-show for the new atmospherics, but really the logic has long been as sound as a temple bell. Turning a proportion of the national wealth and its administration over to its people, the working of its bourses, public scrutiny, financial institutions, both local and foreign, is wholly appropriate.

When Finance Minister Pranab Mukherjee made his Budget Speech at the beginning of UPA II last year, he had most except the most astute fooled. It sounded as if he was nostalgic for the Indira Gandhi slogan-rich years of garibi hatao morphed into Sonia Gandhi’s aam aadmi, with very little care as to how the largesse proposed would be paid for.

Loftily unstated, it looked like the plan was to go in for ever bigger Soviet style deficits and the looming spectre of hyper-inflation it would eventually engender, not to mention the eventual fall of the temple altogether USSR style.

But Pranabbabu did talk a little of divestment, tinkering with minor figures (Rs.1,120 crores for fiscal 2009), to illustrate his seemingly tepid intent.

And now here we are, looking at big ticket divestment of scores of PSUs even before the second budget of UPA II coming up next month. And while very little has happened with regard to the Reforms Agenda over 2009, the Government has engineered a most welcome stabilisation of the economy as a first priority. So, one is much better served to look ahead.

Our GDP growth is looking good, with projections converging at a shade above 7 per cent in 2010. This is good, and illustrates that our modest series of stimulus packages and the reduced impact of the global downturn on our domestic focussed economy has helped us recover faster.

But Mr. Mukherjee has already moved on, and made several statements projecting 9 per cent GDP growth, or more, in two years time, while vowing to reduce the fiscal deficit at the same time. Of course, a higher compounding GDP does reduce percentages of debt but that is probably not what he meant.

Meanwhile, our fiscal deficit hovers at between 10-15 per cent of GDP (when all the culprits are honestly counted), and public debt is at a massive 76 per cent of GDP (Centre plus States) or USD 760 billion! The most of the balance 24 per cent of GDP must go into debt servicing and the only way we can probably retire debt is by taking on fresh debt.

And then there’s the External Debt, at upwards of USD 231 billion with a foreign exchange reserve of just USD 255 billion to support it. Unchecked, all this could turn us into a fiscal/debt burdened basket- case where we owe our entire gross domestic product or a multiple thereof , weakening our eventual ability to repay at all and turning our currency gradually worthless.

That would be true Banana Republic finance management. Or perhaps that description is old hat. Because the 16 nation Eurozone is currently bleating about a looming public debt crisis as its average public debt stands at 84 per cent of GDP!

China’s public debt is estimated by the CIA World Factbook at 16.2 per cent of their GDP on the latest available end 2008 figures. But, it is widely known that China does not include its Local Government liabilities, estimated at USD 680 billion at end 2008. Add in the bail-out of their banking system in 2003 ( USD 260 billion) and the USD 400 billion guarantee to four “policy banks” and it starts looking real at about 62 per cent of GDP or USD 1.7 trillion. Its external debt at USD 380 billion is of course a small proportion of its USD 3 trillion reserves.

But we have a ways to go before the size of our economy bails us out. So what impact will a proper divestment programme have on the Government’s finances? It plans to garner as much as Rs. 28,000 crores in the next three months. And a long line of PSUs await, some 61 in number.

This initial divestment target echoes erstwhile Finance Secretary Ashok Chawla’s Economic Survey 2009, when he called for a minimum divestment programme worth Rs. 25,000 crores per annum for all five years of UPA II.

Chawla was right, but even now, the Government is at pains to state that the monies garnered will be used to finance capital projects for the aam aadmi and not to close the fiscal deficit. This is slightly disingenuous because social sector expenditure, not all of it “productive” in the economic sense, has indeed ballooned the deficit and public debt in recent times.

But that may be aimed at the gallery, because the Government has also announced a fiscal deficit target of 5.5 per cent in 2010 and 4 per cent in 2011. Huh?

Well, you see, they only admit to a 6.8 per cent fiscal deficit at present, but it is more productive to see the positives in the numbers and the plan.

But think of a scenario when the fiscal deficit is cut in half or more by a programme of enlightened and well-managed public sector disinvestment and the Government not only realising the front-end payment for selling some of its stock but the recurring benefit of higher dividends and valuation of its reduced stake in its erstwhile wholly owned companies.

(1,052 words)
Lohri, January 13th, 2010
Gautam Mukherjee

Molly & Me & The Baby Makes Three

http://www.youtube.com/watch?v=O9tXyQ7wTOs
Molly & Me & The Baby Makes Three

Pregnant ladies with food cravings are meant to be promptly catered to, with the reassurance that they are eating for two. And the creation of family units, as in father, mother, child, traditionally brings on a glow of satisfaction in the human condition wherever we happen to live and breathe.

It is the nesting instinct, an ideal of domestic bliss, a nurturing and civilising tendency. It has meaning, truth, stability and posterity embedded within its swaddling clothes. In harsher times no one stopped at one baby, they often didn’t stop at a dozen, letting age and obsolescence take care of the big decisions, and natural selection take care of the fates.

And if many still don’t do so, especially in populous India slated to become the most populous country in the world by 2020, it is currently viewed as an expression of essential freedom and individual preference.

This is not surprising as it turns out, given the benefits of our demographic dividend. Nations too are, in a sense, a conglomeration of family units with many of the same impulses multiplied manifold. And survival, growth and proliferation are vital to both. We already have the world’s greatest human resource pool less than 35 years of age, and this vibrancy will be ground reality till at least 2035, accounting for much of our success in a twist to the Marxist dogma about “Labour”. And this, while the rest of the world ages and suffers declining population.

Today India’s gargantuan and growing population represents actual and potential demand. We are no longer afraid of starvation given the effects of greater prosperity, globalisation, international and local advances in agriculture, its mechanisation, irrigation, bio-technology, communication, supercomputers, satellites, other technological advances and efficiencies.

And neither is the world. China, our Asian competitor in the population stakes, now probably rues its Mao era one baby policy, with all its linear suppositions and Malthusian flaws, even as it shakes its rapidly greying head in the midst of its new found power and wealth. But it will be a geriatric China that is going from strength to strength.

At the start of decade two of the 21st century, independent India’s sixty plus years, its one trillion dollar economy is headed firmly towards three trillion before this decade ends.

We all need to internalise the implications of this altogether well reasoned projection. If we do so we won’t make the mistake of judging the future with the yardstick of the past. Because it is otherwise easy to be unaware of the relentless entwining of economics in our daily lives. And as things stand, we can fail to realise the message of immense hope wrapped up in its probable benefits.

Of course, things will cost more and more, but when the nation gets richer, more and more of us will get richer with it, and over time, many amongst us will be able to afford not only the lifestyle we have at present but many aspects of our aspirational lives as well. So much so, that we are likely to take our progress for granted, and find ourselves seamlessly aiming ever higher.

The key driver of this high growth for the next twenty years will not be, principally, consumption, as it has been in America for the second half of the twentieth century and more; though we are certainly a fast-growing and domestic market driven economy. But, right now the numbers reflect the focussed investment in infrastructure and power which accounts for about 40 per cent of GDP.

This is up from some 26 per cent a few years ago. But that erstwhile 26 per cent used to be distributed across a large band of industry, while infrastructure languished, usually resulting in inadequacies of various kinds amongst the beneficiaries, not to mention its muted impact on growth as a whole.

In contrast, this 40 per cent of GDP investment in infrastructure and power, albeit largely private sector investment, aided and supported by foreign investment, is boosting our annual growth figures. Even though, this bout of development is only going to meet a proportion of the pent up demand of a one trillion dollar economy grown up from half a billion a decade ago.

In other words, we are not as yet eating for two, let alone three. Our quantum investments on upgrading, modernising and infrastructure, will have to rise year on year if we are to keep pushing that ever present bottle-neck further down the turnpike. The coming decade will remain a race between growth and the seizure engendered by a full dress bazaar style logjam.

Western economies have a different history. They have transited from the harshness of a medieval existence, riches via Empire segueing into the evils of a Dickensian/Victorian Industrial Revolution, and then onwards through two World Wars and the end of the Class Divide. They went on through the shortcomings of the brave new world of Socialism/Communism to Welfare Statism and a more supervised version of Capitalism now.

India is catching up to prosperity via a very different route and experience. We are post-colonials, post feudal - up to a point, post-caste, post-socialism, secularist, but most importantly, we are standing at the threshold of post being defined by our poverty. We are therefore in a good, if unexpected place.

And unexpectedly again, if one recalls the assumptions of our early planning processes, we didn’t get here by growing our agricultural productivity as a bigger chunk of GDP. We did grow it enough to feed many more of ourselves though and generate surpluses too.

Neither did we get here via boosting manufacturing particularly, though the proverbial fat lady has by no means sung in this regard. Emerging trends in areas such as small car manufacture and auto components seem to suggest good times ahead. We have grown over the last decade, almost by default, mostly on the back of our services and software sectors.

But future growth may come from currently inadequate Education and Healthcare, supplemented with incremental growth and sophistication in everything, from agriculture using genetically modified seeds, to manufacturing where we are turning into global hubs for selected things, and from new areas such as bio-technology and drug discovery. We will also have to see further productivity gains, and show greater evidence of innovation, design engineering, confidence and quality.


(1,053 words)

January 5th, 2010
Gautam Mukherjee

Published in The Pioneer as "Rich in young blood" as Op-Ed Leader on 6th January 2010. Also online at www.dailypioneer.com and is archived there under Columnists.