Ram Rajya

Ram Rajya

TIME magazine reports, in a snippet, that 47% of Americans can’t raise $2,000, in US dollars, in 30 days, without selling an asset. I dare say most of the middle classes in India, including the lower echelons of the descriptor, can find, or borrow, one solitary lakh of rupees in one month without liquidating any asset.

Of course, our poor, some 500 million souls, and almost the same percentage of our 1.25 billion population, can’t.

However, the comparison is between the richest country in the world, albeit going through a rough economic patch, and the second fastest growing emerging nation, going through its own political turbulence and governance deficits.

But then America is largely made up of wage-earners. These range from the mind boggling compensation of the business leaders to the millions of humbler folk living on weekly pay-slips. This is because some 3% of the American population actually own everything there, and in most other areas of American influence across the world. Capitalism has its advantages, but they are rarely spread evenly.

Another major difference between America and India is the sheer extent of national debt. India, with an economy hovering short of 2 trillion dollars has a large current account deficit, but it is still in single digit percentages. India also has a sizeable chunk of national debt, measured against GDP, and this is definitely in double digit percentages. Our off-book liabilities, such as those of various poorly run state power corporations, ad hoc “non-plan” expenditure and the like, are considerable. We probably owe at least one third to 40% of our GDP, when all of it is accurately admitted to.

This could have been higher, but partly because our infrastructure bottlenecks in electrical power, roads, trains, ports, airports, automation, health, education, methodology, etc. they collectively act to dampen confidence in our economy, and slow it down. Besides, we are growing at anywhere between 7% to 9% per annum nevertheless.

But America, the world’s sole super power is hardly growing now, but continues to do its borrowing in many multiples, not percentages, of its $13 to $ 15 trillion economy. Its national debt is reported at 64% of GDP, but add in all the off-balance sheet liabilities and it is more like 500% according to FORTUNE magazine.

Bob Rodriguez, CEO of a $16 billion money management firm First Pacific Advisors thinks there will be a debt crisis in the American economy within two to five years and that it will shake the global financial systems much harder than the financial crises of 2008. Rodriguez expects US Government borrowing to hit a wall of international under-confidence, sending global interest costs spiralling out of control.

America is the greatest debtor in the world, and China, alongside most of the other leading countries, including India, is its greatest lender. And the US dollar is the main currency of global trade.

So, if America, as a nation, goes through a debt burden crisis, it will be many magnitudes bigger than the 2008 one. It will hit most national economies, in a horrific domino effect. The answer, Rodriguez says, is fiscal belt-tightening now, not more and more borrow-and-spend policies to promote growth. But, many do not agree with this, citing the Great Depression of the 1930s when precisely this was done.

India, of course, goes too much the other way, ever ready to strangulate growth, citing inflation, but never really looking for efficiencies and modernisation as substitute strategies. So, we become World Bank/IMF/ Davos Summit heroes by default. But it is interesting to note that no other country wants to follow the Indian way nevertheless, lacking perhaps our sizeable domestic demand.

That we routinely sacrifice our destiny on the altar of fiscal prudence is cold comfort to those of us who want this country to first, for once, achieve its true potential, because that could heave us into a different shore and paradigm going forward.

Slowdowns hit the poorest hardest, and this is true of people and nations. But a recent book by Management Professor Upendra Kachru: India Land of a billion entrepreneurs, meditates entertainingly on how we have the largest number of shops and mobile hawkers, in urban and rural India alike, relative to our population, in the world. The book also comments that: “The way entrepreneurs operate, whether their strategy is attack or defence, differentiates them”. Indian fiscal policy, on the whole, is defensive.

This prudent stance may well be built into the national DNA. Traditional Indian business always emphasises the balancing of the daily cash books, with a bias towards income over expenditure. Our middle class can come up with a lakh because we’ve got it secreted away, in public sector bank savings accounts, in post-office savings, in ubiquitous PPF accounts, in life insurance policies, and even in the relatively new-fangled mutual funds with their open-plan formats and any working day deposits and withdrawals.

Welfarism, including the NAC variety, is largely, if not wholly, directed at the poor and the destitute, even as it infamously enriches the gravy train that leads towards them. Perhaps the Americans, long used to being on top, are habituated to spending every cent they have; but we cannot afford to, in any event. There will be no bail-outs for us because we at least have food on the table and a roof above our heads.

When the middle class in India has no money to fall back upon, given the less than dire nature of our needs, we are on our own, because the poor are much worse off, and even they have totted up over 25 lakh farmer suicides and counting!

Perhaps this lack of bold carpe diem, is a civilisational deficit, in a nation that boasts of 5,000 year plus traditions. Because, erring always on the side of caution, we don’t seem to have the guts to realise our full potential, not only just now, but at any time during our long story of survival.

Of course, this virtue of making sure we have a financial cushion, is partly due to our innate conservatism, our trust in gold and silver over currency, and the saving habit, that has only strengthened with greater prosperity after 20 years of the reforms process. The savings rate has actually gone up by over 10 % to about 32% of household earnings, instead of the other way around.

Another country that saves like us is China, and they’ve also been around for centuries through ups, like today, and not a few downs too. But just because they save, the Chinese don’t skimp on infrastructure, national security, or growth like us.

(1,102 words)

26th June 2011
Gautam Mukherjee


Published as Leader,Edit Page on June 30th, 2011, entitled "China's boon,India's bane" and online at www.dailypioneer.com. Also in The Pioneer ePaper. Archived under Columnists at www.dailypioneer.com

Obliquity

Obliquity

What is truth?
Pontius Pilate

The one major thing in Indian governance that is not substantially tainted yet, despite routine shrill allegations, usually from the losing side, is the conduct of elections under the Election Commission of India. And the actual, rather swift, counting of votes from the hard-to-rig EVMs (electronic voting machines).

We are somewhat ahead of the world in the use of EVMs, despite unproven allegations of electronic ways to make them favour one side or the other. They are, curiously, not yet used in the West - remember the “pregnant chads” controversy from a punching of cards system in the Florida primaries, in the closely fought George W Bush Vs Al Gore presidential election?

Well, our voters from the proverbial Kashmir to Kanyakumari, in the largest voting exercise on earth, don’t have a problem with them. And, as a consequence, our elections are much less susceptible to the traditional “stuffing” of ballot boxes. But alas, we tend not to have wildly popular winners with over 99% of the votes cast, such as former President Pervez Musharraf of Pakistan or President Robert Mugabe of Zimbabwe!

This free and fair election system is probably India’s last bastion, because even the higher judiciary has not escaped corruption charges, with more than one Chief Justice of the Supreme Court in contention in recent times. And so, the supremacy of the people’s verdict holds out the greatest hope for the future; despite the inexcusable go slow and stonewalling tactics of the Government besieged by a sea of corruption charges and the huge civil discontent over them.

With every investigative institution, including the CBI, also allegedly serving the Government’s narrow objectives, the voting public has no recourse against the might of an experienced ruling party, except at election time. But fortunately for us, the Indian voter knows this full well from past experience.

So irrespective of the havoc being wreaked on the protests of “civil society” by multiple and ruthless government action, all is by no means lost. Matters may well be addressed, if not redressed, at the general elections in 2014, notwithstanding the several assembly elections before that, which will also indicate which way the wind is blowing.

The Indian voting public has already shown itself to be astute and well-informed in recent assembly elections in West Bengal and Tamil Nadu in particular, and there are many instances of how it has brought about dramatic and decisive change time and again throughout our 63 years as an independent nation.

The Government meanwhile is inexplicably unable, or perhaps unwilling, to stem the rot with any urgent measures, be they swiftly bringing those charged with corruption to book, or controlling inflation and runaway prices, or indeed reviving the long stalled reformation process amongst other things. So we find the economy is slowing, the stock markets declining, and governance in a tail-spin.

In such a situation, the UPA may be well served by changing tack. It could resort to the power of tangentiality, that is, approaching subject matters via the scenic route, obliquely, rather than directly. This method has long been the life blood of diplomacy, and some new age management theorists say, all successful change.

It leaves, owing to its strategic ambiguity and deliberate vagueness, its calibrated diplomatic code, its ability to save face, enough wiggle room to wriggle out of long held positions. Positions, that have perhaps outlived their usefulness.

Using obliqueness, not only people and ruling parties, but nations also, can stay engaged in almost all situations short of all-out hells-bells war. And even then, the secret back channels would keep buzzing, just as, in the old days, spies from every side and a half mingled and swarmed over neutral territories-- such as the storied and romantic Casablanca in Morocco, the more matter-of-fact Geneva in Switzerland, Lisbon, Portugal, or Vienna, Austria. And all that spying was also diplomacy, and not just an opportunity to meet, and mate, with Mata Hari.

The result of such negotiated change, includes the accommodations necessary on both sides and flanks, across parties at the parliamentary and assembly levels, bilaterally at the national one, and sometimes multilaterally too. It can actually move mountains, an example being the multilateralism that resulted in India’s recent and semi-official inclusion by the de-jure nuclear powers club.

Consensus building processes, arrived at obliquely, with some big brother support to boot, do not result in rupture and its inconvenient consequence of lack of continuity. And this, even amongst people and nations of considerably divergent viewpoint, or in common parlance, amongst sworn enemies, frothing at the mouth, with daggers drawn!

Obliqueness, or as one new management study calls it, obliquity, has the embedded virtue of effectiveness and positive yield, that swashbuckling, but usually tragic, duels of honour do not.

Our long-held notions of non-alignment are a case in point. They were betrayed from the start with our eagerly sought inclusion in the Soviet camp, necessary for our very survival. But it didn’t somehow stop us pounding the pulpit at international fora without ever noticing the ridiculousness of our situation.

Meaning, in a roundabout munimji to sarkar kind of way, that in order to succeed, leaving leg-room for contenders to adjust and shift positions, is probably better, and happens when issues are approached tangentially.

This way, we could not only arrive at consensus on the running of this country internally, but also work with both China and Pakistan, at a qualitatively better level, without in fact compromising any of our strategic concerns. We could however actively refurbish, renovate, remove and reincarnate a political trajectory.

Closer home, think of what a power of minority wooing could do to the prime ministerial prospects of a most efficient chief minister like Narendra Modi of Gujarat? And how it can result in forgiveness, much like the Delhi anti-sikh riots of 1984, which actually killed more Sikhs than the Godhra carnage killed Muslims, despite, or is it because of, the oft repeated mantra of secularism? Played right, the whole Godhra controversy can yet be released to the slipstream of history, duly defanged, denuded, dessicated and dropped.

Pablo Picasso, famous and successful from the age of 19, spoke of art as a lie that revealed the truth. But in this season of innumerable scams and political drift, public and media outrage, actual retribution still faces heavy headwinds.

Is this then the reactionary backlash against a head-on confrontationist approach essentially doomed to failure? Or is the sarkari repression mobilising and consolidating public opinion rather well, making it ready to counterattack and unravel the power structures of today at the next elections?


(1,100 words)

20th June 2011
Gautam Mukherjee

You can run but you can't hide

You can run but you can’t hide


In the middle of India’s anti-corruption stir fuelled by civil society, one is reminded of the theory of information blitzing and opinion building that underwrites the practice. Much of politics, apart from media, marketing, advertising and public relations runs on these very tracks.

I have to invoke Herbert Marshall McLuhan, the famous Canadian professor, who made a considerable impact when he published “The Medium is the Massage: an Inventory of Effects (1967). This book was about the effect of different mediums on the human sensorium. Media, such as TV with its visual content in addition to audio, radio, music on vinyl, even “noise”, were not only “hot” and “cool” on the senses, said McLuhan, but were “extensions” of human personalities, their emotions and thoughts.

McLuhan not only anticipated the ability of the various mediums of communication to witness, record, influence, but actually chronicle the inevitability of change.

Through the 1970s, hip media types toted McLuhan’s books around because they were loaded with futuristic phrases such as “global village” and “surfing”, meaning the very same as what we do today with keyboard and mouse, and not what beach boys do in Malibu or Bondi Beach.

McLuhan, who died in 1980, also visualised the “world-wide-web”, still called “www” in his very own phrasing, even though the internet was not even invented till the 1990s.

Marshall McLuhan anticipated the freedom of information and action the web would bestow on the ordinary member of the public. Still, he didn’t foresee the ubiquitous cellphone in every pocket, and the apexing and convergence of various abilities on this platform of great portability.

In the relatively simple 1960s and 1970s, technologically if not culturally speaking, people were exploring sexual freedom with the advent of the contraceptive pill- minus the scourge of HIV and AIDS. They were also much troubled by the inequities of the Vietnam War, in a time when left-liberalism, even socialism in certain quarters was thought to be fashionable.

In this setting, McLuhan’s message seemed both avant garde and psychedelic, rather than dazzlingly prescient. But then, given the mindset of the times, a lot of pronouncements did, such as Harvard psychology professor Timothy Leary’s exhortation to: “Turn on, tune in, drop out”.

This was not, we are now told, a call to use drugs, particularly LSD, and do nothing, as was popularly supposed; but a fairly cerebral call to look within. But then, till recently, we were still in the era of managing perception to reflect the reality we wanted to project.

Hence, in his 1983 autobiography Flashbacks, Leary explained, though some would accuse The LSD using professor of revisionism: "Turn on meant go within to activate your neural and genetic equipment. Become sensitive... Tune in meant interact harmoniously with the world around you... Drop out meant self-reliance, a discovery of one's singularity, a commitment to mobility, choice, and change". This high-minded apologia could almost be a prescription for the awakened Civil Society of today, not willing to stomach the corruption meekly anymore, instead of a seemingly misinterpreted hippie battle cry from the seventies.

Leary even reworked his famous slogan for the personal computer era in the decade before he died in 1996. He now said, “turn on, boot up, jack in”, and presumably contribute to the cyberdelic counterculture that cannot be controlled by the state. Once a subversive, always a subversive, I suppose.

If indeed Leary was suggesting a cultural revolution via the net, isn’t it a little of what is happening in Indian Civil Society,both from the City (read Anna) and country (read Baba Ramdev), albeit vanguarded by conventional media, and so long as the Government does not send in the clowns. Murmurs about the “Emergency” have not surfaced without possibility.

But it isn’t just the freedom of the Internet and its denizens on Facebook and Twitter and the Blogosphere that is the McLuhan style massage here. In 2011, we have to accept that the nature of the domestic and global political discourse itself has changed irrevocably.

Traditional politics from the days of Julius Caesar involved the management of perception. JFK won his sliver thin presidential battle with Richard Nixon by suggesting the latter looked like an untrustworthy used car salesman, exploiting Nixon’s intense five ‘o clock shadow in his presidential bid advertisements. And the photogenic JFK handled the first televised presidential candidate debates very much better than the ill-at-ease Nixon. But then, Richard Nixon did manage to repackage himself expertly as described in “The Selling Of The President” by Joe McGinniss (1968), for his next, and successful bid for the high office.

But with the McLuhan Age no longer in the future, a new transparency, not intentional, not even voluntary, has come to stay, and will determine things going forward.

It is not just the brilliant simplicity of a virtual drop box in cyberspace that is at the heart of the Wikileaks phenomenon. It is the true, if inconvenient meaning of transparency, without the fear of consequences, for the anonymous “snitch”. Or even for the aggressive Tehelka brand of ambush journalism. It is the empowering technology being carried around in every pocket today on a cellphone; ubiquitous, but potent as a loaded gun.

And then there is streaming technology, used extensively and thus constantly improved by the purveyors of free pornography on the internet. It not only entertains millions, but also enables the President, Vice President, Secretary of State, the CIA Director and the military top brass of the US, sitting in Washington DC, to watch the raid on Osama Bin Laden’s lair in distant Abbotabad. And this, in real time.

Any place can be infiltrated, anything can be streamed and/or recorded with spy cameras, on cellphones, or be conveyed, as to what is decided, via text message or email, almost simultaneously, with reasonable anonymity.

It gives a new meaning to the notion of “live” reporting, because this kind does not need the services of a professional journalist, except perhaps to contextualise and distribute the information revealed. No Cabinet meeting, full of Union Ministers, notwithstanding their vows of secrecy and confidentiality, is safe anymore.

Besides, the 24x7 news channels have ample time and space to give blanket coverage to opposing view points, and the newspapers specialise in merciless analysis. Most importantly though, it is no longer a contest of political leanings packaged for the public like it was. Now the public can and does receive its news unvarnished. It is the political discourse that must adapt and mutate to suit.

Herbert Marshall McLuhan loved to cry that people knew nothing about his work. Well, perhaps now we do, when we recognise its effects all around us.

(1103 words)

7th June, 2011
Gautam Mukherjee


Published as Leader Edit Page under same title on 16th June 2011.Also online at www.dailypioneer.com,in The Pioneer ePaper, and archived under Columnists online at www.dailypioneer.com

Leapfrog or Hopscotch?

Leapfrog or Hopscotch?

Leapfrog is a hurtling over hurdles game, using friendly neighbourhood lads obligingly bent over for the purpose. Hopscotch involves one-legged hopping, except for the relief spot half way up that allows for a jumping jack motion using both legs, if only for a moment, before the hopping resumes. And the way the terrain is laid out, when you get to the head square, you need to about turn around towards the starting square; in short, it goes both ways.

Hopscotch also involves throwing markers at squares, balancing on one leg to bend down and pick up said markers without mishap, turning about, and proceeding down the return leg, without doing any of it outside the delineated boundaries of the squares, or muscling into one occupied by a marker already.

Such calibrated exercise, is Hopscotch, that it makes for a good metaphor for economic planning and policy implementation in India. Leapfrog then would be the sports model equivalent metaphor, designed and built for economic growth above all other considerations. But we don’t play this game, certainly never officially.

So what is more important now--containing inflation by tightening the stays on liquidity, hopping awkwardly between attempts at price control and promoting growth? Or is it wiser to pour scorn on our present sea of troubles by leapfrogging over them? Shall we promote breakneck growth, exhilaratingly, recklessly, with a view that we only live once in this life, notwithstanding reincarnation?

Shall we cock a snook at the resultant inflation as just so much froth and lather that will be left behind in the wake of our resultant prosperity? There really are so many questions, especially if you are willing to daydream dangerously.

It is hard, and not a little thankless, to be prudent, as the RBI Governor Dr. Duvvuri Subbarao knows full well, as he bears the brunt of tacit disapproval from his political overlords for his frequent, if largely ineffectual, tightening of liquidity to try and contain inflation.

The RBI Governor would be better off executing this piece of classic macroeconomic theory, if inflation was indeed succumbing to his prescriptions. Instead, he’s having to watch food prices, industrial input prices, the cost of all kinds of services, being buffeted by record petroleum and commodity prices.

And these are spiralling ever skywards, fuelled not so much by shortages versus demand, as ample liquidity generated by the US and Western Europe, as they struggle to revive their economies. Their interest rates, along with Japan’s, are at near zero levels, and they raise them at 0.25% rests when they do, alongside huge stimulus packages running into billions of dollars.

And so, as a side effect of all this money sloshing about the world’s financial systems, Commodities, including Precious Metals, have been going up to unprecedented levels, chased by the monies being invested in them looking for a quick buck.

Dr. Subbarao, presiding over the central bank of a $1.6 trillion economy, is therefore up against these beyond his control realities. Those of a partially globalised economy that India has become.

Meanwhile, in the domestic sphere, the tightening of the fiscal screws are demoralising business and industry, making them reluctant to invest in fresh capacities or modernisation, and slowing economic growth at the same time.

This, in turn, is putting pressure on the political imperatives. Inflation is hurtful to the poor. Slower growth is damaging to the economy on the whole. Together, this double jeopardy could substantially harm the UPA Government’s 2014 re-election bid. Finance Minister Pranab Mukherjee cannot be happy about this, particularly on top of the Pork Barrel of rampant corruption and shocking drift in policy matters.

A case may therefore be made out in favour of the Leapfrog. One needs to say it even if no one is listening. India can, it was estimated by Mr. Motilal Oswal, Chairman of the leading Bombay Stock Exchange Brokers in 2007, be a $5 trillion economy by 2020.

In December 2010, Mr. Oswal revisited his firm’s original thesis, without any dilution, stating: “We published our first note on the concept of NTD (next trillion dollars of India's GDP) in 2007. The core NTD thesis is this: It took India about 60 years post independence to clock the first trillion dollars of GDP. With nominal GDP growth of 14-15%, at constant exchange rates, India's next trillion dollars (NTD) will come in just 5-7 years. We juxtapose the NTD idea with the GDP growth experience of China to arrive at India's GDP of almost US$5 trillion by 2020.”

And this, at our usual game of economic Hopscotch, not Leapfrog. Even though we are a little behind Mr. Oswal’s forecast today, having added $0.6 trillion since 2007, we are broadly on track. And the second part of Mr. Oswal’s forecast has us more than doubling it again in the next five to seven years! And yet, there are many financial analysts, both Indian and foreign, who agree most soberly with Mr. Oswal’s prognostications.

The momentum of a large economy on a roll cannot be underestimated, but then we cannot afford to get in the way of the juggernaut either. So the stalled Reforms need to be advanced despite the UPA Government inexplicably making heavy weather out of their near majority of a mandate. And obsessing about inflation is not the only way.

We could, for instance, carry the farming sector into the modern era, just as this year, with industrial growth choked off by the liquidity squeeze and high input prices; and both the services sector and exports under pressure because of sluggish growth and global softness in demand; agriculture will come to the rescue with a projected 6.6% growth rate, monsoons willing; to clock us in at an estimated 8.5% GDP figure overall.

Besides, we never have counted the informal sectoring black economy, which is, we all know, as big as the official one. And therefore when we reach two, we will actually be at four. So, in 2020 we would be at $10 trillion, if you counted everyone on the bus. Now, that is almost as big as the economy of the United States at around $13 trillion today.

So why do we focus on all sorts of trouble instead of going in for policies that promote growth above all else? Perhaps we are pessimistic in our calculations out of force of habit. Or perhaps it just does not suit our temperament to play at Leapfrog. We actually prefer Hopscotch. Perhaps they should enter Hopscotch as a category in the London Olympics next year, if not into the economic theory books at the World Bank and the IMF.

(1,102 words)

1st June 2011
Gautam Mukherjee


Footnote:Hopscotch
Hopscotch began in ancient Britain during the early Roman Empire. The original hopscotch courts were over 100 feet long and used for military training exercises. Roman foot-soldiers ran the course in full armor and field packs to improve their footwork, much the same way modern football players run through rows of truck tires today.
Roman children drew their own smaller courts in imitation of the soldiers, added a scoring system and "Hopscotch" spread throughout Europe.

Published (without above footnote) as Leader Edit in The Pioneer with same title "Leapfrog or Hopscotch?", on 3rd June, 2011, and mirrored online at www.dailypioneer.com and The Pioneer ePaper. Archived under Guest Columnists at www.dailypioneer.com