When the cookie crumbles

When the cookie crumbles

International Labour Day celebrated on 1^st May is a worldwide holiday to salute the contribution of the working classes. It is a good day to ruminate on what the Americans call “The state of the nation”.

When all things begin to unravel in a malfunctioning democracy like ours, the ones who are meant to be naturally pleased are the Marxists.It was Karl Marx who wrote with great, almost religious conviction, about the inevitable “withering” of the Capitalist State, eventually. That was more of a moral judgement than logical argument, however just the cause of the proletariat; but of course Karl Marx did not think so.

And today, with the economies of the developed world tottering on the brink, due to its excesses rather than the effects of the Marxian dialectic, he does nevertheless seem vaguely prophetic.

India, on its part, tends to be both fish and fowl simultaneously, and so, we are probably at least as much Socialist as we are Capitalist.

In the TV series Mad Men, episode 5 in the 6^th season, Don Draper’s wife Megan, who is American- French, speaks from New York to her Parisian father on the telephone. The time is April 4^th, 1968, the day Rev. Martin Luther King was killed.

Megan Draper’s Communist father, on hearing Rev. Martin Luther King has been shot in the face, says, “I applaud the acceleration of decay,” echoing Marxist sentiment. And, believe it or not, in French, “acceleration of decay” does not sound ghoulish or pompous.

After all Megan's father is in the Paris of the 1960s. The Paris of the barricades that came to pass on May 3^rd, 1968, just a month later. And the swirling popular protests that followed- part student, part worker, part trade union, part anarchist and adventurer, wholly utopian, and not a little bizarre, as popular uprising tend to be.

That 1968 happening was the biggest ever eruption of working class protest in the 20^th century, within the confines of a democracy, and with no overthrowing of the Government at the end of it.

In fact, the whirlwind of protest came and went leaving only profound lessons in its wake.  Working class life did become fairer, in France, and elsewhere. But, the baby did not go out with the bathwater.  The same Gaullist ruling party was voted back to power, more strongly than before in the elections that followed later in the same year.

But first, there were pitched battles between students from the Sorbonne and elsewhere, trade unionised workers, 11 million of them, 20% of the entire population of France, and the police of President De Gaulle.

The photographs of that time, in the now defunct  LIFE Magazine, of the barricaded Latin Quarter of Paris, still resonate. Even if Bashar Assad’s Government is using chemical weapons against the rebels in Syria now. The fangs bared today are just far more lethal.

President Francois Hollande, in today’s France, in dire economic trouble, must be thinking if only Socialism could cure the malaise. Then the EU wouldn’t have to break up. But it is so bad that the EU is unlikely to see 2014 in one piece.

But the Marxists globally have lost their chutzpah. Their vision has developed cataracts. They can offer no relief from our travails. Fidel Castro is an ancient shuffling ruin. Chavez is dead. Communists may be at the head of rebellions, but they fail to keep their promises as always. And here in India, the Communists have lost almost all vestiges of electoral power.

The watered down version, Socialism, has been taken over , appropriated, by the ruling Congress party and several of its regional allies. It is thought to be a reliable vote gathering device.  So there is always pious talk; of Pro-poorism, aam admiism, and other politically correct lip-service.  It stays iffy though, a whistling in the dark form of politics, of non-performance, but tall on promise.

But meanwhile, everything has been breached, compromised and vandalised. Our war preparation plans are in the hands of the enemy while China sits pretty in five tents 19 km inside Indian Ladakh. We say nothing to them, but threaten Pakistan with nuclear destruction if they use tactical nuclear weapons on us. Meanwhile Pakistan continues with its daily savagery as if we hadn’t spoken.

The CBI has become the Government’s own pet inquisitors. The intelligence agencies are used to keep an eye on political rivals. The banks, the Reserve Bank, all do partisan work.

The Lok Sabha, meant to legislate, is a fish market of dissension and bad behaviour. The Rajya Sabha offers no respite either. Every day ordinary people blatantly break the law and perpetrate inhuman acts on each other. The country is riddled with scandals of every kind.

The judiciary too is not objective. Some say it is corrupt. Certainly two Chief Justices of the Supreme Court stand accused. It has also become more proactive as the executive has failed to deliver. Meanwhile its back- log stays gargantuan.

But justice is no longer blind. It lets Mr. Sajjan Kumar off, like a tight slap in the Sikh face after 25 years, when thousands saw him directing murder and arson on the streets of Delhi personally in 1984. That was an Orwellian year alright, steeped in Big Brother denial that persists to this day.

The litany of woe is not just in the neglect and compromised nature of our institutions but in the blatant subversion of every instrument of the Government to suit its own strategic and tactical purpose.

It does not matter what the citizenry want. It does not matter if it is good for the country. What our political masters want to do, they do. They are all complicit in the “decay”. Survival has meant a jettisoning of the true intent of the constitution.

We need a strong new broom to sweep clean, to purge the suppurating body politic. We need our own Cromwellian figure. Oliver Cromwell brought in representative Government and redirected power to the representatives in parliament, and away from the Crown.

Our representatives, at state and central levels, have power of course. But they use it to feather their own nests and run the Government badly. What we need is governance for the benefit of the people, a post-modern Cromwellism.

We can see such a man, Mr. Narendra  Modi, waiting in the wings, who can deliver this. He must be given an opportunity to bring his brand of politics and performance to New Delhi. And through him India can stem the rot and begin to realise its true potential for probity and greatness.

(1,102 words)

April 30th, 2013

Gautam Mukherjee

The Indian Economy Is Stressed Out

The Indian Economy Is Stressed Out

The Indian economy is stressed out to the point of crisis. And the principal reasons are the number and open-ended nature of the burdens placed on it by the very Government meant to manage it in good health. The Government of India imposes financial commitments daily in an unplanned and cavalier manner. And this on top of planned and budgeted expenditure. And with this it also grows its size to cope.

But when unplanned and ad hoc expenditure rivals what has been officially debated and sanctioned via 5 year plans, the annual budget balancing exercises, aided by the work and input of the many ministries, the PMO, the planning commission, other quango bodies and think-tanks; then things are truly out of control.  

How can a series of after- thoughts be allowed to threaten the viability of the whole effort? How can money be sanctioned and spent without even a glance at the income side of the ledger?

If the GOI was a company, it would have gone bankrupt long ago. After all, a company cannot print its own currency and sanction an endless stream of loans to itself! Not that as an economy we are very far from collapse in 2013 after 9 years of UPA rule. This, despite the formidable powers of the Government to sustain itself by hook or by crook.

The economy that UPA inherited from the previous NDA Government was robust. The statistics then and now tell the very different stories. But the next Government coming in 2014, most unlikely to be the UPA as it is facing the brunt of public disenchantment, will have a very hard time of it. It will inherit the remains of a scorched earth policy and very high expectations of change from the same public.

The only way out is bold and urgent reform with the necessary political vision to boost the economy in no uncertain terms.

Something most thinking people realise a Government led by the economically savvy Narendra  Modi is well placed to deliver. But the situation is so grave that the way out is not optional. If we don’t change our ways drastically, India will become the biggest banana of banana republics.

Our size, as the 7^th largest country in terms of land mass, and the second largest population in the world, will see to that. We are currently a titanic disaster in the making.

In 2009, the GDP of the Indian Economy was USD 3.5 trillion based on a purchasing power parity (PPP) calculation, placing it as the 4^th largest in the world. But its composition was badly askew in favour of the service sector, which accounted for 62.5% of the economy.

Manufacturing made up a modest 20%, and agriculture, wherein most Indians, some 52% of the population, were engaged, accounted for just 17.5% of GDP.

But that was also roughly when the world economy also collapsed. It was in 2008 actually, beginning with the debacle on Wall Street and the US main street, but things coasted well enough for a while in India before external pressures made themselves felt.

The 62.5% of the service sector then was largely export driven and instantly began to struggle to survive let alone grow. India was never much good at manufacturing anyway and our demand for manufactured goods is domestically driven.  We tend to be backdated in our technology and are hampered by acute lack of infrastructure and its great cost. Nevertheless, the domestic demand could have sustained except for foolish Government policy- making.

Because, we reacted to the global mess, not with a boost and stimulus to our own economy, which was doing fine, but with a tightening of monetary credit, as we did not want the same borrow- and- spend contagion to come here.

The then RBI chief kept remarking that he thought the Indian real- estate sector was overheated and stopped bank lending to it. Little realising that while buildings were in the making they consumed a host of manufactured items, thus sustaining all the supply lines- of cement, steel, brick, tiles, sanitary-ware, electrical cables and fixtures, air-conditioning plant and machinery, lifts, etc. etc.

So by Government action we reduced manufacturing growth to zero or minus, even as inflation, mainly due to high cost of imported oil, has raged at 20% or more at the retail level. The Service Sector too has lost market share, heft, strategic salience and profitability. Other exports have also been in the doldrums.

Agriculture, a poor performer at the best of times, because of woeful under- investment in modernisation, headed southwards too. With growth levels of between 1 to 3 per cent in the main, it started to feel the pinch of distribution and transportation costs. And this meant massive food inflation at the consumer level.

And corruption, always endemic in a country like ours, with 24% of the population below the poverty line and 65% of even the capital Delhi’s population living in slums or less, has seen an exponential growth since 2009. That is when UPA’s second term began.

We are now entering a period of stagflation, because despite talk of reform nothing has been implemented on the ground, and is unlikely to see the light of day in the remaining time left to this Government.

Election fever is already taking hold via the series of assembly elections on the cards. Most observers agree we can expect nothing worthwhile till the new Government comes to power. Let us hope the softening of commodity prices globally will see us through till then.

(922 words)

April 29^th, 2013

Gautam Mukherjee

Money Talks

Money Talks

The latest Sharada chit-fund based collapse in West Bengal, of the fund itself, and of newspapers, TV channels etc. promoted by it, underlines the longing for high returns on investment among the Bengali poor and the lower middle class.

TV shows us the over a 1,000 canvassing agents for the fund running scared of the irate depositors and begging the TMC Government to bail them out.

Broadly speaking, whether one is victim to this debacle or not, being so poor for so long is just not happy-making. 

It is another matter that entrepreneurship is not too common amongst Bengalis. So, passive avenues for ostensible advancement such as subscribing to a Chit Fund hold a special attraction.

These are a people hemmed in by lack of capital, connections, being sometimes uneducated too.They cannot generally qualify for kosher loans. They cannot hope to change their circumstances, short of winning a sizeable amount in a lottery. Or becoming a celebrity, a politician, a para dada, adept at honeyed extortion, a goon for hire, a criminal. Or pulling off a large white-collar scam.

When the state economy has been in the doldrums as long as memory serves, what are the alternatives?  West Bengal has fallen far behind other more prosperous states. The choices are stark. You can depart. 

Many Bengalis live elsewhere. The ones who stay are vulnerable to exploitation.

In the chit fund game, the investors are lured in to risk money they cannot afford to lose, because of the high interest rates offered. And like all schemes that have no solid business model, for a while, quite often a long while, one can rob Peter to pay Paul.

Meaning, that the returns can be financed by receipts from the growing number of subscribers or new investors. In this instance, it also underscores how difficult it is to make media ventures deliver a financial return anywhere near commensurate with the money it takes to set it up and run it. Particularly when very large, possibly unjustified payments for personnel and services are taken into account also.

And according to the Sharada Group’s recently apprehended chief, influential politicians from the ruling party from West Bengal and a number of other states, have purloined large chunks of the liquid capital raised by Sharada. They have allegedly simply helped themselves to it using criminal intimidation.

There is, of course, no return on investment from being looted or allowing plunder. And, savaging the money tree itself, tends to kill it.

In a state that has had a bleak economic performance for nearly forty years, the desperation of ordinary people to find a way to get ahead despite lack of opportunity is understandable.

This latest debacle only reminds us of another in the seventies. Then, a certain Mr. Chatterjee who built Kolkata’s first 24 storey building in Middleton Row, Chatterjee International, also ran a chit fund scheme. Straight into the ground. This singed the hands of many of his, largely middle-class housewife investors, who could, and did, make bigger outlays.

Then, in the eighties, it was the notorious turn of Sanchaita Chit Fund, one that targeted the poor and went bust with about 120 crores outstanding.

Currently, Sharada, which has downed shutters, and other chit funds still operating in the state, are said to have collected over Rs.30,000 crores. When and whichever ones fail, there can be little chance of recovery, because the money is always siphoned off first.

Chief Minister Mamata Banerjee on her part, plans to restore some Rs. 500 crores of the depositor money, a drop in the bucket, by imposing an 10% additional cess on the sale of cigarettes in the state.

For small depositor money in a moribund state, this scam involving part of that  Rs. 30,000 crores, is large. And while a good deal of the focus at present is on the effects, the larger picture tempts one to ask why these chit funds are such a draw in West Bengal.

Ms. Banerjee blames the Left Front and the Centre, the former for encouraging their proliferation, and the latter for failing to regulate and supervise them. Chit Funds are a central matter she says. But the anguish of the people who have lost their money in West Bengal is very real. It is after all, not the operation of the chit funds that is at fault, but the profligacy with the money collected.

Most damagingly, the promised “poriborton” or transformation of West Bengal after the TMC victory has failed to materialise beyond a few cosmetic touches. That is why every piece of bad news is magnified into an indictment of the TMC Government.

(748 words)

April 25^th, 2013

Gautam Mukherjee

Nostalgia Kills

Nostalgia Kills

In the sixties, Tripoli, Libya, had an Italian flavour. The ruins of Roman Leptis Magna were magnificent and just some day- tripping distance out- of- town, on the azure Mediterranean coast. Rome itself was an hour by the planes of those days. And Malta, perhaps twenty minutes of flying time and some half an hour to the parking slot on the apron.

 The overlay was American because of the extensive oil connection. And the recent past was to do with WWII, the Rommel versus Montgomery North African conflict, Tobruk, the “Desert Fox”, and the British 5th Army, still there. But in 1966, it was pulling out, 25 years after the war, in line with post-war treaties.

Downtown Tripoli was redolent of plazas, piazzas, fountain roundabouts, brewed coffee and Italian chanteuse Wilma Goich played loud out of record stores to lure in the buyers. The Libyans in the reign of King Idris were monarchy moderates. And the expatriate living was easy.

The Americans were there with their biggest military airbase outside of Europe, and it was from here that they supported Israel in the 6 day war of 1967 that humiliated Nasser’s Egypt.

Wheelus Airbase had a tremendous Golf Course and the best hamburgers I’ve ever eaten. Thanks to the American military presence the general population enjoyed American TV with serials such as “Gunsmoke” and “Have gun will travel”.

Westerns were popular in those days. You could have seen a young Clint Eastwood, in yet another called “Rawhide”, where he played a “trail boss”, driving cattle on the hoof across territory to the meat processing plants in the city.

And then there was rock n roll and Country & Western on the radio. America travels with Americans wherever they go.

From this neo-colonial idyll in which I lived and left, the place morphed into the Libyan Arab Jamahiriya under Colonel Gaddafi. Then followed the bizarre image building, the many attempts at Arab and African and even Arab solidarity, the state terrorism, the attempts to go nuclear, the rhetoric against the US, and finally, what seemed to be a Western brokered reconciliation.

Only to fuel a “home- grown insurgency”, and the denouement, with a stereotypical dictator’s death, deep in the Sahara.

In between,  Gaddafi’s Libya lived under American sanctions and overseas account freezings. There were others, then and since,  in the same boat - Libya, Iraq, Afghanistan, Somalia, South Africa, Israel, The Palestinian Authority, and now Iran and Syria. Others, not mentioned here, on all five continents.

Together, adversity being the mother of invention, virally, disparately, they developed a vast underground banking system, forged trade documents,   and became expert  at other necessary dodges.

There were, and are, enabling countries such as Dubai in the UAE, and good old Pakistan, and even Russia and China and Saudi Arabia. The covert and intelligence apparatuses of most countries also use the same networks for illegal transfers, banned arms sales and the like, all flowing furiously but under the radar.

The nod and wink of the underground and the accommodating underworld, is highly sophisticated and reliable.

All our front- page news merely consist of the eruptions that break the surface and indeed operate at visible, if not transparent, levels. But a lot of the big work goes on through back channels, tacit agreements, shadow economies and slush funds. There Governments can operate unfettered and interact with “non-state actors” all they want.

Everyone is necessarily adept at sleeping with the enemy. It is the only way for civilised skulduggery to operate. But the new kids on the block tend to defy all norms even as they settle down into the system.

Al Qaeda is no longer revolutionary. It is a multi-national corporation. The Pakistan Taliban is the Harvard of guerrilla warfare inspired terrorism and the school of DIY low-cost murder and mayhem.  

On the surface again, we have our Finance Minister going to Washington to parlay with the World Bank President, one Mr. Kim, in the presence of the UN Secretary General, the self- same South Korean Mr. Kim Ban Ki Moon that beat our suave Mr. Tharoor to the job with George W Bush’s backing. All Mr.Tharoor had were Mr. Manmohan Singh’s good- offices.

Mr. Chidambaram told Mr. Kim, The World bank Chief, and the media, that India needs at least another trillion dollars from the private sector. This, to complement all its Government and international lending agency money over the next five years,  for India’s infrastructure development.

Mr. Kim told him, and the media, how the World Bank has stopped funding a corrupt series of projects in Bangladesh for the last 10 years. The World Bank has indeed agreed to help India, but the details are not known and bracketed with this veiled warning.

Meanwhile, official and non-official India possesses a robust parallel economy, and trillions stashed abroad. If we launch an amnesty scheme, no questions asked, with a guaranteed return on investment equivalent to that of the foreign lending agencies, we won’t have much trouble in raising just one trillion dollars.

And if this kind of thing is politically fraught above- ground, the money can always be brought in via fronts and hawala channels used by most political parties anyway.

All we need is some imagination and less hypocrisy to liberate ourselves from many dilemmas.

  (881 words)

April 22^nd, 2013

Gautam Mukherjee

Gold Fever

Gold Fever

Is the gold “bubble”, as George Soros puts it, heading towards its last waltz? Is Cyprus, its economy, found to be in need of Euro 30 billion now, not Euro 10 billion as estimated earlier, going to sell its gold reserves? Is this going to compound the stampede for the door evident amongst the Hedge Funds and other speculators in gold?

But Jim Rogers, another famous billionaire investor like Soros, is buying gold, and keeping his current holdings. He thinks, perhaps, that it has intrinsic value, in the jewellery business certainly, and as a traditional hedge against inflation.

Is France, under Francois Hollande’s disastrous Socialist leadership, said to be headed for a worse recession than Spain, going to also unload some of its gold to ease the pressure?

Being the second biggest economy in Eurozone after Germany, France’s fate is very important to the EU and the world economy.

Certainly, its high profile people, hit by Hollande’s punitive 75% tax imposition on income, are running away into tax exile, and that includes the Socialist rich people.

Does gold, a decorative precious metal,  actually have intrinsic value beyond its relative scarcity? All the gold mined and above ground over the last 6,000 years amounts to no more than 170,000 tons. About 52,000 tons is still estimated to be in the ground. Accounting for new discoveries, the grand total will not exceed 300,000 tons.

This is neither a little nor a lot, but 300,000 tons of decorative yellow metal seems adequate, even though for the first time, some 12% of the gold above ground is being consumed by electronic devices, and is not recycled, being in miniscule quantities in any one device.

So theoretically, the world’s gold reserves could be depleted gradually if a substitute is not found.

But today’s economies and currencies are not on the old gold standard. Neither are they much bothered by how much money they actually have in their kitties, because of the prevalence of deficit financing.

The world’s No.1 economy has trillions in debt amounting to many times its annual GDP, and every other country is in the same boat. Some, including all the major economies of the US, the EU and Japan, are suffering the consequences of overdoing their debt- fuelled growth.

But, coming back to the sell-off, the present run for the exits is not just from gold but all commodities, including petroleum.

Economic channels, business pages and assorted analysts are saying commodity prices,  that of petroleum, gold, zinc, copper, etc. are declining because of slowed growth in China. This implies the days of double digit Chinese growth are over for the foreseeable future.

But what about the fact that most commodities were priced at levels that were much higher than what could be justified by any “fair value” reckoning?

For the present,   China’s exports to the West are indeed down because of recession in the host countries. Its showcase mega infrastructure development in- country is slowing, but this is partially by declared design. The new leaders Xi and Li have stated as much. China wants to consolidate its vast hinterland now to avoid possible social unrest.

It will therefore start growing strongly again as soon as they have recalibrated its spending on domestic development, in multiple local level projects. So commodity prices too should rise again once this happens. Besides,  Chinese overseas infra- building in Africa, Afghanistan, Pakistan and other points distant is going on apace.

But, another, more immediate reason for lowering commodity prices, is that the speculators in commodities are simply booking profits and exiting. The logic for this is in Newton’s gravity inspired statement: “What goes up must come down”.

The trick, as always in high risk gambling, is in leaving the casino soon enough, and with your profits. A lot of Hedge Fund Managers are very good at this.

Meanwhile, a happy side- effect of falling commodity prices is lower inflation. Especially in a country  like ours that imports about 75% of its petroleum.  So if the economy picks up, it is on the basis of a commodity price decline, but welcome nevertheless.

Gold prices falling has already fuelled India’s insatiable demand for the metal. Why that happens in India has many cultural and religious reasons besides the traditional hedge against hard times.

The decline in commodity prices may not do much for the mature economies though, because of the sheer magnitude of their accumulated debt.

Further down the road, if strong growth recommences, in India, China and elsewhere, then commodity prices easing may be regarded in hindsight as an early green shoot, heralding revival. 

(766 words)

19^th April 2013

Gautam Mukherjee

Pandits and Panjandrums

Pandits and Panjandrums

Listening to a retired Secretary of the Government of India from Kashmir, an elegant, dignified and polished man, I was reminded of a glorious tradition that has been elbowed aside by its inferiors.

This gentleman, a denizen of one of the top Muslim families from the Valley, was reminiscing about his earlier days as a Lecturer in the University of Kashmir at Srinagar.

He said something that resonates with most upper class Muslim Indians, who tend to be dyed- in- the- wool secular: “I miss the Pandits. They were my guides. All the learning and intelligence of the Kashmiris came from them. Without them, Kashmir has lost its class and sophistication”.

Such top class Muslims demonstrate their lack of orthodoxy in ways large and small. They marry whomsoever they want. And just because they fall in love. They worry not at all about religion. They marry Hindu, Sikh, Christian or even Jewish. They don’t feel limited by caste, creed, race, money, class. 

The Kashmiri gentleman I was talking to reminded me of the Sufi tradition of Islam, much beloved of all the Indian people. And once, not so long ago, the people of the entire sub-continent, including those in presently benighted Pakistan.

I thought of our Pirs and Babas, and their graves, where lakhs come to pay their respects all over the country. And of the miraculous Ajmer Sharif that has withstood and weathered the scorn of any bigot summoned mystically to its presence. Of legends about Jesus in Kashmir and how he learned to turn the other cheek there.

But what about this aggressive face of radical Islam that seems to have taken over the citadel?

We have probably Saudi Arabia and its misplaced zeal for the propagation of the austere strain of Wahhabism to blame for our plight. The money that the guardians of the Holy Ka’aba have spent on promoting Wahhabism is estimated at over $87 billion over the last twenty years alone. It is this Sunni puritanism and intolerance that has leached the peace out of Islam.

We have Wahhabism to blame for usually tolerant Sunni Islam’s largely stern face of late. It has brainwashed illiterate hordes to its austere tenets. It is Wahhabism and its mutation that is instrumental in our collective loss of innocence.

Saudi Arabia funds mosques and Islamic charities all over the world, pays publishing and television to promote Wahhabism; and is reported to be stepping it up further of late. It wants to retain its slipping hold and influence over its own creature.

It is Saudi money that has sowed the seeds of Al Qaeda, all its affiliates and sympathisers, and the Taliban too. But a key result of such unintended spawn was the round condemnation of the House of Ibn Saud for its close ties with The United States.

For its own “corruption”, its “decadence”, its “greed”, its “apostasy”. Of course,  any Frankenstein creation tends to snowball in unexpected ways. The radical Islamist movements of the world are now fuelled by drug and extortion money too.

It was perhaps inevitable, because of the internationalisation of the jihad. A diverse Islamic brotherhood came together in Afghanistan to expel first the Soviets and now the Americans. This counted Indonesians, Pakistanis, radical Kashmiris, and Chechens etc. in their ranks.

These people have overlaid austere Wahhabi ideas with the bloodthirstiness of revolutionary fervour. They bear no allegiance to anybody.

But all of this is in the end a sectarian Sunni phenomenon. And on the other side of the divide is Iran, and Southern Iraq around the holy shrine of Karbala, where most of the Shias of the world come from.

The irony is in that before the Sunni radicals, or indeed the Sunni powers, target Hindu and Christian infidels, they worry first about their fellow Shias.

It is Shia Iran that is working hard to go nuclear, and you can be sure Sunni Saudi Arabia, Sunni Pakistan and Sunni Afghanistan, Sunni most of Arabia and Asia, are a great deal more perturbed about this than even a covertly nuclear Israel.

While such fractures and contradictions trouble the Islamists, we in India have our own betrayal of the Muslim population to worry about and need to do something urgently to make amends.

The Congress brand of lip-service is both an insult and an injury. Indian Muslims comprise 14.6% of the population, accounting for 177 million souls, about a fifth of the total population.

The Sachar Report, tabled in 2006 and thereafter ignored, says the Indian Muslim is stuck at the bottom of every economic pyramid. Muslims have a minimal share in Government jobs, school and university places. There are only token Muslims in politics. Muslims are less educated, are poorer, have less access to bank finance, and are not well represented in the police or armed forces. This is after 55 years of so called “inclusive” Congress rule out of the 65 we have been independent!

Paradoxically, despite the noise about Narendra Modi’s and BJP’s supposedly communal outlook and “intolerance”, it is in Gujarat that the Muslims have prospered.

This has not happened in UP under the BSP or the SP, despite their professed leaning towards the cause of the minorities. This has not happened in any of the Congress ruled states. Nor in Nitish Kumar’s Bihar, despite his spurious concern about “secularism”.

It has also not happened in arch-left West Bengal under Trinamool or 34 years of Left rule. It is not true of Left ruled Kerala. And the same rate of Muslim progress is not evident in other BJP ruled states either.

But in Gujarat, 21% of the Muslims voted in Narendra Modi, to give him a fourth consecutive term. 

Because, they said, of his Government’s work for Muslims in development and maintaining communal peace.

Muslims and other communities alike backed Modi and the BJP in Municipal elections too, conducted in February, giving them victories in 47 out of 76 elections, including, famously, Muslim majority Salaya in Jamnagar.

There, BJP won in all 24 seats contested, fielding Muslim candidates. The people of Salaya are pleased because Modi is modernising their port in association with the Essar Group, and has established a massive power plant there.

Salaya was a Congress bastion in the past. This time, Congress failed to win even one seat.

It is clearly time to do something real, truthful and substantial at the national level for India’s Muslims. Narendra Modi, low on lip-service, deserves an opportunity to put teeth into his development- for- all and India First mantras.

And we, the Indian people, need to rid ourselves of hypocrites out to pull off yet another term of confidence tricks at our expense.  

1,108 words

April 14^th, 2013

Gautam Mukherjee

The Unrealised Potential of Rural India

The Unrealised Potential Of Rural India

In Gangster Squad,  based on a true story starring a laconic Sean Penn, a little crew of crack policemen is set up to destroy Micky Cohen’s business operations. Cohen is a Jewish racketeer from 1949, with a yen to “own” Los Angeles.

In a stylish scene from the movie, the best marksman in the cop squad, nicknamed “Hopalong” by his colleagues, advises his admiring Mexican junior: “Don’t shoot where it is son, shoot where it’s going to be”.

The Indian agricultural sector may be very largely primitive, still in the bullock and plough era, and pathetically, back-breakingly, underproductive, but it does feed a population of 1.2 billion. We are not living on food aid anymore. In fact we export various food surpluses nowadays.

A new joint study by the Confederation of Indian Industry and McKinsey & Company, says if agriculture was made more productive: via massive capital investment in infrastructure, irrigation, yield technology and processes, plus strong technological upgrades and collectivisation/cooperation; food inflation would cease to feature so readily amongst our problems.

There would be a lot more to go around.  Ergo, a supply- side economic solution!

But, of course, it would require more efficient systems and policies too. More fruit and vegetables would need to be disbursed with volume sales, and quickly, as we are dealing with a perishable commodity. And a much better involvement and integration with infrastructure, and food- processing must account for greater than the present 10% figure. Besides, with changing demand trends towards more meat, chicken, eggs, and fish, scientific agricultural techniques to improve quality and yield have to be employed there too.

The Socialist system of minimum guaranteed prices to farmers, which implies and often involves a subsidy, as it varies from market prices, would have to be phased out, and replaced with a productivity bonus. Besides it distorts the pricing at retail level too. Volume sales would have to rule, as unit prices would drop because of the bountiful crop, better infrastructure, etc.

Since 60 per cent of India still “lives in its villages”, it is high time something was done to boost farm income and contribution of the agricultural sector towards GDP. What was once a significant percentage of the total in the infancy of this country, when not much else was happening, now lags at 14% of the total per 2012 figures, and is dropping still.

That means 0.72 billion people, the masses who live in rural India, contribute just 14% of roughly $1 trillion of the official Gross Domestic Product. If you assume the actual economy to be twice as large including the cash portion, this figure would drop to 7%.

Mahatma Gandhi probably never expected India to show signs of capitalist muscle, in his lifetime, or in the misty future. It is surprising in hindsight he thought that way, for so sagacious, shrewd and far-sighted a man in other respects. But perhaps the Mahatma was merely playing to his biases as is all too human.

The economist in bar-at-law MK Gandhi wanted fervently the village to be a viable economic unit and the hub of modern, independent India, rather than its cities.

He might not have anticipated or even accepted that development, and aspiration, would see a steady migration of the rural population to urban India.

However, today it stands at 40% urban and 60% rural, but the future tilt is in favour of the city as it has been from the very start. In the US, one of the greatest agricultural producers in the world, and the largest by far in certain staple items of farm produce, such as wheat, only  1% to 2% of the population of 313 odd million, plus a huge array of machinery and technology, manages this feat.

Of course, The US uses huge subsidies too, but the approximately $ 20 billion it gives out per annum, is efficiency/yield based, and designed to keep the farms producing massive quantities of food. In 1930, some 25% of Americans lived on farms, but no longer.

In India, our farm subsidies amount to  a subsistence dole being handed out to 60% of an under productive population! And then we have so many other welfare programmes to further compound the problem.

At present Gujarat is the only state that has shown double digit growth in agriculture.  While the national averages for agricultural growth are in the poor 1% to 3% band. This shows the way as to what can be done with the right policy support.

A political class that harps on the plight of the rural poor without doing very much to alleviate their misery is patently fraudulent and self- serving. And the selfishness is all the more diabolical if we understand that the real agenda is to keep the rural population permanently poor while purporting to help them in multifarious ways. Even if the desire is sincere, the methods adopted so far have not succeeded. 

We need, says the above cited report, a fully functional “national cold chain”. This calls for massive state to state and state to centre cooperation. It needs to supersede many provisions of the Agricultural Produce Marketing Committee Act administered by the states, which place various restrictions on farmer freedom of action.

But more fundamentally, we need to up the ante to a double digit growth in agricultural output across the country and all that this implies. This will result in a new Green Revolution just as potent as the earlier one that has made us food sufficient several decades ago, or the White Revolution that has us produce the greatest amount of milk in the world now.

The Private Sector needs to be attracted to make this happen on the back of benign support from the Government.    

(956 words)

April 14^th, 2013

Gautam Mukherjee

THE TUSSLE

The Tussle

“People will do anything to alleviate their anxiety”, says  medical doctor Arnold Rosen to Don Draper, the celebrated Ad Man in Mad Men, Season 6 Episode 1.   

Even turn a blind eye to corruption, appeasement, terrorism, economic chaos, being snubbed, bullied, and laughed at by other countries. They will put up with rapine, plunder, lies, high-handedness, all to sue for a supposed stability and peace. Even in an era when economics has subordinated politics everywhere and we are doing very badly indeed.

Yet the entire Indian public has been enabling a discredited Government that refuses to go. One that dares to presume on a third consecutive term! It hopes for this by constantly harping of people’s fears and risk aversion. And also because it holds the intelligence of the public in contempt.

How can an illegitimate Government, run by remote control, using the unelected and extra-constitutional NAC, presume to lecture everyone? But it patently does.

But change, as we all know, is inevitable. And the Congress Party, much to its terror, can sniff it in the air.

So it is fascinating to watch Mr. Narendra Modi position himself on the national stage as a man with solutions for all our ills. Particularly, as the bad economic news continues unabated and relentless.

The lines are clearly drawn. The conch shells of electoral battle can be heard. The contender, more than his party, gives us hope, while the Government and all its stratagems, gives us anxiety.

All the euphoria of the India Story is slipping away. The Stock market indices are at a seven month low. SEBI is busy bullying Sahara while all others and their concerns wait.

Listed companies are going to post the worst quarterly results in three years.  A stellar company like Wipro lost 11% of its value in one day. The automobile sector, one of our greatest FDI attractors, is sitting on shrinking demand for the first time in 12 years.

The mid-cap stocks are so beaten down, that the companies, hundreds of them, have lost 90% of their market value. The promoters’ stakes too are pledged to lending institutions and banks. They would all go bankrupt any day of the week if their loans were called in.

The Banks too have unprecedented piles of Non- Performing Assets (NPAs), and if the bad debts were to be wiped off their books, several of them, both private and public sector, would also go belly up. 

But the welfare expenditure keeps climbing, even as Government coffers empty out because of lower direct and indirect tax yields-- combined with massive Government debt and debt servicing.

Loaning money to business and industry is largely a thing of the past, thanks to the RBI’s unreasonable and short-sighted stranglehold on liquidity. There were more than a dozen brutal interest rate hikes over the last two years. Credit growth, as a consequence, has now plunged to a 15 year low.

The Planning Commission, a useless relic from the era of Soviet style central planning, only makes some out-of-touch-with-reality pronouncements. One such is its infamous a-family-can-live-on-Rs. 32- a-day remark.

The Government meanwhile refuses to acknowledge any culpability for the dire straits the economy finds itself in. It is busy trying to mislead everyone with anodyne forward- looking statements.  

The Congress Party, that controls all the key ministries in the UPA, knows most people do not understand financial matters, and are taking advantage of this fact.

Of course, the huge price rise, the inflation, the scams galore, the high fuel and LPG prices, the lousy law and order situation and rampant terrorism, the public does comprehend.

But the Government seems to have decided that middle- class wrath is worth taking, thereby risking their arm with 40% of the population in urban areas. But will the 60% in the rural areas, more than half of them very poor, vote for them as a result of the massive welfare spending on doles?

This might have worked in the India of the seventies, but since then, the poor too have become aspirational. They will not content themselves with scraps from the high table anymore. They want development and infrastructure and the dignity of making a living for themselves.  

The bribe of a sari, a bottle and a measure of cloth is not enough.  Neither is a well- publicised but paltry dole that never seems to reach the intended recipients.

The Government meanwhile is running scared of Narendra Modi. They are trying all that they can to discredit him. They would rather have anyone else from the BJP or the regional parties to work against.  Hordes of functionaries, “stooges”, and hysterical acolytes have been tasked by the Congress Party to propagandise against Mr. Modi. The 128 year old Congress Party doesn’t seem to mind rolling about in this muck of misinformation with porcine aplomb.

Of course, Mr. Modi is well aware of this.He is working hard and his detractors are being countered with a groundswell of popular support. He, like game-changer Barack Obama, is setting the agenda for the next general elections. He is forcing the debate to rise above its usual promises and lies.

This will be an election in which the issues are framed in terms of both Government and Governance as applied to Development. The Congress Party, new to this show and tell technique, is busy playing catch-up.

(889 words)

April 11, 2013

Gautam Mukherjee

Cromwellian Purity of Purpose:From Jassuben's Pizza to Induben Khakrawala

Cromwellian Purity of Purpose: From Jassuben’s Pizza to Induben Khakrawala

 At Mr. Narendra Modi’s address under the auspices of FICCI Women’s FLO organisation, in New Delhi’s capacious Le Meridien Hotel, the excitement was palpable.

Modi once again demonstrated his Cromwellian passion to improve the fortunes of “Bharat Mata” and equivalent purity of purpose. Oliver Cromwell, of course, was the earnest politician that substantially ended the era of absolute monarchy in Britain.

In the process, Mr. Modi was mellow and relaxed in his delivery today to a hall full of mostly women from the elite classes. But, quietly though it begins, Narendra Modi may be well on his way to striking a telling blow against the politics of dynasty and unquestionable entitlement.

 Modi’s politics of development and concrete achievements naturally outclasses the politics of unaccountability, privilege an d vague intention, bolstered at all times with cringe-worthy sycophancy. Even the desperate scare-mongering is wearing thin. The increasing number of Modi’s votaries packing the hall, in the studios, and in the interactive social media, have clearly moved on.

 

With his flair for extending the Gujarat analogy in all seasons, Mr. Modi did not disappoint in the context of women’s empowerment .  He pointedly avoided the laudatory achievements of big business in Gujarat on this occasion. Instead, he concentrated on example after example of successful grass- roots entrepreneurship by women, with the state playing facilitator in some instances.

Modi spoke entertainingly of the entrepreneurship of Jassuben’s Pizza and Induben’s Khakra in a modified version of Rahul Gandhi’s folksy approach. But there was more than sentimentality to drive home his points. He spoke of tribal women growing flowers marketed in Mumbai, and those who did likewise with cashews and almonds.

Mr. Modi cited many instances of female empowerment assisted by his Government in Gujarat, including the waiver of stamp duty for property registered in the name of women.

He asserted a staunch commitment to gender equality and decried the incidence of female foeticide all over the country that is creating a demographic imbalance. Mr.Modi has, and wants to constantly keep promoting, women’s participation in decision making.

Modi asserted that 50% or thereabouts of the population consisting of women needs to be brought into the political and economic discourse on an equal footing with men. And that given a chance, women often out- performed men in every field, some of them quite unusual in nature. He mentioned female tour guides in the Gir Forest  admiringly.

Mr. Modi felt, in answer to a question, that it was important to promote tourism to help the demand for handicrafts which are commonly manufactured by women.  

In his speech, he spoke of how the child widow Ganga Ma introduced the Charkha to the Mahatma which went on to be such a potent symbol of the freedom movement.

Most News Channels gave the address a build-up of talking head discussions for over an hour from 10.a.m. today, before the event was covered live, beginning shortly after 11.30 a.m.

At 1.15 pm, when Mr. Modi finished answering the last question at the function, the talking heads got to work again, analysing his pronouncements in acute detail.

“ The Modi Show”, as one channel called it, is clearly on the road. Next stop, a Chamber of Commerce in Kolkata tomorrow. And then back to core constituency Gujarat to celebrate Navratra.

(547 words)

8^th April 2013

Gautam Mukherjee

Coping with our millions

Coping with our millions

The Economist thinks India could do with 20 or 30 more states to take administrative care of a projected population of 1.6 billion by 2050. The theory being that smaller states will be better administered and run for the benefit of its people.

 The last round of new states were all created during BJP- led NDA rule, over nine years ago, the last time bold decisions were taken in  Government, inclusive of India going overtly nuclear. There were many other visionary moves made then, amongst them the hugely beneficial Golden Quadrilateral roads project .

The UPA, by way of contrast, in its two consecutive terms in power has effectively ruined the economy. On the plus side, it has managed to sign the Civil Nuclear Deal, and has passed FDI in single and multi-brand retail. And these too are being implemented at a snail’s pace.

Meanwhile,  Uttarakhand has  prospered, relatively speaking, since being hived off Uttar Pradesh. Chattisgarh too has done much better since being carved out of Madhya Pradesh. In a rarity since Independence, Chattisgarh, which suffers from a virulent Maoist menace in some of its districts, has nevertheless created a brand new capital at New or Naya Raipur.

Jharkhand, in terminal political flux since birth, has not fared that well, despite being very rich in natural resources. But the “rump” Bihar, is starting to revive, even though it is seeking “special” status from the Centre. The Economist was essentially writing in the context of the persistent agitation for a separate Telengana, the demand for which tends to hot up around election time.

Earlier, then Chief Minister Mayawati of Uttar Pradesh had suggested the quartering of the state for better governance, but the notion has since faded from public notice. And a long time ago, grass roots empowerment at the Panchayat level was mooted by former Prime Minister Rajiv Gandhi. That too has not made much progress over the years. The only fitful votary of Panchayati Raj these days is maverick Congressman Mr. Mani Shankar Iyer.

And Mr. Rahul Gandhi did mention the need to bring in the Pradhans into the political system because 4000 elected MLAs and 700 MPs were disconnected from the people. He did this in his maiden address to the CII on April 4^th, 2013.

He spoke admiringly of the voting in the primary system in the US election process as well. And yes, if this can be implemented before this country sinks further into the mire, it might indeed prove beneficial. However, Rahul Gandhi is not very good at implementing his vision, and he is ignoring the nuts and bolts role played by various caucuses and interest groups even in the US.

But will smaller sizing of everything not put up costs? Ditto including the third and fourth tier and who knows whom else into the politico/governance machinery?

Will it not replicate hundreds of  administrative units all busy living off the sarkari gravy train?

Looking at the gargantuan and prohibitively expensive size of state and central Governments with its ancillaries and adjuncts, the answer does not seem encouraging. But some things could indeed get better.

At the city and municipal level, it is now revealed, Delhi is collecting more property taxes since the trifurcation of the MCD. And the number of property tax payers has also risen. The NDMC too has reached an all-time high in tax collection in 2012-13, up some 33%.

Hopefully, all this benefit to the municipal coffers will translate into better civic facilities, particularly greater cleanliness, efficient garbage collection, recycling, and/or its safe disposal, more parking lots including the modern multi-storied kind, rather than rough and ready fields commandeered to the purpose.  

In the case of Delhi there are of course, overlaps between the state, the municipalities and the centre, and so it is difficult to know and appreciate just what comes under which authority.

But building more municipal organisations should not result in just a larger number of municipal employees doing as little as possible for their monthly salaries.

While the efficacy of smaller administrative units both at state and municipal level, localised, and manned by people who live in them, should, in theory, provide better results, we have to wait and see what happens, particularly after the first flush.

The key seems to be in the ability to raise and deploy resources on its own instead of waiting on a central or superior authority elsewhere to allocate them. Plus, of course, a natural focus on the needs of the state now rendered more homogenous because of its regional identity. And the untangling of the multiple layers of decision- making, from the districts and blocks all the way up to the state level and on to the centre.

The  proof of the pudding  will have to be when the devolution and smaller unit structures actually spend most of the money they generate on the state, city, municipality, districts, blocks and panchayats. And not on themselves.

But government anywhere is not very good at being lean or productive. So smaller states , municipalities etc. or not, the key to long term benefit is in  having a bias towards shrinking government size to its essentials, and handing over all peripheral functions to the private sector.

This is precisely the Narendra Modi style of governance and it has worked well so far only in Gujarat.

The private sector works to market principles, and this, of course, may not suit people used to  doles, hand-outs and subsidies. It also means the downsizing of the gravy train mentality, both in government and amongst the people. 

Otherwise smaller units could mean an opportunity to secure a position because there are more of them made available.

And the same old corruption brought closer to home.

(958 words)

April 4^th, 2013

Gautam Mukherjee

I have lost it...One Sec

“I have lost it…One Sec”

There is something disconcertingly childish about the 42 year old Mr. Rahul Gandhi. This wouldn’t be worrisome if he was a visiting lecturer from a minor Leftist college. Mr. Gandhi just does not have the heft of a full professor either way.

But this man is aspiring to become the prime minister of India, if all the buzz from his party and the media is to be believed, and he does admit India is “complex”. Unfortunately, there wasn’t one word he uttered that was the remotest bit practical throughout his speech and the reluctantly put Q&A that followed.

Mr. Gandhi dabbled self-consciously with broad- brush thematics, full of tired platitudes and mawkish sentiment. He stumbled through his prepared speech after a fashion. There were no solutions offered.

The biggest single idea stated was that the energy of the people needs to be unleashed. Yes, and infrastructure needs to be constructed. Yes, and everyone needs to be empowered.

It was reminiscent of a lecturer who would have been more comfortable teaching tiny tots at primary school. Analysts who spoke after the performance, even sympathetic ones, were left groping to describe it, and rate it within the context of Mr. Gandhi’s thoughts on Business and Industry.

The captains of said business and industry who were listening to him along with a contingent of senior bureaucrats and officials could barely raise weak applause two or three times during the hour. They did clap more enthusiastically at his assumed modesty, but the undertone was one of confused despair.

This man, the assemblage could see, had no answers for them. Everything that he talked of was on the never-never, with an infinity focus. Urgency and time frames were conspicuous by their absence.

Rahul Gandhi raised a few desultory issues in the most abstract terms leaving his audience quite foxed. He rambled on for over an hour, crossing and re-crossing the same ground with a disconnected, halting, anecdotal, rhetorical froth.

Yes, Rahul Gandhi clearly stated the Congress line on inclusiveness. He spoke of harmony. But he took absolutely no responsibility for the dismal showing of the UPA over the last nine plus years. Yet, Mr. Gandhi was careful to give himself a cop- out by declaring he wasn’t a “hard-nosed politician”. This even though his apprenticeship has taken him to the post of PM- in-waiting.

Or perhaps  one pole of the “diarchy- dual centres of power”  style of functioning without accountability, currently  being followed by the UPA.

Mr. Gandhi   said there is no “guy on a horse” who will come along and fix anything.  He believes it can’t be done by anyone, but this is better translated as he certainly can’t do it, and does not even want to try.

Rahul Gandhi was quite impassioned and sincere that he wants to give voice to the people of India. But he thinks the political system is clogged and cannot deliver. He thinks it is disconnected. He does not believe 4000 MLAs and 700 MPs can run this country effectively because they are not really representative. The Pradhans need to be brought into the political system he said, without giving any clue as to how.

The weird thing about all that he said is that it is at complete variance with the reality of what his Party and the UPA Government practices.

Perhaps Mr. Gandhi sees himself as some kind of political philosopher and critic of the system including his own party and government.

He used various anecdotes and analogies in his by now typical style. He did not agree with JFK’s statement about a rising tide raising all boats by quipping the poor have no boats and the Government must build it for them.

He spoke fitfully of exponential growth as opposed to incremental growth, but did not seem to have much faith in his speech-written lines. Rahul Gandhi spoke of dreams and energy, of infrastructure development, roads, ports, electricity, partnership with business and industry. Speed.

Seeds of a world class system, training, skill development, making education relevant and his speech mascot, Girish the migrant carpenter, come to Mumbai on the Lokmanya Tilak Express from Gorakhpur in UP.

But please Mr. Gandhi where is the action on any of this from your Government in power? Your Government which is disconnected. And which you admit is corrupt.  

But never mind all that. Mr. Gandhi actually panicked when he got his papers mixed up during his time on the CII podium. He said on the mike,  “I have lost it…One Sec”.

To me this sums it all up in his own words.

(762 words)

April 4^th, 2013

Gautam Mukherjee