Rudderless but going down

Rudderless but going down

In a season of increasing political activity, the economic markers tend to be anything but uniform. But the trend is basically downwards and the feeling is that there is no one at the controls. In the remaining months before the general elections, governance is the last thing on the Government’s mind.

This is not surprising, when the Government has come to loggerheads with its leading constituent party. The ill-conceived ordinance to preserve in office convicted criminals as legislators, and electable candidates, is contemptuously thwarted by none other than the Vice President of the Congress Party. The Pakistani Prime Minister, not to be outdone, calls ours a “dehati aurat”, pressing the plausible deniability button simultaneously, while both are being hosted by the Americans. Much, it is rumoured, to their straight-faced amusement.

Petroleum Minister Moily talks of cutting petrol prices slightly, while diesel rates at the pump need to be raised sharply. The latter, necessitated by a weaker rupee, portends another round of food and other price rises.

Meanwhile in the absence of any Government efforts at stimulus or liberalisation, Private Sector company profits declined 11% on average in the first quarter, as per the Government’s own RBI.

Foreign exchange reserves rose $2 billion however, the exact same amount as the increased FII investment in the stock market. This is stimulus money coming back in, say some analysts, because the US has postponed its “tapering” and the reserves have risen because of Rajan’s easing of some banking “swap” norms.

The new RBI Governor, receiving yet another award for his economic prowess in Frankfurt Germany, pointedly wondered about the efficacy of low interest rates on the revival of an economy. The suggestion is we need to brace for tougher moves on his part if inflation does not succumb to his will first.

A few editorials around India liken Raghuram Rajan to Paul Volcker, the Carter era Fed Chairman, who put a stop to US inflation by shutting down economic growth. But Volcker did set the stage for the 19 year hyper-growth party under his successor at the Fed, Alan Greenspan.

So does Rajan, likewise, intend to be cruel to be kind? His anticipation that as a Central Banker he is not looking for a large number of Facebook “likes” probably gives us a clue.

There are other reports that suggest Rajan will take a series of growth inducing measures shortly. Both reports must be true, though the import of one or the other will hold the balance. But we shall have to just wait and see in this atmosphere of rudderless uncertainty. Rajan has already said he maintains a “neutral” stance, but will act either way based on developments and exigencies.

Meanwhile, DLF, India’s biggest developer watches its share value decline everyday as it tries to reduce some of its $3.5 billion (Rs. 21,000 crores) debt by selling of land parcels around the country. DLF calls them “non-core” investments, and wants to return to its roots in Gurgaon, Haryana, and other places in the North where it is best accepted, without exactly saying so.  But its pan-India ambitions are being gobbled up by cash- rich regional developers with little or no debt on its books.

Other builders too, particularly in the expensive Mumbai market, are groaning with massive debt burdens, even as offtake has slowed down, leaving many holding large inventories.

There has long been talk of a property bubble, but while it could apply to the commercial developments in new and far-flung areas, in India, the demand for residential property is real. And deep cuts in price, meaning a reduction in builder profits, should move the unsold flats quickly enough. The bottleneck formation includes the fewer and more expensive housing loans these days.

Still, the prices are likely to be discounted this festive season, along with inducements and sops, not only for houses and flats, but cars and white goods and clothes too.

But travel, on the back of raised fuel bills and increased demand will be more costly. The airlines expect ticket prices to soar but are apprehensive about consumer resistance at the same time. The spectre of stagflation is never too far away when growth is practically non-existent.

The BJP contender for the top spot intends to usher in sweeping change with his “dream team” instead of a “dirty” one ruling the roost at present. This hints at alliances in the making. Even as there are rumblings of discontent amongst the UPA allies at the Government’s proclivity to give itself clean chits with regard to Congress involvement in every scam.

Others are never so lucky, though the CBI tends to get called off if they remain loyal.

The new button on the EVM that allows a voter to choose “none of the above”, an abstention, will now be counted. And this too, along with the decriminalisation of legislatures will have a long term effect on our polity and thereby on our economy.

To say, we need more reform of everything cannot be denied. Amongst the most pressing is judicial reform. If the courts don’t deliver justice within a reasonable period it makes a mess of the rule of law and proves to be a major disincentive to the growth of business and industry.

Corruption becomes more brazen every day. So does criminal activity, including rioting, murder and mayhem as in Muzzafarpur and now Meerut.

Is the ruling party politician happy to keep the judicial system over- burdened and largely ineffective? Perhaps. They don’t seem to be very happy with Supreme Court directives and orders to clean up their act.

The BJP has declared it wants change, and been to the President to protest the “criminals in parliament” ordinance.  So what about the Congress? When will it begin to walk the talk?

(962 words)

September 30^th, 2013

Gautam Mukherjee

INSOLVENT OR ILLIQUID?

BOOK REVIEW

Title: THE ALCHEMISTS- Inside the secret world of central bankers

Author: NEIL IRWIN

Publisher: Headline Business Plus, UK, 2013

Price:  Rs. 599/- or 25 Pounds Sterling.

__________________________________________________________________________________

Insolvent or Illiquid?

The world of the Central Banker is a repository of arcane, almost limitless power, magnified by the fact that economists rarely agree on the disease, let alone the cure.  Classic text book economics seldom works in the real world, particularly when the Central Banker is invested with the monetary policy, and the Politician with the fiscal, legislative/executive side. And neither is capable of prescience to the degree required, no matter how learned.

Most of the paroxysms of financial suffering therefore, inflicted on the populace during economic crises, are usually the consequences of the assumptions and actions of just two men, the Reserve Bank Chairman and the Finance Minister. And their well-meaning experiments to: ‘do no harm” which sometimes go horribly wrong.

In Central Banking, as in other fields, you need luck. It sustained the legendary Alan Greenspan through 19 years at the helm of the US Federal Reserve, with more or less untrammelled prosperity during his watch. 

His predecessor, the  six feet seven inches tall Paul Volcker, tamed inflation by choking off the US  economy, rather like the Subbarao- Rajan  effort on-going here in India.

Others, coming after; Ben Bernanke of the US Federal Reserve, Mervyn King and Jean-Claude Trichet of the Bank of England and The European Central Bank respectively, have been grappling with the greatest threat to the world’s economic stability since 2007. 

These latter have prevented a collapse of a highly connected and globalised financial system with challenges possibly greater than ever before encountered.

All the expertise in the world is essentially inert except as it is applied. And the Central Banker along with the Finance Minister have the ability by law, to print money, thereby creating wealth out of paper  and ink, and applying it to the threats and objectives they deem appropriate.

The title of this book, The Alchemists, alludes not so much to the medieval pursuit of creating gold out of base metals, but to this sure- shot conjuring up of wealth. But, it was not always so.

Modern banking began with holding reserves of Copper in Sweden. Huge, heavy plates of the metal were kept in vaults. Then there was Gold, held in reserves in the Bank of England and France and elsewhere. And right up to Richard Nixon’s time in the Seventies, you could give in your dollars and receive a fixed, not variable, amount of gold, till it was noticed the paper dollar had begun to fall in value compared to the gold.

And then finally, the world moved on to backing its paper money with the perceived strength of the economy and the credibility of its government, albeit along with some gold. There were difficult to understand exchange control mechanisms between currencies, but anything of fixed value that began to falter made speculators “short” it.

This meant borrowing money to be “settled” or paid for later, at the estimated lower price, thereby making a tidy profit for the short-seller if he got his speculation right.  It forced currencies to “float” against a designated “basket” of currencies in the main, so that they could go up and down in value in tandem with the state of their economies.

This book is a compelling read for the reasonably educated, a masterful romp through the fears, foibles and prejudices of central bankers and their beneficiaries, their assumptions and actions, the causes and effects obtained, taken almost from the beginning of the modern monetary system to date.

Neil Irwin, the young author, is a Washington Post Columnist, and from 2007 to 2012 he covered the global financial crisis, recession and its aftermath. Irwin has an MBA from Columbia University where he was a Knight-Bagehot Fellow in Economics and Business Journalism. But this book recommends itself for being devoid of jargon. It has made a difficult subject fascinating, and is delivered with the narrative style of a reporter telling an engaging story.

The dilemma of the Central Banker runs along two mainline tracks: In a time when the economy is in trouble, the Central Bank can raise interest rates, thus tightening the money supply, slowing growth, and hopefully cutting inflation. Or, it could lower interest rates and encourage growth and risk a measure of inflation. Other variations in vogue include stimulus such as Bernanke’s “Quantitative Easing”, meaning issuing bonds for billions of dollars a month to provide ‘liquidity”.  

But great historical events like hyperinflation that occurred in post-World- War Germany, both times, and the Great Depression of the 1930s, in the US, tell us that, at extremes, “When Central Bankers fail, so do the societies they serve”.

However,as Irwin also states, the processes are evolving, and Central Bankers everywhere do get better at their craft, learning from their predecessors. They can see better now and contribute substantially towards the lofty and far-reaching civilizational objective of creating a “Just and prosperous society”.

(809 words)

September 28^th, 2013

Gautam Mukherjee

Minister Of Financial Jugglery

             

Minister Of Financial Jugglery

Former BJP Finance Minister Yashwant Sinha put it well when he said Mr P Chidambaram uses statistics to suit his purpose, sometimes quoting yearly or quarterly figures, sometimes an average.

Mr. Chidambaram, whose own multiple stints as Finance Minister at different times, has never seen high growth figures, seemed extremely strident in his reactions to Mr. Modi’s statements.

The economy, by way of contrast, did very well during Mr. Yashwant Singh’s tenure, thereby giving heft to his defense of Mr. Modi, and  credibility to his determination to refuse the Congress disinformation to go unchallenged. Mr. Modi, meanwhile, is too busy making friends and allies along with comrade in arms Party President Rajnath Singh, including, happily, TDP supremo Chandrababu Naidu once more.

NaMo is primarily focussed on rousing the general voter to BJP’s side, and chooses not to take note of the constant barbs aimed at him personally by highly agitated Congress stalwarts.

Mr. Chidambaram’s latest  intemperate attack, using underhand street imagery on fake figures, that too while travelling in the US, perpetrated on BJP’s prime ministerial candidate Mr. Narendra Modi,  showed the extent to which the Government is rattled.  Figures are figures. All of them speak for themselves despite the attempted spin.

This juxtaposed with the Government of India’s highly damaged credibility in the eyes of the Americans cannot but add grist to the mill, and actually do Mr. Modi and the BJP a favour, nationally and internationally.  Mr. Modi seems to gain greater popularity the more he is unfairly criticised. This has happened throughout his political rise in Gujarat, and is now happening  across the board.

Not only are various senior members of the Congress attacking every statement made by Mr. Modi on a daily basis, they would, if they could, put a stop to Opinion Polls that show ever greater support for Mr. Modi, the BJP and its prospects, contrasted with the poor showing the UPA can expect for itself in the coming Assembly and General Elections.

The desperation of the Congress Party and many of its UPA allies, unable to counter the nation-wide Modi wave, has led to them resorting to such harangues and propaganda on the same stale agenda, with communal innuendo as its centrepiece. The UPA must therefore be terrified to witness the large Muslim attendance at many of NaMo’s rallies of late.

This is a pitched battle to grab the imagination and influence opinion against the contending political party. It is only natural at election time, and we are likely to see the thrust and parry hotting up more as the days go by.

But it is amusing to see every Congress Minister and spokesperson is on the defensive. It is, of course, hard to seize the initiative when the economy is in crisis, the prices of food and fuel at the highest ever, loans are becoming ever costlier, and the slowing of business and industry is crippling the country. 

Unable to better its own performance and credibility, the UPA stalwarts are busy attacking the Opposition instead. It is hoping against hope to survive the election by projecting itself as the known devil. But as NaMo said, the mood of the nation is like it was going into the general elections after the excesses of The Emergency.

Mr Modi did speak of over 8% growth per annum in GDP during Mr. Vajpayee’s time because it happened. Mr. Chidambaram’s nit- picking with averages is just an attempt to salvage the situation as best as he can.

But the UPA would be much better served to actually show some results on its problem- solving during its remaining months in power.

(603 words)

September 23^rd 2013

Gautam Mukherjee

Old Fashioned Efficiency & Reliability Pays In All Seasons

Old-Fashioned Efficiency & Reliability Pays In All  Seasons

Even in tough times, the efficient and reliable come through. India’s civil aviation industry, plagued by high costs of servicing, fuel, taxes and apron charges, and inferior technology at airports and ground handling, is a case in point.

But even in this sector, the adage holds good. Budget carrier IndiGo Airlines, with a market share of just under 30%, and revenues of Rs. 9458 crores, has turned in a handsome profit for FY13, while all other carriers have posted losses.

IndiGo’s Rs.787 crores profit figure is sharply up on the previous year’s 128 crores, and this is the fifth year in a row that it has turned in positive numbers.  It prides itself on not cancelling flights and always running them on time.

The flying public, from its numbers, and all other parameters such as customer satisfaction, seems to agree.

Other airlines, possibly embarrassed by their own inferior showing, while admitting IndiGo is indeed well-run, think the lack of transparency, as IndiGo is not a listed entity, may explain its stellar profitability.

They hint at accounting practices at variance with the others, to boost the stated profit. Industry analysts think IndiGo adds back the profits of buying aircraft, giving them back to the seller and leasing them again, and thereby adding a few million dollars to the bottom-line on every aircraft being used. But then, who is stopping the others from following suit?

IndiGo is owned by InterGlobe Aviation Pvt.Ltd. and claims to carry no debt on its books and has healthy cash flows despite the continuous addition of aircraft to its rosters.  This may be of much greater significance because high debt is a profit killer in this business for many reasons including the vagaries of seat-loads, and the perishability of the product flight to flight.

IndiGo’s performance, says the airline, comes from good management of its resources, efficiency, teamwork, and the fact that it carried 27% more passengers in FY13 while other airlines combined saw a 5% fall in passenger numbers.

Jet Airways which recently sold a chunk of itself (24%), to Etihad, along with its budget airline, JetKonnect, made about the same amount, 779.80 crores, in losses, as IndiGo did in profit.

The Indian aviation industry overall has lost $1.95 billion (About Rs. 12,226 crores) in FY 13 on a revenue of $9.5 billion, according to Centre For Asia Pacific Aviation (Capa).  And this does not include the red- ink from grounded airline Kingfisher. But a lot of this accounted loss is attributed to the national carrier Air India, once run profitably by Tata, and then counted amongst the best airlines in the world.

And Indian aviation is likely to lose more money because of rising fares and declining passenger numbers going forward, based on quarterly figures coming in.

One might conclude that the airline business is difficult in India, particularly for the under-funded/over-leveraged, and inefficient.

But it is still a great magnet for some.  The Tata Group, pioneers of Indian aviation under JDR Tata, are coming back into the fray with yet another joint venture with Singapore Airlines, but this time in a much changed economic and statutory environment. It is also entering the budget airline space with AirAsia from Malaysia.

Like Indigo, Tata has deep pockets and solid management credentials. This may make all the difference to its success. Tata will also be in a position to truly turn its joint ventures into global airlines able once again to compete on some of the more lucrative routes around the world.

To keep things going forward, there is a dire need for the liberalisation and modernisation process to continue, not only with regard to ownership, both national and international, but  upgrading of servicing hubs domestically, technology at airports, baggage handling, airport upgradation, new airports, rationalisation and lowering of taxes and so on.

India is potentially a huge market for civil aviation but Indians are price conscious travellers, and will go without rather than pay exorbitant rates, especially for leisure travel.

The opportunity therefore needs to be supported both by the government and the airlines in order to grow an d be efficiently cost-effective.  There is a new dawn in civil aviation emerging with the potential to add significant revenue and employment. It needs to be nurtured and encouraged.      

(712 words)

September 27^th, 2013

Gautam Mukherjee

Governor Rajan Flatters to Deceive

Governor Rajan Flatters to Deceive

The Indian market expected growth promotion, sharp cuts in the interest rates and other measures to increase liquidity in the system from the new RBI governor Raghuram Rajan. Why? Perhaps because of the hype surrounding his international credentials, translated to mean his bias towards the West’s way of tackling a broken economy with stimulus, his considerable academic learning, and relative youth.

And perhaps because the optimists amongst us live in a fool’s paradise far removed from the Indian reality of inertia and policy confusion. Besides, one rather professorial man’s impact on an institution like the RBI, and indeed in interface with the Finance Ministry and the PMO, is, by definition extremely limited.

And besides, does the GOI really want growth at this point in its tenure? It probably does not, for two reasons. It does not want to hand over an economy partially recovered to any successor government, unlikely to be itself. And it plain does not believe that promoting growth is the only way out of its economic woes. Instead, it prefers to fight a losing battle against inflation, and resort to a number of technical and tactical moves rather than any bold strategic ones.

After all, it must be horrified by the extent of food inflation. A recent Times of India report says food prices have gone up drastically-157% between 2004, when UPA took over, and 2013, with vegetables shooting up 350% in the same period.

Onions, that tend to make and break governments in India, have shot up 521% since 2004!

Cabbages, sometimes associated with kings, have gone up a whopping 714% in the same time. Milk- is up 119%, Egg-124%, Spices-119%, Sugar-106%, even Salt is up 85%. Rice and Wheat prices have increased  137% and 117% respectively. Fruits are up 95%. And all of these are wholesale price rises, not what we pay in retail, which is very much higher.

But the stock market in its anticipation of good times, chose to ignore all this, and the fact that Rajan had always been very conservative on inflation, even a contrarian, when growth was the prevailing mantra, and the US economy was booming.

He was even mocked by officials of the US Federal Reserve for his statements predicting an impending crash due to excesses of borrowing and over-exuberant financial leveraging. Rajan became famous for being proved right then.

So true to form, conceding nothing to current circumstance, meaning the window of opportunity afforded by the US postponing its tapering of stimulus, even when some analysts felt he could have been bolder to seize the day; he let the bulls down with a thud.

Governor Raghuram Rajan,  in his first monetary policy announcements after taking over, pretty much continued his predecessor’s policy of emphasising inflation over growth and his futile, King Canute like efforts to tame the waves of price rises.

Besides there are grave concerns on non-performing assets of public sector banks- a phenomenon that goes with a slowing economy, when people find it difficult to pay back what they owe. But the answer is not to refuse to lend them any more money as the West’s efforts to stave off economic collapse has demonstrated.  

Deaf to other voices and options, Rajan has kept the policy stance of a tight rein on liquidity intact. Those sifting through the arcana of his pronouncements  concluded he actually tightened liquidity a notch leaving the  stock market observers stunned and the banking sector despairing. Others say no, pointing desperately to the marginal standing facility rate which has indeed been reduced.

The marginal standing facility (msf), an inter-bank borrowing rate, was reduced from 10.25% to  9.5%. The ‘repo rate’, a policy interest rate, was however upped by 25 basis points to 7.5%, even though Mr. Rajan sought to deflect criticism of this by calling the impact of this latter as: ‘peanuts’.

He also eased the cash reserve ratio (CRR) requirement, which is a minimum amount to be held by banks at all times to shore up their own liquidity,  but by a miniscule amount, from 99% to 95%.

Rajan made no moves whatsoever to promote growth in the economy, unless you take the above minuet as a dance, while categorically stating he would watch all aspects with a ‘neutral’ stance. The hint was that the repo rate would be tightened further in the near future, as worse quarterly economic and deficit numbers were expected.

Like Mr. Subbarao before him, it is inflation and control of the Current Account Deficit (CAD), that Mr. Rajan will focus upon. These monetary policy measures are likely to send the ‘animal spirits’ of business and industry Prime Minister Manmohan Singh referred to months ago, to the Intensive Care Unit instead. But, if the FIIs keep pumping in their near- free- from- interest stimulus money, it may be possible to ignore the RBI.

And, as before, due to the impact of this massive liquidity from the US and European stimulus programmes, commodity prices, particularly that of fuel, will see to it that these efforts at controlling domestic inflation will most likely fail.  

As for how India expects to cope with any future tapering of the US stimulus, Rajan thought various measures put in place recently will reduce the future impact. He meant that the room for spontaneous reaction domestically has been curbed. Everyone is already bound and gagged.

However, the impact on the rupee externally will have to be tackled at the time when it occurs.

Raghuram Rajan, who was welcomed for seeming very pro-growth just days ago, has left everyone confused as to the future stance of the Reserve Bank of India while his apologists say that this stance is already a departure from further tightening or the status quo.

(953 words)

September 20^th, 2013

Gautam Mukherjee

Revival or Mirage?

Revival or Mirage?

The US Federal Reserve Bank has not begun to taper its massive economic stimulus programme of $ 85 billion per month after all.  Mr. Ben Bernanke, the Fed Chairman, could not announce a tapering this time on the 18^th of September, but repeated his message on it, saying he might begin to do so soon.

But Mr . Bernanke will be ending his term shortly, and the tipped to the post incoming Federal Reserve Chairman is expected to continue the easy money policy too.

The tapering could begin in December,  say several international brokerages who feel the constant printing of money must be reduced, and it may extend into 2014, and could begin larger than the $15 billion that was expected this time.

Others say the economy, and indeed the entire economy of the West, and consequently the world, is far too fragile to countenance any such move in the near future. And tapering during the holiday season?

Hawkish observers think the huge stimulus programme in the US may be building a new bubble and  are promoting ever higher commodity prices, but even talk of tapering spooks the US market every time. So the strategy may well be to keep threatening a tapering, to see when the markets finally stop reacting adversely, before actually moving in real terms.

People, banks, business, industry, have, let us accept, all become accustomed to near free money, and are unwilling to give it up.

Politically too, it is also very difficult for the Obama government to take an economic decision that promises great turbulence both at home and abroad. The US has a very large economy, the largest in the world, but it is built on enormous debt in many trillions of dollars, built over many years, quite a lot of it financed by several foreign governments.

Any tightening of monetary policy, even in the next year or two, will rock the global economic foundations again. But if the real economy does not grow sufficiently, say the economic hawks, the eventual outcome will be a disastrous and disorderly collapse.

Meanwhile, sensing the gravy train is unlikely to stop anytime soon, the world’s emerging stock and currency markets are happy, that at least for now, they can hope to consolidate some gains.

This, after a severe drubbing received all around, less or more in different countries, since the first announcements on possible future tapering came from Mr. Bernanke in May 2013.

This reprieve has enthused our stock market too, chafing at the bit to rally before the festive season. The Sensex has gone up over 700 points after the announcement today, the Nifty by over 200 points likewise. The markets are near all-time highs and might have to be re-rated as to its expectations on a bullish basis.

The rupee has also rallied, and may indeed hover around the Rs. 60 to the $ mark soon, a good recovery from being within a whisker of Rs. 70 to the dollar just days ago. But this is, paradoxically, because the  US dollar is weakening.

This externally induced windfall cum solid relief rally in India, albeit on highly beaten down prices of 90% of the stocks, affords an opportunity for the RBI and the Finance Ministry to reduce interest rates, and ease the very tight monetary policy in other ways too.  

The RBI and its new governor Raghuram Rajan, who certainly has luck on his side, will speak on its own monetary policy on Friday 20^th September 2013, just one day after this piece is being written.

A right and strong signal on monetary easing to Indian business and industry and the foreign investing community will be most welcome.  The markets could rally for the next two or three quarters if the US tapering bogey goes away, irrespective of the domestic scenario, and in anticipation of a green signal after the elections on many fronts.

While it is not the province of the RBI, might one hope about some policy pronouncements alongside  to stimulate domestic growth too?

There are reports on the government planning to introduce mild austerity measures. This is defensive action, and not very encouraging. It is just as well they are likely to be mild in nature because government austerity imposed on itself is often bypassed by shifting expenditure to other heads in an accounting sleight- of- hand.

The downsizing of government, of course, is the only effective answer, but this is unlikely to be voluntarily undertaken. Logically, it can only come about when it reduces its tentacular hold on a whole list of things in favour of the private sector.

However, the old socialist mistrust of the private sector is alive and well , and the conviction towards greater privatisation despite the likely increase in efficiency is not much in evidence. Instead, there is the relentless promotion of big government for the patronage, power and opportunities for corruption it affords.

Will Narendra Modi’s government do it given the chance? It is very likely that his government will shift focus to only those things that help the poor and needy and transfer the profitable areas to the private sector and quite swiftly at that. That is how the Gujarat government has shown good results, and there is every likelihood of his implementing similar policies on a national basis.

The UPA  meanwhile has rushed through  a number of laws, with large price tags attached to their implementation, in its last few months of office. They are hoping it will provide them political traction at the hustings, with special reference to the Food and Land legislation.

And now, it seems keen on waiving nuclear safeguards and liability clauses for reactors to be purchased from the US prior to the general elections being announced.

The Congress Party wants to retain its influence with the West even if it is forced into the Opposition benches, while the new government will have a tough time finding the finances to implement the new laws, if the economy continues to stay in the doldrums.

And since it is not perceived to be politically strategic to hand over a reviving economy to the successor government, the UPA is not likely to take sufficient advantage of the opportunity afforded by the moves of the US Federal Reserve.  

The market could revive spontaneously however, doing so on a variety of global cues, despite a do-nothing government, and the Indian agriculture sector could also do better on the back of a good monsoon.   

This may improve matters generally, but the Congress led UPA will no doubt be hoping to discredit any successor government led by the BJP or the “People’s Federal Front” as Derek O’ Brien of the Trinamool Congress would have it.  

But since not much is going in favour of the UPA at present, perhaps they won’t be so lucky.

(1,137 words)

September 19^th, 2013

Gautam Mukherjee

The Candidate of Transformation

The Candidate of Transformation

The implications of a union government led by a fourth consecutive term chief minister like Narendra Modi are wide, deep and transformational.

 It is something the Congress Party can never aspire to in the medium-term future, given the virtual reign of the Nehru- Gandhis, however undeserving and incompetent, and however many times they may claim democratic legitimacy for their grip on power.

The despair on the faces of their many  senior Congress ministers, experienced and brilliant people, many of them, who cannot aspire to the prime ministership because of the glass ceiling they work under needs to be rationalised anew every day. It is cast in the way all of us must deal with inevitability. But the tantalising truth is that the Congress –Gandhi shibboleth is not really all that inevitable. It is a self-inflicted injury that must evolve to its denouement. It could however, be a long time.

 As NaMo has said on more than one occasion, the Congress Party, before independence and after it, is not at all the same quantity.

Candidate Modi’s dramatic emergence on to the national stage, by way of contrast, in a presidential manner, though still within the confines of a parliamentary system, has all the hallmarks of a truly democratic ascent. It shows not only how this country has matured and changed, by enthusiastically signalling his acceptability around the country, but also how the old must give way to the new, even in traditionally conservative parties and their ideological underpinnings.

It is of course ironic that this dynamic shift towards democratisation in political parties should come from one long identified with much mocked Hindutva  in a dispensation embarrassed by its heritage, derided, colonial fashion, for being obscurantist and medieval; and not, after all, the ‘modern’ party set up in the 19^th century by an Englishman, and run by West- leaning leaders, albeit dyed an unmistakeable shade of pink if not red.

The question is, does the Congress Party leadership, for that matter any of our political leadership in this so- called poor country, really live the Socialist life? Is it not comical when Rahul Gandhi says the BJP does not care for the poor?

NaMo has come however, as we all know, all the way from an assistant in a Chai-stall outside the RSS office in Ahmedabad, to become the properly anointed prime ministerial aspirant after much debate and confabulation in the party . The parallels to the emergence of a black Barack Obama to fulfil Martin Luther King’s dream are palpable. 

That NaMo is from the OBC category, by no means a Delhi insider, is another great breakthrough in a BJP and Sangh Parivar long identified with the high caste Hindu and the politics of privilege. This despite its earlier and on-going initiatives to incorporate, amongst others, both Dalit leaders and followers in its fold.

And that the much maligned “hard-liner” is able and willing to reach out to and receive a favourable response from the Muslim community, a full 25% of whom in Gujarat have already voted for him, and the BJP, is cutting the ground from under the feet of the vote- bank politics, of the Congress and some of its supporting cast who sup off the same table.

The entire recent story of Modi’s rise to the chosen parliamentary pole position in his party while retaining his hold over Gujarat, shows that the status quoists, in the ruling government, among some prominent members of his own party, vociferous civil society groups who owe their standing to the present order, other interested pressure groups and lobbies both rural and urban, intelligentsia living on “The idea of India” etc. are a worried lot.  

They have had no cause in their complacence to update their ideas to suit a new resurgent India that wants exponential progress. Theirs is a design for incremental benefits that leave their power structure cosy and intact.

Modi, borne up on a groundswell of popular support, has crashed their party, despite their best efforts to keep him out, and they don’t know how to deal with their own marginalisation, both as power- brokers and privilege hounds.

Some of these resentful and fearful people have the temerity to suggest that popularity with the masses is not everything in a democracy, while whining that the BJP, the Sangh Parivar, its followers and supporters, and indeed NaMo himself, are all fascists.

So to these people, the voice of the people should be disregarded, because, the self-appointed, and not the masses of people, are to be taken for the true defenders of freedom and democracy. George Orwell could not have topped this kind of double-speak for its revisionism if he were to rewrite Animal Farm today! 

Paradoxically, these champions of progress and change and pluralism and the poor, are alarmed at the prospect of real change and transformation. They are alarmed at the more accurate definition of each of their oft repeated ideological positions.

They are afraid of the response Modi is garnering from the public wherever he goes around the country to his new definitions of secularism, security, development, poverty, progress, terrorism, governance, integrity and truth. 

Interestingly many important constituencies are not at all confused. in Modi’s corner we find, the youth across the board, a vast majority of our voters, the rank and file political cadres in the Sangh Parivar itself, the small band of right wing intelligentsia that have long been advocating his advent.

We also see the new “true secularist”, that believes in equal opportunity for all instead of Muzaffarnagar style vote bank politics that leads invariably to murder and mayhem.

We see a world of support from abroad, fed up with India’s policy paralysis. The foreign investor community, indeed the entire West, as also the newly independent nations of the former Soviet bloc, the Middle East, the Far East- even China and Pakistan, would like to do business with Modi.

The good-natured joke on the ‘right’ is that they are much easier to deal with than the ever prevaricating ‘left’, always tacking their positions to the prevailing wind. Even your enemies prefer a solid ground for their negotiations after all.

Take for example,  the much hailed Raghuram Rajan at the RBI, his straight- forward policy pronouncements, without  the trademark  ifs and buts, his impressive international credentials, his plain- speaking bias towards growth and the cutting of red tape,  his swiftness of action so far. He will fit in very well with NaMo’s style of functioning.

We may even manage to find subscribers to the Sovereign Fund he is backing to keep the home fires burning in the interim.

(1,101 words)

September 18^th, 2013

Gautam Mukherjee

Prime Mover Of Development

Prime Mover Of Development

India has long managed to avoid a reality check via a combination of high minded rhetoric belied and betrayed by the sordid facts. It could be film noir but it is not. Sometimes, a passionate tide, a surge of the popular will, does rent this fabric to let a little of the light.

A true grass- roots leader has for once been anointed to the pole position by a national party of India. A national party, of which there are, in India, just two- amongst a large and rambunctious number of regional ones.

There would perhaps have been just one, like in a banana republic, with a patent belonging to the Nehru-Gandhi family.

If it weren’t for the realpolitik of Lal Krishna Advani in his prime, the BJP would only be a fringe player today. Therefore, the patriarch in his petulance still deserves to be treated with dignity for all  that he has done and created.

Meanwhile, this, as Congress Minister Kapil Sibal puts it: “Early Diwali”, has come about, like the rise of Barack Obama in the US, in the midst of unprecedented economic, security and credibility crises.  

Narendra Modi said it himself, when accepting his anointment on Friday 13^th September, just days before his own birthday on the 17^th.  Incidentally, Mr. Vajpayee, the only BJP prime minister to date, considered 13 as his lucky number.

Modi said, in his little acceptance speech, that he had come from very humble origins and was honoured to take on such a huge responsibility on behalf of the BJP. He seemed to be a little awed . And he said, with great intensity, that he would do his utmost to win for the BJP.

Meanwhile, across the aisle, the callow young man of privilege must be ruing his fated place in the sun in the face of such a formidable challenger.

There is, to draw the lines, the BJP, a national party, turned into one by statesman Atal Bihari Vajpayee and key strategist LK Advani.  

And which, in selecting Narendra Modi as its prime ministerial candidate, in a US presidential style move, has offered the nation a clear- cut option of hope.

In economic terms, the emergence of Narendra Modi from the pulls and tugs of the democratic processes in the BJP,  is being hailed as a sunrise development by big business.

The international diplomatic community has been taking stock of the rise and rise Modi for quite some time now. And they, ever practical, seem to welcome it.

Modi not only has a good and consistent track record on economic matters, but is an able administrator, and is also an  accomplished politician. He is without taint of personal corruption despite having attracted, to Gujarat, most of the top business houses operating in India.

For a man of grass-root strengths, Modi routinely uses modern technology, as his 3D holograph campaign demonstrated in Gujarat.

In Indian terms, this lack of corruption and family or friends as hangers-on, is a rarity; almost baffling, given that he is on his 4^th consecutive term as chief minister of his state.

And there seem to be none of the scam- a- day revelations that emanate from the central government and its allies, either with regard to his political colleagues,  or his Gandhinagar controlled officialdom.

India has always been led down by bad governance, including chicanery, pomposity, policy paralysis and populism, all in place of development. Perhaps this will change appreciably under  Narendra Modi. Of course, having passed muster within the BJP, Modi must now win over the people  to be able to form the next government.

Modi has also got a good standing with the rebels and oustees, such as Yeddurappa and Raj Thackeray, who may come back into the fold under his leadership, thereby vastly improving BJP’s chances of winning back Karnataka and Maharashtra.

That both the Uddhav Thackeray led Shiv Sena and the father-son duo of Badal led Shiromani Akali Dal have  swiftly backed his candidature, is also a most welcome thing.

Mr. Modi, in election mode, must do everything in his power to woo the Muslim vote, even as he needs to stick to a development agenda over the entrenched Hindutva issues.

The RSS, not always pleased with Modi’s independent streak, have nevertheless backed him strongly to this point. A more pragmatic RSS and broader Sangh Parivar seems to understand that winnability must take precedence over ideology for now.

Modi needs to challenge the unfair perception  of being called a polarising figure. Development does not polarise or alienate at all if applied evenly, and many Muslims in Gujarat state acknowledge this by voting for him.

As NaMo himself points out, he gets 25% of the Muslim vote in Gujarat, and sees no reason to not do likewise nationally. And , combined with his core youth constituency, this support can blunt the  criticism of the ruling combine, and take the sting out of their barbs.

Meanwhile, the election agenda is a presidential Modi in the BJP corner, supported by his early birds in chorus. And in the other, the Congress Party, very uncomfortable for being well and truly challenged.

As for our economy, just electing Modi is going to be therapeutic, and the India Story could well be back with a bang.

(877 words)

September 14^th , 2013

Gautam Mukherjee

When Wishes Become Horses

 

 

When Wishes Become Horses

 

The recent spurt of government activity in giving legislative shape to long pending needs that we can still ill-afford; makes one wonder whether the government will eventually default on its promises.

The objective, of wiping out poverty and hunger is most laudable. Doing it, or attempting it via a free lunch may be extreme however, and unlikely to succeed. And more so, because a free lunch in India could end up killing you faster than even a drink of illicit hooch. A lot of evidence makes this likelihood far from fanciful.

 A lot of the international rating agencies, full of accountants not renowned for their risk appetites,    are forever down-rating our GDP prospects, and are thinking the same thing. And in a muted fashion, with an edge of stridency, they are saying so already too.

Especially, since all the promises are on the expenditure side of the ledger, in the manner of a major billionaire philanthropist tossing out his largesse at the deserving and the supplicating alike. The braggadocio in this can come when one is made of illegitimate money, extorted from just about everywhere, like monopoly notes spilling out of the game box; but our poor country is near bankrupt keeping up with these fantasies, and the stupendous bills they engender.

It is hard not to be angry if you’re the finance minister.

There have been a rush of expensive promises, but very little has been said on how these will be funded. This generally means that the ever expanding fiscal deficit will pay for them.  It is a bit like a rich man signing chits at the shops. He’s good for it-maybe. Who knows just how many chits he’s been signing all over the place though.

But in the interim, the just passed new bills on land and food and street vendors make for good wish fulfilment on the stump. That is why the Vice President of the Congress, Rahul Gandhi, says he has adopted the dreams of the janata as his own. He also says he’s forsaking his own. Since they are unlikely to be as weighty, it is probably just as well. A useful life is better lived than a frivolous one.

This even as the ceremonial Vice President, Mr. Ansari, emboldened by his second term in office no doubt, has had his people demand a guard of honour for himself in every domestic place he goes, just like the President.

 And Rahul Gandhi seems to suggest, out on the election trail in Rajasthan, that this amount of   rapid legislative wish-fulfilment, pulled off by the UPA, deserves a vote of thanks to the Congress.

And if business and industry picks up when the present recessionary cycle ends, read when Narendra Modi gets elected as prime minister; then the deficit could even come down. This, while it pays for the expensive promises, even  with built-in inflation as to their cost.

Modi will lift the markets just by getting elected; he will become a vast multiplier on what we are witnessing with the appointment of the energetic and extremely smart Raghuram Rajan to the RBI.

The fiscal deficit could come down, because of greater growth and productivity, which can then more ably pay for the welfare. A country like ours will tend to double the size of its economy every few years, meaning well within a decade. One of the reasons we are not revisiting 1991 already is because the economy is much bigger then it was then.  

The present dire straits is real though, and a consequence of arrogant neglect of growth from 2008 onwards, throughout UPAII really, and will spur changes.

This government may not go to the IMF and World Bank, but the next one will have to, and they, in turn, will force reform on us.

And no, the little bit of a week- long upturn we are noticing will not last, because fuel price rises won’t let it, in the absence of an investment cycle for us to harvest.

And these changes coming up will mean the inertia about the football, will eventually, sometime in 2014 or 2015, be elbowed aside, along with the politics of the status quo.

Crisis, dark deep, and gloomy, paradoxically, works for India. It enables politicians to bite the bullet without worrying about political consequences to themselves. It causes hard-headed decisions amongst the soft rhetoric of inclusiveness and aam aadmi dreaming. And it provides dictation in the manner of an offer one just cannot refuse.

 Since the welfare and rights legislation passed recently- viz. food bill, land bill, vendors bill, etc. is directed at the poor, uplifting them will also be good for the economy, in the medium to long term as they too become useful citizenry.  Not to mention the humungous sums proposed to be spent on them through an absolute sieve that is the proverbial sarkari gravy train.

Christopher Wood, the Chief Equity Strategist for CLSA, is quoted as hoping Narendra Modi overcomes the opposition to his emergence as PM candidate and PM, because his chances get better as the economic handling gets worse under the UPA.

Wood thinks our woes are self-inflicted, mainly because of that absent investment cycle. He thinks nevertheless that we could be in for a sovereign downgrade if we keep sliding. He thinks our PSU banks are carrying too much bad debt. He is not impressed with the current uptick because a week is not representative.

But Wood also thinks we can set things right. Christopher Wood is very astute. He is well aware of India’s potential, has made several accurate assessments on our prospects over the years, and wants it realised. He thinks we can return to 9-10% GDP growth if we restore a robust investment regime.

He realises though this UPA government can’t do it. He knows Narendra Modi can. But in the infuriating way we conduct our affairs he, and we, are all not sure what we will actually end up doing!

(992 words)

September  12^th, 2013

Gautam Mukherjee

The Havoc Of A Crashing Economy

The Havoc Of A Crashing Economy

The havoc continues unabated, with the plunging Indian Rupee and the sharply rising cost of Petrol, Diesel, LPG,PNG, Aviation Fuel, and the cascading g effect of all this on other prices of almost everything.

Airline fares have been jacked up a startling 25% at one go. Cars are being priced higher. Insurance premiums too. Food is significantly more costly. And it is open season on price hikes everywhere and on everything, alongside shrinking demand amid high interest rates. The equity and debt markets too are most volatile and directionless, with some multi-crore scams of their own too.  

The recently concluded parliamentary session managed, probably as a response to these acute crisis conditions, and general disappointment from India observers abroad, to pass 11 bills out of over 45 pending parliamentary passage – many languishing for a decade or thereabouts! Perhaps, even the usually contentious and oblivious parliamentarians felt obliged to do something positive. In the last session before this there were such battles that only one bill was passed.

There is a strenuous attempt afoot on the part of the government to extract political mileage from at least the Food Bill and the Land Bill amongst them. This is probably as a prelude and cat’s paw to taking it to the people at public rallies. The government is desperate to put a positive face on something, an d whatever resonates with the Congress Party’s aam aadmi pretensions has the pole position.

But several commentators have opined that the voting public will not be moved by these bills, or the Pension bill or the new Companies Act either for that matter. These items of legislation are unlikely to connect with the voters urban or rural. Not with prices of everyday staples shooting through the roof and everyone feeling the pinch.

Meanwhile, the scams keep rolling out, and bumping into each other, with invariably large sums of money involved, almost in counterpoint to the tough times the economy and the people are going through.

Wild ideas, like laying hands on some of the over a trillion dollars’ worth of domestically hoarded gold, some 31,000 tonnes of it, are doing the rounds, as a possible fix it for the fiscal and current account deficits. This even as the government is threatening severe import curbs to conserve its dwindling foreign exchange reserves down by over $16 billion since April 2013.

The whisper is that the government wants to issue pieces of paper, Gold Bonds, and paper interest, in lieu of real gold deposited with the government. This flies in the face of the lack of confidence the public feels by acquiring and hoarding the gold in the first place, quite apart from its sentimental allure and traditional pull.

The GDP forecast too is now in the 4.4% p.a. range, having left even the 5% mark firmly behind.

The new Governor of the RBI, the energetic Mr. Rajan, has had a good impact with his first moves after taking over, and might well go some way to rescuing the economy from further rack and ruin. He has certainly demonstrated a reformist tone already, and provided some succour to the beleaguered banks. He also does not seem fixated on inflation to the exclusion of growth like his predecessor. He might just stave off an international ratings downgrade if his ideas are allowed to go through.

Mr. Rajan, young and accomplished in a sea of senior citizen politicians, is a breath of fresh air, blowing over a dispirited, embattled government, that has patently lost control of the economy. But even with all numbers and forecasts in such dire straits, the government is focussed firmly on political matters rather than economics.

This is like a return to the old days of 2% growth in the Indira Gandhi era, when economics was considered irrelevant to the real tasks of governance.

In fact, it is uncanny how much today resembles yesterday, and how the aam aadmi agenda of the Congress Party, however naively put together by the National Advisory Council, now dominates the government.

Somehow, it is being touted about that the welfarist MNREGA, directed at rural India, won the Congress 206 seats on its own in 2009, whereas the reason for the impressive tally was that it swept the urban vote, and actually only some 20% of the rural vote.

But, because the prevailing belief is that MNREGA worked, despite the inconvenient facts, many in the Congress Party think the Food Bill will similarly bring them back to power this time.

As far as public opinion goes however, the worry is not whether there will be a UPA III, which seems very unlikely given the food price rise and corruption, but how any other ruling dispensation will rule over the economic mess it inherits.

If the idea is to deliberately set the table so that the successor government fails, then the UPA is going about things very well. That this is, if true, very cynical and harmful to the interests of this country, will hopefully be noted by the voters.

But even if this kind of scorched earth strategy is being executed on purpose, the good news is that there is nothing intrinsically wrong with the Indian economy. And, significantly, some stubborn foreign investors understand this too.

So, a new, for example, Narendra Modi -led government, may be able to unleash the very “animal spirits” that Prime Minister Manmohan Singh dreams of sporadically, but has not been allowed to see through at all.

Rarely has a government been so dominated by the party chief. But then, in the past, a lot of the time, the party chief was also the prime minister, despite the intent, from time to time, to separate the two offices. 

Still, current events bear out that the economic agenda should definitely remain the province of the government, rather than be remote controlled by the party- which is, in the final analysis, not accountable. 

Hopefully therefore, a strong government initiative after the polls, will set the economy back on the rails and we can start taking pride in our future again.

(1,013 words)

September 8^th, 2013

Gautam Mukherjee

Land and Property

Land and Property- Zameen Aur Zaidaat

The new Land Bill just passed by both houses of parliament and now going for Presidential assent before becoming a law to replace the colonial one enacted in 1894, is bold, most welcome, and has come not a moment too soon.

It has always felt strange to witness, even if one is not being stripped of one’s land, one’s most valued possession and source of livelihood, to be  bluntly coerced by one’s own elected representatives, in an  independent country.

The Industry and the Builder lobby may protest but their costs of doing business have not gone up appreciably.What has happened is the politician has let a little of his fee go to the land-owners and farmers.

This is because he has realised, with the instinct for survival highly developed in him, that if nothing is done to properly compensate the land- owning farmer, that he, the politician, could well reap the whirlwind. The daylight robbery is not just unfair but it has gone on for 67 years too many since independence.

The farmers and rural landless, a massive voting entity, even now forming 60 % of the total, have been cheated out of their lands for a pittance, by legal dictation enforced by the state, for all this time.

The landlords and zamindars, even maligned as undeserving, were helpless to resist, except via endless court cases for those amongst them rich and patient enough to be able to litigate and see it through.

Most small holders just give up their land for an arbitrary sum fixed by the government acquisition mechanism, which works off very infrequently updated circle rates for agricultural land.

And this scandalous fraud and sanctioned brigandage has been perpetrated all over the country all this while. That it was a deliberate rip- off came to particularly rankle because the politician in every state knows change of land use is a license to print money, which he has exploited ruthlessly.

And that is what has been happening brazenly, in the presence of the hapless farmer and erstwhile owner of the land. After it is snatched away  by the government, and only then, the politician in cahoots with the developer and the CLU converts it to residential, commercial or institutional, all at a stroke of a pen.

Instantly, the land is valued at lakhs per yard after being taken over for a paltry few lakhs per acre from the farmer for an ostensible ‘public purpose’.

When this’purpose’ turns out to be residential high-rises for the rich or commercial malls, the farmer is rightfully indignant because everyone has minted money except him.

And it is hard for him to understand this state operated scam is in any way a ‘public purpose’ as in commonwealth. But then the grandest multi-national commonwealth was just fancy talk for a systematic plunder of natural resources extracted by near slave labour.

The government has put a  set of curbs to this exploitation by passing the  new Land Bill which mandates that 80% of the land owners must agree to sell to a private entity, 70% to a public cum private entity. And though the government can acquire land as necessary for that ubiquitous ‘public purpose’, it must pay twice the prevailing market rate for agricultural land abutting urban areas, and four times the going rate in rural areas.

The government is also advertising this new law under final process extensively on TV, radio and the press as a farmer-friendly move with a beaming portrait each of Mrs Sonia Gandhi and Mr Manmohan Singh on every advertisement. Let us therefore hope the government has ready money to pay out and doesn’t hand farmers an IOU of some kind! And let us hope the ‘market value’ is assessed fairly.

A likely effect of this law will be to automatically double and quadruple prices in the urban and rural areas respectively , because any private deal or public-private accord is not going to be struck at a figure lower than what it has declared it will pay.

So a land-based bonanza is at last in the offing on a more democratic basis than ever before in independent India. And like the Food Bill before it, both the  government and the opposition BJP have made common cause to ensure smooth passage of these laws one after the other. Well, well.The former has already been signed into law by the President.

Yet another law,  the Pension Bill which now allows 26% foreign investment in the companies that put themselves forward to manage and invest massive amounts of government employee pension has been passed in the Lok Sabha.

That it has been blocked and pending for 8 years for want of consensus and opposition support has  neverthelessgone through behind the other two laws above- mentioned. In the midst of a routinely adjourned Lok and Rajya Sabha, disgracefully stymied for 85% of its time in session, passing three important laws in a row is remarkable.

But will allowing pension funds to seek higher returns with attendant risks be a good thing? Or might it be much too late at this juncture, where domestic and international stock markets are trading very weak, and gains are from deep craters and abysmal depths. Besides our propensity for corruption is a perennial worry.

It may be, this hoary Pension Bill law, eight years in the waiting, a bit like securing the barn doors after the horses have bolted. But it could of course go very much better than anticipated, and put paid to misplaced concerns.

 (921 words)

September  5^th, 2013

Gautam Mukherjee

Beguiling the Nation

Beguiling the Nation

“Objective journalism is a contradiction in terms”

Hunter S Thompson

Beguiling the nation, which seems to be a policy of the government, in the age of 24 hour, 7 days a week TV news channels in major and minor regional languages, plus Hindi and English, is not easy.

Even the illiterate have-nots, the target audience, the patsy and dupe for the predatory politician, for this discredited government angling to be re-elected, cannot be fooled out of hand.

Even they, supposedly not bothered about anything large and beyond their day to day livelihood,  want more than tokenism and promises. Such supposedly disconnected and disinterested people are also bombarded by a lot of information, and many images and sound bytes. By sheer exposure to all this, much is absorbed to inform their opinion.

    

Boasting, as in: I will turn Mumbai or Kolkata into Hong Kong or London, or transform the economy into untold prosperity, does not work. The mai-baaps and their maternal/paternal postures are simply not believed, as the poor wonder just how rich the politician speaking to them is. And how many of their relatives, friends and benami buddies are in on the gravy train?

Public Relations practitioners, paid for their image building strategies, are mining a thinner seam these days. Walking through shadows, alleys, land-mines of paradox, and lies that contradict other lies, force them to wear blinkers and be heroic in what they are projecting.

The image maker and his subject need must believe their own thesis; viz. Congress is the default programme if India were a computer, a kind of Canadian rocker Brian Adams rip-off.

And trust in paint-it-bright Bharat Nirman advertisements which are mildly psychotic in their hectic gaiety, their subjects airbrushed to suit the frame.

But where are all these happy people giddy with satisfaction the government is talking about? Do they exist outside the recording studio? What we see with our jaundiced eyes is a procession of dysfunctional cheats, rapists, murderers, frauds, and apologists.

Many, many paid and compromised apologists, who insist that any other dispensation would be very much worse. How they know that is a mystery, but one in keeping with projecting the myth of trading better for worse.

And some of us are made to feel a little ashamed for being cynics. But the government is experienced and thick-skinned. It thinks its work is done if it aims its message properly. Rome was not built in a day and neither was its propaganda. So lay it on thick.

The people are presumed to have been well prepared- their attitudes induced to serve, like pre-cooked meals or instant noodles. Brainwashed, ready to heat and eat when it comes to election time and voting behaviour.  

But attempt to beguile reality is turning on its conjurer. This is not the Doordarshan, All India Radio,  the limited print media  era. Everything came out pseudo-objective, mandatorily upbeat then, tightly edited, like a police state bulletin on the health and morals of the dictator.  

Yeh sab chalta tha in that comfortably insular world before globalisation in 1991 let the vendors and internationals in via the tradesmen’s entrance. But now, there is no u turn visible. People, the times, the roads, routes and pathways, have all changed irrevocably.

But you can see the longing for those days within a mercilessly pilloried government. You see it in clumsy attempts to regulate internet commentary, websites, blogs and twitter, and even some alternate media channels on You Tube, and the snooping on friend and foe alike through their cellphones and GPS.

The idea of licensing journalists, like factories or lifts , was  also a recently mooted idea. The intent was probably to suspend the licence if things did not suit, like the moves of a bad or drunk driver. The present I&B minister, frothing at the mouth with impressive legalisms, is maybe hoping to seduce favourable reportage via the recently opened swank media centre in New Delhi.

There are also if-you-can’t-beat-them-then-join-them ideas, such as buying twitter followers even if they do hail from Istanbul and Sofia and may not know how to spell Gehlot, or even Gaylord, for the too many unfamiliar vowels.

Besides, there are soap operas and talk shows and the occasional bold movie in keeping with the multiplex revolution that also serve the awareness juggernaut.

But there is no going back or subduing this octopus. As a former Information and Broadcasting Minister, 

Shri Ajit Panja, said at the start of the satellite TV revolution, that he knew no method to control or indeed censor satellite broadcasts.

And this was in the days when neither mobile telephony with its converged internet applications, nor the internet itself, had particularly arrived.

Today, every comment, gaffe, and public rally, is recorded under the gaze of the news cameras and the highlights are sent over the airwaves again and again. Talk shows discuss the news of the day. The print and online media editorialise  away . And all of it is creates a new rumble of up- to- date  awareness.  And there are major changes afoot.

Picture this. Here are Trinamool Congress goons from the Maoist badlands, wild as troglodytes, roaming the corridors of air-conditioned malls in Kolkata.  Their forest- dwelling eyes are blinking with equality married to branding and disposable income too. This is the confluence of revolution and lipstick/deodorant in designer clothes, and it won’t go away.

It is a phenomenon very interesting to observe but probably worrisome for the party ideologues. It’s all going Maobadi to Market-badi spontaneously. Are these people, the cadres, angry or hungry for more? Only the polls can tell.

Who can stop it? Our politicians must deliver on aspiration and not on potted grievance alone. How can this be done by ignoring development and growth?

Our populists need to go to school in China and change their thinking. Learn from modern day Maoists who have made sure that nothing gets in the way of progress, meaning the fattening of their billions of wallets. Besides, they are willing to work for it in good capitalist fashion.

We are too soft here in India, expecting riches by gift parcel. The new China is consumerist and has earned the money to pay for it. Nixon knew what he was doing but probably had no idea how well it would all turn out.

And yet, our government, lusting to be re-elected for the third time in a row, keeps up its barrage of misinformation. But misinformed we are not. We know things are bad and whose fault it is. And beguiled we are, rich and poor, only if we want to be.  

(1,101 words)

September 2^nd, 2013

Gautam Mukherjeeindu Kush in India. Hindu Kush in India.