The Subrata Roy Sahara Arrest Seems Like Overkill

The Subrata Roy Sahara Arrest Seems Like Overkill

Part of the Sahara imbroglio can be attributed to Stock Market regulator SEBI wanting to try out its newly installed teeth and claws. SEBI has turned the confrontation into a test case because it wants to have massive oversight, along with punitive and search and seizure powers like the American US SEC. And the Sahara Group, with its flamboyant Chairman, presents a juicy target. SEBI has picked on a Sahara Group debenture issue to private investors, millions of them, as is the wont of parabanking giants like Sahara and Peerless; via a couple of unlisted companies, as listed companies were  disallowed to do this kind of fund-raising now.

The amount in question is some Rs. 24,000 crores, typically made up of millions of small deposits. SEBI, on its part, is citing a law that if the depositors number more than 50, it automatically becomes a public raising of funds, and comes under its purview.  SEBI therefore instructed Sahara to return the funds to the investors as they had been raised ‘illegally’. Sahara, ostensibly has complied in the main. SEBI however is not convinced. In the balance, should this lead to a weakening of the Sahara Group, are the jobs of over a million employees and many millions of investors.

This despite SEBI having been sent 17 truck-loads of papers that allegedly prove Sahara has paid back most of its investors. SEBI has reportedly not ploughed through this ‘proof’ as yet, even as several more truck-loads of material await its scrutiny in a Mumbai godown. Instead, SEBI has got the Court to order Sahara to deposit Rs. 24,000 crores either in cash or by way of suitable and unencumbered property documents with it, in case the evidence does not check out. It is a fact that Sahara is struggling to do all this in cash-strapped circumstances presently, but there is nothing to suggest a  deeper malaise.
  

Sahara on its part has deposited some 5,206 crores claiming, at the time, that the net outstanding was about Rs. 5,120 crores. Since then, more payouts have been made, and the net outstanding now is about Rs. 2,000 crores. The property documents, also submitted to SEBI are apparently not up to the requisite value of over Rs. 20,000 crores, but since most of the money has allegedly been paid back, events may have overtaken this requirement. But not, it seems, SEBI scepticism.

The RBI has also been fretting over regulation of parabanking, and has curtailed much of Sahara’s room to manoeuvre over the years, and there is also the rumoured Congress high command antipathy towards the Group. The close relations that the Sahara Group has long enjoyed with Samajwadi Party and the father and son duo of Mulayam Singh Yadav and Akhilesh also seems now to be missing in action.

Sahara is no longer as cash-rich as it used to be, partially because of some large overseas hotel purchases, a downturn in the real estate asset valuations and liquidity,and the regulatory killing off of most of its parabanking businesses. It has also suffered significant losses in some of  its diversified forays.

The Supreme Court’s insistence on a personal appearance of corporate big-wig Subroto Roy Sahara, followed by a non-bailable arrest warrant, has now coalesced and focussed attention on the case. It is also why Subrata Roy Sahara is in a forest rest house near Lucknow under police custody till 2 pm on March 4^th when the bench of the Supreme Court will see and hear him in New Delhi.

If indeed only some Rs. 2,000 crores remains to be paid out, it possibly will resolve quite quickly. The Honourable Supreme Court justices are annoyed at Subrata Roy dragging his feet when summoned, though the latter claims it is because his 92 year old mother is seriously ill. It may also be important to bring this case to a business-like conclusion in short order to send out a signal that India is not in the way of harassing its eminent and accomplished corporate brass. If the idea is to make clear that no one is above the law, surely there is also a need to calibrate judicial wisdom and outreach according to the nature and gravity of the legal infraction. Top lawyers Ram Jehmalani and Ravi Shankar Prasad who are representing Subrata Roy, did try and fail to get his arrest waived and the hearing advanced.

But looking forward now, they need to put this matter into judicial perspective before it does a lot of damage to the image of India at a time when we need to encourage business, industry, FDI and FII.  India’s GDP has meanwhile plummeted to 4.78% and this kind of high profile trial that involves the arrest of top corporates does not help matters.

(793 words)

March 1^st, 2014

Gautam Mukherjeence ts new teeth and claws and the Supreme Court'

Modinomics Comes Closer

Modinomics Comes Closer

Narendra Modi is being keenly followed for his economic vision. Recently, in various fora, including traders, captains of industry and chartered accountants, he gave both the target audiences and the voting public a glimpse sometimes, a little more elaborate preview at others. While more detailed specifics will be spelled out in the BJP manifesto and in the Vision 2020 document to be released shortly. And, of course, in his ongoing speeches, and those of other NDA leaders, over the next 60 days. Modi made it clear however that he had a strong and inclusive development agenda.

He  also brought the old Mahatma Gandhi/Tata idea of ‘Trusteeship’ out of the closet for another turn in the sun, implying Government’s that claim to be doing the public a favour, are in effect being less than truthful. This, because they are essentially taking initiatives with the public’s money, while pretending to be bountiful.

The other macro point, undeniable in its authenticity, is NaMo’s assertion that as a Chief Minister of long standing, coming out to the national arena, he knows precisely where the shoe pinches for the State satraps. 

He has promised to empower the States and strengthen federalism. He is also showing a great responsiveness to economic suggestions from various quarters, be they that of the trader organisations, the chambers of commerce, think-tanks, intellectuals, captains of industry, media mavens etc. Modi has promised to simplify the thicket of complex laws that affect the businessman to promote ease of working and quickened inclusive growth.

And he asserted continuously that he would do everything not tackled in 60 years of Congress/UPA rule, give or take, in the 60 months of the next Government’s tenure. He expects India at 75, in round figures if somewhat beyond the next 60 months, to be renewed afresh into a ‘new country’. Modi’s is an exciting, bold and transformational message, and implies that the gradualism and incrementalisation of approach followed by the UPA with limited success, will be sharply overhauled to promote rapid growth and progress for all sections. Perhaps now, at last, India   will be set on the path of realising its true potential.

Modi says he wants to see GST implemented and sees it as a great unifier pan-India, but points out you cannot do so till the IT connectivities are put in place. He says the UPA has been lethargic over it, rather than the States, but then what’s new? He wants, most of all probably, to ramp up infrastructure spends as possibly the key growth driver.

HDFC’s Deepak Parekh, who seems to be on the same page, pointed out at a function under the auspices of the India Foundation, that infrastructure spending had been derailed over the last two years, and needed urgent attention from the new Government. Of the over $1 trillion projected in the 12th Plan period, 47% was meant to come from the private sector, but this  has certainly not been forthcoming, with two years of the plan period already elapsed. Parekh suggested corporatisation of the Railways, ramping up urban infrastructure, developing brand new cities and injection of massive FDI. We know China and Japan are waiting in the wings to bring in a lot of investment, and there are probably others, like Saudi Arabia and Iran, waiting to make their declarations soon. Notice our potential that our investors do not have to belong to the same camp. This is a lesson that should not be lost on the US and NATO and may be a philosophical gift from our idealistic non-alignment days. So Russia and the US are welcome, along with Germany and France and Australia too. 

Narendra Modi, as always, positioned himself as an ardent Reformist and an efficient administrator, emphasising that Governance was very important. This brings cheer and not a little wonder to all in an age of policy paralysis where all hopes have been long belied. With just a couple of months to go till the elections, and possibly a substantial economic renaissance.

Modi says we have almost fallen out of the BRICS  wall, Humpty-Dumpty like, and need to get back into the reckoning. Who can deny that this is true? But it is a practical streak amongst all the lofty intent that is the most reassuring about Modinomics. Modi wants to bring about 24x7 electricity around the country, including the little villages, and strong Internet connectivity. On the back of this intent, he exhorted small traders to develop virtual malls and not be afraid of technology or the big traders either.

Columnist Andy Mukherjee, writing in Business Standard, says he expects Modi to revive ‘credit growth’.  He joins commentator and free-marketeer Gurcharan Das and Siddharth Birla of FICCI in desiring more detail on Modinomics in the coming days.  Still, almost all observers and analysts expect optimism to return, and business and industry, rooting heavily for Modi, to start borrowing for modernisation and expansion again.

The dependence on populist coalition partners might queer the pitch a little, some reckon, but the stock markets and property markets are expected to revive. The numbers are anywhere upwards of 10 to 30%, according to the international rating agencies watching India, with more than the usual interest at this time.

 (869 words)

28^th February 2014

Gautam Mukherjee

America Does Not Want A Strong India

America does not want a strong India

The rise of Narendra Modi and the prospect of a BJP/NDA Government at the Centre in a few months time is being viewed with trepidation, not only by extremist and inimical elements in Pakistan, but with little warmth by the US as well.  A more assertive India, when it is already much too independent for  America’s liking, is not seen to be particularly welcome.

President Obama, approaching the end of his second and final term in office, in 2016, has lost interest in the strategic relationship that his predecessor George W Bush initiated. The disappointment began when India decided not to buy its mega order of 126 off fighter jets from the US, and finally settled on the advanced but largely untried in combat Rafale jets from France instead. Obama thought his PR blitzkrieg during his visit to India had all but sewn up the order, one of the biggest single purchases of military hardware in the world in recent times.

After being miffed by the Indian action, he has more or less distanced his administration from India, and downgraded his expectations from the relationship. In addition, the present Secretary of State John Kerry is perceived to be more or less pro-Pakistan when compared to his predecessor Mrs Hillary Clinton.

 India is effectively strategically downgraded for the moment, and China’s constant provocations on our borders are also a reflection of the distance that is developing in the Indo-US bilateral relationship.

Meanwhile, much as Americana is the prevalent influence, and the economic and cultural yardstick here, the American strategic vision with regard to  India reflects an altogether colder reality. Americana reigns in large parts of the world, in an economically bonded and beholden EU, in much of the English-speaking world, and specifically amongst the young. America represents the good life; in freedom, dignity and plenitude, but always tending towards isolationism. But yet drawn into assuming its responsibilities as the world’s sole super power, oracle, and general arbiter. Despite this, it seems, of late, alas, America is no longer interested in being inclusive.

Hollywood movies, Apple smartphones, and American popular music and so on may be on the mind and at the finger-tips of most affluent people around the globe. And its ambassadors, McDonalds, KFC, the neighbourhood air-conditioned Mall, Starbucks, designer jeans, the wonder weaponry, the massive economic might even in its decline, are indeed all hugely aspirational in the emerging economies.

But, alongside this easy palatability, our embrace of Americana, our desire to emulate, is not felt or believed to be reciprocal. We in India must realise that we are neither viewed with such eager warmth, nor included in the American scheme of things in any deeper sense.  And the lack of movement on all fronts in the bilateral relationship underlines this.

Our outgoing Prime Minister Dr. Manmohan Singh, did try very hard. He wanted to change the India-US relationship from one of decades of ‘benign neglect’ on the part of the US, to a ‘strategic partnership’  full ofr vibrancy and movement.But, this was not to be. India is, for the moment, not to guard the Indian Ocean around its neighbourhood for the US. It is not going to be developed into any kind of counter balance to China.  Our exasperating non-alignment does not suit America’s John Wayne type sensibilities.

We are therefore assessed to be decent enough but not seen as a reliable ally. We do not have enough to offer the US if we routinely fail/ refuse to lay out a red carpet against every item of bilateral advantage. Even Dr. Manmohan Singh could not dare go that far, much to the chagrin of the Americans.

The Americans probably expected huge reparations in exchange for their leaning our way in the Civil Nuclear Deal. The nuclear pariah status did end thanks to US backing, but nothing substantial by way of implementation has followed in the wake of that breakthrough. Nor have we become an obvious American satellite as was anticipated, even demanded, by the US.

India keeps asking for bilateral reciprocity, as if we do not understand that we must know our place. And reciprocity cannot be demanded by the weaker from the stronger.And if the size of the Indian market is considered to be our ultimate leverage and lure; the Americans think they can access it anyway without conceding very much in return.  And so we find ourselves searching our own faces in the mirror and wondering why we find ourselves in political limbo.

That inclusive and inspiring, and vastly generous American dream of the founding fathers of nearly 250 years ago, ended long so.  It was set aside along with Ellis Island as a point of entry. When it was open, ships carrying impoverished Irishmen, Italians, English, Welsh and Scots, East Europeans, Jews, Germans Poles, Lithuanians, Lebanese, all coming from the ‘old world to the new’, across the Atlantic and other seas, to New York. And under the blazing gaze of the Statue of Liberty. Today Ellis Island basks in   its silent emptiness, no  more than a tourist attraction, and that kind of open-handedness and welcome ended well over a century ago.

That American dream changed with technology upgradation, and time. When ships gave way to planes, Time itself quickened, and America grew rich. And the socio-economic barriers started going up. America’s rulers have been steadily less forthcoming  as the 20^th century advanced, and tightened immigration even more in the 21^st. Most of the Indian diaspora in the US trace their migration to the 1960s and 1970s when professionals from the sub-continent were in demand. Today’s IT men, if they are not US citizens or Green Card Holders, are only tolerated on short-term visas, but are preferably  engaged to work offshore, or in India itself.

The American Black may well marvel at an African-American in the White House, but there is little that is necessarily pro-black about Obama in the conduct of his governance or policies.  

Perhaps this is because Obama is both White and Black at the same time. The point is however, no matter how it was all intended, huge inequalities do thrive in America. The top couple of per cent of the population own 98% of the wealth and resources. The lot of the wage-earning or unemployed underprivileged in the US has not been getting appreciably better since the Second World War!

And since the recent Wall Street Crash of 2008,  more suddenly impoverished people are much worse off. And despite some signs of revival now, the US economy will stay under pressure for at least the rest of this decade.  

(1,098 words)

January 21^st, 2014

Gautam Mukherjee

New India Is An Exciting Overlay

New India Is An Exciting Overlay

Driving from New Delhi to Goa for the first time, some 2000 kilometres, I confirm and discover that there are four or six-lane expressways that enable consistent speeds of over a 100 km throughout. That is, for all expect the last bit, from naturally air-conditioned Belgaum to touristy Goa.

All of it, these stupendous roads, conceived of and initiated by former prime minister Atal Behari Vajpayee in his terms at the helm of the NDA, is now built and completed, an amazement to me in itself. It is not often when India completes, substantially and fulsomely, what it has begun.  

And these roads, will transform the connectivities in this country, if they have not already done so.  To drive along them involves the paying of scores of tolls, but adding up to no more than perhaps Rs. 3,000/-, a modest enough fraction of what one would pay in the EU or elsewhere, probably as much or more in Euro, for such a cross-country jaunt today.

Thank God once again for our robust numbers which help to keep the charges modest. But most of the roads are indeed as good as anything abroad, except for the fact that very few  eligible Indians drive across the country for pleasure, or indeed, business.  Most upwardly mobile middle class Indians are essentially noveau riche in attitude, and thus oblivious of many finer points that make for the nuanced life. In their thinking and values, it is preferable, as a status thing, to fly everywhere, and be driven, rather than drive, for the rest. The lure of the ‘open road’ as a metaphor for freedom and renewal is mostly an American thing and little comprehended here.

So these wonderful roads are almost exclusively the province of the pan- India travelling trucks, driven by hard working if prosaic illiterates, hauling all manner of cargo. And reasonably localised movements of motorcycles carrying entire families, commuters between obscure villages, tractors carrying sugarcane, and the like.

And those of the middle /entrepreneurial classes who swan around on these roads in their high performance modern cars, are served, along the new highways, by a  liberal sprouting  of KFC’s and McDonalds and  the home grown Café Coffee Days, interspersed with more desi fare, both vegetarian and non-vegetarian. I even spotted a Parsi Dhaba in the neighbourhood of Bharuch. The pizzas, burgers and food courts, the malls on the edge of cities, an occasional hyper-market out in the sticks, all bear the stamp of their foreign franchisors, compete with dhabas glorified into a tinsel  roadhouse gaudiness. These gaily-lit roadhouses reek of bad housekeeping and questionable  hygiene standards, hobbled by lack of sophistication and indifferent wares. There is an uncomfortable feeling that great roads do not do the whole trick. They seem to be a modern overlay on a sensibility struggling to catch up.  

Still, the gaudy roadhouses survive in their numerousness, across the several states I drove through, perhaps because they have large parking aprons and cater to the truckers and the villagers along the routes.

But on these new highways, there are no standardised Best Western style motels to cater to the wonders and the solaces of the open road for the middle classes. The larger petrol pumps try to provide some amenities, but all is not seamless yet. There is probably not enough demand for such infrastructure along these wonderful roads, but this could change in the future as mofussil incomes in tier two and three towns/cities rise to mirror those of the tier one metropolises. The housing estates being built alongside certainly suggest this, even if one might have to get away into the interior to see swaying mustard fields in the future.

And that final stretch, from Belgaum to Goa, under 200 km., by the coast, is a two-lane scenic road from decades ago.  The cities I passed through are bustling, but there is much inner-city decay from the years of stagnation that has been the bequest of  Socialism. These hang there still, sometimes shabby, derelict, or overtaken, but still an  eyesore on the landscape like stubborn carbuncles that refuse to be obliterated.

The contrast is stark and devastating to witness; and the disconnect between the open road of the expressways, and the higgledy-piggledy slums, the unplanned sprawl that often abuts the fancy roadways, is self-evident, if sad.

The new India will, it seems, have to completely replace the old India, lock stock and barrel, but fortunately not the ancient India of enormous wealth, wisdom and accomplishments. This post-independence oldness is not very profound, except for the fact that it mocked what was once solid, but being insubstantial itself, has run out of its luck. Not only that, it is embarrassingly clear that the Socialism of decades past has utterly failed us, and these puissant roads pulsating with trucks is a welcome departure from that  debacle of economic disappointment.

What it created, quite unintentionally, is a divorcing of the obsolete ugliness and inadequacy of the past. That stuff cannot be spliced into the present and the future. But since it has survived and exists against the odds, it must be regarded like a close relative who refuses to be locked away Jane Eyre fashion. But who nevertheless, and all too often, stamps about the stage, angst-ridden, in all its gaucherie and unrestrained squalor. It cannot, alas, be sanitised and deodorised into conformity. Indeed, all our past failures, elaborate and wrapped up in the shrink-wrap of denial, refuse to die. And present successes, considerable as they are, look like they are some distance away from  a clear ascendancy.

(928 words)

January 24^th, 2014

Gautam Mukherjee

The Farexisation of the polity

The Farexisation Of The Polity

Farex is a brand of baby food that comes in little jars.  It mashes up all kinds of goodness, fortifies it with mild baby digestible boosters, and there you have it. It is for mothers who want the best for their babies in a developed world consciousness. But Farex is not the last word, or even the first word in baby rearing and nutrition. It is just high quality branded baby food manufactured and sold in most parts of the developed world. Affordability is the half of it in the once-upon-a-time ‘First World’; and convenience brings up the rear.

Drawing the analogy tighter to apply it to our desi political karta dartas in the ruling dispensation, you find yourself wondering and despairing simultaneously. It is not as if your disquiet is easy to define. After all, it comes and goes, hero and villain at the same time, but with a persistent residue of systemic decline.

If you were to ask about the sins of the Congress, for example, and its now necessary omnibus passengers in the UPA, the main thing that would stand out is not its actions, venal as many are, but its cumulative inheritance. It might have started off well enough in the glowing idealism of the independence movement, but grew noxious, and toxic, as the decades passed post- azaadi. Today it wears a face not unlike a Dorian Gray-like progression.

Rahul Gandhi is weighed down by it, this nameless evil, and this sensitivity is the single most, if not only, attractive feature of the ‘bird-brained’ scion of a diminished dynasty, or words to this effect pronounced by Pakistani-British Seventies onward London-based activist Tariq Ali. Tariq Ali also said recently that the Indian people want Modi as PM, and don’t care about the controversies being raked up by the Congress.

But Rahul Gandhi, striving to not let his side down however ineptly, does evoke a great maternal instinct and protectiveness quite disproportionate to his intrinsic political worth. It is as if he is at the very least entitled to sympathy for his dynastic predicament. It is a sort of post-modern Hamletism with the Indian people subjected to the flux.

And in the era of coalitions over the last three decades, the rot that comes from a constant distribution of the loaves and fishes of office to buy support that is traded freely, has truly set in. 

The  Indian Railways, once a proud thing, even if the British did set it up for their own colonial/imperial purposes, is today reduced to a whopping loss of Rs 25,000 crores a year on the under realisation from passenger fares alone! Once a guarded and nurtured plum of the majority wielding Congress Party, it has been too often used to mollify the hubris of this or that restive ally. Consequently, it is falling apart from ageing stock and rail,  the primitive safety standards, low utilisation and realisation, little or no modernisation, and populist additions and deletions that weaken it further.

It is, sadly, not the only institution systematically subverted by Congress’ political calculations. The CBI is not called a ‘caged parrot’ for nothing, even if its current incumbent seems to have noticed which way the wind is blowing in the matter of key NaMo aide Amit Shah being left out of the 2^nd charge sheet in the Ishrat Jahan imbroglio.

The Congress  Party, in the days when it used to command a majority, out of  insecurity, lust for power, and a disrespect for the Indian Constitution it helped formulate, mashed up its institutions into running  dogs of complicity. The jury is out on the Judiciary, but enough corruption and motivated judgements have surfaced even there.

It turned almost every Government official into a yes-manning servant of its will, and with devices like the 100% dearness allowance and other perquisites of office, manages still to keep them complicit in the main. It practices a patronage system so pervasive that it has put paid to the pretence of parliamentary democracy given its six decades, more or less, in power.

Everything appears to be fixed to a lesser or greater extent well in advance. The charade causes the voting public, the ruthlessly manipulated people of this country, to vomit up its bile against this confidence trick from time to time.

Every once in a while, when it all gets too much to bear, the people throw a spanner in the works. This causes twice as expensive manoeuvres by the engines of Government, but does not dilute its basic lack of respect for the wishes of the public.  We get this public displeasure as a corrective and purging.  But it costs us in instability, clownish eruptions like the AAP, and frequent elections, economic stagnation, military vulnerability and so on. But the Congress worries only about its essentials, namely its hold on power. This lack of patriotic concern in the garb of politics as usual is probably the greatest wrong done to the country by its oldest political party.

Congress practices the art of telling the people what it is supposed to think, and does not feel the slightest embarrassment at the presumption. But it is terrified at the threat of anyone else trying out the same sorry stunt. It is not only promoting the ‘old club tie’ style cabalism, the you are required to be ‘people like us’, shorthand for the closed club, but  is hugely rattled to see its variations practiced by any other rival.

The many newsy specifics of UPA failure and Congress misrepresentation are surely legion, and will only read like an endless charge sheet of the most heartless venality. Our talking heads debate such things on TV news channels every single night till our heads spin. But the broad trends, like dishas, are much more telling. Congress and the UPA have systematically let the country down while feathering its own nests. It has been seductive in its hold, lulling the exploited public into thinking that, on the contrary, it is munificent and beneficial. It hopes the scales will never fall away from the eyes of the viewing public, for them to see their rulers for the failures they have been.

But if it progress and development our people want now, in  place of a diet of thwarted hopes and bloating lies, they need to look at the man who is offering it with both hands. They need to respond to his call, and relegate the jaded ‘Sultanate’ grown stale and useless, into the fitting dustbin of history.

(1,085 words)

February 13^th, 2014

Gautam Mukherjee

The System And The Contender

The System And The Contender

Rahul  Gandhi’s maiden one-on-one interview with Times Now in 10 years as a politician, had nothing at all to say on the economy. Neither did Arnab Goswami ask him a single question on it. This is just the way the narrative has become, with political concerns overshadowing economic matters to such an extent that it is not even mentioned in such an elaborate conversation!

However, much airtime was devoted to making a distinction between centralised and  decentralised power, as in Congress is committed to empower people with legislation enabling RTI, Panchayati Raj, The passing of the Lokpal Bill and so on; and a presumptive BJP centralising power in the hands of one man.  

This is, of course, the kind of fantasy Rahul Gandhi routinely inhabits. Any act of parliament does need bipartisan or even multi-party support in a coalition, and the latest and vaunted Lokpal Bill could not have been passed without BJP support to be enacted into law. Besides, most drafted laws are refined in Standing Committees manned by MPs from various parties before they are presented afresh to be debated and voted on. So to lay sole claim to them on behalf of the Congress Party is a little silly.

Besides, it must be crystal clear to all observers that Congress in Government has always centralised power, and reduced the Union, State and Chief Ministers, let alone mere bureaucrats and other components of governance, into so many fawning courtiers.

In Jawaharlal Nehru’s time he was primus-inter-pares to such an extent, that others in his party were actually dwarfed by his stature, particularly after the demise of Sardar Patel; Mahatma Gandhi and Subhas Chandra Bose having already gone before. Nehru was democratic enough in instinct, as his copious correspondence on record suggests, and in his desire to nurture the nation’s fledgling institutions, but his natural aristocratic and British-bred hauteur tended to overawe his cabinet colleagues, and others.

But the blatant kitchen cabinetry was constructed somewhat later, under a congenitally insecure Indira Gandhi who had learned through hard experience to trust no one and never look back. She also mooted the concept of a ‘committed bureaucracy’, meaning the IAS and others should toe her line without demur. Having ruled India for 18 years, a little longer than her father, she certainly managed to mutate the Government machinery to suit her ways.

Sonia Gandhi, let us remind ourselves, learnt statecraft and politics at the feet of Indira Gandhi as more or less manager of the Prime Minister’s household. And so the centralisation of power has continued unabated, and the extra-constitutional NAC closely resembles the advisory group around Mrs India Gandhi. The only others, privy to every decision taken, are members of the immediate Gandhi family, including Rahul Gandhi.

The very term ‘High Command’ epitomises the Congress Party, and is the apex and fount of all power, both in the Party and in the current Government. Nothing is sanctioned without the High Command’s approval. Not a leaf moves without the High Command being made aware of it. So what is an RTI, or Lokpal Bill, or an empowered Panchayat, compared to this kind of centralisation of power?

As for the BJP, announcing a prime ministerial candidate may have given it a degree of focus and cohesion, particularly due to the grass roots popularity of Narendra Modi and his ability to enthuse the masses wherever he goes around the country. But it does not amount to any lack of democratic process and took much negotiation and consensus building to arrive at.

This takes us to some of the other blatant lies delivered with dimpled simplicity by the ‘Shehzada’. Many Sikh groups are outraged at Rahul Gandhi’s failed attempt to absolve the Congress Government led by the  then newly-appointed Prime Minister Rajiv Gandhi, in the aftermath of Mrs. Indira Gandhi’s assassination and the horrendous genocide of Sikhs in 1984.

Rahul Gandhi said the Congress Government did not aid and abet the genocide,but the facts are that the police stood by and the Army was not called for 3 days as Congress instigators organised the slaughter of some 5,000 Sikhs in the capital city of India dislocating many times the number of lives, and accompanied by the destruction  of much property.

Rahul Gandhi said the Gujarat Government led by Narendra Modi goaded mobs into murder, mayhem and arson, after the burning alive of 60 Hindu pilgrims in a train stopped at Godhra in 2002. But the statistics in the aftermath of the Godhra murders include the shooting of over 300 rioters by the Police, preventive and punitive arrests of over 65,000 people, and the Army called in within 48 hours. There have been convictions and successful prosecutions in Gujarat, but practically none in Delhi. And yet the Congress VP makes little of it apart from saying the PM and Party President have already apologised for the 1984 anti-sikh riots and yes, there may have been some Congress people involved in instigating it. The Law, said Mr. Gandhi, should be allowed to take its course ignoring the fact that there are precious few prosecutions.

Rahul Gandhi’s constant harping in broad strokes on systemic change and induction of youth into the Congress Party had little new in them but attempt to cast him in a reformist light. There is a widespread scepticism about the effectiveness of Rahul Gandhi’s experiments with systemic change over his spent decade in politics, and even more pessimism with regard to his ability to win votes for his Party, or indeed manage electoral campaigns successfully. His making bold to lead the Congress campaign in 2014 therefore does not augur well for the fortunes of the UPA.

Rahul Gandhi claims, as a leading dynast, that he wants to make political decision-making more inclusive, while ignoring the anomaly of his own semi-nominated situation. And even though he seems sincere in his wish to transform the way candidates for election are chosen starting with some 15% of Congress candidates in 2014, it is difficult to visualise his successfully taking on the ‘System’ that he simultaneously praises and criticises. One can’t help thinking it is all a rather elaborate pose and alibi for failure. Many commentators, amongst them Outlook Editorial Director Vinod Mehta, expressed doubt about Rahul Gandhi’s ability to change the ‘System’. Mehta thought, on the contrary, like many others before him, that the System could well change Rahul Gandhi.

(1,064 words)

January 28^th,2014

Gautam Mukherjee

Where are the second-stage reforms?

Where are the second-stage economic reforms?

Having taken in the final interim budget from the UPA, the last it is likely to place in front of the nation for years to come, the moot question remains, where are the second generation economic reforms that were promised almost a decade ago? Why are we still in the doldrums in terms of job creation, poverty alleviation, taxation and labour laws? Where is the great leap forward in infrastructure? When can we hope to see state-of-the-art health and educational facilities? When will the Judiciary be adequate to deliver timely justice? 

Where is the modernisation in our systems and methods? Why is the bureaucracy so slothful and complacent? Why are our municipalities so filthy and overburdened? When is the military going to get the best equipment and facilities? What happens to all our planning when it comes to results? Why are our rivers stinking? Where is the cold chain, the value addition of massive agri-business, the mechanisation, the efficiency?

Why do Rahul Gandhi and Sonia Gandhi sound like actors in the Supriya Sen starrer Aandhi? Why is this country stuck in a Soviet-era time-warp, befuddled by dated Krishi-darshan type Socialist propaganda, surrounded by ugly concrete blocks?

What a contrast this slight interim budget, unable to address any of this, presents to the dynamic Vision 2020 document being produced by the BJP. That targets a blistering 12% per annum in GDP growth. A figure which will allow India to catch up to China by 2020. It is a document that allies itself to the demands of the ‘market’. The ideology, as Narendra Modi keeps saying, is “Development Politics” and not “Vote-Bank Politics”. And he wants 60 months to do what the Congress could not in 60 years!

The entire UPA tenure of two consecutive terms has been spent mismanaging the economy with minute tinkering with the status quo combined with massive corruption. If it were not for the deviation of the PV Narasimha Rao and Atal Bihari Vajpayee years, we might still be paying premiums to secure an Ambassador or a Premier Padmini and petitioning an MP or MLA for nearly every other necessity of life. And yet, the whizzing Audis, BMWs and Mercedes Benzes seem like no more than an overlay, a metaphor for a pseudo-modernity, waiting for the real thing to catch up.

But next to what cannot be undone, current policies have driven our numbers to its lowest point since the early 1980s, or the last years of Mrs Indira Gandhi’s rule. It is perhaps fitting then, that Mrs Sonia Gandhi, an avid understudy and mimic of the erstwhile prime minister, de facto ruler of India throughout the UPA years, should return the country to its abject nadir and decades of failed Socialism.

Finance Minister P Chidambaram looked bone-tired during his last attempt to make the most of a bad job. But the result was still a lacklustre interim budget, hemmed in by the usual Congress contradictions between total inertia and highly defensive micro-management of policy. It is hard to believe that this damp squib of an offering is the UPA’s idea of playing to the gallery and its targeted constituents.

Some captains of industry and custodians of sundry chambers of commerce, constrained by their positions, intoned that it was a ‘balanced’ budget, not particularly ‘populist’, but their sorry expressions, like those who have come to offer condolences, gave away their true feelings.

Others, like JDU ideologue and former Finance Ministry mandarin N P Singh, said it lacked anything to revive ‘animal spirits’, in  an echo of a fond hope whispered on the wind by our helpless and fast fading prime minister Manmohan Singh.

Chidambaram did perform the classic Congress manoeuvre of trying to play to various vote banks, such as minorities and students, with the giveaway mantra, but even these were tame allocations from a constrained and diminished kitty, hamstrung with colossal debt. He made no bold moves, cut no direct taxes whatsoever, despite its proven potential to stimulate and enthuse the moribund economy. Even the subsidies stayed on for the moment.

Many called his attempt to contain the current account and fiscal deficits ‘jugglery’ and ‘unethical’ because he brought forward income not yet earned and pushed away expenditure to the next fiscal for the arithmetic to work. International rating agency Moody, stated that the fiscal situation in India remained ‘worrisome’. It implied that it would have to look at a downgrade if Narendra Modi and the BJP/NDA did not form the next Government.  

But, much as Chidambaram may point at his cossetted deficit number, it is not the only culprit, because the entire economy is on its knees, and needs some bold market-friendly steps urgently. But Congress thinks market-friendliness and being for the aam aadmi are mutually exclusive, instead of being essential partners towards the objective of prosperity for all. This, fortunately, is apparent to the BJP, and it is not afraid to say so.

Chidambaram did try to enthuse some long suffering quarters such as the automotive sector with excise cuts. But both interest rates and inflation are too high and GDP too low for this isolated action to have much impact. He also directed some commendable largesse towards one rank one pension for the Armed Forces.

Economic Times perennial Swaminathan Aiyer wrote, not unsympathetically, that Chidambaram’s numbers and projections are not credible. Communist stalwart Sitaram Yechury said that the lack of public investment has driven the country back to 1991, and worried aloud about what it is doing to our already bleak employment prospects.

The Finance Minister doggedly cited the rise of the GDP from 4.4% to 4.6% and on to possibly 5.2% for the latter two quarters, saying it was not a bad showing in a difficult global environment. He hoped it might lead to even 6% in the next fiscal. But the fact is, India needs double-digit growth in GDP to gradually eliminate abject poverty. Hand-outs, which Congress specialises in still, is an admission that it has failed over six decades, to actually remove poverty.

Perhaps the dynamism and commitment to growth of Narendra Modi, the economic prescriptions of Arthakranti, an RSS influenced economic think-tank, former Commerce Minister and Harvard Economics Professor Subramanian Swamy, and B JP Vision Document 2020 Head and former BJP President Nitin Gadkari, can take this country forward to its zenith. That is, after the elections throw up the expected BJP/NDA led Government.

And it might be an excellent idea to make the bold Mr. Subramanian Swamy the new Finance Minister in order to see the vision into reality, in concert with NaMo and the rest of the Government.      

(1,101 words)

February 18^th, 2014

Gautam Mukherjee

Threads and Strands

Threads and Strands

The Chinese Year Of The Horse 2014, with a reputed tendency to gallop, begins Friday the 31^st  of January instead of the usual 4^th of February. It follows on from the Hindu Mauni Amavasya, which occurred, with its recommended Ganga Snan, on Thursday, 30^th January.

It is remarkable how the cultural and religious calendars of the world seem to intersect. In India a Muslim festival invariably occurs within a day or two of a Hindu one, even as both religions follow a moon-based calendar. Whatever the effects of the confluence that is India, this implies our diversity has many common features and binders, not always obvious to the naked-eye of the Western trained Sociologist.

The Chinese reckon their symbolisms somewhat differently, as their ancient cultural influences of Confucianism and Animism mixed with a modified and stratified Buddhism, are at some variance from that of the sub-continent.

Likewise, some observers criticise our political parties for being too similar to each other. But this is because all must, for electoral gain, have an element of Welfarism and Socialism/Populism aimed at the masses. Growth may strengthen the country at both a fundamental and macro-level, but is not very comprehensible to the poor voter, and a much harder sell. This makes Narendra Modi’s success at promoting his ‘Development’ vision all the more remarkable.

This election is crucial because the country is in drift, politically, militarily and economically, and most political parties are still clinging to yesterday’s ham-fisted prescriptions in an empty sloganizing sort of way. But the public senses, thanks to the robust vision enunciated by Narendra Modi, that strong, decisive leadership could set India and Bharat galloping towards a bright economic future. This is the No.1 issue and requirement at present.

The Congress, for all its riches of experience and wealth, because of the way it is structured, is unable to provide that leadership to guide the destiny of this nation. It has become a fiefdom of one intellectually rudderless family, and even though many senior leaders in the Congress are privately vocal about the Gandhi family’s shortcomings, they cannot act on their perceptions, for fear of the fissiparous tendencies it would unleash. These could break up the grand old party, contained as it is with its many internal rivalries.

So a Congressman’s ambitions must necessarily flow through conduits leading to Rahul Gandhi and 10, Janpath. It is a process of application, supplication, demonstrated loyalty and usefulness. But will this process sustain beyond the steady grip of the Sonia Gandhi era? Will Congressmen and other UPA constituents jump ship to the BJP/NDA once the 2014 results come out? This is likely after an NDA win, overtures are already on, for Narendra Modi certainly represents the future of this country as much as Congress represents the past.

This election seems to be demanding more than rhetoric and political flourishes. It wants to know what the contenders will do about the people’s aspirations. And as the Congress citadel and fort are under imminent threat of being breached, it is under pressure to find ways and means to connect with the hoi polloi that votes. This is proving extraordinarily difficult, given the corruption, the policy paralysis, the economic down-turn, the high prices and surging inflation. These factors are compounded by the criticism of thought leaders, influencers, literati and media. And the pervasive demoralisation of the rank and file Congress-worker in the absence of vote-getting leadership. Talk of systemic change a la Rahul Gandhi sounds like a vague promise and crafty dodge of present requirements. 

There is a lot of whistling in the dark from the many Congress spokesmen that try to correct the gaffes of its ‘poll campaign chief’, but the key plank of attacking Narendra Modi on Godhra has  now been decisively lost.

This because Rahul Gandhi has now effectively equated, in the public eye, 1984 with 2002, claiming falsely that there was no Government push given to the 1984 pogrom. But he also admitted the involvement of ‘Some Congressmen’ at the same time, and did not apologise to put a quick lid on it. The fact is, the Central Government’s encouragement of the Anti-Sikh Riots of 1984 in Delhi was shameful and deliberate.

The BJP could not have done a better job of telling the truth and clearing the air on the facts. Neither could it have hoped for a better windfall than the resurrection of the 1984 riots by Rahul Gandhi himself. More so, given that the ruling combine has little else to criticise Narendra Modi on, except that he has risen from the status of humble ‘chai-wala’, belongs to a backward caste, and was Chief Minister during the Godhra Riots. The former slurs clash with its espousal of the cause of the common man, and the latter reeks of hypocrisy and selective amnesia.

But meanwhile, the reason why Narendra Modi is getting an over 50% rating as the most preferred candidate for prime minister, is because the people want someone in the driver’s seat who is able and willing to drive! This is simply not on offer either from Rahul Gandhi or anyone else in plain sight.

Progressives, not in the Socialist or Communist sense, but to name those who drive the economic betterment of this country, are few and far between, interspersed with many, in small parties and big, who pitch various divisive and self- aggrandising political saws.

After PV Narasimha Rao, we can count only Atal Bihari Vajpayee amongst prime ministers with a visible economic vision and legacy nationwide. In the States, Chandrababu Naidu did much to elevate the status of Hyderabad in his time, and Shiela Dikshit certainly added to the circumstances of the Delhi city-state. Similar things have been done by Narendra Modi in Gujarat over his three terms and counting. Shivraj Singh Chouhan in Madhya Pradesh, Raman Singh in Chattisgarh have been voted into third consecutive terms for the same reason, and the spectacular come back of Vijayraje Scindia in Rajasthan also points to her good governance during her previous term.

But again, looking at the size of the pack, the leaders who make an impact economically are few and far between. Others raise the political temperature and make for much heat and light but leave the country poorer, less sure of its future, and with its institutions and governance in disarray. And unfortunately, all such tub-thumping is invariably done in the name of the common people, accompanied by a cavalier attitude to the core strengthening of the country, that true and visionary leadership calls for.

(1,089 words)

January 31^st, 2014

Gautam Mukherjee

Development Politics

Development Politics

The BJP Vision document that targets 12% growth in GDP per annum based on an ‘aggressive market economy’ emphasis, particularly at the State level, is downright thrilling as a blueprint. Its federal tilt towards the States is noticeable. It reflects the shift towards greater decentralisation that is the current reality and the best way forward.

 Inspired by the efforts of former Commerce Minister and Harvard Professor of Economics Subramanian Swamy, Vision 2020 Head and former BJP President Nitin Gadkari, the dynamic ideas of Narendra Modi and RSS inspired think-tank Aarth Kranti; the document seeks to bring in ‘second-generation reforms’ alongside massive improvements in the ‘quality of governance and accountability’.

Both these objectives have effectively eluded the failed Socialist UPA Government in its nearly 10 years in power, much to the disappointment of all stakeholders. But, with ideas such as these, it is no wonder that NaMo asks for 60 months to unleash India onto a path to prosperity not seen in the 60 years given to Congress rule! And, it will no doubt be music to the ears of a young and aspirational India, fed up to the back teeth with vote-bank politics and fraudulent Socialist mantras that have only served to create mirages of progress in place of a grim reality of grinding and never-ending poverty.

This 12% level of growth, if achieved, will not only raise millions of people out of penury, but help us catch up with Chinese levels of growth by 2020. If produced year on year, it will even enable us to overtake it after twenty years, and build India into one of the top three economies of the world.  

Such growth will effectively lead to a doubling of GDP every six years with per capita income doubling every seven years per the Vision document. But since each doubling is achieved on a higher base line, the total impact year on year will be excitingly palpable. India will truly be on its real tryst with destiny that was betrayed by the Congress maladministration for these many decades.

The BJP Vision 2020 document preview promises to exempt income up to Rs.12 lakhs per annum from income tax and this too will bring relief and cheer to millions of the under-privileged and those in the middle classes. While the programme seems to have moderated from an earlier stance of doing away with most taxes altogether in favour of a nominal universal expenditure tax, this proposal too will be hugely beneficial. The Vision document also plans to scrap inter-state sales tax in another brilliant and progressive step that will cut red-tape and help bring down prices.

Meanwhile, Congress, facing a wall of unpopularity, is continuing on its old fashioned plank of divisive politics, busy accusing the Opposition and others, some of whom are in the UPA, of all kind of negatives in its propagandist and empty manner. But the facts on its major thrust on Welfarism put out recently, seem to suggest, that it has come at the expense of spending on Education and Health for the masses.

The variegated and possible members of the proposed Third or Federal Front all have prime ministerial ambitions as their main motive. This is naturally an impossible basis for any kind of cohesiveness. In the face of Opinion Polls that predict a tally of 226 for the NDA as it stands, the more sensible thing for those who have worked with the Atal Bihari Vajpayee Government in the past is to join up again in a post-poll alliance. Others, who may wish to strengthen the stability of the Government and also share in its power, could help to take the tally near or above 300 in the forthcoming Lok Sabha; thereby making bold legislation and effective governance for the Centre very much easier.

The newbie AAP, self-destructing in front of our eyes, is suffering from delusions of both paranoia and grandeur. A new broom it might have been, but it has failed miserably to sweep clean. Not only that, it makes a habit of contradicting itself on camera where the complete charade is on audio/video record. Its lies and about-turns are teaching the rest of the Indian polity new heights of just how craven it is possible to be.

But the AAP allure is not only fading, but disturbing questions are surfacing about its lack of  consistency and thought-through method.  The NRI contingent has stopped lavishing money on it already, and the middle class support it once enjoyed, is also retreating in embarrassment. It is reduced to a shadow of its boastful self after just 49 grinding in office, during which it discovered that translating its grand promises into any kind of action was easier said than done. But, much as it hopes to find resonance with the public still, it is NaMo and the BJP/NDA that has the pulse of the Indian people today.

(814 words)

February 17^th, 2014

Gautam Mukherjee

A Grand Chinese Initiative For NaMo

A  Grand Chinese Initiative for NaMo

China was amongst the first countries to start treating Narendra Modi like a PM-in-waiting, even before he had won his latest term in Gujarat. This was well before the Europeans beat a path to Gandhinagar, and years before America decided to reluctantly smell the coffee. There was prescience in the Chinese move to host Narendra Modi like a head of state in China. Done a couple of years ago, it was an acknowledgement and an intelligence assessment that was on target.

Is it any wonder then that China is on its way to overtaking the US as the biggest economy in the world even as there are natural apprehensions on its hegemonistic tendencies? We are especially traumatised by our experience in 1962, at the bitter end of the Hindi-Chini-Bhai-Bhai era, but this could be potentially a very different world now.

Standing as a bulwark against Western manipulation together, may work to benefit both India and China more than alternate scenarios. After all, the US-Chinese economic and diplomatic relationship continues strong, even as Chinese power and assertiveness, economic and military, keeps growing steadily. But first, the trust deficit between India and China must be bridged, and this can happen gradually in a cautious and calibrated manner, if we determine to do so.

But in 2014, should our fear of Chinese ulterior motives, the tensions on the borders, the blatant alliance with Pakistan, and help being given to some of our insurgents, turn us away from the opportunity for economic growth and betterment on offer? Can the economic opportunities be regarded separately from the other contentions? The present UPA Government seems to think so.

What, after all, have we really gained by our overtures and diplomatic leanings towards America and the West over many decades besides the George W Bush era Nuclear Power Deal? Things have gone into a semi-freeze thereafter during the Obama years, and China has given practically the same deal to Pakistan  alongside.

Some defence analysts state that Pakistan’s nuclear arsenal is actually bigger and better than ours, and Indian access to nuclear fuel and high technology has not, in fact, improved dramatically. Bush and the Republicans might have wanted to create an unequivocal Indian ally, but there has been some revision in the thinking of the Democrat-run US since. The EU, Japan, Australia and the rest must therefore follow suit, if in a muted fashion. 

An economic cooperation with China now, and the consequent mutuality, may thwart some American globocop ambitions in the Indian Ocean, the Pacific and South Asia, but need not necessarily put India at increased military risk. Besides, these tilts tend to engender healthy competition from other ‘providers’, that could benefit both countries. Besides, it must be noted realistically, that all our neighbours are already on board the Chinese omnibus.  

And now China, with trillions in investible funds, has said it wants to invest $300 billion, an estimated third of the present requirement, to create, upgrade or modernise our quaint infrastructure.  This is the biggest offer that has come to India from any country in the world. Currently, China has a strong balance of trade surplus of around $40 billion in its favour, but a miniscule share of just 0.15% of India’s FDI inflows between April 2000 and December 2013.  There are plans to ramp up bilateral trade between our two countries to $100 billion by 2015, but this cannot come about without some bold initiatives being taken.  

On infrastructure, the Chinese have offered to work in Telecom, Nuclear Power, Solar and Hydel Power, Railways, Roads, Sewage Treatment, Tunnel building etc. as well as in agro-processing and manufacturing.  They are particularly keen on transforming our Railways with enhanced electrification, high-speed trains, modern wagons, last-mile connectivity and gauge conversion. This should surely be welcomed by the incoming Government, because the once proud Railways, amongst the most elaborate in the world, is now out-dated, inadequate, over-burdened and notoriously unsafe.

The Indian Railways however, remains a major employer, and is of enormous strategic importance because it links the length and breadth of the country. That it gets a separate budget presentation every year speaks for itself. It therefore merits the Government’s urgent attention to arrest its terminal decline, particularly as it is also rapidly losing money. A recent CAG Audit puts the loss figure at over Rs. 1,155 crores between 2010-2013 in engineering and operations alone. This is a tremendous comedown for one of India’s proudest institutions that was once a major revenue earner for the nation. With no money being self-generated to spend on modernisation, safety, comfort and capacity enhancement, the Railways are being slowly abandoned by both passengers and freight whenever possible.

While the fulsome Chinese offer has come in the dying days of the UPA dispensation, in which very little actual progress can be expected, it needs to be taken up promptly by the incoming Government. China is undoubtedly one of the most adept manufacturing nations in the world and also has stellar infrastructure development experience under its belt, both at home and abroad.

With $3.8 trillion in reserves and counting, it is already contributing to the development of the South Asian region: in Pakistan, Sri Lanka, Nepal, Myanmar, and extensively in parts of the African continent as well.  We must therefore take a fresh look at our suspicions and induct Chinese expertise and money in a phased manner, as this kind of economic engagement tends to also go a long way to ease tensions and promote trust. If the West is interested in the Indian market opportunity on favourable terms, then why not the Chinese?

The scale of the offer is indeed unprecedented, and dwarfs our economic engagement with the West and Japan too. The Japanese, who have recently financed some of our infrastructure projects, have only invested a fraction of the Chinese offer, that too, over the years,  inclusive of the Delhi Metro and the work ongoing in the Delhi-Mumbai Industrial Corridor.

The Chinese offer is also in harmony with  Narendra Modi’s stated dream to develop India on fast-track to catch up to China by 2020. NaMo reportedly wants to provide 24x7 Power throughout the nation as a spur towards this objective. He has repeatedly stressed that employment generation is a top priority in this country with its huge demographic dividend.  He wants to enhance employment by promoting big and medium industry, the IT, financial, and other service sectors, the backbone of infrastructure and the initiative of entrepreneurship across the board.

The roads in some parts of the country may be fairly good now thanks to the Vajpayee Golden Quadrilateral initiative, but in other parts of the nation they remain quite basic or practically non-existent. This road sector alone can  be viewed as a metaphor for all the work that remains to be done. Infrastructure development such as this, on multiple fronts, in a new phase of dynamic activity, will boost the GDP to near or above 10% per annum by itself, and open up a wealth of unprecedented opportunity for everyone.

(1,169 words)

February 20^th, 2014

Gautam Mukherjee

Discover the price of Natural Gas

Discover The Price Of Gas

Unlike petroleum in a ‘barrel’, priced on the up and up, reacting to global demand and supply, while roiling the fuel dependent economies of the world; there is no universal market for its vaporous cousin, Natural Gas. It needs trapping and liquefying and on-streaming to precise destinations and applications like simultaneous ducks in a row. The North Sea off Scotland has a lot. The Americas have a huge amount off-shore, Norway does, Qatar does, we do too, with modest quantities brought up from Bombay High by ONGC, and Reliance, ever since the discoveries in the Krishna-Godavari basin in 2002.

And there is talk of going after bigger reserves in the Bay of Bengal soon, but located at great depths that will mean expensive extraction. With our overwhelming dependence on foreign sourced petroleum, ranging at between 70 and 80 per cent of requirement, exploitation of domestic petroleum and the Natural Gas in our own fields, is of great importance. However, each gas field involves varying levels of technological and monetary resource inputs, and this necessitates a somewhat prismatic approach to what is known as ‘price discovery’.  

In Reliance’s case, the original bid to develop the KG Basin gas in 2004, envisaged a spend of $2.39 billion to extract 40mmscmd of gas. This was in Mani Shankar Iyer’s tenure. In 2006, under his successor, Oil Minister Murli Deora, Reliance put forth an estimated spend of $8.8 billion to extract just double the original yield projected in 2004. Now $8.8 billion was needed to be spent to extract 80 mmscmd of gas, and attributing all of the increase to price padding and Deora’s proximity to the Ambanis, may be taking things a little too far.

Though on the face of it, drawing averages from Natural Gas exchanges around the globe, the morally impeccable Rangarajan Committee pegs the ‘market price’ currently at $8.4 per mmbtu. So, to start making a morcha out of gas prices at $1 and so on is patently a little silly.

 A major producer of Natural Gas like Qatar has bettered its fortunes manifold via long-term contracts for its almost limitless supplies, but Qatari gas is a volume game rather than a unit price one measured in mmbtu. And before it found its buyers, put in its liquefying plants, its tankers and pipelines, the abundant gas was simply flared to prevent well-head blow-outs, burning like the engines of doom lighting up the sky for some years on end. And Qatar conversely does not have much petroleum; unlike neighbouring Saudi Arabia, or Kuwait or Iraq or Iran, where the gas associated is not plentiful.  Oman has some, in modest proportion to its modest amount of petroleum. And so the relative inventory goes, around the oil and gas producing nations of the world.

Arvind Kejriwal, with his FIR, and his letter writing and heckling, may be making his usual  spurious and self-serving fuss, with the facts pared down to comic book proportions. But the matter is not quite like he tells it. He might want to drum up an election campaign issue over BJP and Congress collusion and cronyism with big business, in the form of Mukesh Ambani’s Reliance Industries, but his home-work is decidedly not up to the mark.

Kejriwal disingenuously cites a 2009 Reliance communication to the Petroleum Ministry, of gas priced at the wellhead at $1 in ‘cost’, actually 89 cents, but at $ 3.31 in terms of ‘value’ for ‘royalty’ calculations, payable, of course to the nation via the Government. Reliance has, in fact, found it difficult, with sharply rising costs, to stick to its original commitment in 2004 when it won a bid to supply the Krishna-Godavari Gas found in the K6-D6 sector at $2.43 per mmbtu to NTPC and others, including Anil Ambani’s fertilizer plants.  Further efforts at more realistic price discovery brought it to the $4.2 price band, and this was accepted as reasonable by then Finance Minister Pranab Mukherjee, even though he too is regarded to be close to the Ambanis from Dhirubhai’s times. But Mukherjee pointed out the obvious fact that the biggest producer of Natural Gas in India is ONGC, a public sector behemoth, and higher gas prices benefit it the most.

Petroleum Ministers have come and gone, from Mani Shankar Iyer, to Jaipal Reddy to Murli Deora and now Veerappa Moily, several of whom are accused of allegedly favouring Reliance in terms of gas pricing. But the considered opinion is that $ 4.3 to $4.9 was a realistic ‘market price’ for the substance in 2007, and $8.4 per mmbtu as per the Rangarajan Committee is the right price today.

Besides, Reliance Industries claims its costs today are about $7 per mmbtu making $8.4 a realistic  selling price.  So, it looks like a price rise is definitely in the offing. Will it put up the prices of various other things downstream when implemented? Undoubtedly. Is Reliance padding its costs? Probably no more than the next company involved in gas exploration and extraction would anywhere around the world. Besides, there have been a number of expensive dud wells, and gas recovery from the productive ones has fallen both below expectations and original estimates. All these factors certainly form part of the equation when it comes to the pricing of the Natural Gas.

Now can Kejriwal really sustain this item as a campaign plank, painting it out to be a scandalously inflated thing, or will he have to abandon it as yet another one of his half-baked ideas designed to inflame the public imagination?

What would be good for the nation however is a substantial new flow of oil and gas, maybe in the Bay of Bengal, maybe from our abundant shale deposits also being looked into by Reliance. This would reduce our chronic dependence on imports, and feed into our ever increasing demand.

(971 words)

February 25^th, 2014

Gautam Mukherjee

NaMo Knows His Numbers

NaMo Knows His Numbers

What kind of financial health can we expect from an expected Narendra Modi led Government at the Centre in a few months? Of course, the overburdening of expenditure over income the projected NDA Government will inherit, is both profligate and colossal. Still, looking for clues in the highlights of the Gujarat interim budget just presented, can be rewarding. It is only a vote-on-account for the first four months of the next fiscal 2014-15, but it says a lot, and will be filled out more once the new Government forms and sets its economic direction.

But let us note that here is Gujarat, with a rare Clinton administration style surplus of Rs. 7,697 crores, contrasted with a sea of red ink in many places elsewhere. West Bengal, for instance, has an interest load on borrowings alone of Rs. 28,000 crores annually, which the Congress led UPA refused to help out with, occasioning Trinamool Congress to withdraw its support for it. But BJP President Rajnath Singh has reportedly told Mamata Banerjee that it ‘could be’ deferred when the NDA comes to power, and that there may be other largesse for West Bengal too. Mamata Banerjee is apparently counting on it, because she has promptly gone public with this, announcing it would unleash a ‘golden’ period in her State.

Meanwhile, the Kolkata based public-sector United Bank of India (UBI) has just posted losses in excess of Rs. 1500 crores from non-performing assets (NPAs), not provisioned for earlier. This on an equity base of Rs. 700 crores, calls for serious recharging of capital. And apparently Rs. 1,000 crores has just been pumped in, enabling the bank to reopen its loan desk. Its lady Chairperson has become the willing scapegoat, having resigned and taken early retirement alongside the loss announcement which comes to add to an NPA load of over Rs. 8000 crores for UBI.

But reading between the lines, a lot of this NPA probably has a lot to do with a West Bengal Government that is practically bankrupt.  But not all of the UBI bad debt is old, from Left Front times. Some of it is recent, over the last two quarters. West Bengal is not, and has not been solvent for many years. Like the massive Saradha Chit Fund debacle of a few months ago, it takes its money from wherever it can. It will therefore do itself a favour to ally itself with the NDA, as before, instead of dreaming Third Front dreams, with new found friend Anna Hazare chiming in alongside. But apart from waivers and hand-outs, West Bengal, like many other States in India, must become productive, efficient and profitable again.  

Actually, reflecting the current malaise, the PSU Banking Sector across the country has seen unprecedented growth in NPAs over the last couple of years, hinting at massive Government influence and hidden collusion. This will need sharp correctives to restore a semblance of the prudence and probity expected, along with massive recapitalisation from the new Government.

Meanwhile, discussing the Gujarat interim budget, let us note it has upped the allocation for development to Rs. 80,974 crores, thereby keeping its emphasis on productive growth. It is growth that provides both balance in the economy between income and expenditure and in some cases, even surpluses. The fiscal deficit reported is just 1.93% at Rs. 17,611 crores. Compare this with the Centre’s ‘on target’  fiscal deficit, manipulated with blatant financial jugglery by Mr. Chidambaram, of over 4.5%, that too, on much larger national numbers!

Gujarat’s Gross State Domestic Product (GSDP) is pegged at  Rs.6,70,016 crores for 2012-13, making it one of our most prosperous in our union. The State’s Public Debt, at an expected 1.53 lakh crores, up from the current 1.38 lakh crores, is still about 25% of GSDP for the 2012-13 fiscal.

If a Narendra Modi led NDA Government can turn out national figures that resemble Gujarat’s, and help states such as West Bengal, blustering and floundering in financial mismanagement, we are in for a very good time. It is no wonder therefore then that another report from the National Housing Bank exhorts property investment in Vadodara amongst other tier-two and three cities across the country, for its connectivity and proximity to Ahmedabad, where the prices have already run up considerably.

The BJP’s  economic agenda for the general elections and beyond, not yet unveiled except in previews and glimpses, is however clear on its atmospherics. It expects to offer clear and transparent guidelines and hold the line on a stable and consistent basis. It also will stress new job generation by truly unleashing the ‘animal spirits’ of business and industry without the all-pervasive corruption and policy paralysis that has characterised the UPA years.

On the foreign investment front, In addition to China, Japan, already operating in the infrastructure and industrial space in India, is expected to considerably ramp up its FDI. New Prime Minister Abe and Narendra Modi enjoy a good rapport, and Japan has also been a partner  in the organisation of the Vibrant Gujarat Summit. Japan needs a good industrial base abroad in a country it can trust. B y process of elimination it has zeroed in on India and seems ready to overlook its earlier reservations on Indian ponderousness and lack of  many civilised facilities.

Curiously, our relationship with America, hyped from time to time, has gone into something of a decline for no good reason. This will not however particularly hurt India, on its growth path, because there are many countries eager to forge closer ties with us. Including, as it turns out, several in the dollar and petroleum rich Middle East including Iran. But the US cold-shoulder is occasioned by petulance at India’s less than forthcoming biddability; and more so under an anticipatedly assertive NaMo-led Government. Perhaps they are too used to pushing nations around.

This is sad in a way, because the Americans need to change their attitude, towards not only India, but the demands of a multipolar dispensation, of which India willy-nilly has become an integral part in its own bumbling and stumbling way. 

(1,011 words)

February 22^nd, 2014

Gautam Mukherjee