The Eagle's View Of The Indian Economy

The Eagle’s View of the Indian Economy

The ultimate fate of India seems to hover above the fray in some ethereal manner. Even as we face myriad economic and political challenges daily, most learned observers seem to believe in our long term future, thereby implying and endorsing the essential stability and achieved success of this country.

One recent report from the Paris based think-tank OECD (The Organisation for Economic Cooperation and Development), says the Indian economy has probably overtaken Japan’s making it the world’s third biggest already. This even as it says India’s economy is likely to grow at 6.7% in 2014, after having posted a decade’s low of 3.8% in 2012. In fiscal 2013, the projections show approximately 5% growth in GDP.

Another Reuters poll of 37 economists, many of them living and operating in India, expect a 5% growth in the economy for 2013 too. But these economists are pessimistic about the future citing “years of fiscal profligacy, a long struggle with high inflation, high interest rates, persistent political gridlock and a fragile global economy,” which have collectively “put India back in a rut”.

The Government is expected to give out its own figures on the fiscal deficit very soon now.

OECD meanwhile keeps the upward trajectory in its future outlook for India, expecting China to outstrip the US as the world’s largest economy over the next few years, but says it will slow its rate of growth by 2020. 

And that’s when India is expected by OECD to be growing faster than China too. Sometimes when one reads about this kind of rosy picture being painted, one can perhaps be forgiven for thinking a Paris based think- tank may be having a particularly optimistic day. But this is a serious analysis from a highly respected body.

The difference in perceptions with regard to the Indian economy are largely a consequence of the quality of governance in this country. Policies are always slow going into implementation, which ends up distorting outcomes because quite often external circumstances change, making various assumptions out-of-date. 

There is also enormous corruption which vitiates outcomes. Our own fiscal administration from the different bodies that participate in economic matters often retard the pace of both policy-making and administration. Sometimes different bodies are at loggerheads such as the PMO, the Finance Ministry and the RBI.

In a country of many poor people even as the middle class grows to out-number them gradually, many decisions tend to be welfare- oriented rather than strictly sound economics. Affirmative action is now embedded in the thinking of the Government and it is constantly involved in quotas and reservations to uplift various sections of our diverse society. Women’s reservation too is gaining some traction in some areas. All this and more have their effect on growth in GDP.

On the positive side, India has always tried to stretch its resources to address very many needs. Whatever is and has been done is never adequate, but compared to doing nothing it is both commendable and in sum total over the years, able to make a difference. This is a big departure, over the last 66 years, from colonial administration, when vast swathes of the economy were allowed to languish while only those areas that were useful to the British were dealt with. Part of our great divide, albeit narrowing, between the poor and the middle class, have their origins in imperial times.

The real difference we have made to ourselves, after the initial and interim period, of building a framework for a relatively modern India as informed by a socialist outlook, came in 1991. Once we unfettered private enterprise to some extent, the economic growth of this country accelerated. So much so that if we cannot deliver 9% growth in GDP per annum we don’t think we are doing well.

It is also true that if we do not go back to 9% growth we cannot lift many more millions of our poor out of the morass of their poverty. But the best part of our situation is that the private sector and the unorganised economy tends to push ahead, despite the lag in government policy and support.  Indian business is used to working in challenging conditions, and it has served to hone the skills of our managers and workers alike. So is the glass half full or half empty?

(721 words)

May 31^st, 2013

Gautam Mukherjee

How The Worm Turns

How The Worm Turns

The LTTE killed Rajiv Gandhi. The self- same with whom he signed an accord, a veritable Faustian compact with V.Prabhakaran that achieved, in hindsight, little more than the death of several IPKF commandos in Sri Lanka, bad blood with the Sri Lankan Government and the LTTE alike, and then Rajiv Gandhi’s own cruel, undeserved, assassination.

The whole thing was a failure of both diplomacy and a military misadventure, with resonances that affect domestic politics in Chennai to this day. The central Government, and even the much- in- the- news IPL, responds tamely when there are shows of solidarity with the Sri Lankan Tamils in Tamil Nadu and localised bans on Sri Lankan cricketers.

Long after Sri Lanka’s civil war and the overcoming of the LTTE, there are relatively few cries for an independent Eelam, but the issue of Tamil suppression in Sri Lanka is still very much alive in Tamil Nadu.

This is borne out when a Kashmiri radical like Geelani suddenly announces his support for the Tamils of Sri Lanka recently. That we are commenting at various levels on the internal affairs of a neighbouring country is being ignored. But the sensitivities are aroused when the same is done to us, particularly by Pakistan, and with regard to Kashmir. 

Likewise, the Leftists in the Congress Party, of which there are quite a few, and indeed the CPM too, obliquely side with the Maoists. And now a massacre has taken place with over 20 deaths in Jagdalpur district of Chattisgarh.

Revolution, rag-tag or otherwise, does tend to eat its acolytes. As a country we are at least for the moment united in our condemnation of the massacre, but for how long? Instead of treating the menace spread over several states as a sizeable armed rebellion with well- trained cadres, we are tempted to blame the Salwa Judum movement.

But even in this massacre, the Maoists killed both the PCC President and his son as well as Mahendra Karma, erstwhile of the Salwa Judum. So they don’t want elections in Bastar and they don’t want anyone trying to curb their growth and dominance in the area either.

India has been underestimating the Maoist strategic and tactical resolve and execution. We don’t seem to know very much about the Maoists in our intelligence community, and our attempts to win their support base over has been rebuffed several times so far with sudden and bloody retaliation on their part.

All in all a course correction for the Left-liberal should be in the offing. When it pinches close to the bone the only thing to do is change tack, and yet there does not seem to be much stomach for dealing with the Maoists as a military threat.

But India thinks, implicitly, that human life is cheap. The rest is only a matter of acting out one’s preferences.

Do we begin to win when we see the problem clearly? Definitely, but do we really want to? Do we have the political will, and is there a political dividend in putting down the Maoists?

The deeper question that underlies such prevarication and desire to appease is how not reacting appropriately to a problem in its infancy turns it into an intractable one over time. It happened in Bhindranwale’s Punjab and matters would have slipped out of control with Pakistan’s aid and abetment if it weren’t for a very determined Mrs Indira Gandhi. It is playing out in Kashmir today but we have no one in the political arena with the possible exception of Narendra Modi with the courage and determination to tackle the issue.

In Kashmir the core issue is the special status the state enjoys. This has long been a political bone of contention but no one has seen fit to revoke it by developing a two- thirds consensus for the lifting of article 370 in parliament.  

Talk of revoking Article 370 in J&K has always been viewed as a communally sensitive issue with an eye on the 170 million plus Muslim population of India. But to regard the Indian Muslim as somehow less than patriotic is an insult to them, and to the many Muslims that serve in our armed and Para- military forces.

Somehow this does not seem to matter to some of our politicians in the ruling establishment and the Left- Liberal intelligentsia, who even believe it is not a good idea to go after  Islamic terrorists with too much determination.

This lot tries to equate Islamic terrorism, much greater in intensity and frequency, with a foreign induced component more often than not, on par with “Hindu terrorism”, necessarily home- grown. This politics-as-usual approach is doing the country as a whole irreparable harm.

The local politicians in J&K, which includes the nowadays frequently threatened Ladakh area, have grown intractable over time. The local population in the Valley are dangerously politicised and prone to disruption. The state laws prevent free access to this potential paradise in terms of buying and owning property there for the rest of the Indians.

And Pakistan, even China, fishes constantly in troubled waters. China is now developing infrastructure in POK and stationing troops there. And yet we cannot find enough determination to change the political and demographic complexion of Kashmir and make it an integral part of India on par with any other state.

And when it comes to the Maoists, there is a dilemma at the heart of the Left- wing politics prevailing in this country from the National Advisory Council downwards. Every political party professes its support for the poor in much the same manner.  In a country where one third of the population is very poor this is sensible, but sops and doles are not going to solve the problem. Development of rural infrastructure is the answer and not enough is being done in this regard.

The Government is embarked instead on a major thrust of Welfarism and sees it as promotion of equity and justice for the poor who must not be left behind. And, of course, it hopes for a political dividend from this largesse that returns it to power yet again.

The various supporting parties within and without the UPA feel likewise. The Opposition BJP implements the welfare projects in its states and hopes it will return them to power as well. The CPM may not have any states to run at present but is definitely a champion of the poor. The Trinamool Congress has had fairly cordial relations with the Maoists in West Bengal and adjoining states. All across the Leftist spectrum, people are loathe to regard the Maoists as the enemy.

And so the menace grows.

(1,107 words)

May 29^th, 2013

Gautam Mukherjee

Imagine Imported Cars, Chocolate, Wine, But Without Those Rapacious Prices

Imagine Imported Cars, Chocolate, Wine, But Without Those Rapacious Prices

Indian high-rollers fit the description  well because they acquire what they want or aspire to without letting some of the highest indirect taxes on everything dampen their “animal spirits”.

 This is as our most dispirited Prime Minister ever puts it. That is also why they put up boards welcoming Indian tourists in the picturesque cantons of Switzerland. Contrary to supposition, we are good spenders when we are on vacation, even though we know value when we see it.

Imagine though, buying a sexy new S Class Mercedes Benz sedan for say Rs. 40 lakhs, instead of nearly a crore. This could be reality before we get into 2014, because India is almost there in terms of a historic free trade agreement. Officially named the Bilateral Trade and Investment Agreement (BTIA) with the EU, it has already been in the negotiating for 7 years now.

The BTIA covers practically all the trade between the EU and India and the sticking points have been the one-sided nature of some of the European demands without adequate concessions of their own to the Indian ones. So what is likely to come about first are the easy bits under a broad agreement while negotiations will continue over more complicated and contentious areas of bilateral commerce and industry.

Most recently, Commerce and Industry Minister Anand Sharma met with  the EU Trade Commissioner  Karl De Gucht on April 15, 2013 in Brussels, and opined that the talks were going well and that the two sides would be meeting again in June 2013.

The EU wants India to authorise significant duty cuts on auto, wines, spirits and dairy products besides a hike in the FDI cap on insurance sector and a strong intellectual property regime so that they can let us at their software. India too wants, most crucially, “data secure status”, which will give our IT industry access to all kinds of high-end specialised software.

The Europeans however are stuck on perceived threats of piracy and unauthorised replication of proprietary software. But the lure of substantial potential sales are likely to overcome their misgivings.

It must be said here that over the years since 2007, India has, unilaterally, reduced overlapping and exorbitant import duties quite a bit, on its own. So they have certainly moderated from their stratospheric levels, as India walks the path to becoming less protectionist and swadeshi and more globalised and market- friendly. But as usual there is a long way to go.

The circumstances of the EU however have drastically altered for the worse since 2007, thereby eroding its negotiating leverage. Therefore, Chancellor Angela Merkel of Germany, the most powerful country in the EU, who met on the subject with Prime Minister Manmohan Singh too, thinks an agreement  is in the offing soon.

India wants more visas for its professionals, particularly its IT wonks, to visit and work in the EU and fewer, less stringent restrictions on what it must do on the ground here in India.

There have already been 16 rounds of negotiations since 2007, but the pace is picking up significantly now.

From the consumer’s point of view, the goodies expected to come in at vastly lesser cost are in the nature of a bonanza. From the balance of trade point of view it could be a win-win for both sides at a time when the EU does not have very much to cheer about. 

The EU wants access to multiple sectors of the Indian economy while softening its stances on regulatory, sustainability and environmental issues. However, a few items are definitely ahead of the rest.

The local car makers including those who have sunk substantial investments in putting in manufacturing and assembling facilities in India, the IMFL wallahs, the Nasik wine growers, maybe also multi-nationals and big local operators like Cadbury, Amul, Nestle India and their ilk, may not be too thrilled, but will have to reconcile themselves to the inevitable.

But they will get over it soon enough, when their obstructionist lobbies seem destined to be brushed aside. Because despite the duty cuts stacked at  well over 100% on all imported cars, wines, spirits and even chocolates, apart from duties on duties, central excise and state taxes, the domestic manufacturers get several concessions and advantages that can keep them ahead of the imported brigade. Of course, they will have to shift for themselves now and stop hiding behind the rhetoric of poor farmers threatened, livelihood issues etc.

It will mean healthy competition, modernisation, streamlining. The competition will sometimes be between their own imported product lines versus the India made ones, and better quality and specifications all around.

But despite Left-wing murmurs, no real unfairness or body blows to domestic agriculture, commerce or industry are likely that will sink it. People who make those type of noises are living in the past or are working their vested interest. After all, misinformation is cheap to disseminate, but gearing up for market share may not be.

 Again, it is the consumer, and quite often the suppliers and producers also, who will benefit. Our sizeable population of 1.21 billlion is the attraction for both the foreign and domestic players and the potential of their buying power will overcome all obstacles. Right now there is a great deal of unexploited demand because of artificially high prices preventing uptake.

The two-way trade with the EU is logged in at over $91 billion per 2010-11 figures, but if even elements of the broad spectrum BTIA is implemented this year, the figures could double. And that is nothing to sniff at.

(923 words)

May 26^th, 2013

Gautam Mukherjee

Smoke and Mirrors

Smoke and Mirrors

The bizarre display of strained bonhomie and brazen self- congratulation put up by the denizens at the apex of UPA II, namely the “triumvirate”, as Foreign Minister Salman Khurshid describes Sonia Gandhi, Manmohan Singh and Rahul Gandhi, singularly fails to impress.

That it reminds one of Caesar, Crassus, and Pompey, the original triumvirate that ruled Rome, all vying for the laurel wreath that eventually went to Julius, is no doubt a mirage of inappropriateness here.  And this despite all the protestations of essential harmony between ‘church’ and “state” as it were.

Because here, the Prime Minister is a seat warming facilitator to all the fabulously rich Crassus’s. Nothing like having an ostensibly clean man at the helm that enables all the looters.  Caesar today is actually Calpurnia, totally above suspicion, at least mention thereof, and Pompey is Hamlet, wondering if it is worth his while turning into Julius.

Communist leader Sitaram Yechury, not given to strong language, says a minority government is surviving with the help of the CBI. By this he means that the CBI is being used to menace both the SP and BSP leadership because they are people who have massive corruption charges against them. And so, they are constrained to prop up the minority government. At least till they see their way clear. And loyal general secretary Digvijay Singh does not think it is at all a good idea to render CBI autonomous no matter what anyone else says.

The BJP meanwhile is beefing up its arsenal for an assault on Uttar Pradesh, with both prime ministerial aspirant Narendra Modi and his trusted aide Amit Shah concentrating on raising its tally there in the coming general elections.

The idea being that if Rajasthan and Madhya Pradesh and Chhattisgarh fall into the BJP lap, as they well might in the forthcoming assembly elections preparatory to the general elections; then wresting a larger number of seats in UP  too, at the general elections, could make the road to a minimum of 175 seats for the NDA somewhat easier.

The adage is: “He who controls UP with its 80 parliamentary seats, controls the centre,” and Mr. Mulayam Singh Yadav knows this one very well.

But all these moves are probably wishes looking for horses. What is glaringly bad here and now is the UPA II report card on completion of 9 straight years in power. But nobody seems to have noticed within the portals of power.

It is almost as if The Congress Party and its allies are daring someone, anyone, to put them out of their misery. The burdens of high office have worn them down. And yet the Opposition and the contenders, even the pretenders, are still at a loss. They are too busy setting their own houses in order and adjusting their draw strings.

They cannot, it is clear, do much to exploit the dismal performance of the ruling dispensation in all matters economic, political and even social. That will fall to the wisdom of the voting public.

Meanwhile, the UPA report card is a shabby effort made sleazy by the indictment of not just civil society, the courts of law, and the media, but the bitter truth.

It is a harsh reality, of inflation, falling growth figures, dwindling investment, calumny, and worse-ridicule. But the Congress Party head said she is very satisfied by the performance of the Government, and that the Dilliwallahs do not understand just how much the UPA regime has, in fact, succeeded.

This kind of propaganda-speak comes forth because Mrs. Sonia Gandhi lives in a time warp at Mrs Indira Gandhi’s elbow, and believes India still lives in its villages, and the villagers like her and her party just fine.  So all is well.

But in Mrs. Indira Gandhi’s time the villages accounted for 80% of the population,  and not the 53% it does today. And they, nice peasants, were content with a lot less.

There was no urban vote to speak of in the time of Mrs Indira Gandhi.  Ah, but there is now, over 40 % worth, both knowledgeable and aspirational.

And in a fragmented polity, with many regional parties claiming their share, both the BJP and the Congress will have to take what they can get, wherever they can get it.

Mrs. Sonia Gandhi’s attempt at rural bravado seems to suggest she concedes the urban vote. But can Congress and the UPA win without it? Win meaning form a viable coalition they can lead. The answer is, actually, no.

The polls say Congress and its allies cannot win.  So like the millionaires on the Titanic after it had struck the iceberg, their spokesmen and their PR agents speak of unfinished business, and try, weak as Green tea, to  pour scorn on a divided Opposition, praying all the while, no doubt, that they stay that way. 

Therefore the wishful horses are just as popular with the Government as they are with the Opposition. The economic data is dreadful. Enumerating the ways is horrifying. Other matters, governance, reputation, truth, lies, all of it is in flux and chaos. This is Tsar Nicholas and his Tsarina in the grip of Rasputin. The end is not going to be pleasant.

Meanwhile, like a taped message looped to repeat endlessly inside a marionette, the PM intones:

“ The economic situation is turning around. Inflation is coming under control. The fiscal deficit is being brought under control. The current account deficit is high, but we will bring it down gradually”.

The marionette intones a lot more: about agriculture, the GDP, food grain production, scams, natural resource allocations, transparency, quality of governance, foreign affairs, even relations with China.

And guess what?  It says everything is alright and going to get even better.

(953 words)

May 23^rd, 2013

Gautam Mukherjee

JUNKED

Junked

Standard and Poor’s  threat to cut India’s sovereign grade rating from BBB-, already the lowest amongst BRICS countries, to “junk” status, is to be taken seriously. They have already moved our BBB-rating from “stable” to “negative” last year.

If the junk rating comes about, and is supported by similar downgrades from other global credit rating agencies such as Moody’s and Fitch, it will balloon India’s external borrowing costs, put pressure on an already weak rupee, and greatly increase our alarming fiscal deficit. It will also reduce investment money flows into India and adversely affect our reserves.

S&P are very disappointed with India’s inability to implement reforms it has announced, and others long pending. It is also unhappy with the governance of India’s minority government, buffeted on all sides by unruly allies and outside supporters, many of whom have reservations about economic reform which seek to free the markets and promote competition. They may not be saying it plainly but the only business that has grown phenomenally over the last few years is the business of corruption. That too cannot be exactly confidence- building.

Some quarters have been suggesting that S&P is thinking of downgrading “emerging markets” such as India, so that investment funds coming to them will be redirected to the EU. These analysts fear that Greece is on the brink of economic collapse despite massive bailouts and draconian austerity measures. They also fear that if Greece collapses the “domino” effect is likely to break open the unified 17 member EU.

This talk of the EU breaking up has some truth to it because even the top three economies in it namely Germany, France, and Italy, are in difficulties. But there is little credibility to the idea that investments being made currently in emerging markets including future projections, if redirected to the EU will save it from collapse.

The numbers, as the saying goes, simply don’t add up. The mountain of debt and the stresses the banking system in the EU need much more money than the collective investment in BRICS and other emerging economies.

India anyway has seen a precipitous decline in FDI, projected at a 43% decline over the previous year and may top out at not more than $30 billion for the fiscal per a report to parliament. And our Finance Minister P.Chidambaram himself says we cannot absorb more than $50 billion per annum at present. China took in FDI of $253 billion in 2012 per OECD figures.

And the money that has been coming into the stock markets as FII, a paltry $11 billion so far this year, has been looking for short term gains. Our indices have been moving in a narrow band for several years now. The top 30 stock Sensex vacillates between 16,000 and 20,000 points, and the top fifty stock Nifty ditto, between 5,000 and 6,000 points. This means that with an eroding rupee and inflation factored in, the only profits to be had have to be on a very short time frame.

All of it, FDI plus FII into India, or indeed into BRICS,  is by no means more than a drop in the bucket for EU’s woes. The FDI, which is the rooted money that goes into factories and infrastructure in India has declined substantially. The liquid funds that come in via FII meagre and not here for long.

Meanwhile we languish at a 5% or so growth rate in GDP which is not enough to meet our needs. We are a country of a 1.21 billion people and in great need of huge infrastructure development and modernisation in our market operations.  It could be argued that a 1% growth in the EU or America in an already developed scenario has a bigger impact, than making do on a borrowed or deficit financing basis in a largely underdeveloped country like India.

Being reduced to “junk” status, if it comes about, “over the next one year” will be akin to a thumbs down from the international rating agencies. It will show scepticism that we can ever get a grip on our downward spiral.

This is to be viewed in the context of impending general elections in 2014 or sooner, which could throw up an unclear verdict. We might be saddled with a further weakened UPA III for example, a beholden, hemmed in BJP led NDA, or a highly unstable Third Front led government. Any of this type of outcome will not help us improve our economic conditions. S&P’s pessimism may have factored all this into its thinking.

Moody’s, for the moment, has asserted the India sovereign rating  is “stable” at Baa3 which indicates “investment grade”. However, they have said they may consider a downgrade if the fiscal deficit gets worse.

Fitch currently rates India at BBB-, its lowest investment grade, and like S&P, revised its outlook from “stable” to “negative in 2012.

India, on its part, has no choice but to show some growth and increase in investment or face being dragged down further.  And this means cutting interest rates sharply and encouraging business and industry in every way. It means cutting customs duties, tariffs and taxes. It means cutting subsidies. It means turning the page on Socialism and big government.

(870 words)

May 20^th, 2013

Gautam  Mukherjee

The Ride Of The Valkyries

The Ride Of The Valkyries

The economic games we play are not lost when profits start to disappear but much before. It is when an economy fails to understand which way to jump to get ahead and keeps subscribing instead to the game it knows. It thinks it is playing to its strengths by doing this, but yesterday’s victories mean nothing to tomorrow’s challenges.

And this goes double for ideological shibboleths. You cannot bring back, for example, the Congress Party glory years, at least politically, as in Mrs Indira Gandhi’s time, with its successive terms and majority governments by playing her garibi hatao card rebooted in 2013. It will not work but the government does not seem to agree. So we shall see what we shall see.

There comes a time though, with terrifying speed in these days of rapid technological obsolescence and great leaps of invention, before no-one knows who you are anymore, because you, truth be told, belong to another era.

This is how The Economist writes pessimistically, startlingly, of Microsoft’s future, because it has not quite kept up with the shift away from the PC towards hand-held devices, the tablets and smart phones that everyone seems to tote about these days.

So even though at present with Windows 8 it is still making good profits, the tomorrow scenario is going to thrust it into yesterday’s greatness. It has happened to Apple in comparison to Samsung though many claim the fat lady has not yet sung in the apple tree. But visionary Steve Jobs is gone and they simply don’t make game- changing inventors like him every day.

Apple is struggling with its minimally improved iPhone 5 and Blackberry is trying to resurrect itself from the dustbin of history with the Z10. Nokia, king of the hill just five years ago, now dead in the water, is doing and hoping likewise with its Nokia Lumia.

On the software providing side,  our own Infosys and Wipro are trying to survive in a world that is looking for innovation and not cost savings through body- shopping and offshore batch- processing. With the Western economies shattered there is no demand for the old model of growth. TCS may be surging for the moment but the ebb- tide is not far away for them either.

The bigger picture is that the 56% of the Indian economy, perhaps a bit more on momentum, is  under siege and is going to shrink, unless there is massive reinvention to suit a very altered reality.

So our growth engine, the key to the India Story itself is dying, even as we have been railing against obtuse government monetary and fiscal policies and surging inflation.  But consider this, even if the government, this one, or the one that follows it, did everything right, we still might not be a software superpower anymore.

Our software providers are experiencing shrinking demand and not just cheaper competition. Ditto the world of call- centres. They need an economy to cater to too! So never mind cheaper competition from the Philippines,  because that is not the real problem.

Looking at the West, France has slipped into recession, the second biggest economy in the EU, only just in the quarter past, but experts say the contraction will accelerate. Under the Socialist Francois Hollande it can do nothing else, because Socialism has no answers for the challenges of growth.

First placed Germany has grown but just 0.1%,  and is expected to get better, but number 3, Italy, is down 0.5% and slated to get worse. There is no possibility of the EU as a whole turning around, even slightly, till 2015, or later, and its banking system could collapse in the meantime, pretty much anytime.

Richard Wagner’s work in parts were a great favourite with the Nazis. They loved the intoxicating grandeur of his music and felt it expressed the heroism of the “Aryan Race” and the glory of the Third Reich with its crashing cymbals and soaring notes.  They also thought he was anti-Semitic like them. All the better to like his music, though there is some doubt on Richard Wagner’s paternity and that he might have had a Jewish father, that Wagner senior may not have fathered his ninth child. But the myth- making carried on unheeding.

In The Ride of the Valkyries, a short five minute or so piece within his 2^nd Opera, Brunhilde and all her sisters assemble at the top of the mountain to carry the fallen heroes to Valhalla, the German but more especially, the Nazi heaven.

Valhalla, and the many flaxen- haired blue- eyed Brunhildes of the Nazi imagination, must have been   very over- burdened by the time the WWII ended. It was truly a dream gone wrong. A would be thousand year Reich ended in just three with millions sacrificed to its ambition.

It is time for us to realise that the old India is not adequate to the task. And we don’t have the luxury or time to prevaricate and dicker. With a population of 1.21 billion, we need to come to conclusions that deliver 8 to 10% per cent growth or preside over what promises to be a very painful decline.We may, without a drastic makeover, find ourselves going backwards, like the Europeans, the Japanese and the Americans. Who would have thought?

(883 words)

May 16^th, 2013

Gautam Mukherjee

We Need A New Militarism To Stiffen Our Spines

We need a new militarism to stiffen our spines

India reasonable is India laughably soft. We are now reduced to a global pushover thanks to our unblinking appetite for humiliation self-justified with amazing verbosity. Many people look at a sub-continental country of 1.21 billion people quite unable to hold its own, with amusement. Not even against Mauritius, and Nepal.  

But we can rationalise any insult with exquisite wordiness, and convince ourselves we have done very well for ourselves. Italy challenges our courts and strains our ability to rectify the hurt, and China tells us what to do in our own territory. We can protect neither our distressed citizens abroad nor our tortured and mutilated soldiers on our borders.  All we can produce is clumsy diplomacy and ponderous self- regard.

Why we won’t militarise sharply defies logic. Of course, our policy implementation is so poor and slow that a lot of our unreadiness is due to this. Our military back-datedness  obtains by default rather than design perhaps.

Our armed force may be ill-equipped, but it is well trained nevertheless, and enables us to acquit ourselves well in any theatre of conflict or war. Of course, we lose more good men like this, because bravery and the spirit of patriotic sacrifice has to make up for our criminal neglect of the  equipment needs of the fighting man.  Nevertheless, the Indian armed forces are respected globally for being able to punch much harder than its weight.

Of late, most of our prowess has been demonstrated ably, either in UN Peace Keeping Missions, or in joint exercise with other militaries. We have, in these joint exercises, always impressed our counterparts with our ability and professionalism which stands out all the more starkly due to our inadequate and obsolete weapons and delivery systems.

We also manage to keep going, without adequate ammunition and spare parts, by cannibalising, localised ingenuity and substitution. We have had no howitzers enter the Army since the Bofors scandal broke in the eighties for example! The Defence Ministry is now looking into the matter after 30 odd years. Who knows, it might take another several years to come to fruition.

Our defence sector is also riddled with corruption at various levels up and down. The graft and commission farming encompasses even some serving men in uniform and retired officers. The recent Agusta Westland helicopter procurement scandal is a case in point.

We manage, despite the incompetence of our defence preparedness, to compete most creditably with much superior technology available to others, the Americans and Chinese for example.

The roots of our battle readiness, regimental spirit and izzat, may well hark back to the days of British India. But we have more than held our own over the 65 years of independence, and almost all the credit for this goes to the Armed Forces themselves, rather than their civilian masters.

Domestically speaking, it is our Army, Navy and Air Force, along with the CRPF, the BSF, the ITPB etc.  that we routinely involve to quell both insurgency and manage disasters. And the men in uniform invariably do a heroic and competent job. The guts and glory seems to slip up with more public contact and interaction, as in the Police. While there is much to be proud of in the upper echelons of the IPS, the lower ranks are often riddled with petty corruption, mirroring perhaps the citizens they are mandated to protect.

It is an irony therefore that such a corrupt and venal people produce and maintain such an honourable and admirable armed force! This is given teeth by the fact that we are an overt nuclear power. Even though Pakistan is attempting to raise the ante by working to develop tactical nuclear weapons in addition to having numerical superiority in warheads.  Having said all this, we, like the famed Polish Cavalry, could be wiped out in any conventional war with China, and be badly mauled even in one with Pakistan.

We are being constantly menaced and bullied by China with little by way of counteraction available to us. Diplomacy may settle the border issues with China but any negotiation will see India represented from a position of weakness. How then can our voice be taken seriously by a belligerent and militarily regenerated China? Pakistan,  which is China’s cat’s paw to harass India is complicit at all times, to compound the issue and potentially subject India to pincer movements.

It will take a decade or more for us to develop sufficient strategic deterrence vis a vis China. The worry is, what can we do to protect ourselves from the Chinese dragon in the meantime? And this presupposes that we intend to catch up, or at least checkmate Chinese designs to dominate India ,if not with overt military action, then with constant menace.  

In the event we do nothing to help ourselves, let us understand that this time there is no JFK and America’s overwhelming military superiority to come to our rescue as happened in 1962.

Today America’s economy and domestic appetite for foreign adventures is severely curtailed. It has made a mess in Iraq and Afghanistan. It does not quite know what to do about Iran or Syria. Europe also is too economically afflicted to come to anyone’s rescue.

The situation abroad, combined with India’s extraordinary political weakness is perilous. We have a government much diminished by deserting coalition partners at the fag- end of its tenure. It is also wounded by an aggressive Opposition.

China could well seek to exploit our domestic weakness at this juncture, but may hold off if it wrests enough economic manna from an India being driven to its knees.

It is sad that we have had no real recognition of what a multipolar world means. It is even sadder that we aspire to not even one of those poles for ourselves. India has no strategic vision and all its diplomacy seems to be ad hoc fire-fighting.

We are experts at selling ourselves short. Whether a country like this can lead in South Asia, let alone in the global scheme of things, depends most sorely on a rebooted political vision. The UPA may be too tired to enunciate it.  But if it loses the next general election, the winners will have to address the looming challenges of national security.

In the meantime, vulnerable as we are, let us hope China has a greater desire to consolidate its domestic scenario under the new leadership of Xi and Li, instead of letting the PLA set the agenda.

(1,080 words)

May 14^th, 2013

Gautam Mukherjee