Archive for the ‘National issue’ Category

The Germany that Indian libs should really be thinking of when they think of Modi sarkar (hint: NOT Nazi Germany)

May 30, 2021

Of late, it’s been seen that liberals, both in India and abroad, are wont to compare right wing politicians, especially of the populist variety, with Hitler and Nazi Germany. For eg, the break-in by rogue Trump supporters into the Capitol Building on Jan 6 has been compared to the Beer Hall Putsch of 1923. While there are some similarities for sure, an important difference is Trump immediately condemned the violence and distanced himself from the failed coup. Some Republicans also sought to blame the AntiFa and Far Left for posing as Trump supporters to discredit them. This is in contrast to Hitler being arrested and using the trial to make an emotional case for the failed coup.

It is equally as important to study the conditions in Germany that triggered the coup. Which bear little resemblance to US in 2016 or India in 2014. I will keep US aside as the point of interest here is India.

The Nazis took over power in a Germany that had suffered a heavy defeat in World War 1 and whose economy since had been extremely embattled. What recovery there had been thanks to loans from the US disappeared after the Wall Street Crash of 1929. Arguably, this second plunge into despair made the people more amenable to the Nazis as an option.

Contrast that with India. I don’t care how much of a diehard BJP supporter you may be, dear reader, but no, India was not on the verge of collapse in 2014. If you really believe that, you have drank the koolaid (or rather, you watch way too much TimesNow/Republic TV).

Let’s go back to 2013. The chief problem was the lack of political authority for the UPA which left them rudderless when it came to controlling the narrative. The narrative itself had been hijacked mainly by the India Against Corruption activists led by Anna Hazare and Arvind Kejriwal (before he broke away to form a party), with the BJP slyly firing over their shoulders.

But the economy itself was in decent shape. The most painful disappointment then was not on account of widespread unemployment but that India was no longer achieving the 8% growth it had appeared set to for a long period of time. The trajectory to becoming an economic power had been slightly shaken off course.

In other words, Modi received a mandate of aspiration. Modi was seen as the superman manager who, armed with a single party majority, would carry out the necessary reforms and development work that the beleaguered UPA2 seemed to be unable to. Modi was the gamble of a then confident India that believed it did not need to lean on the Congress party anymore for governance. An India that, it may be said in retrospect, was too confident.

This is the juncture Germany stood at when it got engaged in World War 1. It eschewed the option of a more limited engagement accompanied by negotiations with Serbia because its commanders calculated that declaring war on Serbia would bring France and Belgium into the conflict as well as Russia whereupon Germany would fight a two front war and win. Yes, Germany truly believed that its might and superiority would beat back the other powers and it would then rival, if not surpass, the British Empire which it admired and envied.

In the same vein, it would now be clear to liberals – speaking at least of those liberals who have not found clever pretexts to continue supporting Modi for reasons other than TINA (there is no alternative) – that the core base of BJP supporters strongly believed in Modi as the vehicle to take India to superpower status and, more specifically, a glorious Hindu rashtra. That this core base stubbornly resists criticism of the Modi govt by resorting to whataboutery or fake news and resolutely holds on to the belief that the govt is delivering well beyond expectations. I won’t name names but somebody I know who is a CA like me (and therefore, you’d expect, a numbers man) celebrated the 2019 verdict by announcing on FB that Modi would make India a developed nation by 2024!

It is important, then, to recognize that bhaktology, as libs call it, has its roots in unbridled hubris and a sunk cost fallacy that makes acknowledging the failure of Modi a bitter prospect, as opposed to deep wounds nursed over a feeling of being wronged or humiliated that led Germans to throw their lot in with Hitler.

Let us now compare how WW1 unfolded to the progress of Modi sarkar. And here, I introduce this wonderful documentary about the events leading to the Armistice of 1918 as well as the Versailles Treaty.

Listen at 19:18. When Ludendorff is asked what would happen if the great offensive failed, he retorts, “Then Germany will just have to go under.”

It was an all out war propelled by belief in the pre-eminent might of Germany.

By 1918, it was clear that victories on the Eastern Front notwithstanding, Germany was inexorably encircled on the Western Front and forced into retreat.

Ludendorff preferred to involve the US President Woodrow Wilson in the negotiations, hoping that international sympathy from powers not directly harmed by the German offensive (give or take a few American ships) would help him obtain more favourable terms of settlement. He also allowed a civilian government to handle negotiations.

That is, when the Versailles Treaty, such as it was, was revealed, it came as a great shock to a German people that had been led to believe all along that they were winning this war. Prof David Reynolds narrates at 46:46: “For years, the Germans had been insulated from reality by Ludendorff’s dictatorship. Suddenly, their country and all that they had fought for had been ripped apart in a few weeks.” I strongly recommend watching the accompanying visuals from 46:37.

Also watch from 3:50 to 4:13 below:

The passage ends with the chilling words, “Because living was descending into chaos.”

That is the crux.

That is what we in India may have to deal with when the Supreme Leader is finally revealed to BJP supporters as a bitter disappointment. Again, I don’t mean the ones who already concede that he has flaws but believe he is better than the alternatives and also have majoritarian reasons to distrust some of the alternatives like Congress. I am talking about those who have heavily invested in the notion that Modi is triumphantly leading India to greatness.

There are many, many more of them than you think and in places you’d least expect. Why, NRIs who got stuck in India during the second wave and had to undergo quarantine in their home nations to be permitted back in (in spite of holding citizenships) insist that the people at large are responsible for the second wave. Please understand the insidiousness of this argument. Yes, the people got complacent and decided they didn’t need to follow restrictions. But the central govt abetted this air of complacency by loftily declaring that covid had been conquered. Furthermore, even had govt not said so, it is vested with considerable powers to steer the ship. India is not a pure federal union like the US but a quasi-federal union. The Central Govt can, as it did in April last year, use its powers to manage and contain the spread of covid. So…to say the people are responsible is not a more accurate representation of the record but merely a defence of the utter abdication by central govt…by a leader who has never shied away from exerting his authority when he felt the need to.

So think back to 1910s Germany. This, dear liberals, is the climate we are dealing with. The sincere belief in Modi’s greatness is way too entrenched for BJP supporters to be able to give it up even post the desecration of the second wave. Let people die by the hundreds of thousands (if not millions), let millions more lose their jobs, but these supporters will not give in until they hear it from the horse’s mouth.

And do not rejoice when he does. Because when he does, the scenes you witnessed above from Germany post WW-1 will be echoed in India. When the supporters realize that this is what their fervent devotion has been rewarded with, they will not be able to handle the intense disillusionment. They will break down, as did Germany. An emerging economy which should be investing as much as of its time as possible in development will be plunged into the abyss.

And if you really think Modi is the worst, you ain’t seen nothing yet. Modi very much represents the aspirations of the old guard of conservatism (represented in India by the BJP) as did the alliance of Keiser Wilhelm II and Ludendorff. His practice of deception to avoid blame brings them to mind; one does not have to go all the way to Hitler. Hitler created a whole new brand of right wing politics all his own (along with Mussolini in Italy). It is in essence what would be called alt-right today. Modi is not that. We do not know yet what an alt right from India would look like and we shouldn’t exactly look forward to finding out.

So, in conclusion, I am going to present a formulation that will be intensely disagreeable to liberals. The best case scenario is Modi is genuinely touched by a miracle (like the miracle that saves Mr Bean in the Bean movie and helps him salvage the expensive painting that he destroyed) and he manages to reach halfway close to meeting the aspirations of his base. Yes, that means years more in the wilderness for the Left. But when the Left had the chance to beat him, in both 2014 and 2019, they messed up. So one has to pay the price for missed opportunities. But the survival of this right wing hegemony is the best bet for India’s stability – not because there are no alternatives to Modi but because the well being of the republic depends on the mental well being of his supporters.

The next best scenario (actually this is the best one but less likely than the one above) is his supporters do come to their senses without a crash landing. That they awaken to his follies and see the light and deal with it not by throwing the country into chaos but by angrily demanding accountability from him. Were this to happen, all would be well again with the republic. India would revert to the dynamic where voters were once intensely skeptical of politicians and had no love lost for any party. That’s as it should be…because we are all voters and not ideologues nor party workers.

The third best scenario is Modi dies a natural death. I do NOT want to see him get assassinated. For one, nobody deserves that fate and for another, we would then see riots worse than 1984. It is best he dies of what is undeniably a natural disease, leaving no room for conspiracy theories. Yes, again, the BJP will reap a rich harvest from sympathy votes but should the new PM fail to perform, he will not enjoy the same leeway that Modi has and will soon be voted out of power.

The scenario I fear most, as said above, is Modi finally losing his grip to the extent where it is palpable to all that he has failed, to even his most die hard supporters. I know no scenario will give more pleasure to some liberals but I do not believe the endgame of such a scenario would be good for India. Ideally, a hubristic leader should get his comeuppance. But when a nation foolishly attaches itself emotionally to such a leader, the consequences of such a comeuppance will not be pretty.

So, as perverse as it sounds, pray for Modi. Pray because this nation is now too much in love with him to disentangle itself from him in any way that could be described as relatively smooth or harmless.

Covid 19 – A country marooned by a pandemic cannot offer an alternative to China

April 19, 2021

When India went into lockdown this time last year, there was a strangely positive sentiment coming out of the business community. Their take was that countries would want to hedge against future China disruptions by moving operations at least partially to other locations – which presented India with a tremendous opportunity. Missing in this laudably optimistic view was a reasonable projection of when India could come out of a hard lockdown. Don’t you need to be open for business yourself before you can take it away from others?

There is a sinking feeling of deja vu as UK PM Boris Johnson now announces that he has cancelled his visit to India. Hong Kong has announced halting of connecting flights to and from India from tomorrow. Wait for when others like Singapore follow suit. Which they will if daily covid numbers don’t come down soon in India. They are not likely to as long as politicians insist, among other things, that there is no connection between large rallies and a rise in cases.

Before you talk a big talk, you need to walk the walk. Before India can provide emerging world leadership in fighting covid, it must get to grips with the disease and tame it itself. This cannot happen until you remain in selective denial about what causes its spread (eg Tablighi bad, Kumbh good). It also cannot happen as long as you are dreaming big macro dreams and don’t master the finer details of what it takes to keep the virus under check.

It was known since at least January that the UK and South African strains had been discovered in India. But the responsibility of contact tracing and containing the virus was delegated wholly to state govts with not much input from ICMR or the Health Ministry or other Central Govt agencies to ensure it did not snowball. Likewise, the Maha state govt kept asking ICMR to report on whether the strain discovered in Nagpur was a new mutation and ICMR kept denying the same until very recently.

It is possible that ICMR as a medical research unit needed conclusive evidence to report a finding. Which is where the Central Govt needed to have stepped in and worked with Maha on containing the new strain within Nagpur. And this stepping in requires actual grunt work; merely saying so to the media does not suffice. Both the Centre and state govts have been guilty of this.

For eg, I visited Tamil Nadu from my home state of Maha for a wedding in Feb. As per the rules, I was required to carry an Epass with me (without which my entry could be denied). But nobody ever asked me to show the Epass in Chennai – not at the airport nor outside it. A quick thermal screening was all that was done.

On similar lines, when I was talking to a person working for a CA firm that was assisting us in some import matters, he told me he was going by local train to office everyday. I asked him how this could be when he was not an essential worker and he told me that Railways had allowed buying passes online again. So people just bought passes online and travelled merrily on the trains, hoping nobody would screen and catch them. And nobody did, not from the Railways, not from the BMC.

Just as CM Uddhav Thackeray’s cautious guidance was not reflected on the ground in terms of maintaining vigilance in ensuring covid appropriate behaviour and thorough compliance with the restrictions, PM Modi’s words too remained words as the situation on the ground diverged increasingly from his exhortations to wear masks.

And…unlike last year when Modi set an example himself both in word and deed, covid ostensibly took a backseat to elections in his mind. I have never understood why BJP, that is the rank and file of its national leadership, contests each and every state election as a life and death matter, but that’s another topic for another day. The point is you could now see the PM as well as Home Minister Amit Shah appear before huge rallies…of maskless crowds. Mr Shah was also photographed maskless at the Ahmedabad stadium during the India-England series. Per Orwell’s 1984, you can make the photograph disappear from the media and pretend that yours truly is ‘lying’ but you cannot make those who have seen the photo un-see it. I am not singling out my attack on partisan lines; Mamata didi’s realization that rallies are ill advised in these times comes rather late in the day and little more than an opportunistic piggybacking on Rahul Gandhi’s announcement given that she made no bones about attending similar maskless rallies earlier in the campaign trail.

Now that our leaders were no longer practicing what they preached, the public caught on too. A UP businessman who was penalized for not wearing a mask asked why politicians weren’t wearing masks if what he did was wrong. Rajiv Bajaj too asked why business was made to suffer lockdowns while it was business as usual for politicians. And he is right about that. But…

Speaking of business. Maharashtra Chamber of Industry and Trade (CAMIT) strongly represented against lockdowns and even promised protests on the street against the same. Such a fierce display of unity, however, was missing in enforcing covid appropriate behaviour in their own respective organisations. I am one of those who did not get to continue WFH even though I work for a fairly large sized company. And there are many such. White collar employees on low salaries are being forced to come. They can either spend more than their salary on autorickshaws and stay safe…or bite the bullet and travel by local train. Is anybody really surprised that covid roared back in Mumbai?

Now…if you asked CAMIT, they would say that govt allowed us to maintain up to 50% attendance in offices. Yes, but merely because it is allowed doesn’t mean you have to be callous towards your employees. You have the option of being, er, a little more considerate, a little more mindful of employee safety. And not necessarily because you would get beat Azim Premji in philanthropy but because increased covid cases endanger everyone’s safety, including yours.

We talk about working in silos being the bane of many organizations and India has provided a demonstration of silo-ism on a macro scale. Each one giving themselves ‘exemptions’ from covid appropriate behaviour while blaming the others who do not adhere to it collectively make a total pig’s breakfast of things. Which is exactly what we have done. From low cases in Jan, we are now deep in the middle of a second wave that has already overwhelmed our hospitals and even cemeteries and crematoriums.

The stark absence of vigilant central leadership as they concerned themselves with elections was certainly a huge contributing factor. However, it’s all of us, the entirety of our society top-down. We collectively decided that covid would not be a huge problem for us even if it was for many others; we decided covid was over for office/temple/election/kumbh/ramzan etc. But covid does not know the difference between any of these things. It sees opportunities to spread and preys accordingly.

The second wave in India is deeply concerning to the world as they counted on India being able to produce and export vaccines it would not need, having already gotten on top of the virus. Now they learn that India may in fact have to import vaccines being produced ideally for countries that are unable to make them.

If you cannot rely on China because they are devious, you cannot rely on India because we are unreliable. Divergent roads leading to the same destination. Once more, just as India began dreaming of a bumper economic recovery on the strength of a strong first quarter in calendar year 2021, the second wave now leaves the near future shrouded in uncertainty.

And this time, we don’t necessarily have all of the rest of the world for company. So there’s elsewhere they can look to if India is not ready.

Statutory warning: Gurunomics is dangerous for mental and economic health

November 18, 2018

The day S Gurumurthy, Chennai based chartered accountant and right wing ideologue, was inducted as a board member of the RBI, you could see trouble brewing from miles away.  The renowned economist Jagdish Bhagwati famously said that if Gurumurthy is an economist, then he (Bhagwati) must be a Bharatanatyam dancer.  I am no fan of Bhagwati but in this instance, I have to agree.

Now is not the time, though, for pithy asides because the trouble that was once merely brewing has now acquired the proportions of a shitstorm.  For the past couple of weeks, an unseemly back and forth has ensued between the RBI and the Central Govt with the latter demanding that RBI part with their reserves which the Govt slyly continues to present as the demonetisation dividend.  This, in spite of RBI’s statement confirming 99% plus what-have-you-decimal points of old currency notes had been successfully lodged with the banks by the people, whether these pertained legitimate earnings or black money.  In other words, the black money is now officially white.  But that again is a subject for another day.

Having first frayed tempers, provoking an unusually candid riposte from Deputy RBI governor Viral Acharya, the govt sought to make conciliatory noises and cool the temperature, lest the remaining FII money also escaped India’s stock markets.  But as 19th November, the day the RBI Board is set to meet again, approaches, Finance Minister Arun Jaitley has once again urged the RBI to ensure liquidity.  In other words, if you won’t part with reserve, bring down the interest rate (thus, printing notes through the backdoor).  S Gurumurthy, ostensibly the chief architect of the note printing idea (and also a supporter of demonetisation, if I may add), has also given a lengthy speech at the Vivekananda International Speech.  Without saying that that’s his intent, he attempts to drum up support with the public for this note printing idea.

 

For the reason only that Gurumurthy’s words have now unfortunately acquired national importance, I sat through his speech on Youtube.  Trust me – and this has nothing to do with ideological differences – it is a difficult listen because, intentionally or otherwise, Gurumurthy refuses to present Gurunomics in a concise and crisp format.  Instead, he chooses to waste a lot of time talking about the decline of Indian civilisation, our lack of confidence in our own ideas and the attendant need for approval from international agencies established by the Western hegemony, about how experts got Trump completely wrong, so on and so forth.  There is also no structure to the talk as he drifts in and out of tangents until the tangents become indistinguishable from the crux.  I am going to say that I think these digressions are intentional because they are designed to mask the lack of substance in his central argument.  The argument being that India should give the IMF & co a wide berth and print notes as that is what everyone is doing.

Now who is this everyone?  Guru mentions USA and Japan as key examples.  Let us pause here.  USA, a country which until 1980 used to be the world’s biggest creditor and which, prior to Reaganomics (the irony), strongly believed in balancing its books.  It did so again at the end of Clinton’s second term by the way.  Why did USA print notes bigtime again?  Because there was no other way to bail itself out of the 2008 meltdown. Europe belatedly followed suit with its own version of Quantitative Easing (which is the technical term used these days for what is essentially note printing/flooding the market with dollars/euros).  Guru also mentions Japan, which is doing so as well under Abenomics.

As said earlier, extraordinary circumstances forced USA and Europe down this road.  Circumstances which caused the interest rate to nearly touch zero in these countries, with, obviously, low to no inflation.  Japan too has had deflation for many years and Shinzo Abe has only been trying to somehow reflate the economy back to life.

Does the Indian economy have comparable circumstances?  The answer is a vehement and unequivocal no.  India has long trended towards moderate to somewhat high inflation, thus forcing the RBI too to keep interest rates high.  It is not that RBI keeps interest rates high ONLY because the world powers say so.  Even if nobody cared what India did about its monetary policy, RBI would have no choice until India fixes its inflation issue.

I could now drift into a tangent about how govt’s own lethargic implementation of infrastructure projects further fuels this inflation.  Instead, I will stick to the argument that we are not in a position to do what USA and Japan do because our economic circumstances are different.  Now I will devote a few sentences to explain what would happen if India indeed printed notes in a big way as Guru suggests.  We have seen this movie before and I will get to it in a bit.

  1. When the govt prints notes, it essentially means money is available more easily and at a cheaper cost to people at large.
  2. What do people do with this easily available money (it’s actually called easy money policy)?  They buy more stuff than before because they have the money to.  More food, more cars, more houses even.
  3. What happens when more money chases the same stuff?  The price of that stuff increases. I.e. inflation.
  4. There’s more.  To compensate for this inflation, manufacturers now have to pay more salary to their staff. That means it now costs more for manufacturers to make the same stuff than it did prior to note printing.
  5. When product ABC is now exported at a cost of say rupees 110 instead of rupees 100, what do you think happens?  People don’t want to buy, simple.
  6. When people don’t want to buy your exports, you lose foreign exchange.  You keep losing until eventually you reach a crisis situation.  Alternatively, you stop defending your currency with the US dollar reserves you have and let it drop.

Folks, as I said, we have seen this movie before.  What is the name of this movie?  It’s called UPA2.  At the behest of both our industrialists rattled by the meltdown as well as Western powers who suggested India and China should pick up the tab while the developed nations fixed their house, the Indian govt followed an easy money policy and also offered tax cuts to industry.  For a few years, all was well as India experienced some of its highest ever GDP growth.  But the consequences of such steroid-fueled growth caught up very quickly with us.  Imports kept going up (obviously as everybody had money to spend and with US weakness, the Indian rupee strengthened) and inflation first crept up and eventually began to soar.  Property prices too soared, eventually reaching unsustainable levels, particularly in Mumbai. There was much outcry too over the soaring prices of vegetables, fruits and foodgrains.  By 2012, the economy seemed to be in disarray.

And then, in 2013, the US Federal Reserve announced it was going to taper off Quantitative Easing.  The mere announcement triggered panic in emerging markets.  Why?  Because tapering meant those easily available dollars were going to go back to US.  The rupee crashed even as D V Subbarao, the weakest of our RBI governors in terms of being unable to resist Central Govt pressure, left office on an unhappy note.  With some out of the box thinking, the UPA govt appointed Raghuram Rajan as the RBI governor in spite of him not previously holding any position with that organisation.  His exemplary forex management arrested the rupee’s slide and, more importantly, cut down volatility sharply. But all that is history as we know RR too had to go and can perhaps guess why.

That brings us to today and to Guru’s speech.  Guru blasts the UPA govt for allowing what he called bogus foreign money to flood the Indian markets.  He is referring to the inflow of QE dollars into India.  It is not clear what India could have done to just stop that money from entering the economy short of following tighter monetary policy which they should have.

But if they ought to have followed tighter monetary policy then, when there was actually a glut of dollars, why exactly does Guru recommend note printing today?  Today when US interest rates have increased and are set to increase and the dollar is going from strength to strength.  Should the RBI cut interest rates now and the govt actually just take RBI reserves and spend it on projects (possibly including but not limited to gigantic statues), there will be a further exodus of dollars from India, pushing us closer, again, to a forex crisis.  Guru praises India and Japan’s currency swap agreement as something we ought to have done long ago.  We have been, actually. The previous arrangement was for a currency swap of $50 billion.  It has now been hiked to $75 billion.  All good. The only problem is our imports from China alone are $68 billion!  Japan is only our 15th largest trading partner.  You can get around the rules of the economic jungle for only so long.

It beats me why, having criticised UPA 2 correctly for pumping up the Indian economy artificially, Guru proposes exactly that as the cure NOW.  Is it yet another attempt to cover up the govt’s colossal failure with the demonetisation experiment?  Or is it in fact, contrary to his pleas for original ‘Indian civilisation’, nothing but a slavish attempt to imitate Japan just because?

However it may be, and I don’t have a CCTV planted in Guru’s mind, the short point is the prescription, if implemented, would be a complete disaster for the economy.  I see, from the Youtube comments, that Guru, though, is winning favour with his talk.  You see, all it takes is for someone to speak with an appearance of confidence, of knowing what he’s talking about.  It doesn’t matter whether he really knows.  We have seen THIS movie(s) too before and they go by the initials of NM or DJT depending on your choice of language. Guru talks a lot of crap in the midst of some valid observations about experts getting predictions wrong or that there is no universal theory of economics.  But it doesn’t SOUND like crap and that’s all that matters.  Poor Urjit Patel’s introverted reticence is no match for Guru’s confident bluster.  It’s Dravid v/s Srikanth and who would you pick as the more confident batsman if you didn’t know their records?

In order, therefore, that the gullible public is not taken in by a mere appearance of authoritative expertise, I posit that every S Gurumurthy speech on economics should be preceded by a statutory warning.  The warning is as follows: Gurunomics is dangerous for mental and economic health.  Enjoy it but do not ingest it.

From best to worst for RBI?

December 21, 2016

When the Reserve Bank of India announced on Monday that there would be restrictions on deposits in excess of Rs.5000, I thought of composing an irate post on this blog, criticizing the rampant ad hoc-ism.  I did not get the time to and fortunately so, because the RBI has since done a U turn, saying the restrictions will not apply in the case of KYC compliant bank accounts.  Phew!

This latest flip flop has earned it the dubious title of Reverse Bank of India.  It’s a tragedy because the RBI has long been respected as one of the best institutions of the country. And under former RBI governor Raghuram Rajan, its stature rose further with investors like Jim Rogers and Marc Faber hailing him as perhaps the best central banker in the world.  

Indeed, it is as if Raghuram Rajan had provided the anchor that this government sorely misses now.  His trenchant criticism which stung their thin skinned selves in fact provided a solid counterweight that forced the government to eschew short cuts and take hard decisions.  Forex reserves swelled, the rupee held relatively steady and the current account deficit shrunk.  It has been argued that the last aspect wasn’t necessarily a positive for a country at India’s stage of economic development.  But in an environment of declining global trade and anti-globalisation sentiment, it was worth settling for. 

The situation is so different only three months since his exit that it is almost surreal to behold.  From the beginning of the demonetization drive, the RBI has fielded strong criticism of its perceived rubber-stamping of the govt’s decision.  Current governor Urjit Patel stoutly defended the decision during the press conference held after the December policy review but he may have to field tougher questions from a Parliamentary Panel on the 22nd of this month. 

It may have been possible to sympathize with his – and indeed the RBI at large – plight in having to go with the government decision.  While criticism for not upholding the independence of the RBI is valid, Rajan was also a singular incumbent, capable of withstanding persistent pressure from multiple flanks…and paid the price via a most ugly and unbecoming smear campaign to rush him to the exit door.

But the latest U Turn is a different matter altogether.  Surely, if the RBI did see that there was no need to cross question those depositing old notes into KYC compliant notes, they could have taken this position while issuing Monday’s circular.  Is it not too elementary to have even required a rollback under public pressure?  

Even if one presumes that there is somebody pushing buttons on a remote control to make the RBI do his/her bidding,  there’s got to be pushback against elementary blunders if at least one soul in the RBI has a semblance of  a spine.  If such pushback is not viable, it would be advisable for the key personnel of the RBI to step down with honour (or at least whatever remains of it) so the public may come to know what is happening.  

But every day that there is no pushback or no thought, as applicable, is a day that results in yet another ad hoc decision that makes the RBI, North Block, GOI et al a laughing stock and an all too easy target for cartoonists. The mocking, unfortunately, will not be restricted to the Indian media.  Thanks in part to our rapid economic growth and in part to our vociferous breast-beating brand of jingoism, what goes on in India attracts international attention and you can be sure that newspapers and magazines that normally do not pay much attention to developments in India nevertheless won’t miss the opportunity to deride the administrative failure that we are currently witnessing.    

Perhaps, the ruling dispensation is prepared to brazen it out and turn a deaf ear to criticism so as to pursue its agenda through to the end.  But it should bear in mind that the cost of destroying confidence in an institution like the RBI will not be trivial. It could mean dwindling foreign portfolio investment (already under the pump thanks to the Trump rally) and a dimming outlook in the eyes of credit rating agencies.  

Under Raghuram Rajan, a much awaited rating upgrade wasn’t out of reach.  Now the best we can hope for may be to avert a downgrade!  As they say, eternal vigilance is the price of liberty.  India has paid a heavy price for under-appreciating the importance of institutions in a democratic government. 

Why Manmohan Singh was right on demonetization

December 18, 2016

Former Prime Minister, Finance Minister and RBI Governor Manmohan Singh spoke out strongly against demonetization in the Rajya Sabha on November 24, characterising it as an organised loot and legalised plunder of the common people.  The sharp use of adjectives to describe his position stood out as uncharacteristic of his usually mild mannered approach.  More surprisingly, there was a lack of a substantial rebuttal from the government or the ruling party with the exception of questioning what right did the man who preside over the scams of UPA have to talk about loot and plunder.  Nobody questioned why such words were used in the first place.

In light of a seemingly innocuous clarification given by Revenue Secretary Hasmukh Adhia in a press conference on Dec 16, though, the description assumes significance. Adhia clarified that under the Income Tax Act, 1961, deposits made by political parties are exempt as long as their donations are properly accounted for.  When this led to an outcry by the media and the public at large, Finance Minister Arun Jaitley stepped in to put on his best appearance of indignation and ‘clarify’ that the government was taking a tough stand against political parties as well (while only reiterating the law as it stands).

Let us then examine the law and how it works in practice because there is a huge gulf between theory and practice:

  1. Political parties are of course allowed to accept donations.
  2. Donations in cash are allowed.  No amount is specified for the same except that all donations (cash or bank) above Rs.20000, name and address of the donor is to be provided to the EC.
  3. The problem is, it is ridiculously easy to make multiple donations of below 20000 each and not have to report them at all and thus escape tax.
  4. Tax, how?  Well, a person holding black money in (old) 500 and 1000 rupee notes (which have ceased to be legal tender) can simply make a donation to a political party in multiple installments, each below 20000 to escape being taxed on the black money.
  5. But wait, hasn’t the FM said that it is illegal for a party to accept donations in old notes post demonetization?  Right, but you can always backdate the receipt (if any)!  Has been done by lesser mortals than politicians so why wouldn’t a political party be able to get away with it?
  6. Is there a law that says that all receipts must be issued by an automated computerised system that does not allow manually editing the date?  Afraid not!
  7. If this was so, why did the government still go through with demonetization?

Now we are talking!  You see, it stretches credibility to say that the government did not consider such a massive loophole in the chain while rolling out demonetization (with its attendant costs). I mean, if they are really so incompetent, they need to tender their resignations forthwith and publicly own responsibility for such a Himalayan blunder.

But what if they knew?  Once you open your mind to such a possibility, you get a different view.  Remember the tall promise made by the govt to eliminate black money? Something considered impossible by conventional wisdom.  Well, the govt has done exactly that and how!  They have afforded to all black  money operators an opportunity to convert all black money held in cash to white with no questions asked.  The price for that, of course, is ‘donating’ the money to political parties.  But that is perhaps a small price to pay for those who would be overcome by gratitude to the govt for their benevolence.

While the Indian tax administration has hitherto been spectacularly unsuccessful in recovering their rightful claims of tax from black money operators, they have at least had a claim to the same by law.  Black money operators needed to exercise due care whenever they needed to convert black money to white to avoid getting caught.  Not anymore.  Here at last is a one time window to whitewash your sins with not a finger being waved at you.  In 67 years nobody has thought of such a beautiful scheme.  No need to disclose income either, just donate.  Ah, if you won’t donate, that’s too bad.  After all, with several state elections lined up, political parties could do with the extra cash which, and this is the best part, will be totally legal.

Perhaps I am too cynical.  Perhaps I have got it wrong.  Perhaps a man as learned as Manmohan Singh got it wrong too.  But in that case, it is up to the government to offer some substantial rebuttal instead of unleashing trolls who label people as cangi or whatever bullshit to obfuscate the issue. There has thus far been a paucity of clarity from the government, all excused of course under the garb of confidentiality.  But in this instance, the nation really does need to know how exactly does government plan to bring colluding politicians and businesses to book?  That is, if the horse hasn’t already bolted and there’s a good chance that it has.

In the grand tradition of conservative/ Tory parties, the BJP too has arranged for a brutal redistribution of wealth from the poor to the rich.  Only, they have succeeded, thus far, in convincing the people that they are in fact playing Robinhood and doing the exact opposite.  Their UK and US counterparts must be watching their genius with astonishment and not a little envy.

An interview with Mr P

December 4, 2016

Yipee do! I did it!  I interviewed a celebrity.  A seasoned veteran in his field, highly regarded and trusted for his capability and integrity.

I am talking about the security guard of the apartment complex I live in.  15 years back, when we moved into the suburb of Mumbai that we still live in, he was the security guard of this same complex (or society as we call it in Mumbai).  Now, I have taken up a house as a tenant in this society for the time being and he is still the faithful and reliable gatekeeper to paradise. Believe me, we have gone through maybe 15 security guards (or not quite) in 10 years at my parents’s place also in the same suburb.  So this is no ordinary watchman that I speak of.

So..I came back today evening from a small errand and greeted him.  We exchanged pleasantries and he got talking about, what else, demonetisation.  It was an interesting conversation which gave me an insight into the way the working classes look at this decision (in contradistinction to the middle and upper class view of it).  It is not for me to judge if he is right or wrong and I also confess that I do not have the means to thoroughly fact-check him.  But I am sharing his insights in the form of an interview where I play the part of intrepid and unprepared journalist who fields one blow after another as a very different view of things is presented to him. Let’s call him P, the Protector.

A note before I start.  The following is written to stimulate a conversation, not a diss-cuss-ion. So I’d highly appreciate if all of us can step out of our preferred echo chambers and consider the views (not mine) being presented with an open mind.  That out of the way, ready, steady, po!

P:  Sir, what is Modiji’s latest?

Me: I don’t know, you tell me.

P: (Laughs)

Me:  We have to spend our time either standing in the queue for cash or watching the TV set to track his latest surgical strike.  (shakes head)

P:  (Amused, but silent)

Me:  I wonder what people in the villages must be doing to get cash.  It must be so difficult, standing in never ending queues.

P:  Who told you that!

Me:  Pardon, you mean there are no queues in the villages?

P:  Sure there are.  Who told you that we never had to stand in queues before?

Me:  Oh!

P:  Once two years ago I went to the bank branch in my village to withdraw cash.  We stood in the queue all day and had to return empty handed.  Standing in queue for cash, for rations, we are all used to it. It’s nothing new.  We’ll have to wait 3-4 days to get cash, big deal!

Me:  So I guess it’s more of an inconvenience for people who live in the cities and are used to easily obtaining cash.

P:  So let me tell you one more thing that you may not know.  There was no cash in the ATMs in UP for 15 days. 15 days.  But nobody rioted.  Nobody protested.  Politicians tried their best to provoke the people but everybody knows what’s happening.  When Modi is going to transfer money to our bank accounts, why should we do something silly at the instigation of opposition parties?

Me:  So you mean it’s people like Mayawati and Mulayalam Singh who are affected.

P:  Absolutely. I was paid to go to the village and stage protests so I know what I am talking about.  They did not bite the bait. Why should we trust Mayawati who loots people in the name of poverty upliftment when Modi is trying to do something for us?

Me:  So what do you think will happen in the UP elections?

P:  Sir, it will be a landslide for BJP.  They are going to win very easily.

Me:  By the by, won’t the rabi crop be affected by this step?

P:  Again, that is just propaganda by those who don’t support this step.  Farmers don’t leave it to the last minute.  Everything is planned.  Why would they wait until 8th November to withdraw cash?

Me:  But what about the old notes?

P:  Sir, I am telling you, they would have already bought whatever they need.  In villages we can’t keep huge amounts of cash at home.  We don’t have security guards like in the cities.

Me:  Ouch!

P:   (Decides to move on as interviewer is speechless) Daily wage workers…..you know, they get paid in cash everyday.

Me:  Right! (Says duh within)

P:  And then when they come home, the wife wants to spend on this and that, they purchase liquor and in no time the money is gone.  In this way, we remain in poverty. Sir, after so many years of living in Mumbai, what do I have?  Nothing!  Everything has been spent. Whatever I send to the village is spent.

Me:  But if you put it in a bank account, you may not spend everything.

P:  Exactly!  They will ask you to maintain a minimum balance.  So if you get ten thousand, you will keep at least thousand in the bank.  In this way, you save money and get paid interest and the government also benefits.  And once the savings habit is inculcated, they will keep putting more and more money in the bank.

Me:  One thing is for sure.  Nobody anywhere has attempted something like this.  Thanks so much for joining us but I am afraid we are completely out of time.

P:  My pleasure.

P.S:  The tone of the actual conversation, laced with lilting UP Hindi and with myself deferring to Mr.P’s age and experience, was very different.  So don’t take it too literally.  Also stuff I omitted, like when I told him about how the big fish will transfer everything to offshore accounts and can bear losses on their limited cash hoards.  Didn’t seem to shake his faith though, not one bit.  Will Modi keep his  very tall promise to his loyal voters, though, is the question.

Budget 2015: BJP embarks on the Westernisation of the Indian economy

March 2, 2015

The media has largely received the Central Government of India’s budget for Financial Year 2015-16 with tepid applause.  Solid and steady but no big bang announcements is the general refrain.  It is generally perceived as a mild disappointment.  But far from being disappointed with such a response, Finance Minister Arun Jaitley would only be too happy to have his budget perceived as a non event.  For it will give the ruling party BJP the political space they need to push through a paradigm shift in the way the Indian economy works.

One of the most significant announcements in the Budget is perhaps insignificant in terms of its bald monetary impact.  Wealth tax has been abolished and it is to be compensated by imposing an additional 2% surcharge on the income tax collected on crorepatis.  Jaitley argued this will give him Rs.9000 crore additional revenue in lieu of the Rs.1000 crore yielded by wealth tax.   Chump change, one may call it.  Not quite when you consider the difference in outlook such a move reflects.  Abolishing taxes is a rarity in a country where new ones are normally invented every budget.  The government has for the first time made a pragmatic assessment of the trade off between administration cost and revenue and decided that wealth tax has not accomplished its purpose.  By abolishing it, they have also struck off one compliance from the taxpayer’s list.  Meanwhile, they laugh all the way to the bank anyway vide the surcharge.  Simplification of India’s tax regime has begun in full earnest and yet the event went barely noticed thanks perhaps to a combination of astute messaging by the government as well as the media’s pre-conceived notions about big bang reforms.

That abolition of wealth tax is not a one off is appreciated when you consider it as part of a ‘package’ that also includes a move to a lower rate of corporate tax sans exemptions as well as the much touted Goods and Services Tax,  At least so far, the government appears to be moving fast on simplification.  It fits in as part of the larger jigsaw puzzle: that of project Westernisation.

The other elements that were announced either in the Budget speech or in the days preceding and succeeding it were, in no particular order, introduction of universal social security, greater devolution of taxes to the state govts, monetary policy framework jointly framed by the Govt and RBI and the crusade against black money.  I am still skeptical on the last mentioned element but the harshness of the penalties envisaged suggests a shift in the govt’s approach on this front too.  The other elements clearly signal a departure from ‘legacy’ approaches to govt policymaking.  By introducing social security, govt has strengthened the hands of Chief Ministers desiring to pursue labour reforms and blunted the Leftist rhetoric against the same.  The monetary policy framework signals a clear shift to inflation targeting as opposed to the multiple indicators approach of the past where the inflation-growth trade off was ambiguous and discretionary.

By packaging the budget in a form familiar to those who regularly peruse Indian budgets, govt has masked its clear cut preference for running a tight ship, for voluntarily reducing its fiscal space (and ceding the same to the states) so that it can get out of areas where it does not find it feasible to be involved and for a simpler tax regime as opposed to one that, on paper, upholds ‘social justice’.  Pragmatism has replaced an Indian notion of idealism that was usually restricted to govt white papers and seldom observed in actual practice.

It is ironic that the proudly nationalist BJP have embarked on a project that will alter the way the Indian economy operates and bring it closer to the Western model.  Simpler taxes, inflation targeting, federalism, social security, does that not sound familiar?  Or perhaps this model is also to be found somewhere deep inside an ancient Indian text that yours truly is blissfully unaware and for which India ostensibly allowed the West to claim credit!  However it may be, I am at least a bit excited and shall be watching further developments with keen interest.

Modi bhakts v/s Kejri fans: The battle of “I Told You So”

February 21, 2015

The nation is in thrall of not one but two charismatic political leaders – Narendra Modi and Arvind Kejriwal.  While Aam Aadmi Party did not do well at all in the Lok Sabha polls of last year, surveys suggested people had a more favourable opinion on Kejriwal’s candidature for the post of Prime Minister.

When AAP lost and BJP secured a majority all of its own, it was the former’s fans who were most vocal in telling people that BJP would be no different from Congress and that time would prove that the public made a huge mistake in giving BJP such an emphatic mandate.  The columnist G Sampath, whose articles I usually enjoy, wrote a ponderous piece claiming the voters had voted like consumers demanding growth rather than on the grounds of national concern and were too harsh in punishing Kejriwal for his inexperience.

As days turned into months, AAP fans had the opportunity to say “I Told You So” to Modi bhakts (as his acolytes, online or otherwise, are often referred to) in a tone of thinly veiled smugness.  Evidently, the prospect of a disappointing few years of misgovernance was of less concern as that of being proved right.  So much then for national interest.  Be that as it may, as the Hindu right wing organisations fuelled disruptions in Parliament and development remained in the embryonic phase, if that, said chorus only grew louder.  BJP was just another Congress in saffron clothing and the Modi bhakts had been too gullible in falling for his PR machinery, so the rant went.

In the meantime, Kejriwal cleaned up his act and apologised to the Delhi public for squandering the opportunity granted him in the 2013 assembly polls and pleaded with them to give him another chance.  The ostensible sincerity of purpose projected by him as well as BJP poll strategist Amit Shah’s blunder in backing Kiran Bedi as a Chief Ministerial candidate aided a landslide win for AAP in the re-elections this year.  Congress was completely wiped out and BJP had but a band of three musketeers to show for their efforts.  AAP had been given about as emphatic a mandate as they could have hoped for.

And what did they do within days of coming to power but to waive off the requirement of an NOC from the Pollution Control Board for Small Scale Industries!  Whether or not they would be willing to concede as much, this is a move that would have stunned even the most diehard Kejri fans.  They had even sought to strenuously defend his populist electricity and water subsidies, claiming (in full earnest, please note) that the results of the audit of distribution companies would indeed make this possible!  However, what exactly would justify aggravating air pollution in one of the most polluted cities in the world must surely  elude at least known dimensions of reason and logic.  It is now the turn of Modi bhakts to say “I told you so” and gloat over the prospect of what Delhi is going to have endure for the next few years.  Nevermind, again, that it is a seat of political power and an economic powerhouse.  That is, what ails Delhi would surely also infect India pretty soon.  Ah, but the need to watch smug Kejri fans eat humble pie once again precedes self same much abused national interest.

As all this ensued, Modi had a chai-pe-charcha with Kejriwal.  One can only hope that the two leaders would co-operate and act reasonably to negotiate the difficult passage up ahead….in the interest of the nation.

In support of competition

August 3, 2014

Perhaps, I shouldn’t write this piece.  Perhaps, I should be mindful of some authoritarian voices from the ruling party and take it as indication that even the semblance of dissent may not go down too well.  So let me preface what I am about to write with a declaration up front:  I voted for the NDA in this election.  Yes, I did.  So do not rush to call me a cangi or aap-tard or whatever just because you do not like what I said.  I request that if you happened to chance across this blog, please keep your cool and give me a patient hearing.  Don’t shoot the messenger.

I am not writing this essay to complain about the price of onions or tomatoes or the rail fare hike.  If anything, I believe the government should not have rolled back the change in formula for season ticket fares as it was not the right signal expected of a government promising bitter medicine before the deliverance of ‘acche din’.  I am concerned about the stand India has taken at the WTO but this is not to complain about that stance either.

In fact, rather than a complaint, I have a question, a simple and genuine question:  what is the government’s overall commitment to accepting competition in the marketplace?  I’d really like to know the answer to this.  And if they are ambivalent on it, I would like to know the reason why.  Actually, this is a question that I feel a lot of Indians need to start asking right now and it is a very pertinent question on which the very future of the country, more specifically the economy, hinges.

In the meantime, I would like to address the ambivalence of those who feel they do not have a clear stand on this issue or do not even consider it important.  I believe some of this ambivalence comes from not experiencing much of the world outside.  There is, at one level, no need to do so as we live in a vast country with enough opportunities to make a living for plenty of able hands.  But at another level, India is only a blip on the international radar.  Indian products compete with those from many other countries for a share of the world trade pie.  India vies with other countries for resources.  Hence, it is time we got out of our cocoon and thought deeply about where we stand and what we need to do to improve the situation.

So, to this end, let me cite some basic numbers from a trip to the USA that I made only a few months back.  I visited Chicago, New York City and Niagara.  All dollar-Re conversion at an assumed rate of 1$ = Rs.60.

Cost of petrol in Illinois state: Roughly $3.95 per gallon.  i.e. Roughly Rs.63 per litre.

Cost of petrol in Mumbai is roughly Rs.80 with taxes.

Cost of an unlimited Indian buffet meal in a well furnished restaurant near Central Park in Manhattan, NY.  Roughly $10 per head, i.e. Rs.600.

Cost of a meal for two at Copper Chimney, Mumbai according to various websites:  Rs.1300.

Cost of a pizza with custom toppings at a classy bar cum grill attached to Quality chain of hotels at Niagara: $8, i.e. Rs.480.

Cost of a pizza at Le Cafe in a mall in Ghatkopar suburb:  from Rs.375 to Rs.475.

Per square feet rate for a fully furnished 3BHK beautiful independent home in Woodridge suburb of Chicago:  Rs. 9600.

Per square feet rate for a flat in Vashi:  at least Rs.10000 if not more.

I could go on and on but I will stop here as this is enough to illustrate my point.  Rampant inflation over the years has narrowed the gap in cost of living between the USA, the most powerful nation in the world, and India to a dangerous extent.  Through the 90s and noughties, India leveraged its low cost conditions to attract investment in various manufacturing and services enterprises.  That arbitrage, I am afraid, is almost completely wiped out.

The only remaining arbitrage we have is the cost of labour.  People still get paid less here than in advanced nations like the USA.  That, for the time being, allows our economy to survive and carry on but not much more.  You have heard about Indian companies feeling more confident about investing in ventures abroad rather than India.  You also know that you have received measly, if any, hikes in pay for the last couple or so years.  Now consider all that I have said above and ask yourself whether the reason for that is what the media tries to feed you or something else.  In a nutshell, if companies raised wages steeply, even the last lever of arbitrage will be gone and India will be a lousy place to do business.  A year back or so, the Chairman of Bharat Forge, Baba Kalyani, also said something very close to my comparison of costs in USA and India; I wonder how many read that interview though as it did not seem to provoke as much debate and discussion as it should have.

What could possibly resolve the situation?  In the short term, India will need to steeply reduce inflation.  I was sharing my experiences in USA with a family friend who has been there several times.  He told me that the price he paid for various kinds of meals (Indian/Chinese/American) in USA in 1994, the first time he visited the nation, was almost the same as what he did this year.  And I could attest to that as the prices he quoted were close to, if not the same as, what I mentioned above.  India cannot retain a competitive edge of any kind for very long as long as it allows the inflation monster to run amok.  Please do not listen to anyone who says RBI is too inflexible on the issue of inflation and ought to lower interest rates ASAP.  If anything, they have not applied enough of a squeeze and a tighter and harsher squeeze would have brought the rate of inflation down sooner.  Even now the base interest rate of RBI is lower than the rate of consumer inflation, that’s how benevolent they are.

But we have seen a bout of inflation creep up every time the economy grows at a good pace for a few years at a stretch.  This means there are serious supply constraints in the economy and growth runs up against this wall too quickly for sustained high economic growth.  And it is here that I come to the subject mentioned in the title:  competition.  The best way to free India from supply side constraints would be to liberate competition from the shackles of bureaucracy.  Please note that I used the word bureaucracy and not regulation.  I do not advocate completely unfettered competition, at least not as a starting point.  It is important that any impetus to economic growth is based on sound foundations that eventually raise the quality of life for the citizens of the nation.

However, it is no secret that the real hurdle to competition is the bureaucracy.  There is talk of increasing FDI in certain sectors and divesting govt holding of shares in some PSUs.  But these do not yet address the root cause of our problems.  We run up against the wall of constrained supply too soon because we tie up business in undesirable bureaucratic knots.  I shall not get into the sordid details here but anybody who has attempted to obtain registrations to start a business knows how costly and time consuming it is.  Please tell me:  how can a first time entrepreneur with limited resources even get a foothold in the race if he has to pay through his nose and wait for months together just to be allowed to start operations?  So, out of exasperation, he indulges in corrupt practices and speeds up the process.  And from that point on, he is part of the unholy business-govt nexus that holds up corruption as an important and difficult barrier to entry for competition.  He who has not sinned alone shall cast the first stone and so we have a perfectly logical, if sickening, explanation for the business community’s tolerance of corruption.

The Aam Aadmi Party argued in the direction of a third party, independent and (supposedly) incorruptible ombudsman to solve all problems.  However, a (theoretically) easier solution would be to simply remove such artificial barriers to entry.  Govt may, to protect national interest, bar entry in some sectors as a matter of policy (though personally I am not very much in favour of such restrictions either) but why bar entry through procedural wrinkles?  And mind you, many of these procedural wrinkles are unofficial; they are not stated anywhere in the published rules or circulars of the govt which makes them even more frustrating to deal with.

But why do I stress this basic aspect so much?  Because it will facilitate more efficient use of capital.  And remember capital is costly in India.  As it is, a business has to pay a high rate of interest on borrowed funds.  On top of that, they have to factor in a longer gestation period just to account for bureaucratic delays.  By merely eliminating such simple but fundamental pain points, we could bring down the cost of capital and, eventually, the rate of inflation quite dramatically over a period of time.

You see what I am doing here.  I am not making a case based on principles because I know it’s a futile cause.  I know the lowest common denominator of everything today is money.  And it is in the interest of the wealthy and powerful of India, be they in the political or the business class, that they wake up and smell the coffee.  The old ways of doing things will not work anymore.  We have over a period of time been forced to integrate more and more with the international market and so are no longer immune, if we ever were, to international developments.  Whether we like it or not, we are locked in a never ending race with other exporting nations and if we don’t keep up, we will have to shut shop.  And if we shut shop, all the property owned by the wealthy will drastically lose its value.  All the money, held in black or white, will become practically worthless in the face of runaway inflation.  And all demand will collapse, leaving no worthwhile business opportunities in its wake.  I may be exaggerating but only a bit and besides it is necessary to indulge in it slightly to get across the point.

Therefore, it well serves the political and business class’s own self interest that they stop charging a prohibitive gate pass for entry into the Indian economic system.  More competition will make the economy more dynamic and impress upon us the importance of time, something which we are far too elastic with.  It is standard practice in India to keep delaying decisions until it’s impossible to postpone them any further.  If we have to slay the inflation beast, this is the first habit that we need to get rid of for it is the cause of our many stalled or failed projects or of promising companies losing their way and becoming stagnant.  Not to worry, competition by itself will inspire fear of defeat to such an extent that owners and managers will have to become more nimble in the way they operate.

And it is here that I return to the question I asked of the ruling party.  It is important to embrace a pro-competition outlook as a conviction and a commitment, not merely as a “there’s no other alternative” path to get out of difficult external headwinds.  Perhaps the fatal flaw in our liberalisation thrust was that it was embraced only out of compulsion.  But liberalisation is not merely an idea whose time has come.  It is the only idea, it is the only way of life that exists.  For you can excuse yourself from running the race on the grounds of being weak and impoverished for some time but not all the time and not for eternity.  Eventually, if you don’t get up and hit the ground running, you will miss the bus.  India is very, very close to missing the bus.  If India misses the bus, BJP can forget all about its dreams of staying in power for years and years at a stretch.  If BJP wants to get re-elected, it must examine carefully what its outlook on fundamental economic issues are and formulate its course of action on said issues keeping in mind where India really stands, circa 2014, and not based on how it existed in some imagined view of ancient India. That India no longer exists.  The only India we have is the one we live in and continuing to disdain the importance of competition in making India a more robust and hardy economy is a surefire way to ensure this India will never get to the India of nationalist dreams.  And in case you want to insinuate that all that I said is anti-nationalist, please consider that a section of our freedom fighters also believed in the idea of India as a nation that embraced entrepreneurship and competition…. including one in whose name a towering memorial is proposed to be erected.

P.S:  You ask why did not I not write in directly to the PM especially since the new PM is refreshingly open to using new internet media for communication.  So, FYI, I did write in to the PMO in early-June with some practical suggestions on how to reduce the time required to start a business in India.  I was given a standard reply that it will be forwarded to the concerned department.  The budget has come and gone and I see no signs of it or anything somewhat in the spirit of what I had suggested being proposed, much less implemented, yet.  I am waiting but I hope I do not have to wait indefinitely.

P.P.S:  And the reason I said to not call me a cangi or AAP-tard is not because I hate those parties that much but simply because petty arguments over which party I support or don’t support will deflect from the topic, which, in my humble opinion, is far more serious than the question of political affiliation.


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