Monday, June 29, 2009

It happens only in India

45000 out of an estimated 85000 registered as MCD (Municipal Commission Delhi) employees are fake/not traceable. The estimated numbers of the “missing” is still a riddle but the numbers could be double than present estimates. How or why could such a brazen act of corruption is best left to state investigations. But a correction and weeding out could lead to a saving of Rs.500 to 1000 crore annual saving on a Rs.207 crore monthly wage bill.

Elsewhere, the dalit poster girl, behen Mayawati has embarked on a Rs.2681 crore project to have herself, her mentor, Kanshiram, Baba Saheb Ambedkar sculpted in stone and beautify Lucknow city. The plan involves 45 red stone statues, 60 elephant statues and 413 acres of prime land in Lucknow. The annual cost of maintenance is expected to be Rs.270 crore. All this, when the largest population of people below the poverty line – 59 million belong to UP. This money could have wiped out poverty of thousands of people, provided education and amenties to more.

Food security bill, which is under discussion currently, and is expected to provide upto 25 kgs of grains per month to BPL households at a subsidized rate of Rs.3/kg has come up for some execution challenges. The planning commission’s stidy of 2005 shows that roughly 58% of grains issued from the RDS do not reach BPL families due to problems ranging from targeting errors to corruption all along the chain. Worse, there is a no standard in defining and identifying a BPL Family. Planning Commission puts the number of BPL families at 65.9 million, BPL cards issued by states is 107 million and a second and more recent estimate by the planning commission puts this number at 66 million.

So much for accountability and misuse of public funds in the country.

India: A worrisome fiscal situation

A very important part of populist measures of the incumbent government is to provide equal earning and job opportunities to all. Towards this, the National Rural Employment guarantee scheme (NREGS) is a tool for equitable employment and pay disbursals. However a bad monsoon can turn this tool into a fiscal nightmare. A bad monsoon will ensure that the number of people seeking jobs under NREGS will swell. Being an entitlement based programme, the government has to give employment to anyone who demands it. Recently it announced that a further Rs.9000 crore would be spent under NREGS, taking the total expected spending under it in fiscal 2009 to Rs.39000 crore. That was when the effect of Monsoons were not taken into consideration. With this new exigency in horizon, the NREGS spends may be spiraling out of control. A substantial portion of the fiscal deficit was due to budgeting of expenditures for farm loan waivers and expenditure under NREGS.

Already the economic slowdown and the threat of fiscal deficit hitting the double digits is likely to limit the UPA government from unleashing it full deck of “Aam Aadmi” agenda. Increasing the budgetary spending is only possible when the economy recovers on the path to 8 – 9% growth rate.

In February, the government had set a fiscal deficit target of 5.5% of GDP for 2009-10 but increased its borrowing target to Rs.3.62 trillion from Rs.3.05 trillion last year.
In the first month of the fiscal year, the government already achieved 16% of its fiscal deficit target. The reduction in excise tax by 6% as a part of stimulus package and the Food Security act (which provides food-grains @ Rs.3 per KG to below poverty line beneficiaries) is expected to hit the state coffers.With an expected shortfall of Rs.26000 crore in tax collections and an increased expenditure of Rs.24000 crores (Not counting in the impact of late Monsoons), the Fiscal deficit may be grim, very grim.

Tongue in Cheek: Plutonomy

Plutonomy: Coined by Ajay Kapur, Citigroup’s global strategist in 2006, the term denotes an economy that derives its strength from the assured consumption of the super rich.

Tongue in Cheek: Energy estimates in the world

Research by Harvard University suggests, that the world’s conventional oil and gas alone contains 1000 terawatts worth of energy; coal has 5000, the amount of solar energy falling on earth every year is 30000; and our total current use worldwide is only 15 terawatts-years per year. The trick, of course, is in converting this potential into actual available energy.

Tongue in Cheek:Global loss in wealth due to Financial Meltdown

The world wealth report (June 2009) released by Merrill Lynch and Capgemini estimates a damage of $8 trillion (Rs. 388 trillion) due to the financial meltdown of the world economy in 2008.

Friday, June 26, 2009

India and China: Growth Construct



The return of global liquidity is a welcome sign in the recession and downturn strife economies of the world. Amidst the recoveries, India and China have been the earlier ones (alongside Russia and Brazil). The economy growth patterns and road maps of both the economies have been diametrically opposite. While China’s growth has been a function of the demand in consumer markets in the west and its export surplus, the Indian market is domestic demand led. The liquidity crisis affected both these economies in different manners: For China it reduced the export demand and for India, it reduced the external funding and investments.

Two interesting studies, one by Morgan Stanley and the other by World Bank seem to indicate the return of liquidity will benefit India more than China as India and China will pare off in growth rates with India nudging ahead of China.
Even more interesting is Morgan Stanley’s prediction of annual GDP growth for the period 2011-15. While India’s GDP growth under the baseline scenario during these years is predicted to be 7.5% per annum, China’s too is pegged at 7.5%. Similarly, under the bullish scenario, both Indian and Chinese growth during 2011-15 is forecast to be 9% per annum. But in the bear scenario, India is expected to do even better than China, growing at 6.3% compared with China’s 6%.

Even the world bank in a report released on 22nd June ,2009 forecasts that India’s GDP growth in 2010, at 8%, will be higher than China’s growth rate of 7.5% that year. Further, in 2011, both India and China are expected to grow at the same 8.5% rate.

The Tiger is for the first time looking to outrun the Dragon. So, what could be the reason of the Indian Surge/Chinese Slowdown?

China is more exposed to the vagaries of the world market because of its high trade intensity. A Japan style secular slowdown in the US and Europe over the next decade will hurt China more than India unless China moved beyond its admittedly successful mercantilism.
The FDI boom in China since the mid 90s pushed its investment rate, enabled technology transfer and plugged the nation into global supply chains. All this took China closer to the global efficiency frontier, but it now seems that diminishing returns are setting in.
Future growth in China will have to depend on domestic demand and local innovation, which means China will have to change its growth model.
The fast ageing Chinese society will increase the dependency ratios and social costs.
Concern arises from the fact that growth in China will taper off once the push from the Chinese stimulus package runs out of steam and its loan push slow.(In the chart, China’s GDP growth spurts in initial quarters as the result of the stimulus but decelerates as the effect dissipates)
Cost based Chinese manufacturing may be over-rated. Albert Edwards, global strategist  at  Societe Generale, writes: “Most areas in the markets have now discounted a V-shaped recovery. Any doubt will trigger a rapid reversal in prices. I continue to be extremely sceptical and see recent events as part of a 1930s-like long march to revulsion. Talking about long marches, nowhere in the world fills me with more scepticism than the Chinese economic recovery. The continued enthusiasm for all things Chinese reminds me so much of the way investors were almost totally blind to the fact that the US growth miracle was built on sand. China could be the biggest disappointment yet.”

The challenges that both these economies will stand up to fuel their growth stories are again very diverse:
For China, it will be a transition to domestic led growth
For India, it is going to be building infrastructure and its fiscal woes (owing to a bad governance and the quality of national leadership)
Reference:
Catching up with China on Fast Growth Track:
Can India run ahead of China

Tongue in Cheek: The cost of Climate change

ADB in a recent report on the economics of climate change in South East Asia has indicated that the cost of adverse impacts of climate changes would be 6% to 7% of Southeast Asia’s income each year by the end of the century.

Wednesday, June 24, 2009

Tongue in Cheek: Asia and Global Warming

Developing Asia already accounts for one third of global greenhouse gas emissions. It is expected to increase this contribution to 40% by 2030,making it the main driver of global warming.

Tuesday, June 23, 2009

Will Monsoons spook Economic Growth away?

The biggest driver of Indian Economy numbers through the downturn was a bouyant domestic demand. This helped it tide over the economic doom better than most of the countries around the world. However, the spectre of a bad monsoon actually is more insidious to the Indian economy than anything else. And this is one threat the Indian economy is somewhat less prepared to coast over.
The crisis
World Meterological organization warns of greater than average chance of El Nino thus having profound impact on the Indian Monsoons. As it stands, the Indian Monsoon has barely progressed in the last two weeks (2nd/3rd week June).The annual June-September monsoon generates nearly 80% of the annual rainfall over the country and is vital for the economy, being the main source of water for agriculture, which accounts for around 17% of India’s gross domestic product (GDP). Other than the 60% of the country’s workforce that depends on agriculture, the rains are also important for traders dealing in food and cash crops.As of 17th June, the latest estimate shows a 45% shortfall in rainfall.28 out of 36 meterological sub divisions have recorded scanty rainfall as against 4 divisions last year. Read Could El Nino dry up the economy's green shoots? http://www.livemint.com/2009/06/08003141/Could-El-Nino-dry-up-the-econo.html?d=1

The Reason
A full fledged El Nino was only expected around August, commented Mr. Madhavan Rajeevan, meteorologist at ISRO.The only ray of hope is the fact that not all El Ninos are bad: 1997 El Nino led to excess rainfall. 2002 and 2004 El Ninos associated with severe droughts. However statistics favours El Ninos association with droughts: Between 1880 and 2006, 12 out of 18 El Ninos have corresponded with drought like conditions/below normal rainfall.


The Impact
Drought is the most eminent risk of the El Nino fall out with Khariff crops being at risk.Technically speaking a Rainfall deficiency of 10% or more is defined as a drought. Since, 55-60% of the Khariff crop is dependent on Monsoon, a small variation in the rainfall totals can impact the crop very adversely, There has been a drastic dip in water reservoir levels across several states. In nearly 80 national reservoirs, the water stored is 1/3rd less compared with the same time last year.and if not replenished during monsoons, irrigation water will be deficient, because drinking water needs would come first.

Long Term Damage and Control
The current year’s monsoon is considered to be crucial for the economy as buoyant rural consumption has been a key driver of growth amid an economic downturn (read http://www.livemint.com/2009/04/17234039/Monsoon-booster-for-rural-dema.html?d=1). While the country has sufficient food stocks to tide over any crisis this year, the macro economic pressure is expected to accrue on account of food price inflation.

In Orissa, Industries have been asked to cut down their production levels, because of low reservoir levels resulting in low electricity generation. Power deficit levels are expected to be 20 – 30%, even in a power surplus state like Orissa. Elsewhere in Chattisgarh, the Government has already purchased and stored 370,000 tonnes of rice and is ready to procure rice from outside as well. Madhya Pradesh is worst off in terms of reservoir crisis. Reservoirs which were full last year, are all running empty.

A shortfall in rainfall could also impact the power generation in the country. Agricultural demand for power would go up and power availability from hydroelectric projects would come down. This would impact the power supply position in the country.

Source: Truant rains could nix nascent recovery: http://www.livemint.com/2009/06/22235043/Truant-rains-could-nix-nascent.html?pg=1

Also Read: Changing Monsoon trends: http://www.livemint.com/2009/04/30222403/Changing-monsoon-trend-forces.html?d=1

http://www.livemint.com/2009/05/25092131/Monsoon-hits-Indian-coast-ear.html?d=1

Monday, June 22, 2009

Tongue in Cheek: What a waste!

A new section in Newspaper Posts, Tongue In Cheek, is about interesting facts and annecdotes concerning the world around us. Your comments as always are welcome.

Approximately 40% of the farm produce (Fruits and Vegetables) in India is wasted in the absence of organized cold chain network in the country.

Sunday, June 21, 2009

New Tools, new approaches

An excellent article reproduced from Mint's article on comparison on collaborative growth (Chinese approach) versus Inclusive growth (Indian Approach) by S Narayan (former finance secretary and economic adviser to the government).http://www.livemint.com/2009/06/21203159/New-tools-new-approaches.html?h=D

China is focusing on massive infrastructure investment--less than 40% of this is from its central budget

There is a quiet in the corridors of government, and people in the know attribute it to ministries getting down to serious work. There is evidence of cleaning up in several ministries, with changes in the higher echelons of bureaucracy and a revamp of the personal staff of some ministers. The Budget is only a couple of weeks away, and the big companies are making effective use of the media to lobby their requests for tax breaks and tariff reductions. There has been a very good article by Narayana Murthy of Infosys that recommends downplaying the Budget into a revenue-balancing exercise and focusing on deliverables and programmes.


The Prime Minister has made it clear that he wants growth back to double digits, and the good news is that inflation is also falling. There is sufficient liquidity in the system, and there are investors willing to back the equity markets. The poor monsoon is cause for worry, but many financial firms are upgrading India’s 2009 growth prospects.


Financial investment firms upgraded prospects for China as well, based on the financial stimulus packages announced by that government. China has just announced $20 billion loan assistance to Russia, clearly indicating its financial superiority. It is interesting to compare the policy approach for stimulus used by China with that in India. The (Chinese) approach followed has been to focus on a massive infrastructure investment programme of half a trillion dollars. Interestingly, less than 40% of this is from the Chinese central budget—the local governments have been asked to find the balance and to implement the programmes. Banks have been asked to lend to provincial governments for this purpose, and liquidity infusion into the economy is through credit for infrastructure projects. There is, thus, an incentive for provincial governments to take up and implement long-needed projects, and the financial wherewithal to do it. Implementation is monitored through a simple incentive—governors who do well will be rewarded in the party hierarchy; others will not. Among the more important programmes is environment—cleaning waterways, urban waste management and water supply.


Let us compare this with the policy pronouncements made in the President’s address and in the Prime Minister’s letter to his cabinet colleagues. The focus is on “inclusive growth” that would be achieved by extension of the National Rural Employment Guarantee (NREG) programme, an Act to mandate food security—an extension of the NREG programme to urban areas, and liquidity infusion is through bank lending for the private sector and directed lending for agriculture. In short, while increases in liquidity are being targeted in China for the construction of infrastructure and the provision of improved services to citizens, in India it is being used for social welfare programmes and assisting the private sector. We could have done what China is doing, as we have a huge publicly owned banking system, and a federal structure that can reach to state governments and all major cities. Just imagine the benefits if the government had announced a major infrastructure programme in every major town over a one-million population, and left it to the local bodies to implement it, within technical and quality parameters laid down nationally—we would have our cities cleaned up and liveable in five years!


In the rural sector as well, something different is possible rather than granting agricultural loans and writing them off, leaving the farmer no better off. In investment terms, when banks give an agricultural loan, they are “long” on the crop— volume and prices, until the crop is ready. This is a financial risk taken by banks without adequate cover, given the volatility of crop yields and prices and the vagaries of the monsoon. This is the real subprime that hits bank balance sheets and government finances year after year. It should be easy to provide instruments in the markets where this risk could be mitigated by a vibrant spot and futures market of products. If agricultural produce could be stored and quality tested, then the receipts become marketable, with assured delivery at the end of the contract. From this, it is easy to develop futures and options that will mitigate risk. In effect, the bank lending for agriculture can continue, and the market would mitigate the risks of this lending through price and volume discovery that is transparent. Farmers would be benefited through a clear price for their products, middlemen would disappear, bank risk would be mitigated, and government interventions avoided. All that is needed is to create state-specific exchanges where such transactions can take place under the state regulators (under the Agricultural Produce Marketing Committee Act), and encourage farmers to participate.


It is important to think of new approaches. The pattern of programmes outlined by the government is a revisit of the rural development and poverty alleviation programmes of the past several decades, without any attempt to learn from their failures or think in terms of the new, young, urbanizing population of today. The needs of the people, as well as their aspirations, have changed and perhaps we should use the new tools at our disposal in the financial and services sectors to deliver what the citizen expects.

Tongue in Cheek:Twitter ( 6 going to 18)

A new section in Newspaper Posts, Tongue In Cheek, is about interesting facts and annecdotes concerning the world around us. Your comments as always are welcome.

Twitter has roughly 6 million users and is projected to grow to 18.1 million users by 2010. The next Black Swan in making?

Saturday, June 20, 2009

Is it Time for BJP and Left to rift away from its ideological twins?

Post the general elections, the BJP camp has been a veritable mess with accusations and counter accusations flying thick and high. While many theories are going around on the reasons of loss of stature of BJP, my personal belief is BJP lost because of its inadequate agenda. BJP failed to count on their noteworthy successes in governance and fell back on the Hindutva ideology. This has to do with the roots of BJP which are firmly grounded in the RSS and the “Sangh” which are fundamentalist Hindu by nature. Taking the Hindutva platform alienated the BJP from the minorities and the cause was not helped by the Gujarat Muslim pogroms and the Kandahar Christian massacres. Ultimately, the uncharismatic Advani tried to balance the image of a progressive BJP, with its plans for India and the radical Hindu beliefs of its parent, the RSS. The rest is history (as the word goes)

http://blogs.timesofindia.indiatimes.com/ringsideview/entry/how_bjp_lost_the_plot
http://blogs.timesofindia.indiatimes.com/clicklit/entry/leave-hindutva-bjp-left-it
http://timesofindia.indiatimes.com/BJP-situation-now-volcanic-Sushma/articleshow/4658037.cms
http://timesofindia.indiatimes.com/BJP-cant-give-up-Hindutva-RSS-Joshi/articleshow/4663136.cms
http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=HomePage&id=e9c731c5-d28e-442b-8b58-db89d142d300&Headline=Lok+Sabha+debacle+haunts+BJP+as+party+National+Executive+meet


In another news this morning P Chidambaram, the Union Home Minister has asked the West Bengal CM Budhadeb Bhattacharya to do the obvious: Ban the Maoists from the state. Questioning the wisdom of Left-ruled West Bengal for not banning CPI (Maoists) in the state, home minister P Chidambaram said, "I believe there are voices in West Bengal which have raised this issue. We think they should be banned in West Bengal as in other states." Security and intelligence agencies have been raising the issue for long, arguing that West Bengal has become a shelter for Red ultras who take refuge there after committing violence in neighbouring Jharkhand, Bihar and Orissa and also in faraway states like Chhattisgarh and Andhra Pradesh.

http://timesofindia.indiatimes.com/Why-arent-Maoists-banned-in-WB-asks-PC/articleshow/4675711.cms

Both these cases reflect the same fact: A relationship between two siblings (Marxists / Maoists and BJP / RSS). The difference being that one sibling has a progressive developmental perspective while the other is a more radical extremist ideology. Unfortunately, at this point of time, the road ahead presents a dilemma as these ideologies cannot have the same common identity and must part. It is time for the BJP leadership to recognize the fact that Hindutva is not a long term and sustainable platform (and instead it should look to eulogize its infrastructural achievements in Gujarat and else where). For the Kolkata based Left Government the choice is to dissociate with the Extreme Left Maoists to present itself in the right light to the people, for whom it stood for 32 years.

Friday, June 19, 2009

Kolkata's missing millionaires and Lalgarh

(On an interview board, i was once asked the reason of West Bengal's fall from position of emminence. As a native Bong, i accept the feeling of dissapointment when Kolkata/West Bengal feature low in industry/infrastructure/investment indexes in India. Having spent some time in Kolkata, i realise that the historical city is now one in obsolesence. An interesting article summing up this situation by Anand Soondas: http://blogs.timesofindia.indiatimes.com/onefortheroad/entry/kolkata-s-missing-millionaires-and)


Apart from the blood and blotch of Nandigram, and the nightmare that Lalgarh is turning out to be, there was one more, very telling, bad news that came from Bengal in recent times – that Kolkata, its capital city, could only notch up an abysmal number 26 on the list of India's rich cities. Anger has a deep connection with economics and politics. Lalgarh was waiting to happen.
Of course, chief minister Buddhadeb Bhattacharjee and his comrade-in-arms would dismiss with practiced disdain the fact that Kolkata isn’t rich enough, but there's more to it that what the ruling Marxists would like us to believe. Bengal is just not creating any wealth, opportunity or even employment for its people.
For a city Kolkata's size, with an un-updated population of 15 million, drumming up a mere 15,853 millionaires hides a nightmarish horror tale. A comparison with the other three metros makes the city's tragedy quite clear. Comparable to Delhi, Mumbai and Bangalore in both size and number of people – even modern history one would say, which has not been as violent and marginalizing as that of, perhaps, the North-East states – Kolkata figures nowhere even remotely near the 137,992, 100,039 and 104,852 millionaires that India's other main cities have to show for themselves. If the pathos has to be rubbed in just take a look at what Chandigarh, a city with a population 15 times less, has achieved. The rich list shows Le Corbusier's masterpiece showing off an applause-worthy 33,962 millionaires, twice that of Kolkata!
So what is the problem with the state that was one of the first ones to pick up the Queen's English, don the suit-and-tie and use fork and spoon to pick on eileesh. Anyone watching Bengal's steady decline will lay the blame squarely on the politics the state has come to understand and the ideology it has grown to adopt. It is something that fosters sloth, decay and, if truth be told, degeneration.
Some time ago, as I was sitting in one of Bandra's popular pubs, an ad-executive friend of mine recounted with shock how on visit to Kolkata a few years back he was stuck in the middle of Esplanade for a full 20 minutes in a tram that stopped because of a power cut. ``The crazy part was that no one was in a hurry to go anywhere,'' he said. ``In Bombay, people would have fidgeted after five minutes, crossed the tracks and moved on with their lives.''
True, that's probably what would have happened. But Kolkata isn't Mumbai. The politics won't let it be. In a May 2005 report titled `A tale of two states: Maharashtra and West Bengal', prepared by University of British Columbia professor Amartya Lahiri and economist Kei-Mu Yi, there is a clear link between economic evolution and political environment. Spanning the years between 1961 and 1991, the duo says that ``Bengal, which was one of the two richest states in India in 1960 has gone from a relative per capita income of about 105% of Maharashtra to a relative income of around 69%''. One of the important factors responsible for its woes, the economists say, is ``political development…namely the increasing vote share of the Leftist parties''.
No wonder then that the per capita income (2003-04 figures) of West Bengal in the 30 years since the state got its first Marxist chief minister stands at just Rs 20,896, much below those of Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Maharashtra, Punjab, Tamil Nadu, Sikkim, Chandigarh, Delhi, Puducherry.
Nandigram and the millionaires' list, at two ends of the spectrum, should come as a deep pointer to the politics in comrade country. Large parts of Bengal are not even on the fringes of the IT revolution or the economic boom and brim with people who resemble those angry coalminers in Yash Chopra's 1979 classic Kaala Patthar – desperate, hungry, shorn of comforts and hanging on to whatever there is to be had from Party and profession. And the lorai, lorai korte hobe (fight, fight, we must fight) battle cry of the Left parties only serves as a trigger to a fury ready to be unleashed by the mostly-poor cadres. The Frankenstein’s monster that Lalgarh is had to come to life.
It serves perfectly fine for the ideology-spewing bhadralok neta swearing by everybody from Marx to Stalin, Lenin to Castro, Che to Chavez – and even Prachanda – to ``keep `em poor and burning''. That is why the Communists have through the years protested, often scuttled, everything needed for upliftment of people, from introduction of English in junior classes to multinationals setting up businesses. Because money brings comfort and comfort has an intrinsic liking for capitalism.
It isn't any surprise, therefore, that industrialization continues to be a taboo word in this part of the world. Just try investing some money in Purulia or the Parganas. It isn't easy. What is easy, though, is calling bandhs and blocking people from reaching offices, schools, factories.
Lalgarh has just emphasized how hard change is come by in Bengal. But until that happens, Kolkata will not be able to show up its millionaires and Bengal its progress. A mighty tragedy for a mighty state

Lalgarh: The Death of an Ideology as Red Rage boils over


After 32 years of nothingness, as Bengal was left to a state of decrepit rot, with the ruling Communists doing precious little and nothing, the rage in Lalgarh now boils over. Media brands this as a Mao-ist and yet the question that one seeks to answer is: What social conditions would lead tribals and locals to take up such extreme measures as a means of self vindication. This is what 32 years of hunger, unemployment, abject poverty, lack of amenities, corruption, illiteracy, disillusionment and neglect can lead an unassuming mass of poor tribals into. Many brand this as Maoist. To me it is a revolution against the system, governance and bureaucracy.

Consider this:
The Lalgarh-Binpur block in West Midnapore district is only 180 Kms away from the state capital, Kolkata.
For decades, tribals in Lalgarh sat on a powder keg as naxals amassed guns ands bombs, indoctrinated illiterate village boys and fed on the disillusionment with the laid back and corrupt CPM administration
In the last 30 years, the left front has not built roads to connect the far flung villages, with only 1 bus plying between the district headquarters, Jhargram and Belparahai daily.
There have been deaths from Hunger in the nearby villages of Amlasole and Amjhora.These would tantamount to severe lapses in the district administration.
The NREGA has failed to provide any work to the villagers for the mandatory 100 days.
Inhabitants such as Ukil Murmu and his family have only earned Rs.1070 after working for 4 days, and that is all they have to live off for the remaining 361 days of the year till the next time they get some work.
There is no irrigation system and the only work available to majority of people here is tilling the land after the rains.

For years the corrupt Marxists in the left centred, Kolkata Writers Building have been blissfully unaware of the neglect and suffering they have put the state though.West Bengal progressively has lost its sheen post 1970s to upstarts such as Maharashtra, Gujarat, Andhra Pradesh, Tamil Nadu and Karnataka. The crisis that the Marxists face today is the threat from their own ideological brethren, Maoists, who are more “left” than the Left. Being unable to control the extremist form of their own identity is perhaps the biggest defeat of Communists and Marxists in Bengal.

The Communists in China engineered the brilliant re-surgence of China by following open market policies. That their Human rights records are not exactly the best is another thing altogether.In as far as the Communists of Bengal are concerned they can neither boast of Human developmenet indexes or economic progress indexes. Singrur, Nandigram, Khejuri and now Lalgarh are the shinning examples of the loss of an Idealogy.

There was a movie in 2002, Sanjiv Karambelkar's LAL SALAAM, directed by Gaganvihari Borate which foreboded the uprising in its present form in the Naxal led states. It was an authoritative portrayal of the plight of the tribals in face of Governmental atrocities and naxal pressures.A window to this world, it is a must see.

Thursday, June 18, 2009

Are Infrastructural Shortages stiffling India

Two seemingly unrelated news articles in Mint today and yet the connect between both of these is mighty and huge.

The first one is about World Bank raising the its forecast for China’s economic growth from 6.5% to 7.2%. This was due to strong government investment supporting growth of the economy.

The second article was a report on the delays in Mumbai’s Bandra-Worli sea link. The project is being opened this month after a four year schedule delay.

Yours truly, had the opportunity to visit China early this month and the two things that impressed me about China were:
Infrastructure that is at-least 10 – 15 years ahead of India.
The investor and business friendly legislations. The scale of Industry and SEZs and the tax exemptions to the industry.
China had embarked on the journey of open market economic liberation 12 years before India had. However, what seems evident in China is the way they have managed the madness of trade and economic liberalization. They built roads and bridges and power stations and ports and aerodromes to handle growth. India went about all this in a pretty unstructured way vacillating between governments and politics. The result is obvious: China, the most populous state in the world, the third largest economy in the world grows fastest, while the Indian Juggernaut is still taking off.

Hong-Kong Macau Sea Bridge

Bandra Worli Sea Link
The case in point is the Worli Bandra sea link. Conceived in 1990s, the 20 Kms Western Freeway project was designed to reduce the traffic choke on Mumbai road arterials as well as reduce the traveling time for commuters in the commercial hub of India. 8 years after the project had progressed, only half the number of lanes (4 out of 8) on a quarter of the actual length planned (5.6 out of 20 kms) is complete. That’s a project completion rate of 12.5% only in double the allotted time. Compare that with China, which has built 10 such sea links in 8 years. The Hong-Kong Macau sea bridge and the 32kms long Donghai bridge in Shanghai was completed in 3.5 years. The 43 Kms Hong Kong – Macau – GuangDong bridge will be built in 6 years.

Elsewhere in India, Delhi, the Metro Rail system is a better example of project management even though the same cannot be said for Common wealth preparation in Delhi.

Its time that all such projects are thoroughly examined by the state and centre governments and all and any causes of delay are penalized for incompetence. It is imperative that infrastructure projects are completed on time and schedule, for supporting the significant strides made by the Indian private sector.

Monday, June 15, 2009

BJP Imploding (Part III): Lack of Leadership and Way Ahead

Post Reference:
Bharat Karnad:professor at the Centre for Policy Research, New Delhi.
http://www.livemint.com/2009/05/31212229/BJP-finding-the-right-centre.html
Ramesh Thakur: http://timesofindia.indiatimes.com/Opinion/Editorial/TOP-ARTICLE--Press-The-Reset-Button/articleshow/4600720.cms

Anti-incumbency, a nondescript track record in office and an insufficiently thought through nuclear deal should have drubbed the Congress in this general election. The botch-up by the opposition Bharatiya Janata Party (BJP) ended up increasing Congress’s margin in Parliament. But a larger truth lurks behind the BJP’s failure, beyond supposed lapses in electoral strategy and a misreading of the public mood. It even surpasses the little noticed irony of the Congress party acquiring a youthful sheen only because the dynast Rahul Gandhi hand-picked young men and women as candidates, something which L.K. Advani—heading a less autocratically run outfit—could not do. Its failures include lack of vision, leadership and strategy.

Lack of leadership
Taking a swipe at Advani, Karnad says, the problems of the BJP are manifested in the persona of Advani. An ineffably sad man who strived mightily to invent and reinvent himself—in his last stretch, as a latter day “ambassador of Hindu-Muslim unity”—he was flatly rejected by the people as much for his pretensions as, perhaps, for his lack of conviction. Wanting to be prime minister is no bad ambition to have; but, tethered to a nebulous set of beliefs, it became a liability.

The likely successor to Advani, Narendra Modi, too frittered away the opportunity to influence the public consciousness positively and to position himself as a leader of substance for the 2014 general election. Rather than talk about his success in providing power and water 24x7 to Gujarat—the only state to attain this—or his well-founded reputation for incorruptibility and, as its downstream effect, a clean administration at the grass-roots level, Modi heckled the ruling party as a “budhiya” (crone).

What Could be the way ahead?
Moderating its “Hindu” image (Influenced by the Saffron led RSS Militant Hinduism), replacing its intellectually exhausted and morally compromised leadership and returning to the virtues of party discipline, conviction and values that promote national integration and equality for all; pro-growth economic policies that encourage and reward entrepreneurship yet institute compassionate social safety nets; and a foreign policy that rests on confidence in India's ability to compete with the world all of this will position the BJP to capture a significant chunk of India's growing middle class. It can then capitalise on government shortcomings and the corruption issue, by forging winning coalitions with regional parties whose loyalties between the two national parties will continue to fluctuate.

Sunday, June 14, 2009

BJP Imploding (Part II): Lack of Electoral Strategy

Post Reference:
Bharat Karnad:professor at the Centre for Policy Research, New Delhi. http://www.livemint.com/2009/05/31212229/BJP-finding-the-right-centre.html
Ramesh Thakur: http://timesofindia.indiatimes.com/Opinion/Editorial/TOP-ARTICLE--Press-The-Reset-Button/articleshow/4600720.cms


Anti-incumbency, a nondescript track record in office and an insufficiently thought through nuclear deal should have drubbed the Congress in this general election. The botch-up by the opposition Bharatiya Janata Party (BJP) ended up increasing Congress’s margin in Parliament. But a larger truth lurks behind the BJP’s failure, beyond supposed lapses in electoral strategy and a misreading of the public mood. It even surpasses the little noticed irony of the Congress party acquiring a youthful sheen only because the dynast Rahul Gandhi hand-picked young men and women as candidates, something which L.K. Advani—heading a less autocratically run outfit—could not do. Its failures include lack of vision, leadership and strategy.

Lack of Electoral Strategy

The BJP's blistering attacks on Manmohan Singh as a weak and vacillating prime minister taking orders from the Gandhi family, turned the election into a referendum on Singh. Manmohan Singh’s a calming influence amidst terror attacks and the financial crisis and his qualities- decent, honest, unassuming, mild mannered, soft-spoken and likeable are rare qualities in politicians that sit agreeably with voters. So too did the renunciation of political office by Sonia and Rahul in contrast to the clutch of wannabe PMs from other parties. The squandering of economic opportunities over the past five years was blamed by voters on obstructionist coalition parties, not Singh. Attacking him provoked a backlash. Rahul and Priyanka presented younger Congress faces to the BJP's 81-year-old L K Advani. The moderate majority was repelled when fundamentalist Hindus attacked Christians in Orissa and young girls in a Mangalore pub. The BJP alienated its core constituency by hypocritical opposition to the nuclear deal with the US. Strenuously opposed by China, Pakistan and the non-proliferationists, the sweetheart deal was one the BJP would have grabbed in office. Yet it joined the communists with their long history of favouring foreign fellow-ideologues over national interests. Opportunity was squandered also with 26/11 when initial unity collapsed into shrill squabbling at a time of national peril. Attacked for his record on terrorism, Singh counter-punched by recalling Advani's hand-wringing as home minister during a string of terrorist attacks, including on Parliament; release of hardcore terrorists to the Taliban in Kandahar; the year-long military mobilisation against Pakistan that led nowhere; the Babri masjid demolition; and the anti-Muslim pogrom in Gujarat.
The BJP's reputation for communalism distanced allies from the rhetoric and agenda of Narendra Modi and Varun Gandhi. The BJP's only vision was that of the rearview mirror. As India changes, the Indian voter's profile changes. The BJP could neither embrace nor repudiate Varun Gandhi's virulent anti-Muslim rhetoric. It could not reach a broader constituency while appealing to militant Hinduism. On the other hand BJP would/will have lost its core Hindu base if it diluted its ideological purity. The tension will affect its search for fresh leaders. It was entrapped also in the disastrous strategy of trying to win an election on the basis of fear and divisiveness. Hope, generosity of spirit and optimism usually triumph over grievance and negativity.

The BJP’s impressive record of good governance in Gujarat, Madhya Pradesh and Chhattisgarh as well as issues where it holds the whip-hand—such as strong national defence, and an economy speedily unshackled from the remnants of the licence-permit raj—were left adrift. A sustained campaign to pillory the nuclear deal in terms of the “Indian bomb in danger” would have left the Congress utterly on the defensive. The BJP, however, talked of “renegotiating” it, leaving the Congress to walk away with the game.

Saturday, June 13, 2009

Taliban: Loosing its Social and Idealogical base

In an earlier post http://newspaper-posts.blogspot.com/2008/12/is-terror-political-problem.html, i had discussed terror and militancy being a social problem foremost. It is only when the conditions in the society favour radical thought do people and societies favour such radical and exteremist steps. Thus, weeding out terrorism involves striking at its social and idealogical roots to make an impact. It is a commonly accepted fact, that Taliban and Al Qaeda have recieved the patronage of the peoples of the frontier provinces in Pakistan and Afghanistan that has blunted the effects of the US, Pakistan and NATO forces. However, relentless fighting, harsh Sharia laws, belligerence and intransigence and relentless blood shed of the Taliban has started eating into its own social base amongst the people in FATA. Mathew Rosenburg and Zahid Hussain (Wall Street Journal) cover the tribes' dissent and anger with the Taliban.

PESHAWAR, Pakistan -- When the Taliban began filtering into Gul Khan Mehsud's town along the Afghan border nine years ago, residents offered food, shelter and ammunition.
"How could we turn them away? The Americans were killing them. We wanted them to fight," says the 38-year-old from South Waziristan, one of the tribal regions that border Afghanistan and arguably the Taliban's most important stronghold in Pakistan. "We thought the Taliban would help us."
People carry a man injured in a suicide bombing at a mosque Friday in the Upper Dir district, west of the Swat Valley in Pakistan. Military leaders in the country say they are hoping anger among residents at the Pakistan Taliban will help fuel an anti-militant campaign and a coming offensive.
Instead, Mr. Mehsud was forced from his home in South Waziristan earlier this year after the Pakistan Taliban, which grew out of the militants who fled the 2001 U.S.-led invasion of Afghanistan, accused one of his cousins of helping the U.S. plot missile strikes from drone aircraft.
Mr. Mehsud now lives with nearly two dozen relatives in two rooms in this city, the gateway to the tribal borderlands. "I didn't want to be shot," he says.
With Pakistan on the brink of taking its anti-militant campaign to the tribal areas on the restive border with Afghanistan, civilian and military leaders in Islamabad are banking on growing anger with the Pakistan Taliban among tribesmen such as Mr. Mehsud, whose Pashtun ethnic group straddles the frontier and lives in the core of the insurgency in both countries.
Popular support for the insurgents has undermined years of attempts to subdue the border areas, where the Taliban hold sway and al Qaeda operates openly. Residents who have fled report an intensifying reign of terror. The region is largely off limits to outsiders -- foreigners and Pakistanis alike -- and there are signs of growing disgust with the Taliban's hard-line tactics.
Pakistan's military hopes to channel that disenchantment behind its coming campaign in North and South Waziristan, which is likely to be grueling. An estimated 15,000 militants from the northwestern mountains of Pakistan and parts of eastern Afghanistan have massed in the area before an offensive expected to begin in the next month or two.
Anger at the Taliban in tribal areas mirrors a broader anti-Taliban sentiment across Pakistan that backed the military's recent offensive in the Swat Valley, a onetime vacation area overrun by the Taliban in the past two years.
The military launched its assault in Swat, which is roughly 100 miles from Islamabad, about a month ago after the Taliban violated a peace agreement that gave them control of the area.
Pakistan's top brass say the army has cleared militants from most of Swat, but there still are pockets of resistance in the valley and sporadic violence in areas around the region. On Friday, a suicide bomber killed at least 30 people attending afternoon prayers at a mosque in the Upper Dir district, a remote area to the west of Swat. According to Pakistani officials, there was no immediate claim of responsibility, but one local government official blamed the Taliban, saying it was likely in retaliation for the Swat offensive.

The tribal areas -- remote, mountainous and untamed by outside authority for centuries -- represent a far greater challenge. Pakistani intelligence officials say the top leaders of the Swat Taliban have retreated, along with hundreds of followers, to North and South Waziristan.
North and South Waziristan are part of the so-called Federally Administered Tribal Areas, a rugged region cut off physically and politically from the rest of the country. Unlike Pakistan's four main provinces, the region has historically been under only loose federal government control.
There still is broad popular support in the area for militants fighting U.S. and North Atlantic Treaty Organization forces in Afghanistan. And the Pakistan Taliban hasn't lost its allure among the tens of thousands of people whose relatives were killed or homes were flattened in military attempts to reassert authority in the tribal areas.
"Each time there is badly aimed artillery firing or the Americans fire missiles, if one person is killed, all his brothers and sons and cousins join the Taliban," said Hazrat Muhammad, 36, who last year fled fighting in the Mohmand tribal area near South Waziristan.
Even among those, such as Mr. Muhammad, who say they now oppose the Taliban, there's deep distrust of the government, which has done little for the tribal areas since Pakistan was created six decades ago.
In social and economic indicators, the region trails the rest of Pakistan. Per-capita annual income is about $500 -- roughly half the national average -- and literacy hovers under 20%.
Rustam Shah Mohmand, a former official who served as top administrator for both Waziristans, said the people "don't want the Taliban. But they don't want the army. They want to go back to their old ways."
The old ways allowed Islamabad to govern through a network of moderate tribal elders, known as maliks. Pakistani law didn't apply to the tribal areas, and the army stayed out of the region.
The system, which originated more than a century ago when Britain ruled the subcontinent, was upended by the Taliban and al Qaeda after the U.S.-led invasion of Afghanistan in 2001. Hundreds of maliks were killed or forced to flee, and the few government officials in the region brought to heel.
The army sent in soldiers in 2003, but they did little to restore civilian authority. A new generation of Taliban warlords filled the vacuum, banding together in 2007 to form the Tehrik-e-Taliban Pakistan and fight Islamabad.
The group's most powerful commanders are based in the Waziristans. Among them: Baitullah Mehsud, the nominal leader of the Pakistan Taliban.
In one indication of the growing anger at the Pakistan Taliban, a rival from within Mr. Mehsud's tribe is gathering fighters to challenge the commander.
"The government is an enemy," said Gul Khan Mehsud. "First the Taliban must go. Then the army should go," he said. Asked who would then govern the tribal areas, he replied, "We can work that out ourselves."

BJP Imploding (Part I): The lack of a Coherent Vision

Post Reference:
Bharat Karnad:professor at the Centre for Policy Research, New Delhi . http://www.livemint.com/2009/05/31212229/BJP-finding-the-right-centre.html
Ramesh Thakur: http://timesofindia.indiatimes.com/Opinion/Editorial/TOP-ARTICLE--Press-The-Reset-Button/articleshow/4600720.cms


Anti-incumbency, a nondescript track record in office and an insufficiently thought through nuclear deal should have drubbed the Congress in this general election. The botch-up by the opposition Bharatiya Janata Party (BJP) ended up increasing Congress’s margin in Parliament. But a larger truth lurks behind the BJP’s failure, beyond supposed lapses in electoral strategy and a misreading of the public mood. It even surpasses the little noticed irony of the Congress party acquiring a youthful sheen only because the dynast Rahul Gandhi hand-picked young men and women as candidates, something which L.K. Advani—heading a less autocratically run outfit—could not do. Its failures include lack of vision, leadership and strategy.

No Ideological Core apart from Hindutva / Lack of a coherent vision

That truth relates to the BJP’s having no ideological core. There is space for a centre-right national party alongside the Congress on the centre-left, around which politics can be structured and coalition governments formed. Instead of basing itself on any progress and development led idealogical core, BJP went alongwith Hindutva and Congress bashing as its electoral idealogy. After BJPs losses in the 6 state assembly elections (including Delhi), it was expected that BJP would reconsider its electoral USP and communication strategy. However, BJP clung on to its Hindutva platform and demeaning the Congress (instead of exulting its own agenda or achievements).

BJP's challenge was to preserve Hindutva loyalty and yet reach out to a broader social coalition. For the aam aadmi, Jai Shri Ram is increasingly passe. The BJP had a choice: Cling to the past the glory that was India with a shrinking voter base or embrace a vision for the future the glory that awaits India which appeals to the growing voter cohorts of the young and urban.

The Congress at least offered the solace of rhetoric, regardless of whether the condition of the “aam aadmi” (ordinary citizen) is ever bettered by the party’s exertions in power. Election slogans encapsulate the promised thrust of government. It does not matter if the end state is never reached. Recall Indira Gandhi’s “Garibi hatao” (End poverty)? It did little for the poor but kept the Congress party in clover for nearly a generation. In this context, faced with the BJP’s campaign, the average voter would have concluded that it was disconnected from reality.

Social order and stability were the preconditions for the rights and freedoms enjoyed by the citizenry as well as for a free market. It is these principles that the BJP should associate with.

Sunday, June 7, 2009

A better bureaucracy

In a separate post,some time back (http://newspaper-posts.blogspot.com/2009/01/thumbs-up-for-china-thumbs-down-for.html), i had discussed a point of view (widely accepted amongst Indian professionals), that while the growth of China is a result of their governance and bureaucratic efforts, Indian growth is more to do with the effort of individuals, businesses and entrepreneurs. A latest report ranks Indian Bureaucracy as being the worst in Asia. For long the accountability of the bureaucratic class has been a pain in India's governance.Reproducing an article by S. Narayan (former finance secretary and economic adviser to the primeminister) on the same issue.
http://www.livemint.com/2009/06/07212419/A-better-bureaucracy.html

With the reconstitution of the Planning Commission, the government has once again sent out signals that it means business. The new faces in the commission represent a class of people who have achieved considerable success in their own work environments, and who bring a passion to the roles they have been assigned. The President’s address to Parliament has underscored the determination to produce results, and there is evidence that ministries are being activated and some strategies worked out.
The air of expectation that things will happen this time is quite palpable, but one wonders what is different now. Improvements in levels of governance cannot come out of existing systems and deliveries, and yet there is little indication of how things will change. There have been no suggestions of reforms in processes and procedures: The reports of the Administrative Reforms Commission have offered little by way of solutions, and the major impediment to foreign direct investment (FDI) appears to be the excruciating pace at which the bureaucracy works.
Political and Economic Risk Consultancy, a Hong Kong-based organization, in its latest report has ranked India’s bureaucracy the worst in Asia, with a score of 9.45—zero being the best grade and 10 the worst. It is the only country whose ranking has worsened in the last three years. There are several reasons for this.
The first is ambiguity in policy. There are several examples. The foreign institutional investment (FII) policy, for example, allows free flow of funds without transparency of origin, for short-term investment into markets and market-related products, and has a low taxation burden in the form of capital gains tax. FDI has to bear the burden of full corporate taxation, as well as clearances from multiple agencies and continuous scrutiny. Poor mining policies and lack of consensus with states have stultified mineral exploitation, converting it into a resource available only to those with political access. However, most of these problems are in the realm of implementation issues, and can be addressed by ministers who are determined to get matters moving at their ministries.
The second is in the area of implementation strategies and monitoring. In the last five years, there have been several expert committees whose reports (nearly 70 in number) are available with the government, representing suggestions for implementation in areas as wide-ranging as agriculture and skill development: These only need effective implementation at the ministry level, this at the level of secretaries and joint secretaries. There has been almost no attempt to get these recommendations off the ground.
The third is the most difficult. This is in the area in which the public interfaces with the government, in the day-to-day business of life. In the area of sales tax and income tax, in paying bills and getting planning permissions, in running hospitals and schools, the functionaries of the government behave as though they are an Inquisition to extract the most from clients. This cutting edge bureaucracy, the reluctance at the lower levels of government to change, the lack of responsibility and accountability are all states of governance that we have wished upon ourselves.
Part of the problem is probably the scales of pay, but this has been substantially taken care of after the Sixth Pay Commission. More importantly, it has to do with how government servants perceive themselves and how society perceives them. They are part of the elite; and part of the way they display their importance is by being difficult to work with—whether in matters requiring their approval or when dealing with the people they meet. One reason could be the lack of checks and balances—as was demonstrated last week by the inspection of the Sushruta Trauma Centre in Delhi by the health secretary. But this is not all. The real problem arises from the hierarchical nature of decision-taking and the intense fear of taking the wrong decision, resulting in the tendency to pass the buck upwards. From the civil servant’s perspective, it is ideal to hide a decision behind a committee. In India, over the years this has gotten worse—decisions we used to take at the level of joint secretaries now require cabinet approval, that too after a formal recommendation by the committee of secretaries.
The Right to Information (RTI) Act and public interest litigation (PIL) have no doubt contributed to transparency in decisions, but they have also increased the reluctance to take decisions at lower levels. The answer is “no” unless there is no way of avoiding a “yes”—and corruption flourishes in such an atmosphere.
There are no easy solutions here. One way is to distance people from the bureaucracy through technology—payment of bills, tickets for travel, and applications for jobs and admissions can now be done without face-to-face contact. There should be an attempt to enhance these services. However, at the level of approvals for economic activity, improvements can only happen if those at the top are more vigilant—through better supervision and checks and, most importantly, speedy deterrents.
We need to change the way government transacts its business.