Trust your people

Trust your people

In past few years a multiple cracks have surfaced on Indian socio-economic canvass; especially in terms of governance, capital, infrastructure, policy, business & investors’ confidence, regulatory framework etc, leading to plateau in the growth trajectory.

Consequently, the investors no longer seem totally enamored with the still high growth potential of Indian economy highlighted by the immense investment opportunities in incapacitating infrastructure deficit, enticing demographics, burgeoning middle class, low consumption level, scope for rapid urbanization, etc. It is not uncommon to find people asserting that the growth seen during 2003-2008 was an exception, in the long term trend of 4-5% growth rate.

Historically, high fiscal deficit, trade deficits and infrastructure (especially energy) deficit have been recurrently swaying the investors’ sentiment. However, recently governance and trust deficits have attracted more attention.

In our view, the most valuable resource for India is her people. In not implementing the recommendation of Balwant Rai Mehta committee (1957) on local self governance, our political system has been unable to develop an environment of mutual trust and transparency and thus failed the people of India. Despite, Narasimha Rao government ensuring 73^rd constitutional amendment in 1992, the political establishment has obdurately refused to share power with the local bodies and common people.

As per NCAER 2008 Devolution of Power Index – only a handful of States have done meaningful devolution of power to Panchayati Raj Institutions - Madhya Pradesh, West Bengal, Tamil Nadu and Kerala being the notable one.

A series of irregularities that have come to light in past two decades suggest that lack of transparency in government functioning and substantial discretionary powers enjoyed by elected representative in appointments, procurement, resource allocation etc. are the primary reasons for governance deficit.

In our view, an overhaul of governance is long overdue and should be done expeditiously. The following could be a part of agenda that needs to be implemented in this context:

1.       Minimize the size of government. Devolve powers to Panchayti Raj Institutions. Trust people.

2.       Enforce fiscal discipline legally and constitutionally. Violation of FRBM targets without approval of 2/3^rd majority in Parliament and State Assemblies should be prohibited, and FM should be made personally culpable for any violation.

3.       Make public offices un-remunerative by stripping most discretion enjoyed by the elected representatives.

4.       Implement electoral reforms, especially state funding of elections which is widely believed to be at the root of most corrupt practices.

Focus on strengths

Focus on strengths

Prima facie it appears that the Nehruvian model of industry led growth has largely failed in evolving a strong structural base for the Indian economy in past more than 6 decades. Consequently, we still continue to be an economy largely dependent on labor & resource arbitrage and trading. We have failed in making significant progress in the areas such as technological advancement, productivity gains, innovation and localization.

In our view, we have focused too much on our weaknesses and tried hard to overcome by importing technology, energy, intellectual property, capital and consumption patterns. We have also failed in exploiting our strengths and allowed outflow of precious resources both natural and human.

Current account deficit, which has emerged as one of the key concerns in past 5-6 years, is a direct consequence of our failure to make necessary adjustments to the growth model adopted post independence. We suggest, the government should work out a mission scale program to reverse the flow of trade to pre British era. The following programs for example, could improve the balance of payment substantially and structurally by 2025:

(a)   Energy deficiency had been one of the primary reasons for India’s fiscal and trade deficits. Failure in implementing an integrated energy policy has been a major failure of policy making.

It is widely recognized that “roof top solar panel” has the potential greater than the one seen in mobile telephoney in past one decade. Reducing energy intensity of water and developing a world class public transport infrastructure on priority basis, especially in tier II and III cities, and strict legal enforcement of energy efficiency should be considered

(b)   Indians spend approx USD25bn annually on education and related overseas travel. Creating 5 special education zones with liberal VISA, forex, taxation and real estate ownership rules, and allowing foreign institutions to freely set up campuses could reverse this flow. Students from India, far-east, middle-east and Africa who find it difficult to get VISA for US/UK etc. or find that expensive could also benefit from this.

(c)   India holds tremendous potential for tourism. However lack of proper infrastructure had traditionally constricted the growth of this sector. On the other hand Indian outbound tourists flow is rising. Developing some world class self contained international tourism centers, e.g., on lines of Macau, Disney, Las Vegas, etc. with liberal VISA, Forex, taxation and real estate ownership rules could reverse these flows.

(d)   Vindavan, Tirupati, Varanasi, Ayodhya, Gaya, etc. all have potential to be as desirable, venerable and popular destinations as Mecca, Vatican and Jerusalem. Converting these centers of Indian religion and culture into self contained special zones with international airport and annual event calendar could get substantial forex revenue.

These projects also have the potential to generate large scale productive employment opportunity for local talent, besides contributing to economic growth and true globalization of Indian economy.

Learning from Switzerland, Israel and China we can focus on our strengths and locally available resources for faster and sustainable growth.

Enable the youth

Enable the youth

The young demography is famously the biggest strength of Indian economy at this point in time. However, if not managed properly this may as well prove to be the nemesis of the fabled India story, in our view.

The pertinent fact is that Indian growth in past decade or so has miserably failed in creation of adequate productive jobs for the burgeoning workforce of the country. MNREGA has helped to some extent, but it is bound by fiscal constraints, leakages and lower productivity. Disguised and underemployment also continue to impact the productivity and earnings potential.

We have been highlighting that the vast reservoir of youth energy on which Indian economy is sitting presently, could potentially explode if not channelized appropriately. It is therefore extremely critical to evolve an integrated youth policy that include mission scale programs to educate and skill the youth, inculcate enterprise skills in them from early stages, enable them to engage in productive self employment, deal empathetically with their concerns, anguish, frustration and disillusionment.

In our view, the following is the minimum that needs to be urgently implemented:

(a)   Overhaul education system to make it job oriented. Inculcate enterprising skills in students from primary level. It is high time that we do some zero base planning regarding our education rather than just incremental tinkering. Post middle (8^th standard) job oriented education, training and skilling programs should be made more popular with active participation of industry. RTE should be amended to provide for a uniform and standard education to all the children. Bringing social changes like “respect for work” and inclusion of “workers” in main stream would be quintessential to this.

(b)   The trained and skilled youth should be adequately supported and enabled to engage in productive self employment. The present model of MSME promotion may not be adequate to create massive employment needed. This model may not be totally competitive in the emerging scenario where the Indian industry will have to increasingly compete with large global players. Co-operation movement in industry on the lines of AMUL where a large number of trained youth can create, own and profitably manage large globally competitive enterprise should be promoted and encouraged. Giving equity in natural resources to local population could be a great starting point.

(c)   Agriculture and allied activities are still at the core of Indian socio-economic structure. Promoting collective and commercial farming may add significant employment opportunity with increased earnings potential.

(d)   Success of IPL has suggested that sports can potentially generate large scale employment opportunity if managed in industry like manner.

(e)   Last but not the least police reforms are absolutely necessary to manage the agitated & disillusioned youth compassionately and ensuring that they do not stray into prohibited territory of violence and sedition.

20 points program

20 point program

Indian economy is characterized by rising incidence of unemployment and disguised and underemployment; higher than acceptable socio-economic inequality; strong and rising intellectual and skill inequality; gradually bridging but still high regional imbalances; low productivity especially in agri sector, oversized government with extremely low level of decentralization; and seriously incapacitating supply constraints especially in energy, social and physical infrastructure terms.

The young demography provides high potential in terms of growing workforce and consumption demand. But due to low skill level, lack of adequate employment opportunity, financial and social exclusion, and disillusionment of youth due to political indifference and poor governance standards the potential remains under-exploited.

We suggest the following 20 point program for overcoming many of these problems and exploit the tremendous potential of Indian economy that has been recognized by all. We shall discuss these points in some details in coming days.

1.       Overhaul education system to make it job oriented. Inculcate enterprising skills in students from primary level.

2.       Skill youth.

3.       Promote co-operation movement in industry.

4.       Enhance agro productivity to highest level. Promote collective and commercial farming.

5.       Enforce energy efficiency.

6.       Make at least 5 global education clusters by creating special zones.

7.       Make at least 5 world class international tourism centers.

8.       Stop river waters from flowing into sea.

9.       Give equity in natural resources to local population.

10.   Transform RTE into “Right to equal and uniform education”.

11.   Minimize the size of government.

12.   Devolve powers to Panchayti Raj Institutions.

13.   Reform police force.

14.   Declare sports an industry.

15.   Invest in conservation of Indian culture and traditions.

16.   Enforce fiscal discipline legally and constitutionally

17.   Make public offices unremunerative by stripping most discretion.

18.   Implement electoral reforms, especially state funding of elections.

19.   Introduce inheritance tax.

20.   Introduce GST., abolish octroi and entry tax, abolish toll on less than 6 lane roads and highways.

Opium to housing – the journey of China

Opium to housing – the journey of China

In early 19th century the addiction of tens of millions of Chinese to opium was one of the biggest disasters ever to hit China, eventually leading to what is popularly known as the “century of humiliation”.

A recent Bloomberg report suggests that new disaster which could be of similar magnitude might be developing in China. It refers to it as “housing slavery”. The gist of the report is as follows:

The Chinese housing bubble is now the biggest it has ever been; according to some it is even bigger on a relative basis compared to the US housing bubble (either in 2007 or 2013).

The Chinese housing bubble is now the biggest it has ever been; according to some it is even bigger on a relative basis compared to the US housing bubble (either in 2007 or 2013).

The shift to private home ownership stems from reforms started in 1998, when then Premier Zhu Rongji privatized state- owned housing provided at low rents to urbanites, transferring home ownership from the government to the families occupying the dwellings. About 230 million people moved to cities in the 2000- 2011 period, the biggest urbanization in history.

Today about 50 percent to 70 percent of home buyers in the first-tier cities of Shanghai, Beijing and Guangzhou use mortgages. Average per-square-meter prices in 100 cities tracked by SouFun are five times average monthly disposable incomes. A 100- square-meter (1,076-square-foot) apartment today costs about 40 years’ annual income, according to SouFun and government data, even as salaries have more than quadrupled since 1998.

Chinese homebuyers typically use 30 percent to 50 percent of their monthly incomes to repay mortgages, The “general guideline” among Chinese banks is that a borrower’s salary should be at least twice their monthly payment

Given the situation, China can hardly afford a real estate bubble pop as it would make the millions of debt slaves into millions of far poorer, deleveraging and in many cases, broke, debt slaves, and lead to the downfall of the financial system stuck holding mortgages that no longer generate cash flows. On the other hand, inflation is already resurgent, and as the recent halt to reverse repos shows, China is this close to a repeat of the spring of 2011, when it lost control of inflation, and had to demand that global central banks end their reflation effort for fears what hot money flows would do to its social stability.

Worst of all, however, is that in the pursuit of the great Chinese dream, more and more housing slaves will emerge, beholden to an insolvent system reliant on constantly creating over $100 billion in new liabilities (i.e., deposits) per month. Anything more than that, and you have hyperinflation; anything below that and you have a housing crash. And since Goldilocks only works for so long, when the PBOC finally veers off course, it will be the "Sherries" in China left holding the bag. A very empty bag.

Hopes, greed, and fear

Hopes, greed, and fear

Our recent interactions with investors and businesspersons have convinced us that the though the greed is staging a comeback with rising hopes, the fear still continues to be the dominating factor in influencing the investment decisions.

We conclude that the following three may be primary sources of high hopes:

(a)   The slowing growth rising stress in the financial system prompt RBI for an aggressive monetary easing in second half of 2013. Easing inflation, government’s resolve to return to sustainable fiscal path should support RBI’s easing decision.

(b)   The liquidity tightness seen since past few quarters should ease (i) as the government starts spending in new fiscal year; (ii) 9 state assemblies going for election followed by the general election due May 2014 should also prompt higher government spending; (iii) lower inflation and direct cash transfer scheme will leave more money in the hands of consumers to do some discretionary spending; (iv) a normal monsoon will prop rural income and consumption besides savings and deposits: (v) banks will be done with most of the restructuring in 1H2013 and should be willing to lend more in 2H2013 thus improving the liquidity.

(c)   Global economy shall stabilize in 2H2013 with abundant liquidity, still lower rates, stable energy prices (as US energy production continues to rise) and US, EU and Chinese consumers returning to market.

The greed is rising alongside hopes as the investor positioning is ultra conservative and manufacturing and services capacity addition has lagged in past four years. Besides, the valuations (and more importantly the current market prices of stocks) are looking cheaper relative to the boom years of 2006-07.

But surprisingly, no urgency is seen amongst investors and businesspersons to catch the first flight. Since the fear still continues to dominate

The fear is stemming primarily from the political uncertainty and structural weaknesses in the economy. The general sense appears to be that the 2014 elections may produce a fractured mandate with none of the national parties crossing 150 seats. In that case the 1989 and 1996 experiments will recur, deepening the economic crisis even further. This fear will not abate by any stock market rally. We shall have to wait till the 

election results are out.

Secondly, it is feared that the 8%+ growth seen during 2003-2008 period may not be seen in next five years as the economic potential of the country has suffered badly due to severe infrastructure bottlenecks, low capacity creation, falling savings and investments rates and consequent sticky inflation. The earliest evidence, if any, to allay this fear will be available only in 2H2013 when the monetary easing (if any) starts reflecting in IIP and consumption numbers.

Under these circumstances, we continue to remain hopeful that we shall get a better entry point in Indian equities during summer of 2013. Till then savor the cash and watch the targets carefully.

An interesting tag line behind a truck: Jinhe jaldi thi woh chale gaye (Those who were in hurry have passed away.)

Fringe benefits

Fringe benefits

Three significant reforms may be taking shape silently in India, though the government never intended to make these reforms and investors never asked for it, at least not publically.

Firstly, the Competition Commission of India (CCI) is reportedly issuing a notice to three state-owned oil marketing companies (OMCs) on a probe on whether they form a cartel to fix petrol prices. The commission is also looking at the coal and fertilizer sectors, where government-owned companies dominate the market.

This notice could potentially unleash a debate on the corporate governance and accountability of public sector monopolies towards the minority shareholders in particular and public in general.

The public sector corporations can thus be made more accountable to parliament and public and saved from serving political agenda of the ruling parties. Little farfetched but not unfathomable – a CCI stricture on pricing policies of PSU may influence the whole subsidy paradigm in the country.

Secondly, the defence minister, having the image of a clean administrator, pushed to the wall has announced corrective action in the controversial chopper deal. Earlier, he had taken some serious steps to diminish the discretionary powers enjoyed by the defence minister. The political establishment may not like his reformative actions, but notwithstanding he has set a precedence which will be hard to ignore.

A transparent public procurement policy, including defence supplies, with minimal discretions to the minister in-charge may be a game changer in the whole business of government.

Thirdly, the CAG, hitherto a mostly unknown boring accountant, is assuming a central role in the public governance, much against the wishes of the political class.

When Central Election Commission did this, the electoral corruption in the country receded substantially. Hopefully, with the support of judiciary and civil society the CAG will emerge as a true custodian of governance ethos in the country.

A recent nationwide survey by Open/C-Voter substantiated what we had found in our nationwide survey “Mandate 2014” about the need for change in leadership and suitability of Narendra Modi for PMship.

The survey confirmed that Modi so far is more of an urban, middle class, youth phenomenon. He needs to do much more to reach out to the lower strata of the country beyond cities and towns. He needs to reach where TV and his Vikas Rath (or for that matter electricity and roads) have not ventured so far.

Insofar as Rahul Gandhi is concerned, so far he does not appear to be a serious candidate. If the Congress really needs him to be a serious candidates, they should be hitting the road straight away with a credible socio-economic agenda that ‘includes’ middle class also.

Mandate 2014

TINA should not determine the fate of 1.25bn people

Assuming media, including social media, reflects the popular perceptions, we find the country divided in three camps over Narendra Modi. One camp comprises of people who find him the best cure to the policy paralysis and therefore much of the problems afflicting the country at this point in time. The other camp rejects him as a regional phenomenon not of much relevance at national level. The third camp finds him the dark side of the democracy to be rejected as a whole.

In our view, this debate is mostly misdirected, suffers from strong prejudices & elements of romanticism, reflects a conspicuous disconnect between so called intelligentsia and ground realties, and conveniently ignores the political history of past three decades.

We feel we need to debate the issue without prejudice, in light of post emergency political history and from the following three different perspectives.

1.     Does the country need a change in leadership?

First of all, before debating the candidature of Mr. Modi, or Rahul or anybody else for that matter, for PMship, we need to answer “Does the country really needs a change in leadership? If yes, what are the alternatives?”

“Modi vs. Rahul in 2014” debate presumes that the current leadership has failed the country or at least has outlived its utility. If we approve of this hypothesis then we should first junk the current leadership without giving it the benefit of TINA factor. If we disapprove of this hypothesis then this whole debate about new leadership is meaningless and should be junked forthwith. We should rather work to strengthen the current leadership.

In case we believe that the country needs change, we need to discuss the alternatives without prejudice and in light of the historical experience.

Post emergency we have seen a number of permutation and combinations sharing the power, including BJP and Communists, BJP and Mayawati, Mulayam and Mayawati, Lalu and Nitish, NC, BJD & TDP with BJP, Communists and Congress, BJP and AIDMK, BJP and DMK, Scindhia, Tiwari, Pawar against Congress and with Congress etc. Hence restricting the search for alternative to UPA and NDA leadership in the present form would be inappropriate, in our view.

We also believe that the recent trend, in which dominance of regional aspirations over national issues has influenced the national politics leading to emergence of strong regional leaders, should strengthen further.

Therefore the sustainable alternative could only come from the states rather than imposed from Delhi. And if we make the exceptional leadership qualities, capability to deliver responsive administration, business friendliness, mass appeal, clear thinking, personal commitment etc. as primary criteria – the long list of alternatives would include (not exclusive and not necessarily in this order), Advani, Narendra Modi, Jayalalitha, Shivraj Singh Chauhan, Raman Singh, Navin Patnayak, Sharad Pawar, Nitish Kumar, Manohar Joshi, Pawan Chamling, A. K. Antony, Shiela Dikshit, Tarun Gogoi and Chandrababu. Rahul Gandhi may not find place in this list, as he is yet to demonstrate his capabilities in an administrative role.

2.     Will Modi be widely acceptable as leader of the country?

In our view this issue needs to be examined from two angles – (a) his acceptability to the people and (b) his acceptability to the regional parties.

Our discussions with various people across 19 states and from different walks of life shows Modi is very popular amongst students, professionals, middle classes, salaried, traders, entrepreneurs due to his leadership and administrative capabilities and business friendliness. He is widely perceived as honest, religious and straight forward. Farmers and poor outside Gujarat were largely indifferent towards him except for communal reasons. So the doubt about his mass appeal being limited to Gujarat may be without strong basis.

The most interesting point that emerged from our study was the preference of Modi over other regional leaders. We found that Tamilian in Delhi, Mumbai, Hyderabad and Vijaywada prefer Modi over Jayalalitha, though all Tamilians in Chennai and Coimbatore liked their CM more than Modi. Similar was the feedback in case of Oriya people in Delhi/Mumbai and Bhubaneswar/Sambalpur. Person in Tezpur (Assam) supported Modi over Gogoi. A hotel owner in Gangtok however felt Chamling is most suitable to lead the country. All Gujarati and Rajasthani people, wherever they are, preferred Modi over other regional leaders. Most businessmen in Patna believe Modi to be better leader than Nitish Kumar. BJP ruled states MP and Chattisgarh were equally divided between their local leaders and Modi. Raman Singh was sole choice in Raipur, while Bhopal, Indore, Jabalpur were divided between Shivraj, Scindhia and Rahul Gandhi. UP was divided on party lines, between Modi, Rahul Gandhi, Mayawati and Mulayam Singh. Overall, Rahul Gandhi had miniscule support. Some farmers and poor women in north India found him a suitable alternative. Mulayam, Mayawati, Shiela Dikshit, Sharad Pawar, Manohar Joshi found support amongst their respective party supporters only.

Insofar as his acceptability to regional parties, except communists and BSP, is concerned, the issue is somewhat abstruse. If we divide these parties into two camps – (a) who have Congress as the main opposition in their respective states and (b) who do not compete directly with Congress in their respective states. The parties in first group, e.g., SAD, Shiv Sena, BJD, PDP, INLD, SSP, TDP would always prefer a non-Congress alliance. Whereas the parties in the second camp e.g., SP/BSP, JDU, LJP, RLD, AIDMK, DMK, would prefer to go with the alliance which is more likely to form the government. In fact many of these parties have their genesis in the anti-congressism and therefore are more natural allies of BJP. The only bone of contention in this simplistic analysis is the sizable minorities’ votes and that is the only reason of their opposition to Modi. Communists will not join BJP and BSP is mostly unpredictable.

In our view, anti-congressism is the raison d’être of most of these parties and hence more critical to their existence rather than secularism which they often use as convenience. RLD and LJP’s decline is a classic case study of the consequences of preferring convenient secularism over fundamental anti-congressism.

The apparent opposition of Nitish Kumar to Modi’s leadership should therefore not be taken as a major limiting factor, especially when his popularity is already declining at the margins and his government is dependent on BJP’s support.

3. Is Modi relevant in national context?

The third aspect which needs to be intensively debated is whether Modi is relevant to the present national context.

Presently, India is struggling with the limitations of the Nehruvian model of economic development that we have followed since independence. Even BJP, when it came to power, decided to leave the alternative model “integrated humanism” proposed by its ideologue Mr. Deendayal Upadhyaya and followed a variant of Nehruvian model terming it “Gandhian Socialism”.

The current variant of the Nehruvian model is largely a distortion of the classical Keynesian model that advocates a larger role for the private enterprise with active state intervention during extremities of business cycle and argues against higher savings in both private and public sector. The Keynesian model has its genesis in the great depression and found useful during larger economic crisis.

However, Modi seems to be an advocate of Laissez-faire or free market which entails minimal state intervention even during crisis. He has implemented the model in Gujarat with limited success. But it is pertinent to note that unlike many other states, Gujarat has a history of 200years of industrialization and 60mn people who are globally recognized for their enterprising skills.

It is therefore important to evaluate whether the Gujarat model could be replicated at the national level, or in other words whether Modi can deliver the same results as Prime Minister what he has delivered as Chief Minister of Gujarat.

In our view, considering the present state of socio-economic development of various parts of the country, it would be 10-15years too early to test the Laissez-faire model at the pan-India level. Hence, Modi’s Gujarat model may not be of much relevance at the national level.

But at the same time the Gujarat model should not become his limitation also. Modi has very successfully demonstrated his strategy skills in past one decade. It would be totally wrong to assume that he would not be able to adapt to the larger responsibility and formulate an appropriate strategy for integrated development of the country.

Conclusion

To conclude, in our view, the popular debate should be wholesome and not based on sensationalism, prejudices and romanticism. “If” it is felt that a change is required and a particular leader or party is fit and ready to provide a better alternative, we all should support and help such party or leader as the case may be. If there are certain limitations/problems, all should work together overcome that. For example, if we sincerely believe that Modi is a fit and proper person to lead the country, subject to he coming clean on 2002 events – we all should work with him on this aspect and help him to take the corrective action. Isolating him will not do. However, if the popular perception feels no change is required – we all should work to strengthen the current leadership and let Modi serve 60mn Gujaratis

High hopes from low expectations!

High hopes from low expectations!

From the representations of various industry associations, trade associations and business chambers, it is clear that in his attempt to manage expectations from budget, the finance minister has actually raised the hopes to very high level. While the general refrain is that the expectations from the budget this time are low given the fiscal challenges; we find the hopes running high.

It is general anticipation that he will present a tight fiscal budget – cutting on plan and non-planned expenditure substantially. Aggressive disinvestment target and lower fuel subsidy will allow the finance minister to adhere to the 5.3% FY13 and 4.8% FY14 fiscal deficit target.

It is also widely hoped that he will announce substantive measures to motivate equity investments by household investors. The incentives are expected to include tax incentives like raising limit under section 80C and tax free infra bonds. Ambitious disinvestment target also warrants good market conditions.

It is also widely hoped that he will do enough to reignite the comatose investment cycle, especially in financially stressed infrastructure sector. Industry as well as investors are expecting serious measures to boost private investment, including tax concessions, debt restructuring, besides fast tracking mega projects.

The current account deficit has emerged as one of the top concerns for all. RBI, rating agencies and PMEAC have all highlighted this concern on numerous occasions. This high pitch debate seems to have raised significant hopes of substantive measures to boost exports and curb imports to make domestic industry more competitive. A wide range of industry sectors are expecting duty realignment to serve their interest.

Farmers, infrastructure developers (especially power sector) etc. are seriously hoping for another round of debt related concessions, including loan waiver.

While the elevated fiscal concerns should be preparing people for higher effective taxation, the hopes at present seem to be placed to the contrary.

In our view, despite low expectations, everyone might have reasons to be disappointed by the budget. A pre-budget rally driven by high hopes should therefore be used to cut positions in financially stretched infra and realty names. The global commodity rally is also a bad news for capital goods producers who have benefitted from low commodity prices in past 3-4 quarters.

We also believe that fiscal tightening by cutting development expenditure, constricting public investment, letting the taxmen loose to hound the taxpayer may not be the most appropriate path to be taken in the current environment of low confidence, tight liquidity and crippling infrastructure bottlenecks.

4-6hours of power cuts and deficit financing at 12% (the interest government will pay on numerous income tax refunds deliberately delayed since past many months) is not motivating at all.