Vijay Kumar Gaba: March 2015

Thursday, March 26, 2015

Land" does not get you votes, "No Land" does - II

Thought for the day

"From the solemn gloom of the temple children run out to sit in the dust, God watches them play and forgets the priest."

- Rabindranath Tagore (Indian, 1861-1941)

Word for the day

Furtherance (n)

The act of furthering; promotion; advancement.

(Source: Dictionary.com)

Teaser for the day

There should be a gap of three month between election results and swearing in of MP/MLAs.

These three months may be used to impart extensive training to elected representatives in public policy, foreign and federal relations, public speaking, constitution, etc.

Land" does not get you votes, "No Land" does - II

The politically aided agitation over the land acquisition issue has three clear dimensions:

1. It has provided a common cause to parties and politicians who have been struggling to regain the ground they have yielded to Narendra Modi led BJP in recent times.

2. It has provided an opportunity to the medium and large farmers to seek maximization of compensation in lieu of their land which is not commercially viable for agriculture due to miniscule yield as compared to current land prices.

3. It threatens to expose politicians who have indulged in "insider trading" in land acquisition in past.

Prior to 2013 LARR Act, land acquisition used to be a surprise for the land owners. They would usually come to know about it when the statutory notification was published.

The "insiders" who would get to know the project details much in advance would accumulate the land in surrounding areas, and sell at much higher prices once the project and the land acquisition was notified. This had been a cause of discontent amongst farmers who were tricked to sell their land cheaper just before the road or industrial project was announced. Barmer in Rajasthan, NOIDA/Mathura in UP, and Gurgaon/Jhhajar in Haryana could just be some small case studies of this phenomenon.

Let me explain the economics of agriculture in India to explain my point:

(a) The average cultivable land price in 50-100km radius of a city or large industrial project is about Rs5lac/acre, It may though vary between Rs. 1 lac to Rs. 5crore/acre depending upon the location.

The crop on the land yields less than Rs75000/year for a medium and large farmer. Assuming 2 crops every year, for a small and marginal farmer the yield is Rs25000 to Rs50000 per acre/year, excluding the cost of self labor.

Pertinent to note here is that a typical landless, marginal or small farmer household deploys 3-4 adults for 6 months in the farm. At ~Rs3000/month minimum wage rate the cost of self labor itself comes to about Rs55000-75000/year.

If we adjust the yield for one crop loss every three year, lease rent and 18-24% interest that small and marginal farmer pays, agriculture is usually unviable business.

If we factor in rising labor cost, lower subsidy in input prices (fertilizer, electricity, diesel and water) and slower rise in MSP, the viability gap will likely only increase going forward.

(b) A large majority of farmer households in India are landless or marginal. Many of these farmers take land on lease. The rent varies from Rs5000/acre to 50% of produce. A lost crop puts such farmers in a debt trap that may take minimum 3years to get out.

Many of these farmers do agriculture for sustenance. They grow wheat or rice for self consumption only.

A proper implementation of Food Security Law will ensure food for them at minimal cost. In such a scenario, they will anyway have no motivation to engage in land cultivation.

Remember, the Gen X of these farmers is no longer enamored by the feeling of Dharti Meri Mata Hai (my land is my mother). The next generation of landless, marginal and small farmers is therefore least likely to prefer agriculture over construction or industrial labor.(Availability of agriculture labor is likely to shrink even further from the current alarming levels).

(c) Given the low returns, the current generation of medium and large farmers is also not much interested in taking up farming as occupation. Most would want to sell the land or convert it into non-agriculture land.

So, as we can see the reason for farmers' agitation is not that they do not want to sell their land. It is the quantum of compensation that is the issue.

Fighting for this cause could have yielded dividend for AAP in Delhi, because here the farmers are large and rich. Extrapolating this to national level may not work. In fact it may prove counterproductive as this will only alienate the agriculture labor.

A better electoral agenda for the welfare of rural population might therefore be, inter alia:

(a) Faster and full implementation of food security law.

(b) Higher wages under MNREGA.

(d) Stringent enforcement of Banami Transcations law to unearth Benami agriculture land in violation of Land ceiling laws and redistribution of such land to landless and marginal farmers.

(e) Mandatory requirement of employment to landless farmers displaced by the project under consideration.

"Land" does not get you votes, "No Land" does

Thought for the day

"The water in a vessel is sparkling; the water in the sea is dark. The small truth has words which are clear; the great truth has great silence."

- Rabindranath Tagore (Indian, 1861-1941)

Word for the day

Larrikin (adj)

Disorderly; rowdy.

(Source: Dictionary.com)

Teaser for the day

What is a fair compensation to someone who has been unlawfully incarcerated for a day, a week, a month, a year, or a decade?

"Land" does not get you votes, "No Land" does

Continuing from yesterday, I would like to draw attention of the people, who are feeling deeply aggrieved by the likely pain the latest Land Acquisition Bill will cause to the farmers, to the following simple points:

(a) As per 2013 NSSO survey about 83% (80% in 2003) of the total farming households in India are either landless or marginal (holding less than 1 hectare or 2.47 acres cultivable land).

The total cultivable land in India shrank to 92mn hectare in 2013 (average 0.6hectare per farmer household) from 107mn hectare in 2003 (0.72hectare per farmer household).

In 2013 the landless and marginal farmers owned 30% of the total cultivable land in the country up from 23% in 2003. This is due to further fragmentation of the land, or lower conversion of their land holdings.

(b) On the contrary, percentage of medium and large farmer household (owning more than 4 hectares) shrank from 3.5% in 2003 to 2.17% in 2003. The cultivable land owned by these medium and large farmer households shrank from ~35% in 2003 to 24% 2013.

These are the farmers who sell land to industry and infrastructure projects. And these are the farmers who actually do not cultivate their land themselves. They lease the land to landless or small farmers. These are the farmers who stand to gain or lose from the land acquisition laws.

Remember, the compensation under the LARR is given to the owner of the land and to the person who is actually cultivating that land. These people lose their employment irrespective of the consent, compensation amount and environment impact.

(c) From political perspective, 130mn farming households are marginal or landless against just 3mn farmer households are medium to large land owners.

...to continue

Tuesday, March 24, 2015

It's not the one you are looking for

Thought for the day

"Emancipation from the bondage of the soil is no freedom for the tree."

- Rabindranath Tagore (Indian, 1861-1941)

Word for the day

Anthesis (v)

The period or act of expansion in flowers, especially the maturing of the stamens.

(Source: Dictionary.com)

Teaser for the day

Is the "Breaking News" syndrome ripping apart the basic fabric of the society by sensationalizing trivia, or it truly seeks to invoke and give some purpose to the indifferent populace?

It's not the one you are looking for

Caught in traffic jam caused by Congress party workers over the Land Bill issue, I decided to give up and join the small but spirited group. It was nice to be treated with some tea and snacks after a round of sloganeering. The slogans were mostly uninspiring and targeted to please the party President rather than farmers. The usual Sonia ji sangharsh karo hum tumhare saath hain (Sonia ji we are with you in your struggle) appeared rather trite.

An impromptu discussion with some workers from Haryana and Punjab during the tea break was quite revealing. None of the 10 young demonstrators, all from farmer families, had any clue what they were protesting about! Three of them had political ambitions and the rest just tagged along.

After spending well over two hours, I could make out that Congress is dissipating its scarce energy on something that may not yield any electoral dividend for it. To the contrary, by making the land acquisition issue a platform for comeback the party may actually be helping the regional opponents like JDU, SP, TMC, TRS, TDP, Shiv Sena, NC and BJD.

The agitation over land acquisition may have temporarily created some poor sentiments against the NDA government in rural areas, but the Congress Party is in no position to capitalize on it.

The data prima facie suggests that the segment potentially aggrieved by the land law is relatively much smaller to cause material electoral reverses at national level in 2019 general elections. In my sense, for making a comeback, the Congress Party needs a substantial issue that could touch at least 50% of the households and then vigorously pursue it for the next four years.

A stroll back in history would tell the Congress Party that regime changes in India have occurred when the ruling party/group got disconnected with the bottom of the pyramid in pursuit of faster economic growth (or personal ambitions) and opposition could rake in an emotional issue to fill the chasm. It was Mrs. Indira Gandhi (and emergency) Rajiv Gandhi (and Bofors), Narsimha Rao (and JMM bribery case) Atal Bihari Vajpayee (and Aam Aadmi) and Manmohan Singh (and 2G and Coalgate).

2009 victory of Congress party despite all economic mess, occurred due to MNREGA that kept it connected with the poorest amongst poor. The issues like FDI in retail, multiple scams which were seen as pro rich allowed BJP to make an entry on traditional turf and afforded the Congress Party its worst ever defeat in 2014.

The way BJP is going, I believe material improvement in macroeconomic conditions & governance standards, and direct connectivity of leadership with masses, will leave an extremely thin crack for the Congress Party to sneak in. The Congress Party would therefore need an explosive issue to widen the crack; which the land acquisition is certainly not the one.

I will delve a little more on the land acquisition issue in next couple of days, before I leave for a 10day trip to central India to assess the feelings of villagers and tribal people about new land acquisition and mining laws.

Mining for opportunities

Thought for the day

"Gray hairs are signs of wisdom if you hold your tongue, speak and they are but hairs, as in the young."

- Rabindranath Tagore (Indian, 1861-1941)

Word for the day

Gibber (v)

To speak inarticulately or meaninglessly or foolishly.

(Source: Dictionary.com)

Teaser for the day

Masochism of all governments in India is intriguing. They don't like to do anything unless put on mat by media and thrashed!

Mining for opportunities

Considering the corporate earnings outlook, plateau in the domestic macroeconomic good news, mostly assimilated political & policy environment, and fragile global financial conditions, it is reasonable to believe that we are some distance away from a new secular bull market. Though, it is always a good idea to prepare the ground and sow the seed well in advance; doing it too early may result in total dissipation of effort and resources.

I have opined in many earlier posts also, that the bull market in Indian equities will commence mostly due to cyclical recovery in domestic economy. The global factors, primarily liquidity and soft commodity prices may provide some extra impetus. Readjustment in global capital and currency markets due to reversal of rate cycle in US when most other major economies are continuing to be accommodative, shall continue to cause spells of heightened volatility and uncertainty.

Therefore, the investor positioning in Indian equities has to be based on primarily domestic growth drivers, adequately accounting for higher volatility.

In my view, decent investment opportunities may exist in the following broad areas from a 5+ year investment horizon.

Railways could be to 2015-2020 what roads were to 2003-2007. I would however focus on technology leaders rather than generic stock (wagons and wheels) suppliers. In my view, under the new governance paradigm and rising wage rates, it would be difficult for the contractors to make even normalize profits. Companies with proprietary technologies in process automation and productivity enhancement should be preferred.

Agri productivity as an economic activity will likely enjoy highest priority for the incumbent administration. Focus should again be on technology innovators and market leaders rather than generic fertilizer producers.

Cyclicals. Buy cyclicals and industrials with god balance sheet and decent operating leverage (cement, capital goods, auto and EPC).

Global businesses (IT, pharma, auto & ancillaries) as INR completes its correction over next 12-24months.

Consumers (FMCG, 2wheelers, pharma, textile, finance, media) for demand pick up on rise in employment and general household income level.

To put in simpler words, the investment opportunities may be explored in the following areas:

(a) Industrial companies with market and technology leadership, strong brand equity and access to global markets. Product companies rather than services companies are more preferable as they gain from inventory correction, pricing power among other things. I prefer the companies with substantial operating leverage and lower financial leverage.

(b) Consumer companies both in staple and discretionary space which may benefit from rising consumption demand, stable global economy, weaker INR, lower commodity prices.

Correction in stock prices in this space due to poor rural demand in next couple of quarters may be a good opportunity to accumulate.

I would prefer a good mix of staples and discretionary products with special reference to the youth. Though, tobacco is something which I would continue to avoid.

(c) Local units of global corporations that may see larger participation through more investment, hike in stake or transfer of manufacturing operations for regional exports. Heavy engineering companies with proven track record and leadership in railways and defence technology would be my preferred picks.

A 10% weakness in INRUSD from current level may prompt some buy backs, especially in companies with material cash hoard.

(d) Financials will inevitably participate in any bull market. Reduced financial stress, better yielding bond portfolio, higher credit demand, geographical spread due to deeper financial inclusion efforts, and recapitalization are some ideas that will drive value of financial stocks higher from FY17 onwards.

However, as a matter of strategy I continue to remain circumspect about the PSBs. I would therefore suggest private sector lender including select NBFCs

(e) One of the primary premises of my bull case is softer commodity prices. I would therefore not suggest any global commodity exposure. Domestically however cement could see a major spike up due to better utilization rate. Financially unleveraged large players with good operating leverage could be looked upon.

(f) Some companies from textile, construction material, auto ancillary, and consumer durable have done amazingly well to acquire technology, market and product leadership in global sphere. These companies enjoy premium valuations, deservedly though.

A correction in prices from current levels, would be a good opportunity to buy these companies.

(g) The exporters especially IT and pharma should continue to do well. A correction due to cyclical strength in INR would provide a good entry point.

Monday, March 23, 2015

Opportunity vs. threat

Thought for the day

"The butterfly counts not months but moments, and has time enough."

- Rabindranath Tagore (Indian, 1861-1941)

Word for the day

Collywobbles(n)

A feeling of fear, apprehension, or nervousness.

(Source: Dictionary.com)

Teaser for the day

Why do e-commerce firms need to advertise so much on conventional media like TV and newspaper?

Opportunity vs. threat

People scouting for opportunities to buy or sell stocks in secondary market based on political changes or policy related developments need to exercise extreme caution, in my view.

The policy changes emanating from the changes in political regime, legal interpretations or social developments do create once in lifetime opportunity and threat for the entrepreneurs who are invested or who wish to invest in a particular business opportunity.

The changes usually also create opportunities for the workers who could preempt the likely technological, financial and managerial changes well in advance and develop the necessary skills to avail early mover advantage in the new paradigm.

These changes sometime also create opportunities for speculators who could rightly preempt the opportunity in the resource shift and place the bets well in advance.

For traders who buy and sell stocks in secondary market for a brief period, the opportunities arising out of political or legal changes are mostly a function of luck. Anecdotally, I have found the luck mostly not favoring the people seeking to make a quick buck from something that has already grabbed the headlines in pink papers.

This leaves us to my community, i.e., people who are interested in investing in good businesses, but for the paucity of time, skills and/or resources we are contend with owing some share of these businesses rather than controlling the ownership and management of these businesses.

Our commitment to these businesses is usually limited the good times and rational market.

We do not usually stick to these businesses if they show any sign of losing leadership in the spheres of market share, product quality and acceptance, financial management efficiency, technology, innovation, etc.

We should not usually stick to these businesses when the market participants show irrational exuberance towards the future prospects of such businesses and start affording valuations that one would not normally associate with such a business.

The question is whether the policy changes that are taking place currently, due to changes in political alignments, legal interpretations and social pressures present any investment opportunity for investors.

Before answering the question it is critical to understand the changes that are taking place in the environment. We need to identify the changes and assess whether these changes are sustainable to result in a business and/or investment opportunity.

In my assessment, the changes that are currently taking place present more threats than opportunities.....to continue

Friday, March 20, 2015

Sir, we did this!

Thought for the day

"It's a funny thing about life; if you refuse to accept anything but the best, you very often get it."

- Somerset Maugham (British, 1874-1965)

Word for the day

Beamish (adj)

Bright, cheerful, and optimistic.

(Source: Dictionary.com)

Teaser for the day

Does the practice of writing recommendation for school and hospital admissions, railway tickets, etc. by MPs and MLAs violate the constitutional oath of 'Without fear or favor" and Without affection or ill will"?

Sir, we did this!

Yesterday was the annual result day for both my daughters. It was insightful to speak with some parents whose ward study in senior classes. It was even more interesting in light of what the Principal claimed in a rather boastful and boring speech.

Many parents lamented that school teachers do not put in enough effort. The children have to necessarily take multiple tuitions, leaving them with no time to pursue any hobby or sport. Even parents have to spend extraordinary time helping their wards in studies. Most senior students in fact are encouraged to miss school and study at home.

However, the credit for a good result is claimed almost entirely by the principal of the school. I found it rather unethical. Though the aggrieved parents appear to be complaining just as a ritual, absolutely not interested in putting any effort to change the things. The child scoring good marks is good enough an outcome.

On my way back home, I saw some hoardings showing how thankful and obliged some local politicians were to their elected representatives for repairing of roads, cleaning of drains, and getting the hawkers permits to squat on pavements.

Back home I heard a minister claiming in the parliament how in just 10months the government has done wonders to put the country back on high growth path, brought inflation down, eliminated the current account deficit and made doing business so easy. In full page advertisements in newspapers, the government of Uttar Pradesh made similar claims of doing wonders in a short span of three years.

An unusually large number of research reports on my table and hard disk appreciate the government in general and the prime minister in particular for achieving wonderful results. No one cares to talk about the people who have to toil real hard just for survival.

The parents are making sacrifice and the students are investing the best part of their life. Two square meals and some meaningless economic data is what they get to console themselves. The principal gets all the credit.

Duh..............!

If you feel I am being unnecessarily and excessively cynical. You might be mistaken.

The point I am trying to make here is that as an investor, our focus should be on the quality of businessmen & workforce and the business opportunity in the offing. We might miss many good opportunities or mistake a trap for opportunity if we focus the politics instead.

For example, the conduct of the government so far has not suggested that it would begin to bother about the interest of minority shareholders anytime soon. Those seeking an investment opportunity in that space may very well get trapped, yet again.

We shall talk about the opportunity next week.

Thursday, March 19, 2015

BJP vs. the ghost of 1947

Thought for the day

"You know what the critics are. If you tell the truth they only say you're cynical and it does an author no good to get a reputation for cynicism."

- Somerset Maugham (British, 1874-1965)

Word for the day

Intenerate (n)

To make soft or tender; soften.

(Source: Dictionary.com)

Teaser for the day

The united opposition march against the Land Bill appeared like launch of Bihar election campaign!

Should BJP worry?

P.S. - What MMS was doing there?

BJP vs. the ghost of 1947

At a time when the AAP political party is struggling to assimilate the Idea of AAP, and the Congress Party is struggling to shed its quintessential feudal character, BJP has a bigger battle to fight.

I have said it earlier also. The PM has shown remarkably progressive mindset. He has moved around swiftly destroying old paradigms and raising new hopes. But his colleagues and all his army men appear overwhelmed by the feudalistic idea of nationalism and following a dogmatic and in some cases regressive agenda. This is when the dispirited opposition forces are uniting to stop the juggernaut of Modi.

In past six months we heard Prime Minister giving inspirational speeches around the world. His diligence, zest and devotion to work are already part of folklore. He has taken noble initiatives like adoption of villages by elected representatives and cleanliness drive. More admirably, he has successfully skirted controversies. He has earned accolades from many adversaries and established remarkably friendly relations with many heads of states including Japan, Britain, Australia, and US.

But could we say this about his team of ministers also? Outside Rail Bhawan and South Block, besides random stories of punctuality and business friendliness, we have not heard much of a "Plan".

The allied organizations of BJP, broadly referred to as the Saffron Parivar, appear suffering from cognitive dissonance. They claim to strive for renaissance of Vedic period - revival of ancient Hindu culture based purely on pursuit of spirituality, knowledge, righteousness and equity. However, their ideas and thoughts are haplessly stuck in 1947.

They obstinately refuse to accept India, as it exist today. Sometimes it feels that in their view, to regain its past glory, first we need to go back to 1947 undo the religion based partition, then travel back to 16th century to undo the Mughal invasion, then go back to 5th century BCE to undo Budha and only thereafter we could think about rebuilding a equitable, righteous, knowledge seeking society engaged in higher spiritual pursuits.

There is so much commotion over beef trade. The newly elected Maharashtra and Haryana governments have declared it illegal. Thereby the respective chief ministers have pleased their mentors. But how does this contributes to the principal objective of renaissance.

To the contrary it seeks to draw another fault line in the society - those who eat beef and those do not. If BJP truly believes that eating beef is unconstitutional, unhealthy, unrighteous, or unjust, they should tell all their members and supporters not to eat. They may even go to the extent of making the trade economically unviable. But how could they possibly impose their idea of religion on two third population which does not vote for them or support their ideas.

In my view, the cause of India and Hinduism would be better served if we create high institutions of knowledge and produce Nobel Laureates in the fields of physics, mathematics, and medicine.....to continue

Monday, March 16, 2015

The return of political skepticism

Thought for the day

"We are not the same persons this year as last; nor are those we love. It is a happy chance if we, changing, continue to love a changed person."

- Somerset Maugham (British, 1874-1965)

Word for the day

Portent (n)

An indication or omen of something about to happen, especially something momentous.

(Source: Dictionary.com)

Teaser for the day

Does smooth passage to Insurance Bill in Rajya Sabha indicate that INC and TMC might be to NDA what SP and BSP were to UPA.

The return of political skepticism

The political milieu of the country has taken a turn for the worse over last few weeks. The investors, both domestic and global, have been watching the political developments keenly and might be little concerned about the recent developments. Especially considering that the positive sentiment on India has largely been driven the promise of a stable, transparent and responsive government post May 2014 general elections.

The ruling BJP has faced many embarrassing moments in and out of Parliament during past one month. For one, the conduct of allies like Shiv Sena, TDP and PDP has been at odd purpose with BJP. Secondly, the united opposition that enjoys majority in Rajya Sabha has been leaving no opportunity to embarrass the government. Thirdly, the extreme right wing elements within and outside BJP have been challenging the credibility of the PM's promise of inclusivity and faster development.

The principal opposition Congress Party has been struggling to overcome the spate of electoral defeats it has faced in the past couple of years. The party has seen total breakdown in the lower level organizational structure due to a variety of reason. To make the matter worse, the dithering top level leadership has also been conspicuous by their absence from addressing the Party's concerns.

Most regional parties, like JDU in Bihar, TMC in West Bengal, SAD in Punjab, and AAP in Delhi have been mired in controversies. Impropriety, personal ambitions and larger aspirations have impacted the image as well as performance of the governments.

Smooth passage of the Insurance Amendment Bill in Rajya Sabha, might have provided some consolation to the investors that all sanity is not lost. But the mood in opposition circle over the critical Land Acquisition Bill and Mining Bill does not appear kind.

The legal trouble for the former prime minister Dr. Manmohan Singh, and controversy surrounding Delhi police's curious incursion in the Congress Vice president Rahul Gandhi's office shall make the matter worse.

The tax dispute over retroactive tax demand from Cairn Energy Plc. is not helping the government stance of "no tax terrorism" and "no retro tax". A bad publicity on this account, much like the infamous Vodafone case, could impact the credibility of the government.

The forthcoming Bihar state assembly elections due later this year are indicated to be one of the most acrimonious elections seen in recent times. A united opposition and BJP infested with internal strife could further queer the pitch for the central government.

Outside financial markets, the recent squabble between rival factions within AAP, has certainly put a little dent on the optimism of urban middle classes over improvement in socio-political conditions. Restoration of skepticism prevalent till summer of 2013 may have serious economic repercussions in my view. It is therefore important for investors to understand the implications of AAP.................to continue

Friday, March 13, 2015

Reporting from the hinterland

Thought for the day

"Great minds have purposes; others have wishes."

- Washington Irving (American, 1783-1859)

Word for the day

Brouhaha (n)

Excited public interest, discussion, or the like, as the clamor attending some sensational event; hullabaloo:

(Source: Dictionary.com)

Teaser for the day

A youthful Congress driven by the Idea of AAP would provide a strong and stable opposite pole in the Indian politics.

Reporting from the hinterland

A short two day trip to rural areas of western UP and discussions with a few farmers, agro commodity traders and food processors provided some interesting insights into the current economic, social and political conditions.

Though the visit was confined to the villages closer to industrial towns, in my view, the prevailing conditions could be reasonably extrapolated to the entire State of UP, and the adjoining states of Uttrakhand, MP. Haryana, Bihar and Rajasthan.

The unseasonal rains have caused serious damage to the standing crops of wheat, mustard, and pulses. The damage to Sugarcane is not very serious from rains, but the threat from fungus and pests has increased manifold. There is minor damage to Potato crop.

Given the late monsoon rains, most farmers were expecting a good winter rabi crop this year and accordingly have invested higher than normal in the crop. The losses, coming on the back of a poor summer Kharif crop, have compounded impacting the purchasing and borrowing power of the farmers. The majority of landless and marginal farmers may be in distress given lesser demand for labor from construction sector and lower MNREGA spending.

The interesting thing is that most farmers are now aware of the technology advances. They keenly follow the price movements across global and local markets. Most farmers follow midterm weather forecasts and El Nino developments. The forecast about likely below par monsoon this year has dampened the spirits furthers. Most rural households appear to have fastened the strings of their purses tightly.

Another interesting insight was provided by a senior district administrator. He highlighted that in most of rural and semi-rural areas of UP the popular inclusion scheme PM Jandhan Yojna (PMJY) has been marketed and sold as some sort of blessed goose that will regularly keep laying golden eggs. It has not been marketed as a tool to promote inclusion or enhance household savings. The outcome in the short to midterm will therefore only be limited to plugging the leakages in grants that are transferred directly.

On political side, the popularity of PM Modi may be on the wane in UP. Akhilesh government is a clear beneficiary of this. The state government has seriously enhanced its engagement with people post May 2014 Lok Sabha election rout. Save for a dramatic improvement in the economy and performance of the national government, 2017 state assembly election may not be a easy going for BJP.

The social strife seen during the run up to the Lok Sbha election has conspicuously diminished. Muzzafarnagar, Saharanpur and Shamli were found calm and quiet; not many people complaining about the state's apathy.