"It has been said
that man is a rational animal. All my life I have been searching for evidence
which could support this."
—Bertrand Russel (British,
1872-1970)
Word
for the day
Ultracrepidarian (n/adj)
An ultracrepidarian person.
Noting or pertaining to a person who criticizes, judges, or gives advice
outside the area of his or her expertise
Malice
towards none
Regardless of the
recent severe correction in broader markets, it appears that we shall see a
huge wealth effect in Indian middle class as investment in equity grows and
markets do well over next five years.
Real Estate and
Travel will be two notable beneficiaries of this effect.
First random
thought this morning
The market participants have this tendency to discover a
trade from every event that is discussed on TV. From state elections to unrest
in Kashmir. GST is a popular discussion these days, and there are thousands of
"Research Reports" suggesting a trade on GST. Many of these reports
have already declared the winners and losers from GST; much like the way it is
done within hours of FM reading his budget speech every year.
In my view, market will adjust to GST in 3-4months. The
readjustment will happen in a manner that it becomes even for most. Middle
class will pay a little more and government will take home a little more. The
disruption in unorganized businesses may happen in long term only.
No business might gain directly from GST. All tax savings
may have to be passed to consumers. The gain could come from higher demand in
future as prices stabilize and yearly tax fluctuation is controlled.
Political paradigm needs to change
Over past six weeks, I have
discussed my ideas about the factors that could provide necessary escape
velocity to the Indian Economic for transcending to a higher orbit.
We have seen some serious developments in some of these areas in
past decade or so. In fact, the progress has accelerated materially in recent
years. However, a lot of work still remains to be done; especially on
qualitative front. The areas where we have seen material progress in
quantitative terms, the quality seems to have remained mostly ignored.
For me it remains a matter of debate whether we want to develop
economically on the mostly western parameters, or we should focus on our ethos
and measure the economic development & growth in terms of dignity of human
life, peace of mind, social harmony, motivation for scientific enquiry &
spiritual pursuit, and commitment to universal brotherhood.
Nonetheless, even in terms of popular parameters, we have a long
distance to cover before we think of transcending to a higher economic orbit.
In particular, social equity and sustainability are two critical and popular
concerns that have remained mostly unaddressed despite all the political
rhetoric and shenanigans.
To conclude my monologue, I suggest that the present political
structure of the country is not very conducive for a higher trajectory of
economic growth and development either in terms of popular parameters or in
terms of quintessential Indian ethos.
A study of the history of Indian politics would suggest that
unlike western democracies only an abysmal minority of Indian voters are
strongly committed to a political or socio-economic ideology.
The political discourse in India is usually dominated by
contemporary issues and personalities. The economic issues raised during
elections are mostly confined to the slogan of poverty alleviation. In recent
times corruption has also become a popular electioneering slogan.
Perhaps, no political party seems to have taken issues of poverty
alleviation or corruption seriously. Therefore no one has bothered even to
outline a conceptual or ideological framework for solving these problems.
Ideologically, the Congress Party abandoned the most acceptable
and perhaps most suitable Gandhian Socialism in favor of Nehruvian Socialism
that was a poorly mixed concoction of Leninist central planning (central
ownership and management of resources and businesses) and British colonial
legacy (discretionary patronage to the faithful and loyal).
The model was certainly at cross-purpose with the constitutional
federal structure. Poverty, poor governance and corruption were natural
off-springs of this system.
BJP started with Deen Dayal Updhaya's Integral Humanism. However,
in 1990s it adopted Gandhian Socialism (which is not too far moved from the
Integral Humanism) as the principal doctrine.
The present leadership has presented a concoction of Integral
Humanism and Laissez-faire model used by some developed economies principally
USA.
Politically leadership preaches "Human Being" as the
fulcrum of policy making. Whereas the executive is more focused on
"Business", "Markets" and "Macroeconomics" as
central themes. The conflict is for everyone to see. The consequence is that we
seem to be moving in no direction.
The people at the left end of the spectrum exercised significant
sway on the bottom of the pyramid in Indian society since independence. They
controlled most of labor unions. Though divided between Marx, Lenin and Mao
they still were the preferred choice of landless, oppressed and intelligentsia.
There was a time when being poor, intelligent (economist, thinker, poet) or
rebellious meant being communist.
The things however began to change in late 1980s post dismantling
of USSR and the German wall. The Lenin and Marx were relegated to the history
lessons. The economic reforms initiated in China under Deng Xiaoping's
supremacy, further pushed back the traditional Marxists.
Insofar as the Lohiaites (socialist parties occupying the left of
the center space in Indian politics) are concerned, they deserted both Lohia
and his ideologue Gandhi as soon as they came into power. Degenerated into
motley feudals, they mostly have no commitment to any economic idea and mostly
follow the Congress Party's status quoits agenda.
The rise of Aam Aadmi Party (AAP) from a massively popular
anti-corruption civil society movement 4years back had given hope and raised
expectations of people. This party had no ideological baggage and promised to
address the problems as they exist, without any legacy concerns.
This party has also degenerated into a motley group of egotists,
having no commitment to their raison d'être.
In my view, a continuation of the current state of quandary with
respect to economic growth model is a major hindrance in our path to higher
growth orbit.
I strongly believe that the inherent austerity, industriousness
and enterprising skills of the Indian populace are sufficient to provide escape
velocity for moving the Indian economy into higher orbit.
Limiting the role of government to developing and maintaining the
institutional framework relating to law & order, sovereignty, external
security & relations, municipal functions, inter-state relations and
facilitating trade & commerce, may improve economic conditions much faster than
otherwise.
PS: I have received a lot of comments and queries on this series
of notes. I am preparing a consolidated response to all these comments and
queries. If you have any more comments or queries, please mail me at
investrekk@gmail.com.
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