Maintain proportion

Thought for the day

"Do not take life too seriously. You will never get out of it alive."

—Elbert Hubbard (American, 1859-1915)

Word for the day

Uptalk (n)

A rise in pitch at the end, usually of a declarative sentence, especially if habitual.

Malice towards none

Have seen or heard of Digvijay Singh lately?

First random thought this morning

"Good is a noun. That was it....Good as a noun rather than an adjective is all the Metaphysics of Quality is about. Of course, the ultimate Quality isn't a noun or an adjective, but if you had to reduce the Metaphysics of Quality to one sentence, that would be it." — Robery Pirsig in LILA

I feel that this book should be made mandatory for all politicians, media persons and civil society members. "You have done much worse than me" should not be tolerated in defence of any action or argument.

A decade and counting

Thought for the day

"There is not in the universe a more ridiculous, nor a more contemptible animal, than a proud clergyman."

—Henry Fielding (English, 1707-1754)

Word for the day

Glocal (adj)

Of or relating to the interconnection of global and local issues, factors, etc, e.g., a glocal conference on community development.

Malice towards none

Waiting for some sermon on Gita and Unpnishada from Rahul Gandhi!

 

First random thought this morning

If data is a weapon, than H. D. Deve Gowda and Dr. Manmohan Singh could be in possession of the most potent ones of all.

While HD presided over the "Dream Budget" that let the animal spirit of Indian entrepreneurs loose, something that the watershed 1991 budget could not do. The two terms of MMS (2004-2014) saw India's growth galloping from sub 5% in 2004 to over 9% in 2008. The data also shows that he steered the economy remarkably well through the global financial crisis.

But this, as I said, might just be that Data. Nothing more. Those who love to use data to show the unprecedented performance of the incumbent government are advised to read the time series from 1991 at least.

And guess what, P. Chidambaram may emerge as unlikely champion of growth, and Yashwant Sinha a close second.

 

A decade and counting

Exactly a decade ago, during the second week of July 2007, S&P downgraded US$7.3 billion of securities sold in 2005 and 2006. A few weeks later, Moody’s Investor Service slashes ratings on 691 securities from 2006, originally worth US$19.4 billion. Some 78 of the bonds had Moody’s top rating of Aaa. The securities were backed by second lien mortgages that included piggyback mortgages. Moody’s stated that the cause for the downgrades was the dramatically poor overall performance of such loans and rising default rates. Fitch also downgraded subprime bonds sold by Barclays, Merrill Lynch and Credit Suisse.

This was beginning of, what would become a global financial crisis in no time. The crisis which would annihilate some of the leading financial institutions like Lehman Brothers and Merrill Lynch, threaten the solvency of some of the most powerful empires in history, namely Portugal, Italy, Greece and Spain (Inappropriately clubbed under acronym PIGS), lead to erosion of trillions of dollars from global wealth, cause millions of job losses, imperil the unity of European Union, and push the world into a prolonged period of low growth.

Surprisingly, the stock markets did not react to the crisis immediately. After a small jerk in July 2007, stock markets across the world rose dramatically. Except for Chinese equities that corrected in October 2007, most markets rose sharply till January 2008. This was perhaps the sharpest bear market rally, in my view. And then came the inevitable crash. From last week of January to March 2009 was one of the worst periods in decades in terms of stock returns.

The challenging times call for tough measures. But that was not to happen in this case. The central bankers across the world got united to bail the world out of this crisis through an "unconventional method" - quantitative easing, an euphemism for printing more money.

"Whatever it takes" was the new paradigm. The mints across the world ran overtime. Centrals banks printed enough money to buy all the junk available on street, bail out profligate governments & errant banks, and splurge concessions on consumers to boost consumption.

To their credit, the gigantic effort did help in unfreezing the global markets, stabilizing the global financial system, forced a certain degree of fiscal discipline amongst the profligate government, pull out the global economy from recession (that was widely feared to snowball into a worldwide depression, worst that the 1930 episode)

The strategy however created a New Normal in the global economics. Something that was not there in the economic text so books.

The unprecedented monetary and economic stimulus failed to bring the inflation back. The commodity producers continue to struggle. The economic growth potential for most developed economies scaled down materially. The investment demand therefore seems unlikely in foreseeable future. The bond yields remain close to their lows, despite talks of imminent talk of policy reversal. Reflation and bond correction are two trades that have deceived millions of traders following old text books....to continue

Set the priorities right - 2

Thought for the day

"Guilt has very quick ears to an accusation."

—Henry Fielding (English, 1707-1754)

Word for the day

Cannikin (n)

A small can or drinking cup or a small wooden bucket.

Malice towards none

Why did Tubelight flopped on box office?

(a) It's a bad film

(b) People had already spent all their movie budget for the quarter on Bahubali - 2.

(c) Spiderman

(d) Salman Khan's statement on talks with Pakistan

(e) Any other, pl specify.

 

First random thought this morning

Some recent reports have suggested that public sector behemoth and world's largest miner of dirty fuel, Coal India is betting big on renewable energy (see here).

The minister was quoted as having said that "This is a contribution towards a better planet, towards greening the country and greening the world."

What would you call it - Paradox. Irony. Sham. Bizarre. Incongruous. Droll.

Or something else!

Set the priorities right - 2

My colleagues recently visited the flood affected areas of Assam. The misery of people there can't be described in words. Especially when it is a predictable and recurrent phenomenon. The apathy of administration and policy makers is astonishing.

Spending couple of days there and interacting with some other NGOs working in the area, we could figure out very effective solutions (that would cost almost nothing and are very easy to implement) to minimize the misery of people.

The objective of writing this is to highlight two things:

(a)   The political (and therefore administrative) priorities in the country may be seriously misplaced.

(b)   The administration lacks both innovation and initiative, insofar as dealings with people's common problems are concerned. Some of this banality might be due to recurrent political snubs. But that is a weak defense, in my view.

Imagine if this happens to you every year.

 

 

 

We suggest the least the administration could do is to provide a durable survival kit to the people in the areas frequently affected by floods.

The kit may contain small, convenient, and efficient self-help tools to improve the sustaining power of poor and underprivileged people who totally rely on the government's help for survival.

The kit may for example contain:

• A water proof all weather roof for temporary, kutcha and semi-pucca dwelling units.
•  Durable, water proof, inflatable containers to preserve Ration, Medicine and Valuables during the flood period. The container may also be used to safeguard Infants under extreme conditions.
•  A foldable 10x10 tent to be used as temporary accommodation during the floods.
• A solar charged LED lantern for emergency lightening

 

 

Our market survey suggests that this entire kit would cost less than Rs7500 per household. It would last for 7-10years. It can save many precious lives; reduce hardship to millions of people, and materially enhance people's sustenance power.

 

Set the priorities right

Thought for the day

"Commend a fool for his wit, or a rogue for his honesty and he will receive you into his favor."

—Henry Fielding (English, 1707-1754)

Word for the day

Janus-faced (adj)

Having two contrasting aspects.

Having two faces, one looking forward, one looking backward, as the Roman deity Janus.

Malice towards none

The Rebellious TV news anchor wants a full-fledged direct war with Pakistan. He would not mind a war with China too.

What da ya say?

First random thought this morning

At a time when the country is facing serious economic challenges, internal security threats and external threats - we are working with part-time (and not so healthy) finance and defence ministers, a home minister with fractured foot, and an external affairs minister who is also not keeping very good health.

What could be the reason? Is it the dearth of capable people? Is it the trust deficit on part of BJP leadership? Is it the desire of top leadership to totally centralize the command of the nation? or is it all of these?

Set the priorities right

A large part of the population in Eastern and North Eastern parts of India suffers from floods almost every year. Millions of people suffer tremendous hardship every year due to inundation of their houses and fields.

For many of these people life begins afresh every year, as they lose their shelters, belongings, old parents, infants, and jobs to floods or to the disease and starvation that invariably follows the flood.

This cycle has been going on since past many decades. States like Assam and Bihar have a regular flood control department. Every year they go through the same routine. The most unfortunate part is that this misery of people has been accepted by the administration and the politicians as fait accompli. So much so that political parties even do not consider it important to promise effective measures for flood control in their manifestos.

For example, consider the following:

1.    In Assam, where millions of people suffer from floods almost every year, the Vision Document 2016-2025 issued by the ruling BJP, mentions the word flood only twice, once under the heading "Housing" and the second time under the heading "Guwahati Development":

Housing

"Designing and developing world class infrastructure with due consideration to natural disasters like floods and earthquakes."

Guwahati Development

"Using state-of-the-art technologies to prevent flash floods."

2.    Bihar CM Nitish Kumar's agenda for Bihar did not mention the word flood even once.

3.    The largest party in Bihar assembly, RJD, also did not consider flood to be a problem worth according any priority.

Now consider the following basic data points to comprehend the extent of the problem:

(a)   In Assam about 87% rural households live in a Katcha or semi-pucca structure. (NSSO 70^th round survey report – Dec’14)

(b)   40% area of the state of Assam is flood prone.

(c)   Between 1-3million Assamese are affected by floods every year

 

 

Take on GST

Thought for the day

"Never bend your head. Always hold it high. Look the world straight in the eye."

—Helen Keller (American, 1880-1968)

Word for the day

Exurb (n)

A small, usually prosperous, community situated beyond the suburbs of a city.

Malice towards none

Will PM Modi go to Palestine in next 6months on a state visit?

(a) Yes

(b) No

(c) No need

(d) Does not matter

(e) He should but he won't

(f) He will, but he should not.

(g) How do I care

 

First random thought this morning

Bihar Chief Minister has raised a very valid point. The opposition parties in India are completely directionless. They are merely reacting negatively to whatever the government (especially the PM) says or does. They have completely failed in presenting any alternative agenda before the people of the country.

The socio-political narrative in India therefore has become spiteful. If some opinions expressed in recent foreign media reports are any indication, some of this negativity is spilling beyond borders also. This is unfortunate.

This needs to change; rather urgently.

Take on GST

It's been four days since the much talked about, debated, praised, cursed, cheered, resented anticipated and feared tax reform - Goods and Services Tax (GST) has been implemented in the country.

There are reports from various cities that some markets have remained shut in protest. But nothing dramatic has been reported so far. The appearance of fear mongers on TV screens is diminishing. Despite authoring this historic change, the Congress Party finds itself standing on the losing side alongside Mamata Banerjee and Communist parties. Some insignificant parties like Shiv Sena and AAP are talking gibberish, which perhaps no one understands. The rest of the opposition seems to have quietly slipped to the government's side.

Frankly, in past four days, I have not found any change in my Kitchen expense due to GST or otherwise. The so called pre GST sales are continuing in many shopping malls. All the petty shopkeepers have quickly learned the changes in billing system and book-keeping. They expect some glitches in filing returns in August (when first return filing in GST is due), but nothing alarming.

Many of my readers have asked me why I have not written on GST, when all sundry seems to be writing and/or talking about it. I may inform them there are two reasons: (a) I was busy writing about what I believe would be substantive structural reforms; and (b) I find the popular narrative on GST totally hypocritical.

The supporters are claiming virtues that cannot be part of a tax system. The new tax system is being presented as master stroke of PM Modi, just like the way DeMo was marketed. It is being termed the biggest tax reform since independence. Whereas the reality may be that it is an enormous administrative correction in the tax system of the country. But terming it a structural reform is subject to debate, in my view.

Those opposing GST sound ridiculously naive. For example, the argument that a 5% tax on textile will finish the entire textile trade is preposterous. The basic principle of indirect taxation is that the incidence of tax is always on the ultimate consumer of the goods and services. In principle, the manufacturer of goods or service provider or anyone else in the whole supply chain bear no part of the indirect tax.

For the benefit of readers who have sought my views, my take on GST as follows:

(a)   GST is an enormous administrative correction in the tax system of India. The amount of administrative effort that has been put in making this correction is remarkable. The political will shown by the current leadership in bringing GST to life is also commendable. Be it expediting completion of GST Network, evolving political consensus at GST council level, and sticking to 1 July 2017 timeline despite intense lobbying from various pressure groups - the government showed tremendous determination and resolve.

However, the GST as it has been implemented, does not changes the basic structure or taxation principles followed in the country.

There are multiple tax rates, purportedly determined on the basis of socio-economic strata of the ultimate consumer. The classification of goods apparently lacks connect with the ground realities. It is clear that the effort has been to stay close to the status quo, insofar as the incidence of tax is concerned.

(b)   GST will certainly bring about material systemic efficiencies and savings by eliminating redundancies. The benefits will mostly be shared by the government, business and consumers, with the government taking the largest pie. My guess is that the sharing of benefits will occur in the ratio of 60% (Government) 30% (Businesses) and 10% (Consumers).

(c)    The argument of organized sector gaining at the expense of unorganized sector because of GST is mostly unsubstantiated. I feel, this process started couple of decades back and became conspicuous a decade back. GST at best may push the accelerator little harder.

(d)   The primary concern of unorganized sector seems to be income tax not the GST. A large number of small businessmen have so far managed to stay out of tax net. Even a larger number has been paying only a fraction of the tax due on their income. With GST coming into effect, they fear, that concealing income will be an onerous and extremely risky task. The thought of paying full tax on income is agitating their minds. To make matter worse, there are fears that payment of full tax henceforth may also subject their past years transactions to tax scrutiny.

This again to my mind is part of the process that started few years ago. GST may have just set a deadline on blatant tax avoidance.

(e)    GST, like any major change, would throw up many new business opportunities also. On a smaller scale accounting and audit services may gain traction. Business automation products and services may also see significant acceleration.

But the material opportunity (and for some threat) may come from the relocation and consolidation of businesses. The businesses that chose their location purely because of tax arbitrage or established to take advantage of tax concessions, may shift to better locations and consolidate. I believe cities and towns closer to ports, major railway junctions, major manufacturing hubs may see businesses relocating from tax havens like Baddi (HP), Kashipur (UK) etc.

The regional imbalances and inequalities may thus rise further. The real estate prices may also rebalance accordingly. The labor migration may increase. Unfortunately, I have not seen anyone discussing this as a collateral of GST.

PS: I have been asked by a friend, who happens to be office bearer of a trade association, to draft a representation seeking some concession under GST for the Association members. The primary objective is to make representation and assure the members that the Association is functional, rather than actually seeking any concession!

Give them a dignified life; and death

Thought for the day

"Keep your face to the sunshine and you cannot see a shadow."

—Helen Keller (American, 1880-1968)

Word for the day

Smorgasbord (n)

A buffet meal of various hot and cold hors d'oeuvres, salads, casserole dishes, meats, cheeses, etc.

Malice towards none

What is real problem for those who are opposing GST?

(a) They might have to pay income tax due on their full income.

(b) Higher GST rates may impact demand for their product.

(c) GST compliance is very expensive.

First random thought this morning

To promote cashless payments, the government should introduce a card that can be charged maximum of Rs2500 per day. The card could be a debit card, credit card or prepaid card. The PoS for this card should work on show card basis (no swipe, no PIN). For fixed charges like Toll, Parking Fee, Entrance Fee, Platform Ticket, Filing Fee etc., PoS could be pre-programmed so that on showing the card it charges the fixed amount to the card. For variable charges, the PoS operator may be required to punch in the amount to be charged. Toll booth may work on Red/Green light basis rather than barrier basis which is energy intensive and causes delays at Toll Booths.

This can make the transactions really fast and hassle free. A low per day limit, will minimize the chances of misuse of card through theft etc.

Give them a dignified life; and death

As I highlighted in one of my earlier post the notion of "farm loan" is materially different from "farmers' debt" in today's context.

The rise in aspirational consumption; distortion of social customs (especially marriage, death, birth) for the sake of vanity, ignorance, and misguidance; rise in crime and litigation expenses; rise in cases of chronic diseases and hence prohibitive healthcare expenses form an overwhelming part of "farmers' debt". This debt usually has nothing to do with farming activity.

This is in fact may true for a large majority of urban poor and lower middle class people also.

To solve this conundrum, it is important that economic reforms are implemented with social reforms.

The social initiatives like focus on cleanliness, cooking gas connection to BPL families are commendable. But what we need is a social renaissance. Small correction and incremental improvement might not be enough given the serious nature of the problem, in my view.

I am not a social scientist. I may therefore not be an appropriate person to suggest the steps that could be taken within the Indian sociological framework. But this does leaves me at freedom to throw some thoughts that may not belong to the box. For example, consider the following:

(a)   The government should take strong affirmative steps to eradicate social distortions that have crept in over a period time in our social, religious and cultural events.

To begin with the government should totally nationalize the religious part of the birth, death and marriage ceremonies.

The government should appoint qualified religious persons (QRP) who can perform these ceremonies at the designated venues established by government in every Block of the country . All the expenses like salary of QRP, cost of performing the rituals, food offered to QRP, cost of feeding upto 25 close relatives of the person performing for whom the rituals being done, etc. should be borne by the government.

The designated officer at Block level may be appointed to supervise all such ceremonies and issue certificate (Birth, Death, Marriage) on the spot.

The government should actively discourage profligate spending on the social part of these events.

All expenses on marriage & birth related parties and social functions relating to death, shall be taxed @100%. Meaning, if anyone wanting to spend Rs10,00,000 on marriage party of his/her child, shall be required to pay an equivalent amount as tax. This money may be used exclusively for performing the religious ceremonies stated above.

(b)   A dignified birth and death shall be made fundamental right of every citizen.

In case of birth, the government should assume responsibility of the child from the conception stage, for upto two children for each parent. This includes good diet for mother, medical tests, medicine, delivery expenses and immunization of the child. This should be done on a global standard basis not the way typical government medical facility is run by the government.

In case of death, the final rights of the deceased should be performed in a dignified manner, as per his/her religious traditions.

This should apply to all unclaimed and unidentified bodies also.

The insurance companies may be directed to make the claim payments on the spot when the final rituals are done on 13th, 17th or 40th day as the case may be, in cases where the deceased's life was insured, either individually or under some government group scheme.

The corporates may be required to fund this initiative under their CSR obligation.

(c)    A separate assembly of religious leaders, holy men for each religion may formed. This assembly may be given the task to reevaluate all holy scripture, and find if there is any need to reinterpreted the scriptures in the light of modern day circumstances and realities. The religious leaders should be requested to weed out the redundancies and misinterpretations, so that no one manipulate the religious sentiments of the people in the name of scriptures and divine mandate.

The assembly should also frame a code of conduct for all people responsible for helping people with their religious ceremonies and duties.

For example, the Hindu assembly may want to ban flowing the last remains of dead people in holy rivers to save them from dying. The ashes may be used for making bricks that can be used to build places of worships and houses for the poor.

It may also encourage people to use electronic or gas based cremation, instead of wood pyres. Alternatively, each family member of the deceased may be required to plant two trees each and take care of it till it grows to become self-sufficient.

(d)   Distinguish between "education" and "learning". Nationalize and standardize all education. Learning may be imparted by private citizens volunteering in nation building. (Will write in detail on this in a later post)

These steps if taken, may make the life of poor (both rural and urban) materially comfortable and substantially increase the happiness quotient of the country.

Time to do it is Now

Thought for the day

"Nothing happens to any person but what was in his power to go through with."

—Marcus Aurelius (Roman, 121-180)

Word for the day

Beatinest (adj)

Most remarkable or unusual.

Malice towards none

My friend came! He charmed everyone! I sold him drones!

 

First random thought this morning

While the people remain busy with movies and cricket, the country is silently becoming a relevant global force in space technology, automobile, tennis (doubles) and badminton.

Wrestling, archery, shooting etc. are much talked about, but results have not been any spectacular.

Which category you want me to put political ?

Time to do it is Now

Prime Minister Modi has proudly promised Indian Diaspora in US that his government will strive to make India a developed country like US. In past also many political leaders have aspired to make India like China. One former chief minister of Maharashtra promised to make Mumbai like Shanghai. Congress party leader Rahul Gandhi wanted to emulate the manufacturing model of China and manufacture toys and watches in India.

If we eliminate the political rhetoric out of these assertions made in the heat of the moment, what we get is a constricted vision of the future of India. Regardless of the posturing, our political establishment appears mostly lacking in innovation, self-belief, and faith in rich cultural & economic legacy.

The right wing politicians claim to have pride in India's glorious past. Their sole ambition is to restore India's stature as world leader (Vishwa Guru). However, when it comes to implementation, they suffer from cognitive dissonance.

They seem unable to think beyond highly exploitive and authoritarian Chinese model of development. The tragedy is that they want India to become like US by following Chinese model and enforcing parochial social agenda that has no Vedic sanctity!

There is no meaningful left party in the country. The left wing politics is now limited to violent and exploits of handful Naxals and Maoist.

The academics and elite that subscribe to left ideologies appear mostly too pliable and dependent on state favors to make any difference.

The traditionally strong center and left of center parties have mostly degenerated to become feudal lordships. Their vision of India appears to begin and end with their vested political and economic interests.

The tokens like secularism, socialism, equality and justice are blatantly used to camouflage the vicissitude of their ideologies.

Under these circumstances, finding a sustainable solution for farmers' plight seems like a impossibility.

Given that over two third of the population is directly or indirectly dependent on the farming and allied activities, their political importance can hardly be overemphasized. It is not surprising that the structure of policy framework is such that farming should continue to remain an unviable activity, so that the farmers always remain dependent on political establishment and submit to their exploits in lieu of petty concessions.

In my view, imagining India as a developed (or even a middle income) country is meaningless unless some radical structural reforms are implemented in the rural sector. The incremental changes would never be sufficient to cure the deformities developed over past two centuries in the sector.

The recent farmers' agitations across many states are a reminder that things needs to be done immediately, before it is too late. In next couple of days, I would be sharing my somewhat utopian (but not impossible) solutions for initiating a wider discussion on the topic.