Transition from an argumentative to litigant society

Thought for the day

"In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule."

—Friedrich Nietzsche (German, 1844-1900)

Word for the day

Banausic (adj)

Serving utilitarian purposes only; mechanical; practical, e.g., architecture that was more banausic than inspired.

Malice towards none

General Bajwa to Trump:

डॉन तुझे पाकिस्तान पे भरोसा नहीं क्या?

First random thought this morning

One things is clear beyond doubt to me that the respect for human life does not figure in the priorities of political agenda in the country.

Now, if you agree with me on this, is there any point in listening to the political discourse and/or looking for a ray of hope in political promises.

We the people will have to put premium on our life. Raise alarm whenever you face a potential peril to a life.

Transition from an argumentative to litigant society

In India, various courts of law dispose off over 21million cases every year. But still there are more than 30 million cases pending in various courts across India. Over 6 millions of these pending for more than 10years.

Another interesting feature is that while in lower courts criminal cases form more than two third of all pending cases, in higher courts the ratio of pending criminal cases is less than 25%. (see here)

So statistically, one might possibly draw a conclusion that our criminal justice delivery system is superior and most of the cases are conclusively decided at the first point itself.

But anyone who has seen the Indian criminal justice system closely, would know that nothing could be far from the truth. Every common man who has been to police station or court of law even once would know that—

·         Police personnel are criminally ill trained to prepare a criminal case and most of the cases do not even satisfy the elementary criteria for the trial of an accused.

·         A large majority of lawyers and advocates are incompetent, unethical and unfit for the practice of law.

·         The proportion of frivolous cases is too high, for want of an effective deterrent.

·         The corruption in police and lower judiciary is rampant.

·         The justice delivery for petty crimes is too cumbersome.

·         The justice delivery at higher courts is unaffordable for most. Though there is provision for free legal aid for economically weaker section, most litigants are unable to use it.

I believe that if police were little more friendly and courts were little more efficient, the number of cases may rise materially, given that many people avoid seeking justice for fear of harassment.

If you happen to visit a court of law in any of the small towns in hinterlands, you would observe that many of the accused involved in serious crime cases are not criminals.

Most of them committed crimes in fit of rage, pretense of false ego or some misunderstanding. Most of these crimes could be prevented

A majority of property related crimes could be avoided if all property title records are digitized and people are made aware about the need for making a will.

Honor, ego and women related crimes could be totally avoided if children are taught to respect individuality of others at school level.

Ban on drinking at public places (festivals, marriages etc.) could take out more than 10% criminal cases.

If you are wondering, why I am bothering you by this rubbish, I feel there is a strong investment strategy connection here....to continue tomorrow

Monekeyman, a Witch and GST

Thought for the day

"Every church is a stone on the grave of a god-man: it does not want him to rise up again under any circumstances."

—Friedrich Nietzsche (German, 1844-1900)

Word for the day

 Ululate (v)

To lament loudly and shrilly.

To howl, as a dog or a wolf; hoot, as an owl.

Malice towards none

People like Karun Nair are not sure, whether they will find place in Indian cricket squad anytime soon. And we are still discussing Yuvraj Singh.

First random thought this morning

The tragic events like Gorakhpur hospital tragedy and the Wednesday night theft in the Delhi-Mumbai Rajdhani, may sure make a good sequence in Hindi movies. Bollywood may want to thank the authorities for this

In the meantime, I must rework my maths for evaluating government's performance.

I am considering to raising the discount factor I apply to government claims of delivery substantially.

Monekeyman, a Witch and GST

In Vrindavan early this week, while mingling with thousands of devotees from across India, I learned a thing or two, that could have significant economic significance, especially in relation to my investment strategy.

In September 1995, the miraculous milk drinking Ganesha brought the country to standstill. Millions of people queued in front of temples to offer milk to Ganesha idols. The event attracted attention of global media and scientific community also. After discussing and debating for many days, the issues was buried as unresolved.

Six years later, a mysterious monkey man started terrorizing the people of Delhi. For many nights, people in many localities could not sleep. Unconfirmed reports of monkey man appearing subsequently in other cities also emerged. An investigation was launched. But the case remained unresolved. Later, the incidence was used in 2009 Hindi movie "Delhi-6".

Last month, many incidence of attack by a hair cutting Witch in NCR region appeared in media. The Witch would cut braids of sleeping women in night.

The latest incidence was a matter of discussion amongst the common people, gathered to celebrate the birth of Lord Krishna. The difference this time was that almost everyone, from illiterate old farmers to local pundits, was making fun of the "rumors". Even old village women were seen cracking jokes about it. No one appeared to be believing an iota in these incidence.

This is a significant change in the mindset of the society, in my view.

The second interesting thing was discussions on GST. A group comprising small traders, shop keepers, and small time contractors, enjoying lunch at banks of Yamuna was seen intensely debating the impact of GST. As I could feel, most of the arguments were based on inadequate information, misinformation, and prejudices. To most of them GST was no different than the mystery monkey man or the hair cutting Witch, that is out to catch them off guard and destroy their businesses.

This in my view is failure of government in adequately guiding people about GST and its implications for them. The positive thing is that the current gloom in the sentiments could be somewhat based on the misinformation rather than the actual impact of GST.

The third interesting discussion was about real estate. Many people from nearby towns were of the firm view that the prices of their properties are going to crash by 50% in next couple of years.

On enquiry, they suggested that the fall in prices of their property (own house or shop) may not have a material impact of their spending habits or expenditure plans. But it was certainly seen as an obstacle in their future investment and expansion plans.

A deeper inquiry suggested that it may not be GST or RERA that is bothering the real estate market in smaller towns and unplanned colonies of large cities, especially in North India. This is mostly about changing landscape of urban plans and preferences of people......More on this in a later post.

Angry birds and spinning wheels

Thought for the day

"The word 'Christianity' is already a misunderstanding - in reality there has been only one Christian, and he died on the Cross."

—Friedrich Nietzsche (German, 1844-1900)

Word for the day

Iconoclastic (adj)

Attacking or ignoring cherished beliefs and long-held traditions, etc.

Malice towards none

Justice is blind, I had heard. But the government is blind, deaf and dumb, this I only realize recently. It only sees, hears and responds when an issue gets good TRPs in media.

So much so that the amount of compensation in cases of rapes, murders and suicide is directly proportionate to the TRP of the case.

First random thought this morning

The positive outcome of Doklam standoff and Kim Jong Un's jingoism could be stronger and deeper Indo-US and Indo-Japan relations. While the hostilities will end sooner or later, the warmth relationships may last much longer.

The focus therefore should be on making efforts to preserve the opportunistic thaw in relations and convert into a sustainable and lasting phenomenon. Keeping Doklam at the center of focus, may not that fruitful after all.

In the meantime, two nuclear powers are fighting each others with stones!

Angry birds and spinning wheels

A 1hr travel in the Delhi Metro will tell you that a significantly large number of people, youth as well as middle aged, educated and not so educated, are hooked to the digital games like Angry Birds, Bubble Shooter etc.

Most of Indian middle class mothers could be seen complaining about Shin Chen, Doremon et. al., the cartoon character that our children are addicted to.

It was not long ago that when a digital game "Pokeman Go", got many people hooked. The fan club included some renowned people like Shah Rukh Khan (as per media reports).

The latest craze amongst masses seems to be the innocuous Fidget Spinner, being propagated as stress buster device. The device is nothing but a variation of ordinary bearing wheel that has been in use for more than two centuries.

On a visit to Mathura-Vrindavan early this week, I saw at least 500 varieties of Fidget Spinners being sold on the street of this tiny town. Yesterday I noticed that the situation is no different in the streets markets of Delhi. In the popular Connaught Place area you can see hundreds of colorful variants of designed to serve the local taste. On enquiry I discovered that most of the children I know are hooked to the device.

The point is that there are entrepreneurs who seems to have ideas that can work, and also have the capabilities to make such ideas work.

There are numerous examples of successful ideas like Whatsapp, Facebook, Angry Birds, Shin Chen, Doremon, Pokemon that transcend all boundaries be it geographical, socio-economic, or language.

I am sure behind every such successful idea there could be 999 failed ideas also. But that's not the point here. The point is that these successful ideas are about people and not any complex technology. Most of these ideas have created their market themselves. Till the time these ideas were commercialized, no one was really crying need for these products or services.

Unfortunately, our enterprise ecosystem is overwhelmingly skewed in favor of thought followers rather than thought leaders. The cherished unicorns like Flipkart (Amzon), Ola (Uber), PayTM (PayPal) etc. are all poor copies of the global leaders.

Mr. Bhatia created Hotmail two decades back. But he perhaps himself did not believe in the potential of his idea and was happy to sell it to Microsoft for a pittance. And Chota Bheem is so inadequate in rescuing children from the spell of Shin Chen.

If our government is seriously looking to create a New India in five years, we would need to develop an ecosystem that encourages, motivates and supports innovation and not just copying the successful ideas.

I do have some such ideas, if the Prime Minister does care. For those who are itching to make fun of me, I may just remind Dronacharya who taught many a prince and kings the art of winning wars and ruling always remained a poor teacher himself.

Is the new normal permanent?

Thought for the day

"Every vice was once a virtue, and may become respectable again, just as hatred becomes respectable in wartime."

—Will Durant (American, 1885-1981)

Word for the day

Fructify (v)

To bear fruit; become fruitful

Malice towards none

Does India need independent Bail Courts, which would grant or refuse bail to an accused based strictly on the legal provisions relating to bail, and not on the morality of the case or socio-economic status of the accused?

First random thought this morning

The motifs used to depict India globally are mostly Mughal and British era monuments, like Taj Mahal, Qutub Minar, Red Fort, India gate, Parliament House, etc. Besides, some medieval temples and other religious places and emblems are also commonly used.

The paradox is that we are either too nationalist or too secular or too discomfited (e.g., to accept Khajuraho as our culture) to accept these symbols as our true identity.

The tragedy compounds when we find that we can hardly claim the Indus Valley civilization as our own, since most of the sites now lie in Pakistan.

Is the new normal permanent?

 

Professor Harold James (Princeton University, New Jersy) in his recent article, made some interesting points regarding the global financial crisis. Since I mostly agree with these points, I find it redundant to use my words for expressing these same thoughts. I am therefore reproducing Prof. James words here to express my thoughts. (All rights of Prof James acknowledged and respected)

"The legacy of 2007 is still with us. Its most devastating and destructive effect was to put a premium on unconventional monetary measures. Unfortunately, when policymakers scrambled in search of “big bazookas” ten years ago, they set the stage for the return of an old character: a strongman willing to pull the trigger.

To be sure, at the height of the financial crisis, politicians were right to conclude that they could not rely on business as usual. Central banks needed to provide liquidity on a massive scale, and governments needed to complement those monetary-policy efforts with fiscal expansion. Accordingly, China and the US, in particular, launched large-scale stimulus programs in 2008 and 2009, respectively.

.....

...overall, the response to the financial crisis was strikingly successful, and those who led it were right to pat themselves on the back for having prevented a repeat of the Great Depression. But, because unconventional policies were so effective, they are now considered appropriate and necessary responses to any problem, while constitutional safeguards are increasingly dismissed as petty bureaucratic concerns.

.....

The post-crisis view holds that a powerful leader can and should fix things by himself (strongmen are rarely women). This approach was readily apparent in the Russian government’s response to collapsing aluminum prices in 2009, when job losses and unpaid wages gave rise to large-scale protests at a plant in Pikalevo, 150 miles (250 kilometers) southeast of St. Petersburg.

When then-Prime Minister Vladimir Putin toured Pikalevo, he made a show of humiliating the plant’s owner, the oligarch Oleg Deripaska, by calling him a “cockroach.” Putin didn’t announce any new policies to help Russian workers; nonetheless, his performance in Pikalevo was hailed as a bold assertion of state power in the face of capitalist excess.

......

Strongmen tend to present themselves as being uniquely able to tackle a specific problem. For Philippine President Rodrigo Duterte, that means a “war on drugs” that has led to thousands of extrajudicial killings. Putin and Turkish President Recep Tayyip Erdoğan justify their policies in the context of fighting terrorism. And Hungarian Prime Minister Viktor Orbán has framed his autocratic behavior as a necessary response to a domestic financial crisis. By focusing on one narrow “crisis,” these leaders create a mindset in which all other problems become crises that demand immediate, effective, and unconstrained action.

Schmitt, who joined the Nazi Party in 1933, held that sovereign decision-making is the central feature of the political process. When leaders make political decisions, they are reasserting control over the concept of sovereignty itself, which has been gradually eroded and transformed through various phases of globalization."

According to Schmitt, how leaders arrive at their decisions is secondary to the fact that a decision has been made. A sovereign “needs” to act forcefully to protect particular threatened interests. Often, this entails symbolic gestures. In 1930, for example, America’s Smoot-Hawley Tariff Act singled out Swiss watches, Japanese silk products, and other nationally iconic imports.

Protectionism today is no different. Consider US President Donald Trump’s threat to impose tariffs against BMW and Mercedes-Benz: two high-visibility brands that one immediately associates with Germany.

....

Unfortunately, this approach has created a political environment in which established norms have been eroded, and no new norms have taken their place. The Soviet-born British journalist Peter Pomerantsev said it best in the title of his brilliant book about post-Soviet life: Nothing Is True and Everything Is Possible.

Now that crisis has been normalized as a permanent condition, we are all post-Soviet."

Yes, nothing is true and everything is possible is the paradigm of policy making and governance these days.

Back home we have seen a number of examples of this - abolition of 86% of currency notes overnight, being the most glaring one.

Now if I accept this departure from conventional economics and governance models as permanent and hence new normal, my investment strategy would also need to be overhauled.

The dilemma is should I adjust it this morning, or wait some more to see, if Keynesians rise like Phoenix and the 20th century economic and governance order is restored; or may be a still newer paradigm takes shape.

Please help me, if you would, solve this puzzle!

Do you want to keep riding the tiger?

Thought for the day

"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

—Will Durant (American, 1885-1981)

Word for the day

Palsy-Walsy (adj)

Friendly or appearing to be friendly in a very intimate or hearty way, e.g., The police kept their eye on him because he was trying to get palsy-walsy with the security guard.

Malice towards none

Is communism truly and totally irrelevant in Indian context?

First random thought this morning

The present standoff between Indian and China is certainly not likely to escalate into a war of any kind, but nonetheless it has reached a stage where stepping back without a face saving formula may not be feasible.

The leadership on the both sides of the border have much to lose, if they appear compromising on this territorial issue. Indian side though has more at stake since our administration has certainly overcommitted on this issue.

I hope we find some face saving escape sooner than later.

Do you want to keep riding the tiger?

The conventional wisdom says when you move up a ladder, usually the easiest, and mostly the best, way to get down is to take the same ladder on your way down. Jumping from the roof involves risk, unpredictability and uncertainty of outcome.

The same is also true for a situation when you travel to an unknown destination. The easiest and the fastest way back is the same way you took to reach the destination. Trying a new way would entail risk, unpredictability and uncertainty.

When you ride on a tiger's back, the best way is to wait and survive till the tiger dies.

To mitigate the impact of the global financial crisis a decade back, the central bankers world over created unprecedented amount of money.

The trick did work wonderfully well.

The markets got unfrozen in no time without any major collapse; 1930 like depression, that looked almost certain at one point in time, was comprehensibly averted; even the thought of hyper inflation that is classical outcome of such liquidity deluge, has not bothered many in last decade; EU did not disintegrate as many Oracles portended; peripheral European countries that were caught in the eye of the storm survived and not doing bad after all.

The conundrum, the policymakers in the developed world now face is how to unwind the liquidity that has been created in past one decade to mitigate the global financial crisis.

Well as I said, the easiest and the fastest way would be to take the same path you took to reach where you stand today.

The central banks should shrink their balance sheets in the same fashion as these were expanded.

But remember, the effort in 2008-09 was a globally coordinated one. All central banks and other policy makers worked together.

The policies have however diverged in past five years, as per the circumstances of each individual jurisdiction.

In my view, if Fed or any other central bank decides to unwind liquidity in isolation, it could be highly disruptive. The unwinding therefore should also be synchronized the way expansion was.

There could be an argument that the circumstances of each jurisdiction are different. The uneven pace of recovery, say across US, Europe and Japan, may not permit a synchronized response.

In my view, this argument does not hold good, since the growth was skewed even before the crisis. US and China were the primary drivers of the growth, while Japan and Europe were mostly lagging.

The other way is to keep riding the tiger, till either of you die.

More on this tomorrow.

Yet another opportunity missed

Thought for the day

"Sixty years ago I knew everything; now I know nothing; education is a progressive discovery of our own ignorance."

—Will Durant (American, 1885-1981)

Word for the day

Anoesis (n)

A state of mind consisting of pure sensation or emotion without cognitive content.

Malice towards none

If elected representatives are public servants, why the rules relating to attendance and conduct in office should not apply to them mutatis mutandis, as these apply to every other person employed in public service!

First random thought this morning

When an elected representative takes oath of the office he has been elected to, he swears by the name of God that he will perform his duties and obligations as defined by the constitution, without fear or favor and without ill-will or affection towards any one.

I want to ask, when an MP or MLA recommends someone for admission to a school or college, or railway reservation, or out of turn treatment at a government hospital, or job - does he not violate the constitutional oath and hence become liable to be disqualified?

Would the Hon'ble Supreme Court like to examine this question as PIL?

Yet another opportunity missed

The decision of Monetary Policy Committee (MPC) of RBI to cut policy rates by 25bps is on the expected lines. In fact MPC was left with little choice after the largest Indian bank, State Bank of India, decided to cut savings rates that impact close to 330 million savings account, a couple days ago.

Given that SBI touches maximum number of poor households, and account for the largest number of marginal savings account, the decision to cut savings rate must not have been without strong reasons.

In my view, through this move the government has decided to lead the monetary policy. It would therefore be reasonable to expect that lending rate cut, may be little aggressively, will follow. Given the stature of SBI, most other banks may have to follow the move.

Though I will not go full length and question the legitimacy of MPC itself, under the given circumstances, it is certain that the government is more committed to growth rather than inflation at this point in time.

The difference of opinion between the government and MPC on the monetary policy stance is welcome. MPC not listening to the government is also a healthy sign.

But the problem is that this tussle between MPC and the government will likely erode the predictability and data dependability of the policy. This is something that may not be desirable for anyone.

Coming back to the MPC policy statement, I find the following worth taking a note, in India's context:

·         A normal and well-distributed south-west monsoon for the second consecutive year has brightened the prospects of agricultural and allied activities and rural demand.

·         Industrial performance has weakened in April-May 2017. This mainly reflected a broad-based loss of speed in manufacturing. Excess inventories of coal and near stagnant output of crude oil and refinery products combined to slow down mining activity. For electricity generation, deficiency of demand seems to remain a binding constraint.

·         The weakness in the capex cycle was also evident in the number of new investment announcements falling to a 12-year low in Q1, the lack of traction in the implementation of stalled projects, deceleration in the output of infrastructure goods, and the ongoing deleveraging in the corporate sector.

·         The 78th round of the Reserve Bank’s industrial outlook survey (IOS) revealed a waning of optimism in Q2 about demand conditions across parameters, and especially on capacity utilisation, profit margins and employment. The manufacturing purchasing managers’ index (PMI) moderated sequentially to a four-month low in June and the future output index also eased marginally.

·         Surplus liquidity conditions persisted in the system, exacerbated by front-loading of budgetary spending by the Government.

·         Merchandise export growth weakened in May and June from the April peak as the value of shipments across commodity groups either slowed or declined. By contrast, import growth remained in double digits.

·         Business sentiment polled in the manufacturing sector reflects expectations of moderation of activity in Q2 of 2017-18 from the preceding quarter. Moreover, high levels of stress in twin balance sheets – banks and corporations – are likely to deter new investment.

·         With the real estate sector coming under the regulatory umbrella, new project launches may involve extended gestations and, along with the anticipated consolidation in the sector, may restrain growth, with spillovers to construction and ancillary activities. Also, given the limits on raising market borrowings and taxes by States, farm loan waivers are likely to compel a cutback on capital expenditure, with adverse implications for the already damped capex cycle.

·         External demand conditions are gradually improving and should support the domestic economy, although global political risks remain significant.

·         While inflation has fallen to a historic low, a conclusive segregation of transitory and structural factors driving the disinflation is still elusive.

·         There is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all.

·         Keeping in view these factors, the projection of real GVA growth for 2017-18 has been retained at the June 2017 projection of 7.3 per cent, with risks evenly balanced.

Broadly, MPC did see material slowdown in growth momentum. It did recognize the need for reinvigorating private investment, especially in view of the rising fiscal constraints on state government due to loan waiver and pay commission payouts.

MPC did also note that some of the upside risks to inflation have either reduced or not materialised.

MPC also recognized that the global rates may move higher as central banks reverse some of their ultra loose policies. This implies that MPC must have discussed that there may not be much scope to cut rates later.

But still in its wisdom, MPC decided by a majority decision to cut the rates by 25bps.