Do it yourself

Wednesday, November 27, 2013

Great Hopes - II

Thought for the day

“Continuous effort - not strength or intelligence - is the key to unlocking our potential.”

-Winston Churchill(English, 1874-1965)

Word of the day

Ashen (adj)
Extremely pale; drained of color;

(Source: Dictionary.com)

Shri Nārada Uvāca

What are the top concerns of the country today? Rank these on the basis of media coverage:

1. Gutthi

2. Tarun Tejpal

3. Talwar couple

4. Snooping in Gujarat

5. Asaram and his son

6. Shruti Hasan’s stalking

7. Vegetable prices

8. 5 State elections

9. Corruption

10. Unemployment

Great hopes - II

Based on our intense discussion with some investors, fund managers, businessmen, farmers, bureaucrats, and young students we found that the people may in general be expecting the following from Modi, should he become the next prime minister of India. Surprisingly, the expectations from Rahul Gandhi are no different, but few believed that he could become prime minister.

(a) Modi will provide a clean, responsive and business/investment friendly administration.

(b) Modi will provide a proactive administration.

(d) Modi will provide an accountable and responsible administration and protect bureaucracy for their bona fide actions.

(e) Modi will help eliminating corruption from public life.

Unfortunately, no one could produce an iota of substantive evidence that would suggest that Modi is competent enough to meet their expectations. The only argument in the support of Modi is the media coverage mostly fed by BJP itself. We got further confirmation to our earlier finding that the traditional Indian belief of divine intervention at the time of crisis is playing in his favor. Modi is being seen as divine intervention that will get India rid of the current social, political, and economic crisis.

In our view, Modi does appear assertive and has shown tendency to take quick decisions in economic administration matters. A few quick decisions could boost the sagging business sentiment and help kick start the stalled investment cycle. Fortunately, many other things are already falling in place and would work in his favor.

In our view, the following positives could emerge if Narendra Modi gets to lead the next government with a clear mandate:

(a) Business and investor confidence may recover on the hopes that policy making will be proactive, business friendly, consistent and faster.

(b) Important economic and financial legislations like GST, DTC, Insurance and Pension Bills etc. may get cleared in FY15 itself.

(c) Important administrative reforms are implemented to uplift the morale of bureaucracy. This is expected to expedite the project execution.

Besides, the macroeconomic environment may also begin to improve on its own as core inflation and therefore rates bottom out, and consumer demand recover post good Rabi harvest.

This best case scenario is however not free from risks. In fact there are significant risks to this view.

…to continue

Also read:

Letter to Mr. Narendra Modi

Whatever goes around comes around

Ganpati is son of Shiva

Follow the leader

Great Hopes – Part I

Tuesday, November 26, 2013

Great hopes!

Thought for the day

“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.”

- Albert Einstein (German, 1879-1955)

Word of the day

Decant (v)

To pour (a liquid) from one container to another.

(Source: Dictionary.com)

Shri Nārada Uvāca

After Helen, now Lehar threatens the Andhra coast.

Is nature warning about something seriously wrong in Andhra Pradesh?

Great hopes!

It is evident from the reports issued by various brokerages & other agencies, and opinion publicly expressed by many corporate leaders that a lot of hopes are being pinned on Narendra Modi’s electoral success.

The performance of the Indian stock markets post announcement of Modi’s PMship candidature also indicates that investors are probably front-running a Modi government post May 2014 election results. A recent discussion with some fund managers and large corporate investors suggests that the two day 17% jump post May 2009 election results could be a driving force behind their actions.

In our assessment most of the hopes are emanating from the perception of a good track record of the Modi led government of Gujarat state; and therefore leave a lot of scope for disappointment.

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

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

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

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

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

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

…to continue

Also read:

Letter to Mr. Narendra Modi

Whatever goes around comes around

Ganpati is son of Shiva

Follow the leader

Monday, November 25, 2013

Follow the leader

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 of the day

Snarky (n)

Nagging, irritable, testy

(Source: Dictionary.com)

Shri Nārada Uvāca

Does AAP truly represent the common Indian citizen – generally ethical, aspires Ram Rajya, vows high morals but not incorruptible.

Follow the leader

Dear Mr. Modi, BJP under your leadership has invoked the legacy of Sardar Vallabhbhai Patel, who is commonly projected as the symbol of national unity and integrity in post independence India. In past 66years there have been occasional academic debates as to who between Nehru and Gandhi would have made a better prime minister. However, in common people’s consciousness the matter has become totally redundant. It is evident from the fact that in most elections post 1950’s, no party has sought to use his name for political mileage (except BJP briefly in 1990’s during L. K. Aavani’s Rath Yatra).

In our view, Sardar Patel is an important figure in India’s political evolution and as such would continue to occupy a prominent place in the history of modern India. But invoking his name in current socio political and economic context may not yield intended results – neither for BJP which is highlighting his occasional communal bias and using his name to implicitly criticize Nehruvian socio-economic policies and Nehru’s family; nor for Congress which has tacitly deserted him long ago.

It would therefore be more advantageous to follow the legacy of most acceptable and marketable leader – the Father of the Nation – Mohandas Karamchand Gandhi.

We met a dozen of old Congressmen (all 80+ in age) in past four days to share our views on the relevance of Gandhian socio-economic model in current context. All of them fully subscribed to our view that Gandhian Socialism adapted to the current context could only offer a sustainable solution for India’s economic development conundrum.

“Salt and Khadi were the two most effective metaphors used by Gandhi to illustrate his socio-political and socio-economic philosophy”, suggested one octogenarian lady from a reputable industrial family.

“Salt is the best representation of inclusiveness – perhaps the only thing that touches the lives of the entire nation every day; besides salt has special place in all religions – generally implying commitment, incorruptibility, perpetuity, and purification”, she explained.

“Khadi on the other hand is an emblem of self-reliance, sustainability, self-enterprise, austerity and empowerment.”

BJP has experienced that politics of exclusion could take it only thus far and not beyond. Similarly, putting a fancy façade and selling it for Shining India has also not worked in past.

Most people today recognizes that a change in political administration is in order, as it might help breaking the negative feedback loop we are presenting finding ourselves trapped in.

But the change unfortunately would not come by merely changing the nameplates outside sprawling bungalows and plush offices in the Lutyens’ New Delhi. We perhaps need to change the socio-economic growth paradigm itself. The Father of the Nation could be of great help here. No need to carry any guilt here – the youth of the country has forgotten and forgiven Nathuram Godse. Just follow the “Leader”.

Also read:

Letter to Mr. Narendra Modi

Whatever goes around comes around

Ganpati is son of Shiva

Friday, November 22, 2013

Ganpati is son of Shiva

Thought for the day

“Dynasty was the opportunity to take charge of my career rather than waiting around like a library book waiting to be loaned out.”

- Joan Collins (American, 1933-)

Word of the day

Irredentist (n)

A member of a party in any country advocating the acquisition of some region included in another country by reason of cultural, historical, ethnic, racial, or other ties.

(Source: Dictionary.com)

Shri Nārada Uvāca

Some posters in Mumbai depicted Sachin Tendulkar as Lord Vishnu.

Not surprisingly, no one found it blasphemous. Guess, blasphemy is also a function of votes!

Ganpati is son of Shiva

Dear Mr. Modi, you have prominently raised the issue of dynastic culture of Congress Party in your public discourse. In particular you have repeatedly referred to the privileged status accorded to the family of Mrs. Sonia Gandhi by the Congress Party. In our view, this approach is undesirable, fallacious and could eventually prove to be unproductive.

It needs to be appreciated that dynasties are an integral part of Indian culture, traditions, history and even religion. It would be unreasonable to expect it not to be part of politics. Dynasties exist in almost all professions, e.g., legal, medical, accounting, cinema, music, art, religious discourse, etc. Many large businesses in India are also owned and managed by dynasties.

In fact, dynasty should be more acceptable in politics than in business; because in electoral politics the patrons could only ensure that their protégée is nominated to contest election. The protégée however has to win enough popular votes to get elected and get a public office every five year. This is not usually the case with dynastic inheritors of business or profession.

Coming specifically to Congress Party, on close scrutiny the charge of dynastic rule in Congress Party may not as sustainable as it would be in case of most other parties.

Please note that Nehru never appointed Indira Gandhi as his political heir. She was elected by the Party after sudden demise of PM Shastri. People of India later ratified the decision. Similarly, Indira Gandhi never appointed Rajiv Gandhi as her heir. He was elected by the Party after Mrs. Gandhi was assassinated. The people of India overwhelmingly ratified the decision. Later, Rajiv Gandhi did not appoint anyone from his family as his heir. It was only after the Congress Party fortunes declined substantially under Mr. Kesari, that the party sought the return of Mrs. Sonia Gandhi. On her part she has also, rather than seeking any public office for her children, supported a technocrat Manmohan Singh for 10years. Even now she has left Rahul Gandhi to earn his place in Indian politics by winning 2014 elections.

On the other hand, Mulayam Singh, Lalu Yadav, Kanshi Ram, Farooq Abdullah, Balasaheb Thakre, M. Karunanidhi, NTR, Devi Lal, Bhajan Lal, Prakash Singh Badal, etc. have all nominated their family members (heirs) as their political successors. From your logic, J. Jayalalitha, Naveen Patnaik, Ajit Singh etc. are also product of dynastic traditions. Given that BJP leadership is also apparently nominated by RSS, it is also dynastic in that sense.

If you truly believe that dynasties are not acceptable in a democratic setup would you promise that upon coming to power, you would legislate that:

(a) A person would be eligible to contest Lok Sabha election only if he has served at least one full term in an elected local body and an elected state legislative.

(b) An estate duty of 50% shall be levied on inheritance of shares of publically listed companies.

If you find these proposals preposterous, please exclude the word dynasty from your public discourse.

Also read:

Letter to Mr. Narendra Modi

Whatever goes around comes around

Thursday, November 21, 2013

Whatever goes around comes around

Thought for the day

“Don't fight forces, use them.”

- R. Buckminster Fuller (American, 1895-1983)

Word of the day

Inexorable (adj)

Firm; determined; unyielding; unchangeable; inflexible; relentless.

(Source: Dictionary.com)

Shri Nārada Uvāca

Package for Sugar Industry in UP, package for Bihar, 50% cheaper electricity in Delhi, G-Sec yields above 9%, INR back to 63/USD levels – everyone seems to be attacking P. Chidambaram’s red lines with vengeance!

Whatever goes around comes around

Dear Mr. Modi, on a rather simplistic analysis of the present economic conditions we could reasonably trace the roots of some of the malaise to economic crisis of late 1990s and early 2000s when incidentally NDA government was in power.

We acknowledge that asking NDA government to share some of the blame for current inflation, corruption, unemployment and slower economic growth etc. might sound preposterous to many. But in our view a sustainable solution could only be provided if the root cause of the problem is identified properly.

The economy was substantially opened up during economic crisis of late 1990s and early 2000s (exacerbated by economic sanctions post nuclear blast in May 1998). For example, regulations in sectors like coal, power, roads, telecom etc. were liberalized substantially. Selective land, labor & tax reforms were sought to be introduced through SEZ scheme. Financial sector regulations were liberalized to attract greater foreign flows. This was incidentally the period when the global liquidity taps were opened to full flow. This was also the time when China entered WTO and got a license to flood Indian markets with its cheap manufactured goods.

Y2K led global ITeS boom, easy credit led private investment surge, Cheap Chinese import led consumer spending and massive government spend on infrastructure funded by public sector and deficit financing created a mirage of India shining. Unfortunately the higher income-higher consumption and savings-higher investment effect of all this reflected in data with a lag during early years of UPA I regime (2004-2007).

The real problem however is that all this liberalization, investment etc. was done (a) without creating any conceptual framework; (b) without instituting adequate and appropriate institutional and regulatory framework; (c) without addressing sustainability concerns; and (d) without making appropriate financial viability study.

Some of the consequences are-

(a) Rampant corruption in public offices, as allocation of liberalized national resources to private parties was left mostly at the discretion of politicians;

(b) Widespread obstructions and delays in execution of mega projects as these projects conflicted with the sustainability objective and environmental concerns;

(c) Advancement of future investment demand impeding financial viability of projects and creating massive stress in financial system;

(d) Decimation of domestic SME and household sectors which could not compete with cheap Chinese imports leading to structural pressure on currency; current account and general employment level;

(e) Unmanageable rise in aspirations of youth population leading to substantial changes in consumption patterns and thus pressuring household savings and consumer prices;

(f) Sharp rise in rural land prices making food inflation a structural problem.

To continue…

Also read:

Letter to Mr. Narendra Modi

Wednesday, November 20, 2013

Letter to Mr. Narendra Modi

Thought for the day

“A man cannot be too careful in the choice of his enemies.”

- Oscar Wilde (Irish, 1854-1900)

Word of the day

Moiety (n)

One of two equal parts; a half.

(Source: Dictionary.com)

Shri Nārada Uvāca

On World Toilet Day, a World Bank report says 53% Indian households defecate in open. No one has so far challenged this report.

Should all politicians making claims of development, equity and social justice be barred from public life forever for making false claims, lying and misrepresentation of facts?

Letter to Mr. Narendra Modi

Since you were declared PMship candidate of BJP two months ago, you have very aggressively accused the Congress Party for all the mess in the country. In particular, you have raised issues of food inflation, corruption in public life, poor governance, incompetence, nepotism (dynasty), and dichotomy of power sharing between 7RCR and 10 Janpath.

You have usually not held any bars in attacking the Gandhi family and Prime Minister, accusing them for all round failure. While the issue of propriety and morality of personal attacks is debatable, the mood of people so far appears forgiving. However, the moot point is whether highlighting incumbent governments’ failure is reason enough for voting BJP led NDA to power or people would want to see something more.

While you have repeatedly cited the Gujarat Model of development as cure to all malaise, unfortunately we have really not heard any concrete proposals, programs and policies you would want to implement (if voted to power) to take the country out of this mess.

For example, people may want to know -

1. Would you be able to control food inflation? If yes, how and in how much time?

2. How would you ensure that corruption is eliminated from all public offices?

3. What would you do to bring an end to dynastic politics?

4. How would you ensure elimination of Nagpur-New Delhi dichotomy?

5. If you form government with the help of multiple regional parties, how would you ensure good governance and competence in the ministries and departments administered by non-BJP constituents?

6. How would you improve fiscal balance without substantially cutting on subsidies, without raising taxes and tariffs, and continuing with MNREGA, Food Security entitlement and Right to Education enforcement?

7. How would you bring INR/USD level back to below Rs50/USD level?

8. What would you do to create millions of new jobs urgently needed to employ burgeoning workforce of the country?

9. What would be your policy to improve bilateral relations with neighboring countries?

10. Would you free the “caged parrot” or implement Lokpal legislation and bring CBI under this independent constitutional authority?

We appreciate that the incumbent administration may be suffering from fatigue and appears totally demoralized. It has probably lost the plot and perhaps has no ideas as to how to get out of this socio-economic mess.

A change is therefore most desirable. But the change if not properly managed could create more problems rather than solving any.

In coming days we shall highlight why you may like to be little more careful in your criticism. With warm regards and best wishes.

Tuesday, November 19, 2013

Side effects of food security

Thought for the day

“Without leaps of imagination, or dreaming, we lose the excitement of possibilities. Dreaming, after all, is a form of planning.”

- Gloria Steinem (American, 1934-)

Word of the day

Commix (v)

To mix together; blend.

(Source: Dictionary.com)

Shri Nārada Uvāca

Is the Congress’s failure enough reason to vote for BJP?

What would be the shape of next government if BSP gets 38-40 seats?

Side effects of food security

Travelling from Delhi to Lucknow on NH24 a couple of weeks ago we were stuck at Fatehganj (west) railway crossing for over 2hours. This is a critical highway which connects national capital Delhi with state capital Lucknow and important towns like Moradabad, Bareilly and Shahjahanpur. Most traffic from the industrial towns in Uttrakhand Rudrapur, Kashipur and hill station of Nainital also flows through this road via Rampur. The work on the rail over bridge at the crossing was over 90% complete. But we did not see any worker on the site. On enquiry we found that most workers have gone back to their villages for festivals and would be back only by mid December after sowing season is over. The site manager was a worried man. He cribbed that this project like many others has faced delays due to this labor indulgence, primarily a direct outcome of job guarantee under MNREGA.

While various opinions on MNREGA side effects are yet to be substantiated by serious research, it is clear that it has led to – (a) changes in historical labor migration pattern and (b) rise in average wage for unskilled, agriculture and construction workers across country.

Prompted by the discussion with this particular site manager, we attempted to make an assessment of likely socio-economic impact of newly introduced food security during our recent trip across some north Indian states. The key highlights of our findings are as follows:

(a) A large majority of small and marginal farmers in India engage in farming for sustenance purposes only – meaning they grow cereal crops mostly for self consumption. A small part of the crop is sold to pay for other necessities.

Once they are assured of sufficient cereal supplies at Rs1 or 2/kg, they would have little motivation to undertake farming activities. This may result in short to midterm demand-supply inequilibrium for cereal crops. The consequences could be inflation in cereal prices (not seen so far), and short supply necessitating imports (watch CAD).

On positive side, many of these farmers may turn to cash crops, thus improving their income levels. The rural women and children in particular would have better opportunities to acquire better education and skills.

(b) A part of child and women labor, especially in household, farm, retail, and SME sectors could quit if they have food security. In fact better enforcement of right to education (RTE) could significantly enhance school enrollments and dropout rate may also decline.

The short term negative would be rise in cost for affected sectors. However, the structural positive could be augmentation of skilled workforce and improved quality of life indicators.

It would be interesting to see how the next government plans the implementation of National Food Security Act (NFSA). Failure in anticipating the likely demand-supply gap well in advance would definitely make things complicated and unmanageable. The last week’s vegetable loot incidence of Malda, West Bengal might become a trend and eventually culminate in food riots.