Some food for thought
"A writer may tell me that he thinks man will ultimately
become an ostrich. I cannot properly contradict him."
—Thomas Malthus (English Economist, 1766-1834)
Word for the day
Synastry (n)
The comparison of two or more natal charts in order to analyze
or forecast the interaction of the individuals involved.
First thought this morning
I find three social media messages, I received yesterday, worth
pondering over.
The first message asked me to guess "how many companies in
India made recurring PAT higher than US$25mn for two consecutive years (FY17
& FY18) giving a return on capital employed (RoCE) of 20% or more?"
I guessed "around 100".
I was not far from the truth. Only 94 companies achieved this
distinction.
Two hours after answering the question, I realized how amazingly
simple is the life of investors in Indian equities. Just find companies that
have done it for 5 consecutive years and chose 20 stocks of your liking from
that basket of 45 odd stocks.
The second message was a worksheet from a leading brokerage. It
showed how I could make cool 30% return in 15days, by putting in a leveraged
application in Bharat 22 ETF offering.
The message left me in a state of Shock & Awe. Nifty CPSE is
down ~34% in past one year. Nifty CPSE is 5% lower than the level it was five
years ago. Major CPSE IPOs like Bharat Dynamics and Hindustan Aeronautics have
caused serious wealth erosion to investors. Still this brokerage is encouraging
investors to leverage 9x and invest in this offering!
The third message (received separately from more than 20
sources) was data about the companies where the quantum of shares pledged by
promoters has increased sequentially in each of the past four quarters. The
data was presented in isolation, without any mention of the nature of pledge or
reason why promoter might have pledged shares.
The palpable purpose appeared to exacerbate the panic that
prevails around such companies and take advantage.
It would have been better if any such data is presented with
some rationale. The incremental pledge could be compensate for the fall in
market price of security. It could be additional collateral for the loan taken
by the company, say for acquisition etc. It could also be that promoter has
borrowed in his personal capacity to increase stake in his own company or to
fund some other business venture.
Mandate 2019 - Agenda for political reforms
As I highlighted yesterday, the primary problem of India, as a
political entity, could be traced to collective lack of commitment in our
Constitution. (see
here)
The initial governments in post independence era somehow missed
to realize the need for making all citizens committed to the Constitution of
India. The subsequent governments have conveniently perpetuated the mistake
through omission.
(It may be pertinent to mention here that there was a strong
attempt made during the period of emergency (1975-1977) to make citizen
committed to the Constitution. Fundamental duties were prescribed in the
Constitution through 42nd amendment. Also the words socialist & secular
were added in the preamble to make the primary character of our republic clear
to all. However, since the methods used were coercive and the constitutional
sanctity of the government itself was questionable, that attempt failed
miserably. No subsequent government however has tried to undo the 42nd
amendment. This makes "Socialism" and "Secularism" quintessential
characteristics of our republic.)
In light of this, let me discuss the agenda for political
reforms in India.
Agenda for political
reforms
“For indeed any city, however small, is in fact divided into two, one the
city of the poor, the other of the rich; these are at war with one another; and
in either there are many smaller divisions, and you would be altogether beside
the mark if you treated them all as a single State.” (Book IV, The Republic,
Plato)
During
my various journeys across the country, I have acquainted myself with various
people; appreciated their way of living; admired their culture; collected some
souvenirs, recipes, anecdotes and returned to my cocoon- relaxed, happy and
little wiser.
In
the process, I could develop appreciation for a variety of people - their
varied customs & appearance - and usually felt comfortable even in a cross
cultural environment. Subconsciously, more effort was spent on identifying how
other people are different from my own ways, rather than discovering the points
of convergence. (If someone alleges that this is an act of racism – well I
admit it certainly is.)
The
one thing that has bothered me most for past few years is the doubt about the
“Indianness” of “India” and “Indians” as we understand these ideas in common
discourse.
Deriving
from my discussion on social, political and economic conditions with people of
various regions, I suspect that the idea of “Indianness” perhaps only exists in
films, army manuals, national holidays, political speeches and patriotic songs.
The compositions my children write describing “Unity in diversity” appears
mostly mythical to me.
A
national approach to anything is conspicuous by its complete absence in general
public discourse. People have strong dogmatic allegiance to their caste,
religion, locality, region and state, generally in that order. I saw little
evidence of any effort being invested by the system - local politicians,
teachers, social workers, police or administrators - in developing an “Indian”
identity of people.
The
failure of national economic policy in recognizing this regional diversity is
perhaps the primary reason for sub-optimal outcome of our efforts. No special
efforts are needed to discover that most of the states, regions within states
and communities within regions have diverse socio-economic behavior. Hence,
their needs and requirements are also distinct. A blanket policy for all is
therefore least likely to succeed in meeting its objectives.
At country level the regional socio-economic disparities and
cultural differences are well highlighted. These are indeed popular ingredient
of any political and cultural marketing campaign in India. However, not much
awareness is seen about the differences that exist at the state level.
To a person sitting in Mumbai, Bangaluru, Chennai or Hyderabad,
the state of Uttar Pradesh (UP) may not mean much more than – Taj Mahal,
Varanasi, Lucknow, Kebab, taxi drivers and construction labor. Very few
residents of the western and southern states appreciate that UP is as diverse
as India itself. Various regions of the state, i.e., Awadh, Brij, Rohillkhand,
Bundelkhand, Purvanchal, and Doab, have distinctly identifiable history, food,
dialect, customs, deities, and problems.
The regions differ in terms of caste, community, and religions
dynamics. Differences in terms of weather, water and electricity availability,
crop patterns, flood-draught cycle, political influence, urbanization, physical
infrastructure, income disparities and other social indicators are also rather
stark. Same holds true for many other states also.
Unjustifiable socio-economic disparities amongst various states
and regions within states, materially different socio-economic status of
various castes and communities in different states, has frequently led to
demands and agitations for new administrative units (states and districts).
The legislatures have been mostly unsuccessful in developing and
adopting a consensus framework for federal structure of the country (Though
some attempts like Sarkaria Commission have been made). Certainly there has
been a marked improvement in state-center relationship in past 25years, but
this could be more due to political compulsions rather than any structural
change in approach. This has been the period when regional parties have played
critical role in government formation at the center.
It would therefore be reasonable to say that the post
independence political organization of the country designed primarily on
lingual basis may no longer be relevant in the current context.
The political problem therefore is to develop a political
organization that fully assimilates the aspirations of the people, addresses
specific local problems, promotes mutual trust & harmony, bars incompetence
and knavery from public office, and insures that the best is selected and
prepared to rule for the common good.
This could be achieved, in my view, by taking the following
initiatives.
1. Make the
democratic process more equitable and participative. The following specific
measures are suggested to meet this end.
(a) Amend the
Constitution and Representation of the People Act, 1951 suitably to provide for
the following:
Local Bodies
(i) Any adult person
willing to contest elections, must first contest elections of a local body
(Municipality or Panchayat). There should be no party system in these
elections. All candidates should contest as independent individuals.
(ii) Every adult
citizen eligible to vote in a local body election, should have equal opportunity
to get elected for a term of three years. All expenses for such elections shall
be borne by the state. (Takes care of dynasty and nepotism)
(iii) The local body
council shall be a permanent body with 1/3rd members retiring by
rotation each year. No person shall be elected to a local body for more than 2
terms, consecutive or otherwise.
(iv) To win local body
election, a candidate must score at least 51% of all the eligible votes, not
just the number of votes casted. (Takes care of compulsory voting)
(v) Local bodies
should be exclusively responsible for execution of all civic issues (Health,
School Education, Vocational Training, Sanitation, Water, Energy, Sports, Land
Developments, Local Roads, Lower Courts, etc.) and shall have right to impose
direct tax, in addition to the national income tax.
(vi) Local bodies
should have the right to decide the issues of socio-economic backwardness and
special treatment (reservation etc.) required in the interest of justice and
equity for any particular community, caste or class. (Takes care of social
justice and equity)
(vii) A national
accountability commission (NAC) should be established as a constitutional body.
NAC shall evaluate the performance of all local bodies every three years, and
rank these based on a pre defined objective criteria.
State Assemblies
(i) The individuals
who have served 2 complete terms as an elected member of a local body, should
only be eligible to become members of State Assemblies. No person shall be
allowed to serve more than 3 terms as member of a State Assembly.
(ii) State Assemblies
should have a fixed term of 5 years. Party system should be allowed in State
Assemblies. These assemblies should have two types of members - elected (75%)
and nominated (25%)
(iii) The Chairmen of
the top ranked local bodies, who are eligible to become member of state
assemblies shall be nominated to the State Assemblies.
(iv) The State
Assemblies so elected and constituted shall elect one of their members as Chief
Minister. All the members shall be permitted to participate in the election of
CM without any party whip. A CM once elected, shall continue as such for at
least for 2yrs (or remaining term of the assembly if less than 2yr).
(v) The State
Assemblies shall primarily be responsible for maintaining Law & Order in
the state, Higher Education, Interstate Relations, Center State Relations,
Disaster Management, State Highways, Appellant Court and Local Body
Coordination.
National Parliament
(i) The National
Parliament shall have two chambers - Lok Sabha (elected) and Rajya Sabha
(Nominated).
(ii) Lok Sabha shall
have a fixed 5 year term. A person who has served for at least one complete
term as an elected member of a state assembly shall be eligible to contest
election for the Lok Sabha.
(iii) No person shall
be allowed to serve more than 3 consecutive terms and more than 5 overall terms
as member of Lok Sabha.
(iv) The Lok Sabha so
elected and constituted shall elect one of its member as Prime Minister. All the
members shall be permitted to participate in the election of PM without any
party whip. A PM once elected, shall continue as such for at least for 2yrs (or
remaining term of the assembly if less than 2yr).
(v) The Rajya Sabha
shall be a permanent house. Each member of Rajya Sabha shall have a 6year term,
with 1/3rd of the members retiring every two year. No person shall serve as
member of Rajya Sabha for more than one term of 6yrs. All members of Rajya
Sabha shall be independent of any party affiliation.
(vi) Each State
Assembly shall nominate one of its ex Chief Minister to Rajya Sabha. Besides,
President shall nominate from retired CJI of Supreme Court, Chief of Defense
Staff, CAG, Home Secretary, Vice Chancellors of Top 3 Universities, Chairperson
of IPTA/NSD, IG Police, Governor of RBI, Chairman CBDT, President of
CII/FICCI/Assochem, members of Lok Sabha who have served at least 3 complete
terms as such member, etc.
(vii) Lok Sabha shall
deal with matters relating to Constitution of India, interstate coordination,
National Highways, Railways, Civil Aviation, Rivers, Ocean, Space, National
Defense, Foreign Relations, Science & Technology, National Income Tax, GST,
Immigration, etc.
(viii) Each
legislation proposed by the Union Cabinet, must first be approved by the Rajya
Sabha. The Rajya Sabha must return any proposed legislation referred to it
within 30days with or without changes. The Union Cabinet shall then present the
proposed legislation, after incorporating the changes, if any, suggested by Rajya
Sabha for consideration and enactment.
(b) All elected
members shall be entitled to receive prescribed salary (National parliament:
Grade 1; State Assemblies: Grade 2; and Local Bodies: Grade 3).
(c) All the
appointments, transfers, promotions etc of government employees, judicial
officers shall be done by National/State Personnel Authority. None of the
elected member shall have any role to play in this.
(d) The National
Parliament and State Assembly role shall be limited to considering the demands
of various departments and authorities and allocating funds. The actual
procurement shall be done by a transparent system to be managed by a
National/State Authority, as per the specified criteria.
