Some food for thought
"There is not a more unhappy being than a superannuated idol. "
—Joseph Addison (English Writer, 1672-1719)
Word for the day
Brainchild (n)
A product of one's creative work or thought.
First thought this morning
The debate over "Bharat" and "India" dichotomy
is age old. The debate highlights the divide between the middle class dominated
metropolis aspiring to compete with the best cities in the world, and poor
rural areas which lack basic civic amenities and finds place at the bottom of
the global quality of life pyramid. Though past couple of decades have
definitely seen the divide bridging to an extent, but still the contrast is
conspicuous and unacceptable.
During my travel in past one week I noticed another bothersome divide
in India.
Taking a stroll through media, one gets a felling that the whole
country is totally immersed in election frenzy. Everyone is concerned about the
country, politically aware (and opinionated) and willing to make some effort to
strengthen Indian democracy. Social media is full of political enthusiast. Evening
shows on electronic media give a feeling that millions of supporters are sweating
out there in scorching heat to rally behind their respective leaders.
However, driving through streets and alleys in many states,
cities, towns and villages, I could hardly find any enthusiasm for elections. Unlike
2014, citizens are mostly indifferent and dismissive of politics.
Of course, there are troops of bikers roaming around holding
flags of some party and chanting the leader's name. But these are mostly paid workers,
not the party supporters. You can even see these flag bearers holding flags of
different parties on different days. They have been instructed to look for
media people and perform in front of them. Incidentally, most media personnel
are also looking for these people so that they can post some story to their
broadcasting stations. Like in movies, the motley group of 50-100 people is
magnified through camera tricks to appear like mammoth crowds of thousands and
lacs.
This divide ideally should not be bothersome to any. But
considering that there is a large section of people which shall likely take
decisions and/or form opinions based on these media posts, it does bother me.
However, since I can't help the situation much, I am happy ruminate my thoughts.
Chart of the day
Get, set, ready to go
Do you recall the
debate in Lok Sabha over proposal to allow 51% foreign direct investment in
multi brand retail trade? Search for it on YouTube and listen what various
parties said on the floor of the house and how they voted on the proposal.
In particular, I
would like to quote what the leader of opposition in Lok Sabha Mrs. Sushma Swaraj
said during the debate on 5th December 2012:
"The walls
which have echoed with the speeches will have the results of the vote plastered
on them - I want it to be known to posterity who said what and then what they
did."
(Watch the whole
speech here , especially
the last five minutes)
It is also
important to open history books and make a note that much maligned prime
minister Dr. Manmohan Singh put his government on the block twice, first for
signing a civil nuclear deal with USA and then again for allowing 51% FDI in
multi brand retail trade.
Miscellaneous
socialist parties, communist parties and BJP vehemently opposed signing of WTO
agreement post Uruguay round in 1994. But, when in power in 1996-1998 (National
Front) and 1998-2004 (BJP), they not only implemented the obligations under WTO,
but went much further by aggressively cutting duties on almost all articles.
Similar was the
situation with FDI in financial sector. Almost all parties did strongly oppose
FDI in insurance at some point in time. They also stood opposed to implementation
of VAT and GST when it suited their political convenience. But the fact is that
all these reforms have finally happened and indeed helped in strengthening of
foundation of the Indian economy.
I am not making
any political point here. I fully understand the political parties can change
their economic policy view 180 degrees the moment they change their seats in
the parliament. Moreover, unlike the western democracies where the membership
of parties is strictly based on ideology and principles, the membership of
parties in India is mostly fungible.
It is also true
that an idea is opposed only until its time has not come. Once the time is ripe,
the ideas get implemented without even anyone noticing.
Another thing to
be noted is that the cost of contesting parliament elections is prohibitively
high these days. Regardless of the limit on election expenses, the popular
estimates vary from Rs20-25crore each for the top two candidates in each
constituency. No one would therefore like a reelection in case of a totally
fractured mandate. I am sure a government will be formed and that government
would carry the long term agenda forward in right earnest.
Having said that,
I would like to reiterate the time for an industrial revolution in India may
finally be coming. The physical infrastructure is in place and is being
augmented continuously. The policy framework is already supportive and there is
little resistance from any quarter on the legacy issues of FDI limits etc. The
pending issues like labor reforms and sustainability concerns shall be
addressed sooner than later. The minor irritants like taxation predictability
and compliance etc. shall also get sorted in due course.
The fringe benefits
of industrial revolution would be —
(a) Strong addition to rise in middle class as
organized sector job addition jumps, leading to sustained and meaningful jump
in discretionary consumption. Financial services get a major boost.
(b) Trade balance turns favorable and
inflation moves structurally lower.
There are many skeptics who would want to believe that
this is going to be another false start just like mid 1990s. But I would
strongly disagree.
Also see Hedge, don't
panic
