VOX POPULI by Aam Admi

Issue: 110

Date: 28.04.2012

Contents:

1. Montek Does It Again, To a ‘T’!

2. The Continuing Kudankulam NPP Agitation

3. Where Is The Indian Economy Going?

4. In India the Rot of Corruption is Dark and Deep

5. Addl. Solicitor General’s Gaffe

6. Indian Economy: No Policy Paralysis, But Rigor Mortis Now

7. Kaushik Basu As ‘Loose Cannon’

Montek Does It Again, To A ‘T’!

Montek Singh Ahluwalia has again put his foot in his mouth with the comment that tea will be made the national drink of India. With the diversity that we have in the country and on matters like beverages where tastes widely vary why we should have a national drink is something that is not understood. This is clearly planting a divide between the North and the South of India where the former generally prefers tea while the latter are staunch drinkers of coffee. Apart from this we have the health faddists who will criticise anything that suits them. Thus this needless controversy seems to have been fuelled by none other that the Dy Chairman of the Planning Commission ostensibly to commemorate the memory of the Sepoy Mutiny patriot who planted the first tea bush in Assam. Why do we excavate old history to create current problems is again something that none can fathom? Can we not get on with the present? And this during the upcoming Presidential elections where there is already a lack of consensus between the regional parties and the Congress to which will be added the North-South divide issue with this proposal to make tea the national drink.

The Continuing Kudankulam NPP Agitation

The latest news from Japan is that they are dispensing with nuclear energy consequent of massive protests relating to the putting on-stream of a nuclear power plant in Central Japan that was shut down for maintenance and improving its security features. Thus currently Japan has very few of their nuclear plants in operation which has been a result of the public furore over the Fukushima disaster. The new tsunami scare after the Banda Aceh earthquake in Indonesia and the minor earthquakes in Gujarat & Maharasthra on 14th April 2012 which were very close to the new NPP sitings like Jaitapur should have sent alarm bells ringing in Delhi on the location of the shore based NPP’s which the authorities have preferred to ignore. These incidents and above information should have been lessons for our policy planners to eschew nuclear power plants instead of again moving to a confrontational position with the agitators at the Kudankulam NPP plant site by saying that the plant will go on-stream within another 40 days. This when the TN Govt. and the Centre have not met their commitments and assurance to the agitator negotiation teams at the time of withdrawing their earlier fast at the site on March 27th 2012. This has prompted the agitators to resume their relay hunger strikes from May 3rd 2012 again. This is rather sad when the government first is unable to take into confidence its own people and implement any project and then welshes on their commitments to them and lastly threatens them with penal action. This is the state of our democracy which seems to be taking after the repressive regimes of Stalin, Hitler and the like.

Where Is The Indian Economy Going?

Centre turning dictator? Government orders PSU banks to cut rates immediately on the back of the RBI rate cut last week. Industrial production for the month of January was revised down to 1.1% from 6.8% estimated initially, raising more questions about the quality of data put out by the government agencies. The GDP data, particularly the expenditure estimates, CPI/WPI indices and exports numbers have also undergone embarrassing revisions in the past. India 3rd on purchasing power parity beating Japan. GDP slowing to single digit and comparatively sluggish 7% in current year. Our foreign exchange position given the shooting import bills for petroleum fuels and gold is precarious and we are close to the situation of 1991 where we had to pledge our gold reserves to the Bank of England when the reserves were down to just 20 days of imports. These were the headlines or their gist in the financial papers over the last 10 days or so, highlighting the state of the Indian economy. On the back of admitting a few months ago that the CPI/WPI indices are wrong and do not reflect the change in prices in the market place, this government decided to change the frequency of publication of these indices to a more comfortable cycle. This was done at a time when there was runaway inflation which refused being talked down by the ministers and/or government spokespersons. The change in the frequency of publication of these indices to longer spans gave rise to the suspicion that the government was trying to avoid the media flak on rising food prices. On the back of all this we have this very unusual comment that the IIP for Jan had to be scaled down not by a couple of decimal points but by a full 5.7% since sugar production was overestimated. The scale of the reduction raised eyebrows and naturally generated adverse comment. The IIP will have an impact on the GDP figures by which India will be judged internationally and automatically such glaring flaws will attract negative comment apart from great circumspection on any figures that the government of India publishes. Domestically, the government is expected to work on the figures relating to CPI/WPI to combat inflation, the IIP figures to manage GDP etc. and therefore when these figures by themselves become suspect then one wonders how this government manages the economy or if at all makes any effort to manage it? If one goes by what is happening at the ground level and in the market place it is a commonplace belief that this government has no clue on what is happening with the economy and letting things take care of themselves. There have been also reports that with the government unable to manage its imports better particularly relating to the petroleum fuels bill and imports of gold a conspicuous consumption item or where money is going into dead savings, the ability for it to pay for future petroleum fuels bills and servicing of its long term debt is becoming suspect. Given the above laxity to ensure proper fundamental figures relating to the economy, it is no great wonder to understand our present position but it is a matter of alarm since this government is being less than up front about the actual state of the economy and the day will not be far off when, surprise of surprises, they will unveil that India is bankrupt. The reason for this diffidence relating to the economy is the scare that the present government has in facing the electorate. After a number of debacles at the elections, the Congress party which is in the driving seat of this government would rather keep quiet than tell the truth about the economy. So it will not be long before we face runaway inflation and a currency devaluation of monumental proportions. That is why one feels that the government should admit its failures and call for mid-term elections immediately so that it either wins a clear majority by itself to run the country better or hand over charge to others who can do a better job at it. Taking comfort that we are the 3rd largest economy based on purchasing power parity are all very brittle positions since inside the structure of the economy is hollow. Adhocism and vested interests prevails over most policy decisions and wherever decisions are proper the lack of a consultative approach throw these into a loop and implementation gets stalled. Consistent with this Kaushik Basu has done a ‘roll back’ typical of the UPA-2 government on his gaffe about the reforms process by listing out all the reforms that will ‘happen’ over the next 6 months!

In India the Rot of Corruption is Dark and Deep

As they say in India the rot of corruption is dark and deep. Up until now the Indians knew this but now the entire world knows it. That an ineffective but honest Prime Minister is allowing all and sundry in his party and that of his coalition to make money hand over fist as if there is going to be no tomorrow is what everyone knows by now. The blame for this state of affairs has but to fall on the Congress party since it has been the political entity which has been in power at the Centre and the majority of the States since the British left our shores some 65 years ago. The problem has been that the Congress is a licentious entity which not only indulges in corruption but also encourages it in government institutions across the country particularly where it is in the seat of governance. The Congress’ is a laizzez faire approach which says, you make money, I make money, we all make money. That is why it is said that whenever you have a Congress government there is peace and stability, law and order is generally under control, the reason for all this being that everybody is busy making money. A case in point relating to this is in Goa where the Congress lost heavily in the last Assembly elections, and during a review with the party workers to debate the reasons for the loss, it was brought out by these workers themselves that it was their corrupt leaders. These leaders are understood to have charged even their party workers for things like getting their nominees government jobs claiming that all kinds of people have to be paid and the cut goes right up to Delhi. Party and personal coffers are filled up this way and the lines between party and personnel tend to blur when senior leaders at the State and Centre are involved. Apart from that at the Centre, we have seen this in Maharasthra which has had a succession of scams starting with the Adarsh CHS which cost a Congress Chief Minister his chair. Then it was the rags to riches story of Kripasankar Singh, the erstwhile Congress Pradesh Committee chief who from a vegetable vendor became a millionaire many times over. His entire family is enmeshed in this acquisition of wealth by improper means inspite of which his son, an airline pilot, had the gumption of making obscene gestures at the media when his father was being arrested. No one in his right mind could believe that this kind of wealth as amassed by Kripasankar Singh could be by fair means but he and his cohorts in the Congress continue to give him a clean chit when it came to the question of some orchard land bought by him and his wife in Ratnagiri. The Congress spokespersons claimed that the procedure in acquiring that land was above board but nobody seems to question that the money which paid for that land was ill-gotten. This kind of crony dealings has come out in the open with the CAG report in Maharasthra where 8 ministers have been indicted for allotting themselves or those of their trusts with land ostensibly for social objectives like starting schools and colleges but in that process having things like residences, banquet halls etc. on that land. The method is to get the prime land allotted to them at throwaway prices considering the social objectives and then open facilities there for commercial activities or set up their residences therein and when questioned claim umbrage stating that in spite of their pursuing good social causes they are being criticized. Senior Ministers like Chagan Bhujbal, Narayan Rane etc. are all involved in these scams. This is the modus operandi of the Congress party and little wonder that their politicians file asset returns with the Election Commission each time when elections are called typically over every 3-5 years with increases of a minimum of twice or even 8 times their previous declared amounts. But everything is laizzez faire in India where the old saying has a new dimension added to it – That everything is fair in love, war and politics. Even President Pratibha Patil whose credentials for becoming President were that she was a low profile non-controversial candidate and who has done precious little during her tenure has been in the news for having spent Rs. 205 crore in the last 5 years on foreign visits for her entire entourage consisting of family and friends. Apart from that there is already a scandal on her palatial post-retirement home in Pune for which military land has been allotted. She had continued in office despite slurs of her husband being booked in an old murder case and lately her son being intercepted red handed with Rs. 1 core in cash during the recent Maharasthra civic elections. Thus while you can say it runs in her family, it also does for all Congressmen/women irrespective of what posts they occupy. It is not that this greed is limited to the Congress party but politicians from other parties are also involved in reaping these bonanzas but being new at it end up more often than not and get caught while the Congress owls get away with murder and more.

Addl. Solicitor General’s Gaffe

We have these officials of this UPA-2 government who go out on a limb and make submissions which one would believe are their own opinions and do not reflect the government whom they represent. The latest in this regard is the Addl. Solicitor General Harin Raval’s submission to the Supreme Court that the Kerala Police had no jurisdiction in the case of the 2 Italian marines having killed 2 Keralite fishermen since the incident happened in international waters. This completely contradicted the stand taken by the Kerala Police, the Kerala government and the Centre in the matter. The MEA and the Kerala government was naturally furious. One does not understand whether people like Raval consult anyone in the government before they submit their opinions to institutions like the Courts or do they think that they are an authority unto themselves and can shoot their mouth on any matter and whenever they want. If one is not incorrect it was Raval himself who was pulled up by the Supreme Court in the Army Chief’s date of birth issue for having in one instance given an opinion on the matter and then sitting on judgment on the same matter. The same authority cannot give an opinion as well as decide on the opinion is what the Supreme Court had said striking down the government’s position which was a severe embarrassment to the incumbent government. But even then Raval does not seem to have woken up to reality. On the other hand there does not seem to be any coordination between the governments’ various ministries on any matter if such incidents continue to happen and each ministry and official seems to believe that he is the ultimate authority and beyond questioning. A sorry state of affairs, indeed!

Indian Economy: No Policy Paralysis, But Rigor Mortis Now

Pranab Mukherji’s comment that this UPA government does not suffer from policy paralysis after Kaushik Basu’s infamous comment that India’s reforms program will be on hold until after the 2014 elections is technically correct. There is no ‘policy paralysis’ any more since all policy and reforms are well and truly dead and there is ‘policy rigor mortis’ with this government now.

Kaushik Basu As ‘Loose Cannon’

Kaushik Basu, the Chief Economic Advisor, has this regular habit of putting his foot in his mouth. This has been ever since inflation started running away from this government’s ability to contain it over the last 2 years or more. At various times he has been talking of de-regulation of petrol, which happened, while for diesel it did not happen. On FDI in retail he came across as a strong spokesman for the big names in retail from the US and the developed countries like UK and France. When the Rupee started also to fly higher and alone in the last couple of months he was the person at random who would make comments that the RBI should intervene and immediately in the next week, say that they should not intervene. Thus it was nothing unusual for him to say that India reforms would be delayed beyond 2014 when he was addressing the Carnegie Foundation in the US last week. The problem with Kaushik Basu is that he needs to shoot his mouth. In trying to cover himself he has now shot himself in the foot, as they say, by claiming that it is the grace of this government which allows him to say what he wants. This he says with scant regard for the designation he carries, that of Chief Economic Advisor. The reasons for this are multiple. One could be that he has still not got used to the milieu here and having come from the US feels that he can, given the designation that he has been given, shoot his mouth off on any economic policies under the sun as applicable to India. The other reason could be that India is a fashionable topic these days on any issue including economics in the US given the close to double digit growth that it has been achieving which is great given the flat economies in the West who have still, been struggling post-recession. So having been part of the fraternity in the US and having additionally the privilege of inside knowledge of India over the last few years, it would be difficult for him to avoid the position of sharing confidences with his old fraternity of economists or thinktanks as it may be. This is to essentially shore up his personal reputation in the US as a contingency plan in the event that he has to return there and to show off his inside access as said earlier. India be damned, it’s every man for himself out there! That is Kaushik Basu’s problem. He also fails to comprehend that like in the US whenever Ben Bernanke or Timothy Geithner sneezes, it is more Wall Street and the corporates that take notice and not like in India where if Kaushik Basu goes out of line, there are a whole lot of people who will pare him to the bone. Essentially we should not have people like Kaushik Basu be appointed since what these foreign returned professionals do is only live by aping the West little realizing that particularly on economics matters the West over the last decade or more has tied itself up in knots. Europe is in a mess, the Euro has been in trouble and the EC has been looking to China and Japan to shore up the Euro for which Japan has set aside a $60 Billion specifically for this purpose. The US is always on tenterhooks while negotiating with China on its currency rate problems on what it would do in the event that China called in for repayment of the US Treasury bonds that it holds, the largest such holding by any country or group in the world as on date. Unemployment across the developed economies has been rampant and they are basically rehashing their own policies seeking palliatives and living hand to mouth essentially in the hope that a new dawn will finally emerge. Thus if our economists like Kaushik Basu ape the West it will be a retrograde step and we will end up more in a mess. With the West at its level of development and the state of its economies, they are better able to cope or withstand these problems than we are, in the sense that they will not collapse. But if go down the same garden path that they have tread, we will find that we will only accelerate our economy going downhill and blowing ourselves up at the bottom of the hill. Therefore it is best that we tell Kaushik Basu that his sabbatical in India is over and he can go back to the US where he will be safe and India will also be more safer without him.

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