Thursday, December 30, 2010

Why the BJP wont allow Parliament to function

It may sound strange but the real truth behind why the BJP wont allow the government to function is that the Congress led UPA was actually ruling quite well. It was on a roller coaster. This was disastrous for the BJP's hopes to return to power at the center.

Its been proved conclusively over the last several state elections that people vote performing governments back to power for their 2nd and even 3rd spells. The BJP has gained in many of these states.....most recently in Bihar. If this is true, then it had to make sure that the UPA government appears to be failing. The BJP's earlier strategy of Hindutva had conclusively failed anyways.....they needed despearately to stop the Congress's performance.

By any yardstick, the UPA government was rolling along just fine. Its focus on growth and the Aam Aadmi was proving to be a terrific combination for removing millions out of poverty. The support that India got recently from the P5 nations rattled the BJP. If progress continued at this pace, India's GDP would most likely go ahead of the UK and France in the next 5-6 years. India would become the 3rd largest GDP (or maybe the 4th after US, China, Japan and Germany) very soon. Already, with the Nuclear Power deal done, the government was pushing power generation using nuclear technology. That, along with the number of UMPPs (Ultra Mega Power Plants - 4000 MW super structures) that the government had already launched would make India sufficient in power. This would further fuel industrial growth. With Kamal Nath set to spend Rs 1 lac crore for road works by March was looking like the Congress would be voted back to power on its own. (Actually, this has rattled even the Congress's allies.....hence some of them have been secretly plotting against the Congress). All of this shocked the BJP. Never before had the country seen 9% growth over such a long period of time.....never before had we been so close to growing at 12% per annum.

And hence the BJP has got into overdrive. In connivance with the media (which itself was seeking sensational stories to perk up its TRPs), it has un-earthed one story of corruption after another. If their attack got blunted with the sacking of Ashok Chavan and Raja.....they had to figure out other ways of pushing the government back. Hence the blockage of Parliament. Hence the incessant demand for a JPC. Right now, the most nightmarish situation for the BJP would be if the government actually conceded the demand for a JPC.

This piece is not written in favor of the Congress or against the BJP. its just a piece that unveils the real truth. As such, it's a threat faced by all performing states and parties. The Congress is equally capable of behaving like this in BJP ruled and well-performing states. So my argument here really is apolitical.

But the real truth remains: The BJP at the center was petrified with the UPA's work and stepped in to stop it. It hardly matters that the country will suffer now for many months.

Tuesday, December 28, 2010

An agenda to stop India's progress

In an earlier post, I mentioned how easy it was for India to vault to a 12% annual growth rate. The government only had to get its governance right. I emphasized the role of the government. I forgot to mention the role of the people.....that the people of the country need to have the desire to grow fast.....and have the maturity to decide what's good for them.

The opposition's approach these days is to block all governmental programs. Take the example of the power sector. Everyone cribs about the shortage of power. So the government (and I am not holding the brief for any one political party) goes about launching coal based power projects.....because India is a massive producer of coal. But suddenly the brakes are put because coal mining is a huge issue. Someone or the other is being displaced. And that's enough for our socialist mindset to get active and start complaining. Solution: Import the coal. Problem: Takes a long time; proves expensive; raises cost of power; slows down the economy.

Take nuclear power. The entire Jaitapur controversy. An ambitious program that is sought to be scuttled. TV channels put together a panel of "experts".....who argue both for and against. Agreed.....there is an environmental issue here. But should we so openly doubt the integrity of the experts who are still in service?....think they have fudged the environmental impact assessment? Those who have retired - do they necessarily have more credibility than the current scientists - or are they trying to remain relevant in any way possible? Does anyone think that the current Environment minister - jairam ramesh - is one who is too lenient on environment issues? If his ministry has cleared Jaitapur, is there reason to doubt the action? And yet, there is a raging debate about whether India should go ahead with Jaitapur or not. Innovation false accusations - that the reactor designs havent been tested - are being hurled.

In short.....there is a very serious habit of complaining about anything and everything. For any step the government takes, there are going to be cribbers all around. This can cripple economic growth.

That brings me again to the role of media. Again, in the search for sensationalism, media loves anything that creates discord. A smoothly progressing country hardly makes for good TRPs.

What's the end result? A complete stoppage of all government work. With the opposition having boycotted Parliament for the entire session....there is hardly any legislative work happening. But now, even government work is being stopped.

The real truth is that there are too many vested interests against letting a government perform. Its already proven now.....that a performing government secures a 2nd or 3rd term. The opposition dreads a performing government. So they block everything. Its partner in crime is media....esp TV media. Politicians know the media's need for sensationalism. TV channels would lose all TRPs if they show-cased the good work being done by the government. Opposition and media - clearly partners in the crime. Neither of them cares for the country. Both are playing a parochial self serving game.

Which brings me to the point I raised earlier. Do people have the maturity to put a stop to all this? Will people force TV to stop the spread of such negativity ? Will they tell their politicians to lay off? Their response will determine whether we grow at 12% or slump down to the infamous 5% Hindu rate of growth. It will also prove whether democracy is a strength or a huge weakness of country trying to come out of poverty and scale the heights of progress.

Sunday, December 26, 2010

Growing at 12% per annum....

For many years now India has been growing at 8-9% per annum. Further, there is expectation that this growth rate will soon rise to 10-12% per annum and sustain there for a couple of decades. If this were to happen, India would be transformed in less than 10 years. India would be in the top 3 countries in the world by GDP after the US and China.

What is often not understood is that its relatively very easy for India to go to 10-12% growth rate. To  understand this better, lets first try and break up the overall GDP growth number into its components. I dont want to go into the traditional break-up: Agriculture, services and manufacturing. The story is better understood if its broken up into "poor performing states" and "better performing states". The story goes that the poor performing states have traditionally pulled down India's a Bihar, MP, Chhatisgarh, Jharkhand, UP, Orissa, WB have typically grown at 2-4% per annum while the rich states like those in the North, West and South of India have typically grown at between 8-14% per annum. Gujarat has been growing at a rate faster than China's for the last 15 years....Well, the good news here is that in the last 5 years, most of these poor performing states have really got their act together. So Bihar has been growing the fastest at 12% and at the other end, even UP has grown at 6% over the last 5 years. The impact of this growth on the national GDP has been profound. India's national growth climbed to 9% from a low level of 5-6% during the NDA regime primarily as a result of the improvement recorded by the earlier poor performing states.

Having come to 9%, why am I saying that its relatively easy for India to go into the10-12% region? Because, there is another interesting way to dissect this 9% growth. Lets divide this up into contributions from "private sector" and "public sector". Actually, I dont really mean the public sector. What I really mean is the "government". My theory is that if only the government got its act together, that alone would life India's GDP growth to 10-12%. Here's what I mean.

Look around you. Whatever....almost whatever.....has improved around you in the last 20 years is on account of the private sector. Whether it is the quality of automobiles, houses, malls and multiplexes, availability of food items, electronics.....everything has come from the private sector. Truly, the private sector has performed well. But whatever goes into the government domain has lagged behind. Quality of roads, the drainage system, electricity, pollution control.....even education and population control....have all lagged behind. So primary education has lagged behind, but privatized college education has blossomed. So a beach will normally remain very dirty....but when it is handed over to the private sector, it will be well maintained.

The only successful initiative the government has taken has been what is called "PPP".....Public, Private, Participation. So the government gives out the contract to private companies who "build, operate and transfer" the infrastructure. Whatver progress has happened in the government sector has again happened because of the private sector.

Just imagine what could happen if the government got its act together. Like in China. Incidentally, the bulk of Chinese GDP growth comes from the government sector. Even today, more than 85% of Chinese GDP is accounted for by government companies. Imagine if India's governance standards could go somewhere close to the Chinese government's.

This wont happen unless the politicians are held accountable for the work they do. People must stop voting for parties that dont deliver growth. But this is already happening. Look at the 2nd terms that the CMs of MP, Chhatisgarh, Bihar have got. Even the Congress government at the center got a 2nd term. Clearly, the people of India are ready for higher growth. The other important role has to be that of media's. So media has to be on its toes and expose politicians who do not do work. Please note: I am shifting the responsibility of media from one that monitors corruption to one that monitors growth. There is a huge difference. What we need right now is focus on growth. That alone will mitigate the corruption in this country.

The next 2 decades are clearly India's. The truth is that India has grown so much only because of the private sector. The truth also is that if governance improves, nothing can stop us from hitting 12% in the very near future!

Saturday, December 25, 2010

The real truth behind the CWG mess

First, let me clarify......I am not here to defend those who cant be defended. Whether its Raja, or Kalmadi, if they are guilty, they must be shown the severest punishment. I am only trying to separate the wheat from the chaff....get to the real truth. This blog is about getting out the real motivations....the real facts....the real truth.

There is no doubt in my mind that there was a scam in the organizing of the CWG. Does ANYONE have a doubt? Does ANYONE have a doubt that there is corruption in almost EVERY single government project? I would imagine somewhere between 10-15% gets siphoned off from almost all government contracts. Precisely because everyone knows this truth, there is no media story in it!

So what does media do? First, it makes the plot look much bigger.....much more sinister. Rs 1700 crores spent on the CWG is hardly interesting. How about adding the Delhi T3 airport to the CWG account (Rs 10000 crores). The Delhi metro (Rs 10000 crores). Ha....Even those fly-overs, the road beautification projects, the tree planting (a few hundred crores)! But clearly I am not as creative as others in media and politics! They somehow add it all up to Rs 70000 crores! Ingenious!

Second.....give the impression that Kalmadi is responsible for 15% of this entire amount! The poor man may not even have handled the entire sum. Maybe the DDA (BJP ruled) may have spent half of it. Praful Patel, the T3....but media has learnt the art of marketing.  "FOCUS" scream the marketing gurus. And that's what media does! Focus on Kalmadi. Make him look responsible for everything!

Third.....raise the pitch. Sensationalize. Put together politicians, failed sports personnel (pretty faces like Ashwini - has she EVER won an international sporting event?), even Suhel Seth will do for god's sakes! (Someone told me that Suhel Seth was really happy he featured in the Radia proved he was "connected"!). Dont forget to get Swapan Dasgupta in (I am told he takes special pills which create mucus in his throat to give him that hoarse throat-is-jammed tone!). Light them up and see them bandy about their ignorant, illiterate thoughts to lay viewers of the country.

Job done! From this point on, if someone takes a contrarian position .....maybe Kalmadi is guilty of 15% of 1700 crores only......strip the person so he wont appear again on TV! And all along....keep saying that "I am keeping the debate balanced!"

So what's the real truth. The real truth is that Kalmadi made 15% of 1700 crores. There is 15% commission paid on almost all government contract. No point in complaining about this. Has anyone ever thought how the election funds are generated? It is estimated that one round of central and state elections costs a total of Rs 75000 crores. Where does this come from? Has anyone given a thought to the salaries that the IAS officers make? Without their houses, their salaries wont even add up to Rs 1 lac a month. And they control the ever rising budgets of this fast growing country. The 15% supports everyone.

This is the real story.....and unfortunately its boring. It just wont generate TRPs!

Friday, December 24, 2010

The real truth about the 2G scam

Not many people have understood the 2G scam at all. The media and the opposition parties have of course sensationalized the matter by referring to an arbitrary number of Rs 1.76 lac crores. But lets find out the real truth about this number!

The point that has been made out is that the government (and hence the people) "lost" Rs 1.76 lac crores. Really? The immediate impression created is that politicians have pocketed this amount. The real truth is that telecom companies got this concession from the government. And they passed it on to average consumers in the form of ever-lower telecom pricing. All of us have enjoyed these low prices. These low prices have brought this powerful medium of communication to the poorest of the poor in the country. All of us have gloated with pride when our plumber, driver, maid and shoe-shine-boy have all started carrying mobile phones. This low pricing has made India the fastest growing mobile market in the world. Would all this have been possible if the pricing had been....say Rs 5 per minute?

Telcos have not profited from this. Need proof of this? Check out the profitability of telecom companies. The #1 company Airtel has a decent operating margin (OPM) of around 35%. The 2nd largest company Reliance has less than 10% OPM. Tata Tele and Idea have margins of 15%-20%. These are low margins. So if these companies had made the killing, why is it not showing up? The fact is that they have passed on the gains to the consumers.

This represents the most efficient distribution of public resources. Just imagine if the government had gone about distributing this money out itself? At least 30% would have been lost in corruption!

Yes.....there was corruption in the 2G spectrum allocation. Obviously, some of the shareholders of the new companies made a killing by selling their stakes. Most likely some politicians had benami stakes in these companies. But the scale of the corruption is much much lower. People must understand this. What is made out to be a Rs 1.76 lac crore scam may be no more than a few hundred crores or maybe a thousand crore that's not very sensational is it???!

And that's the real truth behind the 2G scam!