Thursday, June 30, 2011

PM speaks. And promises to defreeze his government.....

It’s the time now for India to capture the world. The world is ready for India and is waiting. At such a crucial time, it would be suicidal if anything.....anything at all including scams and Anna et al.....held India back. I have argued in the past that the PM should lead the government out of the logjam that it seems to find itself in. Fast track reforms will capture the imagination of the people all over again and bring the confidence back in the people. Today’s papers talk of a couple of good stories on decisions having been taken.

The first decision is to that the decision on Cairn’s sale of its Indian operations to Vedanta has been cleared. It had been hanging fire for the last 11 months. I am happy the deal has been cleared. But I am happier that a decision has been taken. It is always better to take decisions.....even if they are rejections of proposals.....than to sit on them. The second story is the likely announcement of allowing FDI in the multi-brand retail space. Again, this has been going on for so many months and years. It’s now commonly held that foreign investment in this sector – at least in the major metros – will help spur growth and employment. If anyone was gaining from holding FDI back, it was not the common neighborhood retailer but the large domestic lobby made up of the Reliances and the Future Groups.

I also thought that the PM meeting the media yesterday was a sign of a determination to move ahead. I have said this earlier – in a democracy, the leader has to speak. It’s the same in the corporate world – the CEO has to speak. In a listed company, even more so. Investors want to know what the company is up to. Not speaking makes one imagine the worst. There is always a fine balance. One doesn’t have to be like Hugo Chavez of Venezuela who apparently was seen for 45 minutes on average every single day on TV. The PM spoke and immediately, I can sense a change in the mood of the media. The best part about the PM is his ability to accept failures. Just think about this in our own personal lives. When we know someone has done something wrong, we get angry. But we get really angry only when that person denies the wrong doing. If the person accepts the mistake and promises to make amends, we are more than ready to condone the mistake.

The PM in particular has a very honest tone. I have had the good fortune to meeting him once a few years back and in that 30 minute interaction, I could sense positivity and humility running through me. It’s because of his credibility that the PM is able to complain about the CAG, Anna and the media. On the CAG, the PM pointed out exactly what I have said so many times in my blogs. That the CAG had no business to comment on government’s policies (By the way, nobody in media said this. I was a lone voice on this subject!). Making policies is the government’s prerogative. The CAG’s claims of the 2G pricing were baseless and politically motivated. I won’t be surprised if the CAG Vinod Rai joins the BJP after retirement. This is entirely possible. Since my forecasts have usually been correct, do watch this space! The CAG made the 2G problem look much bigger than it was. By suggesting a figure of Rs 1.76 lac crores, the CAG provided fodder to a politicized media and a desperate opposition. Can anybody please point out to me how much the CBI (under Supreme Court supervision) has found as wrongdoing in the 2G case? Let me tell you. Just Rs 200 crores that Kalaignar TV got from DB Realty as a quid pro quo for the license given to DB. Even this is just an allegation. It still needs to be proved, though it looks that it must have taken place.

By criticizing the media, the PM brought out another thing that I have ranted about for long. By not naming any group, the PM has made the media introspect....and has helped win crucial support from this important pillar of our democracy. By complaining about Anna, he has shown a kind side and a tough side. He’s willing to talk to anyone, but he’s not willing to compromise on what’s wrong. The statement that civil society cannot expect to get A-Z of their demands was particularly apt. As Anna meets political parties, he’s realizing no one wants the judiciary to be included. Is he now going to say that he is smarter than all of them and that only he is clean and all politicians are corrupt? Anna’s support base is shrinking by the day and if he does go on his hunger strike, I don’t think he will create any impact at all.

The real truth is that the PM is the opening bat of India. By losing his coyness, the PM has helped everyone. Most of all, the poor people who are waiting for more jobs and more growth. They are not interested in the politics that is being played out. They are only interested in taking themselves out of poverty. It’s time for the PM now to step on the gas. Move ahead on reforms. Communicate with the media. The problems are not even 5% as bad as they look. Let’s hope for all our collective good that that happens.....

Wednesday, June 29, 2011

Now, the BJP won’t participate in the All Party Meeting on Lokpal.......

First the BJP refused to give its views on the Lokpal bill when Pranab Mukherjee sent them a letter seeking their views. At that time, they said they would do it when an all party meeting was called. After all, they claimed, their views could not be explained in a simple letter. Also, they faulted the format of Pranab’s letter saying it was a “yes/no” kind of a letter....but refused to explain why they could not write a long format reply ignoring the yes/no format of the letter. Now the BJP is saying that they may not even participate in the all party meeting called by the PM. So what’s the BJP game plan?

It’s always been clear to me what the BJP’s gameplan is.

Firstly, the BJP is a duplicitous party which says one thing and does the other. What they do best is play politics....even if the country suffers in the process. When the guilt of this becomes too much to bear, they mouth some highly impractical and highly jingoistic nationalistic slogans and think that people are fools and will be distracted by these statements. They did this on the GST Act. In private, they support it. In fact, the NDA government had made the first moves on the GST. But now, they oppose it without giving any credible reasons for the same. It was the same with the Indo-US nuclear deal. Everyone knows that the BJP is a pro-US party. That much came out in the wikileaks as well (even though, I wouldn’t give much credence to that). And yet when it came to voting in Parliament, they voted against the deal. At that time as well again, they mouthed some random nationalistic statements about “bharat mata” and gave some silly disagreements they had with the bill. With this much known, it’s not difficult to understand their position on the Lokpal bill.

Secondly, the BJP is jammed on the Lokpal issue. They have been in media all throughout projecting great knowledge of the subject. Spokesperson after spokesperson has waxed eloquent about his/her views on the Lokpal bill. Yet and once again, the party showing its true colors. It makes one kind of statements in the media; quite a different kind when it actually matters. If its views are as clear as they appear to be to us lay people, why can’t they just put them down in writing or express them in a meeting? I’ll tell you why. Because, their views in reality, are similar to the Congress’s views. They are not sure about including the PM and the higher judiciary under the Lokpal. They don’t like surrendering their powers to the Lokpal. But they don’t want the public to know this. They want to reap the dividends of the anti-Congress sentiments in the country..

Thirdly, the BJP is secretly hoping that enough parties will vote against the Lokpal Bill in Parliament. This is a risk that the Congress and UPA now run. No matter how many consultations they hold with the opposition, it can never be sure about what the voting pattern will be seen in Parliament. That’s what the Congress is really worried about. Being suckered into a trap by a combination of Anna and BJP. If the Congress presents a strong bill in the Parliament, and if loses that vote, it will have to step down. At that time, no one will say that the party tried hard and the BJP played dirty. The media will report along the lines of their political affiliation. The BJP perceives that it will be able to save its own skin by pointing out some minor disagreements in the bill (like they did in the Indo US nuclear deal) that made them vote against it. But that they support a strong bill. It’s a party that has shown it can speak from both sides of its that’s what it will do this time as well. In the BJP’s dream outcome scenario, the Congress government falls and the BJP gets the credit for booting out a corrupt government. That’s the real ploy. Very few people understand this, but that’s what the BJP ploy is.

The idea scenario for the BJP is that the Lokpal bill gets delayed. Delayed by 3 years precisely. So that the Lokpal debate and the Congress bashing is happening around the time of the next elections. But the people should not attribute the delay to their party. It’s the most frustrating thing for them that all the problems the Congress is facing are so early in its life cycle. Even if the Congress suffers now, it can always regain lost ground in the next few years. So what the BJP will do is......try and delay the bill. When it reaches the Standing committee of Parliament, they will try and delay it. They will do all they can.....but behind the media’s glare. In front of media, they will take a “we need a strong Lokpal and quickly” line. The Congress knows this.....hence it will try and push for as strong a bill as is politically acceptable (one that cannot be voted against) and quickly. Ideally, they would want the issue to be sorted out that around election time, it won’t be a big issue.

The real truth is that all that the BJP wants is to sack the Congress government. They have no idea what they will do themselves if they came to power. Their behavior is like the behavior of the common public of Greece....who all complain about the government’s austerity measures.....but have no solutions to offer themselves. In the case of the BJP, in addition to their ignorance, there is also an aspect of guile. They would like the government to fall....and they would like to reap the benefits of the anti-corruption sentiment.....but they would not like the people believe they had a role to play in this. And media that is politically aligned with them – Times Now, India Today, CNN IBN – will act as platforms for the BJP to exploit. Will this work? I don’t think so. Whoever I have met has said that they want the Lokpal....but they believe both the Congress and BJP are corrupt. I doubt if the people will be fooled.....

Tuesday, June 28, 2011

Time to kick start the reforms.....enough time wasted already

Sitting here in London and meeting a few people from the financial community brings out instantaneously the scary prospect of India missing the bus. This time for it’s own mistakes. There is enough frustration among fund managers here that nothing is moving in India. There is a policy logjam. Reforms, pending for long, have stopped in the tracks. Everyone’s attention inside India is on the politics. Everyone’s attention outside India is on moving on to the several other countries that are stepping on the gas. India, I am worried, is getting left behind.

Global investors dont care for the spate of corruption charges beyond a point. If the civil society agitation helps reduce corruption, that’s great. But if it leads to a policy freeze, then they lose interest. Most investors here mock the Indian media for having gone too far. Ratan Tata had said this once that we have become so self-critical of ourselves that it will harm our decision making. It’s the same feeling I get here. Intelligent Indians and global investors are saying that the political environment in India is such that no one wants to take a decision. Remember the question that I had asked in one of my earlier blogs (June 9th.....We need efficiency, risk taking.....)? Well, it appears that AK Antony (a clean minister who simply doesn’t take decisions) is preferred over Praful Patel (a minister who changed the shape of the airlines sector, but was embroiled in controversies). For the foreign investor, and for the thousands of domestic investors and industrialists waiting for reforms, India has already got waylaid. Foreign inflows are slowing down. Manufacturing growth rates is slowing down. Q4 GDP growth came in at some 7.5% levels. And the mood of confidence has become one of tentativeness.

It’s time for some decisive action. The government has to take its eyes off Anna and Ramdev and the ilk. The Lokpal Bill is only one of the jobs the government has to do. They need to do several more things to kick start the economy which is already starting to sputter.

The problems in the economy are not difficult to spot. Basically, to curb inflation, the RBI has been increasing interest rates. According to Indian experts I met here in London, there are still one or two more rate hikes likely to happen. Increasing rates will help clamp down on demand. It’s a very temporary solution to curb inflation. It’s like when you get cut by a knife and are bleeding; the immediate solution required is some kind of a bandage to stench the blood flow. But after that, there is need for a more permanent corrective treatment. If there is an infection, an antibiotic is required. Likewise, the interest rate hikes will reduce inflation only temporarily. The long term solution to inflation control is always to incentive higher production. If production increases, higher supply will force prices down. For this, we need smarter fiscal policies which encourage industry to invest more. We also need sensible FDI policies which bring in foreign capital. Our domestic savings rate is high at 35% or so (of the GDP), and that will drive up GDP growth. But we need even more investments. For a developing country, we should try and garner as much global finance as we possibly can.

Here are some important reforms pending for a long time:

1)      The GST Act – Essentially, the GST (Goods and Service Tax) will replace a plethora of central taxes and state-imposed taxes which have made doing business in India difficult. The GST Act proposes to remove several central and state taxes like Excise duty, Service tax, VAT, Octroi, Central Sales tax, State sales tax, entry tax, stamp duty, turnover tax, tax on consumption of electricity, tax on transportation etc etc etc and replace them all with one single GST. The GST will be levied at the consumption point rather than at both, the production as well as consumption points today. There are two problems largely in implementing the GST act. One is that this will take away the powers of the states to levy taxes and give those away to the Center. States worry that this will affect their autonomy. Their ability to use fiscal incentives to attract investments will disappear. Second, there are likely to be some states which benefit from GST because they are strong consumption centers.....some others which will lose because they are stronger in production than in consumption. The center plans to offset these imbalances at least in the short run and hopes that things will iron themselves out in the long run. The other advantage of the GST is that it will reduce paper and cost of collection of taxes. It will also reduce corruption as the tax department interface will now be just at one point. The problem in implementing the GST is that it has become a political issue. The Act is an amendment to the Constitution and so requires a 2/3rds majority in Parliament as well as the support of half the states. Without the BJP’s support, the GST cannot be passed. The BJP instinctively supports GST and would try to get it passed if it was in power. But it has now decided to oppose the UPA’s efforts to get it passed. Why? Apparently because Narendra Modi is upset with the Congress chasing down his home minister (Amit Shah) in the Sohrabuddin murder case.
2)      The Direct Tax Code – will remove the several profit-linked exemptions provided under the present act and replace those with investments-linked exemptions. This will help increase foreign investment in India. It will cut tax rates and get more people under the tax net. This is an act that can be passed quickly because it enjoys wide political support.
3)      FDI in multi-brand retail: I was lucky to meet Mr. Nagesh of Shopper’s Stop yesterday in London. And he explained the benefits of allowing FDI in India. Clearly, FDI was being blocked by the Kishore Biyanis and the Mukesh Ambanis who wanted to build their own retail empires before foreign retailers came in. The debate on whether allowing the Walmarts and the Carrefours will increase or threaten employment is an ongoing one. In the end, I would support FDI in multi-brand least in the major cities (and with conditions as reported in the press).
4)      Increasing FDI limits in insurance – The insurance business needs lots of capital. Every time someone buys an insurance policy (for which the insurance company assumes a future liability), the insurance company has to “provide” capital. As insurance penetration grows, insurance companies need more and more capital. Hence the need for higher FDI. The Left traditionally opposed a more liberal FDI regime. What’s stopping this reform now?
5)      Land acquisition and Mining: We need a more modern and more humane act that facilitates easy acquisition of land and yet rewards land owners a lot more generously. We need mining laws that protect the environment and the local population, but which also make it easy for industry to invest. The logjam over Posco is a point in case. India’s largest FDI investment is stuck in red tap and confusion for several years now. It’s good to give global investors the message that we care about the environment.....but isn’t it also good to give the message that we mean business and are willing to move fast?
6)      Labor reforms – one of the reasons why manufacturing moves to China and not India is that the labor laws in India are way too restrictive (protect labor....disallow industrialists from sacking labor). Now I am not an expert in this, but I am told that the industry has managed to bypass the restrictive labor laws by engaging more and more contract labor. These are not even covered by the protection of the labor laws. So the whole leftist purpose of protecting labor has already been defeated. Why not reform the laws in a way that helps hire more labor in the correct manner and which encourages more manufacturing. The ultimate savior for the millions of unemployed has to be manufacturing.....not retailing or other services.

The real truth is that the government has paid too much attention to Anna and Lokpal and their ilk and has taken its eyes off the economy. The media in India has forced the government in this direction.....but media is known to be irresponsible. It’s the government’s job to set the agenda and move ahead forcefully with reforms....and it will find widespread support for itself when the reforms help the economy grow faster and create jobs faster. For the sake of the country, I hope the government will act quickly.....

Monday, June 27, 2011

The way the Greeks live! Not difficult to understand why the country is in such deep trouble....

Everyone’s seen the crippling impact that Greek crisis is having on the economy around the world. The Greek government has been borrowing heavily over the fund what now appears to be a lifestyle that is simply unsustainable. While its economy has been de-growing for the last three years, its debt has been climbing inexorably. The Greek crisis came to the fore last year when the government was about to default on its loan repayments. It now has to borrow to pay. It’s a classic debt trap. To emerge from this debt trap, the Greeks have to cut back on their luxurious spending habits. They have to get used to pay cuts, lower pensions, tougher tax laws and the like. Who likes cuts in their salaries and perks....especially if you’ve got used to them for so many decades?

Some of the most startling stats of where Greece stands today:
  • Greek debt totals $540 billion while its economy is only $310 billion. Worse, the GDP has been de-growing and Greek banks are about to default of loan repayments. GDP shrunk by nearly 5.5% in 2011 after shrinking by 4.5% in 2010 and 2% in 2009. So the GDP has been shrinking and the debt increasing. A typical debt trap! (For India, the same figures are: GDP $1.7 trillion. Debt $750 billion. Economic growth rate 8.5%).
  • Standard and Poor’s rates Greek government debt as CCC which means “ below junk” status. The interest rates on Greek bonds have climbed to 15% or so. In case of default, banks that have leant to the Greek government could lose as much as 30-50% of their principal. (Indian debt is rated BBB – “stable” by S&P).
  • The fiscal deficit in Greece is more than 15% of its GDP....this means that the government needs to continue borrowing more each year just to meet its expenses. (India: approx 5% of GDP).
  • 20% of Greece is now under poverty (defined by European standards as anyone earning less than 6000 euros per year). (India of course is much higher at some 35% and at much more modest income definitions!).
  • Its forex reserves are down to some $7 billion....which is equivalent to just one month’s imports.....(India some $300 billion....about a year’s imports).
  • Unemployment has risen to 16%. Amongst the youth, its 35%. (India 9%.....but again, the real numbers may be higher because of what is called “partial” employment or “hidden” unemployment).
  • The bureaucracy in Greek is way more than in India. One idea is to sell off Greek islands to raise monies. But to sell an island, eight ministries must sign off. 2500 official licenses and permits are need to conclude the sale!
  • Bribes are rampant. Every sixth Greek pays a bribe of 1500 euros per household....or 1 billion euros nationally per year! (I am sure India beats Greece hands down on this score!).

Now the reasons the country has got into this mess. Though we’ve heard of Greek profligacy, some of these facts are sure to raise anyone’s hackles:

  • Huge public sector: One in three Greek (33%) works in the government sector. Government salaries are better than private sector. (India less than 2% and we thought we had too many government employees!). There are four times more teachers per pupil than the “best in education” in Europe – Finland. These are all government jobs!
  • Under a liberal pension system in the country, many people have managed to retire in their 40s. Pensions paid to these retired people continued to be paid even after their deaths in thousands of cases....some for many decades. Now the government insists on a personal visit from the pensioner at least once a year!
    • The government contributes as much as 700 million euros to the pension fund of merely 25000 employees of the state power company. This is annually! (What does that come to: 28,000 euros per person per annum?). More than 8 billion euros have been contributed in the last 12 years or so! The Greeks are surely rich!
  • Apparently (and not so unexpectedly), half the government employees don’t turn up for work! This is why there is a special bonus for them which is based on their punctuality!
  • The government is obviously a great place to work for. Some civil servants claim a bonus for washing their hands regularly. Some get a bonus for just having to use a xerox machine. Others get five days a year in a luxury hotel of their choice!
  • When a tax crackdown was ordered, the government used satellite imagery to detect 17000 unregistered (and hence untaxed) swimming pools in just Athens! 17,000? In a city with a population of some 7.5 lac people. Wow!
  • A former Playboy model, Angela Gerekou was the culture minister of Greece before she was ousted for her husband’s tax evasion of 5 million euros! Her husband was a pop singer. What a glamorous government!
  • Tax evasion is massive in Greece:
    • In a random survey in front of popular Athens nightclubs found that 6000 people who had annual incomes of only 10000 euros owned cars that were worth more than 100,000 euros!
    • Just like in India, the tax authorities were raking it in. In the case of many tax officers, they were found to own properties worth up to 3 million euros when there declared income was only 51000 euros!
    • Greek yacht owners avoid 23% VAT on their yachts by showing them as belonging to Philipino tourists. On a yacht worth 1 million euros, that’s a saving of 230,000 euros!
    • Such tax evasion adds up to some 500 million euros but the Greek government is loathe to collecting it.
  • Some 40% of “small consumers” in Greece have stopped paying their electricity bills claiming they can no longer afford to pay. In reality, they are just following their politicians who do the same out of greed and perfidy (not inability to pay).
  • Until recently, the rules allowed political parties to fly in Non Resident Greeks free of cost to come and vote for them! But the political parties refused to pay to the state owned Olympic Airways leading to its shutdown in 2009. Imagine flying in NRIs to vote in India!

The real truth is just that on the one hand, we must make sure we don’t repeat what we are seeing in Greece. On the other hand, we must learn to appreciate our own performance. When we look at the standards of governance in much of Europe (the famous PIGS nations – Portugal, Ireland, Greece and Spain – and now even extending to Italy), we’re now getting surprised at their own governance standards. We have often mistaken their quality of life to mean good governance. In reality, it was just a loot. The Europeans have been enjoying their life at the expense of the rest of us around the world. The time has come for this to change. It’s not difficult to see why the world is looking at Asia both with envy and hope.

Sunday, June 26, 2011

The PM must speak up......

Chidambaram said yesterday that he believed that the people of India want to hear their PM’s views on corruption and the several other issues facing the nation. Dead right. The people do indeed want to hear him speak. Then there was this lovely article of Karan Thapar’s in HT (Reflections page) yesterday which narrates how Margaret Thatcher in the UK used to communicate with her people. And then of course, there is the example of Obama who holds weekly briefings with the media.

The point made by Margaret Thatcher was interesting. When asked when she chose to grant a lot more interviews to media and when a lot less, she apparently responded: “When things are going wrong, when my government has problems and when criticism is loud, I give as many (interviews) as I can. Because I need to reassure people that I am responding to their concerns, that I care, and ultimately, that they can rely on me to put things right. But when things are swimming along satisfactorily and all seems well, I refuse. Because chances are I’ll put my foot in my mouth and create a problem for myself”! Point well made! Karan’s own comment was that our politicians are the exact opposite!

The important point is that the Executive must speak to its people. Surely, the Executive understands that if they are unavailable to media for a response, the media will “spin” the story the way it wants to (in any case it will......but at least the “responsible” media will give the other side of view also). Surely they understand that the people of this country are cynical of politicians.....and so when they keep quiet, people think that they are hiding something. That they have nothing to clarify?

Take the example of the recent stories of Pranab Mukherjee’s office bugging. Now let’s be clear. No one knows the real story. A few people have said a few things and the rest has been made into a story by the media basis whatever information they have and whatever their political orientation is. The opposition has also chosen to speak from a very narrow perspective. They are apparently not so concerned about the FM’s office being bugged as much as they are in the possibility that there could be a tussle on between the FM and the Home Minister. They have figured that the bugging story is otherwise bogus. That using the internal tussle argument is a better way of hurting the government. Nothing wrong with this. They are the opposition and they will try and show the government in poor light. What is “bugging” is that the government chose to stay quiet yet again. And let the wild stories do the rounds for quite a few days. Till Chidambaram finally spoke up himself and said that “Pranab Mukherjee is at least 10 years older than me....and that he is more senior than there is no question of me wanting to become the PM before him” or some such thing. When Chidambaram himself spoke, the story immediately went cold. The “masala” had been leached out from the story!

Take the 2G problem. I have a strong view that the CAG has no business to comment on policy initiatives of the government. The government chooses to give subsidies for diesel and kerosene. That’s their right. There is no corruption in this policy decision. If there is a process violation in implementing this decision, the CAG has a right to point that out as a case of corruption. In the 2G case, I think the government did the right thing by treating 2G spectrum like saw the power of telecom in elevating the lives of poor people. Had it gone with 3G like spectrum auctions, the penetration of mobile phones would have been much lesser and the poor would have stayed behind! Today, even those who don’t have homes or offices are able to procure orders on their mobile phones. Of course, there was much corruption also....but limited to a few thousand crores (to be factually correct, so far trails of only Rs 200 crores of corruption has been found....the Raja-Kalaignar TV-DB Realty link). The media has built the perception that its 1.7 lac crores. There’s a world of a difference between the two figures. Even in public perception, a few thousand crore rupees in corruption is taken as par for the course today. But a 1.7 lac crore figure gives the story a totally different spin. It suddenly becomes the biggest scam of history. The problem is that the government has chosen to stay quiet and give the impression that it’s been caught by surprise. That there is some truth to the larger corruption figure.

In a democracy, strong leaders are those who can communicate strongly with the people. Whether Nehru or Indira Gandhi or Atal Bihari Vajpayee, they were all strong communicators. And I am not talking of oratory skills here. I am talking of content. The ability to strike a chord with their constituency. Manmohan Singh is a poor orator, but can be a strong communicator. The opposite is equally true. Kapil Sibal is a good orator, but not that good a communicator. He’s too smart for his own good. He speaks with a smugness that doesn’t help. He has the “I know it all” attitude which makes him look like a power broker. Likewise, when Arun Jaitley or RaviShankar Prasad speak, they too look too smug and their agenda drips from their persona. But when Nirmala Seetharaman of the BJP speaks, she communicates very powerfully (the neat sari, the conservative hair style are markers of a carefully crafted “Indianness”). People believe her but they don’t believe Kapil Sibal. They would believe Manmohan Singh. When the PM speaks, people listen with apt attention. They give him the benefit of doubt. They understand that he’s not a great orator....and that earns him their goodwill. It’s because of the PM that the UPA won the elections in 2009. The Congress must ask the PM to speak up.

The real truth is that in today’s times, more so than ever before, perceptions matter more than the truth. The truth is always relative. No one knows what the real truth is (except the writer of this blog!). So people form their perceptions basis what they see. What complicates matters is that media is politically motivated. In an environment like this, how can the PM – the Congress’s best batsman – not come out opening???? I must end with this wonderful sms joke which did the rounds recently. Manmohan Singh was at his dentist’s. A frustrated dentist says “Mr. least now, please open your mouth”!! I hope he gets the hint!

Saturday, June 25, 2011

Pathetic....NDTV discusses castration as a possible punishment for rape

I was horrified to see this show on NDTV. I watched it late in the night last night and I thought for a moment it was some kind of a comedy show. But I was shocked – it was a serious debate conducted by Vikram Chandra on The Big Fight. Should castration be a penalty for rape convicts?

So I watched the show again online today morning. Thankfully Vikram clarified that this discussion was triggered off by Justice Kamini Lau’s suggestion that castration should be discussed in public. A few minutes down the show, it also became clear that we were talking of “chemical castration”, not physical castration. Chemical castration is the administration of anti-androgen drugs by injection every three months to a convicted rapist. These drugs reduce the libido and keeps the rapist away from sexual attacks. But the show soon meandered onto physical castration. It’s not important which form of castration we consider.....the fact that as a society, we can even consider such extreme forms of punishment is scary. It’s the same as Baba Ramdev suggesting death as the penalty for corruption. If we extend this logic, we should be doling out death by the hundreds.....just like it happens in China or Saudi Arabia.

A rape is no doubt a heinous crime. It’s one of the most pathetic crimes inflicted on women and I totally agree that we have very archaic laws in our country to deal with the crime. We need an overhaul of the rape laws.....and stricter punishment. But to suggest that the punishment could be castration is taking the country back into the dark ages. Or into the same league as the Middle Eastern and Taliban ruled countries. How is castration different from chopping off the hands of a person who is caught in theft? Or pelting stones at and killing women convicted of adultery?

Then there is the comparison with murder. Is murder more heinous or rape? In a society like ours, where a woman’s dignity is measured by her virginity before marriage and purity after, the panelist would have us believe that rape is worse than murder. In the heat of the moment, the panelists may feel so. And the audience in the show may agree. But in my mind, while rape is a disastrous crime, it’s no way comparable with taking away the life of a person. At the end of the day, while all crimes are terrible, we have to learn to grade them. In my mind, there is a huge gap between rape and murder. And let me clarify - just because I am saying that rape is not as bad as murder, does not make me a rape sympathizer! Any comparisons with the death penalty for murder is fundamentally flawed.

Besides, I have argued in a previous post, that civilized countries (with the only exception of the US....strangely) have done away with capital punished totally. I am strongly of the view that India should also ban capital punishment. Taking a criminal’s life is in many ways taking over the job of God. Our laws don’t allow for suicides or euthanasia.....on grounds that taking life away is not humane. Yet they allow capital punishment. The countries which have actually executed people in this manner include countries not known for liberalism and not the countries we would like to follow.....China, Saudi Arabia, Iran and the like. Do we want to be in this League of Nations?

I think we are compensating the weaknesses of our poor criminal legal system with draconian penalties. Our legal system is amongst the world’s slowest. It’s probably also the world’s most inefficient. There is probably nothing called forensics in our investigating agencies. We saw in the case of the Aarushi murder, that neighbors and media people were allowed to trample on the crime scene, destroying all evidence in the process. Our courts take years to deliver justice. In such a scenario, people are angry. But instead of correcting what is wrong.....we could end up taking another wrong step. The judge should have sought a debate on how the judiciary should speed up its working. Not on whether castration should be considered. But then she doesn’t want to draw attention to the deficiencies of her own institution.

One other thing. I have argued many times that laws cannot be made by public opinion. Agreed, we are a democracy and the government must reflect the people’s views, but at the same time, we have also set out to become a modern, liberal country. Sometimes, it is important to go against public opinion and make reforms. If this was not done in the British era, we may still have been living with untouchability and sati in our country. Just because a majority of people supported these practices for centuries, should the government of the day have continued with it? If the majority of the people of India want to become a Hindu country, should we allow it? Should we consider public opinion in taking such decisions? Putting together a panel of shrieking women shouting vengeance is no reason for castration to be allowed. Likewise, it hardly matters what the public opinion is about corruption laws.....the laws cannot be made basis opinion polls.

My view is that the justice system should be speeded up. Especially rape cases. And corruption cases. And so many other cases! We also need stronger punishment. 7 years is probably too less given the heinousness of the crime. It can be made 10-12 years. But no more. What we should remember is that 7 years or 10 years is a huge part of one’s life and its deterrence enough for anyone considering rape. The problem is not in the term of the sentence. It’s in the confidence the rapist has that the judicial system will take years to decide. This gives a sense of casualness to the crime. Also, the rapist believes that the “stigma” attached to the rape would prevent the victim from complaining. We still don’t know how many rapes are actually happening which go unreported. This is what we need to think of. We need to remove the stigma attached to rape.....and society must change its views on rape victims. This is where modern society and media must play a role.

In one way, NDTV did the right thing by triggering off the debate. But it should not have packed the panel with so many women (and one man) who all had the same view. Only Ranjana Kumari was arguing for sanity and as expected, she was being out-shouted. In a serious debate like this, what’s the need to have an audience which is expected to applaud every extreme suggestion made by the panelists? After all, not applauding, or taking a contrary view could be seen by many to be supporting weak rape laws. Who wants to be seen like that!

The real truth is that as a society, we are immature and emotional. We love extremes. And we like to wear our honor, dignity, patriotism, religiousness....everything on our sleeves. Just look at our Hindi channels. Every soap has a very easy-to-identify vamp and an equally easy-to-identify “honorable” heroine. Our society demands that our characters be identified clearly as being in one camp or the other. We don’t like the in-between. It’s the same with law-making. Our emotions often dictate what laws we have. If we went by the passion on the show, we should immediately allow castration. But if this happens, very soon, we will have a second “brain drain” movement....with tolerant liberal people leaving India and going to more tolerant countries....

Friday, June 24, 2011

Angst and politics over diesel price hike.....but what options do we have really?

I cannot understand why there is surprise....and yesterday’s hikes in diesel, kerosene and LPG prices. Everyone knows that the price of crude is at $110 and at this price, it is impossible to continue selling these fuels cheap. Either consumer prices keep going up or the subsidies keep increasing. Either way, the burden is borne by the people. And since there is still a huge gap between retail prices and international crude prices, we should expect more prices in the future. There is no surprise....and no reason for shock.

Sure, there can be differences in opinion in how the higher crude oil prices should be handled. But, as is typical in India, instead of a mature discussion on the subject, the price increase has become a political issue. The opposition parties have cried foul without bothering to explain what they would have done if they were in power. Our media has dutifully reported the opposition’s complaints, without either demanding that they offer an alternative, or suggesting one of their own. In reality, no one is worried about the real issues and the impact on the poor (not themselves), even though they all express shock on behalf of them. In reality, almost all of them are using the price hike as another baton to badger the government with.

While there are no constructive solutions ever offered by anyone, there is one that is usually bandied about by the ignorant and the politically motivated (the opposition). That the government should cut taxes so that consumer prices are not increased. Those who suggest such a solution simply cannot understand that the taxes the government collects from fuel are also used for the benefit of the poor only. The various social programs that the government runs are funded by the various taxes the government collects. Taxes from fuel are an important component of the tax kitty. So if the government cuts taxes, it would suffer a tax loss which in turn would affect the poor people only. If the government reduces taxes from fuels, what would it substitute it with? More income and service taxes? More customs? More Excise? More sales tax? Income tax rates cannot be raised because that leads to more tax evasion. More customs, excise and sales tax is anyways what gives the government the higher taxes.....There is no other major source of tax collection that the government can rely on.....

The TOI has argued that the taxes should be moved from the “ad valorem” formula to “specific duties” (“fixed” taxes). Ad valorem means that the taxes are a function of pre-tax prices. Every time pre-tax prices increase, the tax increases and every time pre-tax prices fall, the tax falls. In an environment when pre-tax prices are climbing, it appears a logical formula to keep taxes intact (have “specific duties”). But what would happen if the pre-tax prices fell? Would the taxes be held intact then also? If pre-tax prices were falling, the ad valorem tax structure would be more beneficial to the public. This is what the newspapers do not realize or don’t want to realize. Whichever system we follow – there will be times when that system will be too tough and others when it will be too lenient. We cannot keep changing the system we follow to suit our convenience, because then that will be arbitrary and will harm us. It will then amount to continue subsidizing fuel prices, no matter what the international prices.

One of the longer term solutions that I would like to offer is to reduce our dependence on fossil fuels. We must rely less on crude and increase dependence on other sources of power. For eg., if our goods could be transported using electric trains rather than trucks, the dependence on fossil fuels could reduce. This would only happen if the electricity itself was produced using non-fossil fuels.....viz. hydro electric, nuclear and non-conventional power sources (wind, tides, sun etc). This is a long-haul solution but one that has no alternative. If we do not reduce dependence on fossil fuels, the prices of petrol, diesel, kerosene and LPG will keep rising every few months.

The easiest and most scalable of non-fossil-fuel based power generation sources is nuclear power. In spite of Fukushima, there is absolutely no denying the fact that nuclear power is the safest source of power. There will be a few accidents in anything that we do. We tend to feel that thermal power plants are safer....because we think they don’t lead to people dying. However, we fail to notice the “slow death” that thermal power plants are wreaking on us.....the pollution that they cause is a major source of global warming. Global warming will kill us slowly and indirectly, but the pollution is killing us daily and directly. It’s human tendency to ignore “creeping degradation” (the Boiling Frog anecdote...remember.....a frog will jump out if thrown in boiling water, but will slowly die to death if it is put in cold water and the water is gradually boiled) while being concerned with “sudden blows”. It’s the same with air travel. Common perception is that air travel is more dangerous than road travel. In reality, air travel is far safer. Every year, more than 1.25 lac people die on the roads in India alone.....this hardly gets noticed, because the deaths happen a few numbers at a time. An air crash on the other hand hogs the headlines because a lot of people die at the same time. We must realize this truism about human nature. We must adopt nuclear power immediately.

The world is now moving towards electric vehicles....again the substitute for fossil fuels is electricity. Electricity generated using nuclear fuels.

If we can convert our power generation and transport sectors from fossil fuels to nuclear fuels, it would give us a lot of protection in the decades to come. That is why the Indo-US nuclear deal was so important. That is why India cannot do what Germany and Italy are doing – scrapping nuclear power plants. Those countries don’t need to increase power production in their countries. They are already fully developed. These countries are growing their economies not by increasing their manufacturing base (which needs more power), but by building “Intellectual properties ( the B2B domain)” and “brands (in the B2C domain)”. They have smartly pushed manufacturing onto the developing world. The problems of pollution are ours to handle. The problems that we in India and China face are vastly different from what Germany and Italy face. We have to be smart about all this; not make even this discussion political.

I don’t blame the people of India for not being able to understand the real issues. I blame the Indian media....which is both ignorant and irresponsible on the one hand, and politically motivated on the other. None of the media outlets in the country are bringing out the real issues that any government would face. Media in India is more interested in the politics. None of them have debates that bring up solutions. They have debates in which everyone blames the ruling dispensation. How would matters be different if the BJP or the Left were ruling instead of the Congress? Would they have kept prices constant? If they had done so, how would they have increased taxes so that the social programs could continue.....or would they have cut the social programs? The media in India has to play a much more responsible role. As an important pillar of democracy, it cannot be so irresponsible and politically motivated.

The real truth is that fuel prices will keep rising. The smart already know it. The ignorant keep complaining every time it happens. The only solution is to switch everything to electricity.....electricity generated by nuclear power. If we don’t do this.....and continue to play political games.....we must be ready to face the consequences.

Thursday, June 23, 2011

We need big thinkers, but what do we have? Take the case of the Bombay cabs....

Cabbies in Bombay are going on a strike to protest many things. One, their licenses are not being renewed. Two, they want to convert their non-AC taxis to AC if a customer so desires and is willing to pay 10% extra and they are not being allowed to do so. Three, they want to be able to run any car model as a cab and lastly, they want more licenses for themselves rather than them being given away to fleet operators. In the past, they have complained about fare increases. The story of cabbies in Bombay – and in virtually every other city in India – is one of our authorities thinking extremely small. They simply cannot seem to think big. On the one hand, the PM talks of making Bombay into a Shanghai.....and on the other, our authorities simply cannot seem to be able to think beyond their small minds....

Look at the sorry state of the cabs in the financial capital. Most cabs are still those rickety Premier Padminis......which ordinary citizens like us stopped buying a decade or more back. The average age of the cab in Bombay is surely more than 10 years.....or at least it feels that way. The cabs are small in size.....and with growing economic and physical (!) prosperity; customers struggle to get inside them. Then, as everything else in India, the cabs are horribly dirty.....they are probably never cleaned from the inside; the upholstery never changed. They are a visual eyesore.....almost all of them have been dented at multiple places. And of course, the cabbies are a law unto themselves. The joke goes that the worst disciplined creature on the road is the cabbie in search of a customer....he will swerve left or right or suddenly come to a halt in a fast moving lane if he sees a potential customer. The next worst creature on the road is a cabbie who does have a customer in his cab! But as the saying goes, if you pay peanuts, you get monkies!

Rather than blame the cabbie, I would blame the authorities. In the last two decades, Bombayites (and residents of almost all big cities) have seen a huge improvement in their standards of living. The average income has gone up by some 8-10 times in this period of time. As a result, people are demanding better service and importantly, are willing to pay for them. The vehicles they buy for themselves reflect this fast changing economic reality. Today, even the most measly car is generations ahead of the Premier Padmini. Why would the government then not take bold steps to modernize the cab infrastructure? Why would they not mandate (not just allow) better models of vehicles to be run as cabs? If the customers are ready for a better experience, then why would the service provider not make those services available? Surely, there can be better cars mandated for cab services; surely the cabbies can charge more to recover the costs of running and maintaining a better, newer generation cab?

The problem comes in the lack of vision. Upgrading cabs would necessitate levying a higher tariff structure. Authorities fear (unnecessarily) that there may be a public backlash. To be sure, whenever a tariff increase has happened, a few people have protested. And media (as usual, looking for masala) has covered these protests quite prominently. As a result, cab tariffs in Bombay are pathetically low. Ten years back, the minimum fare used to be some Rs 7 or 8. Today, it’s doubled to Rs 13 or 15. Who amongst us has seen only a doubling of his/her salary in the last 10 years? Most of us have managed an 8-10 times increase in this period. Why then, should we complain about cab fares going up? What if the cab fares started at Rs 25.....but the cab was an air conditioned and clean sedan? It could be a small sized Indigo....or a larger Honda City. But if we were willing (or forced) to pay Rs 25 as the starting fare (and more for longer distances), then we could get a much better cab service in Bombay.

My point is that people are willing to pay the higher fares. At least in the major metros. That’s why so many customers are moving to fleet operators who provide air conditioned cabs and better drivers. The problem is that the government’s thinking is always small. They simply cannot think in terms of planning an upgrade appropriate with the progress made by the people of the city. They worry about fears that are non-existent. Some time back, I read a report that the government was thinking of converting the iconic black-and-yellow cab of Bombay (one that has featured in thousands of films over the decades) into a single color cab. Why? Not because of some new thinking on designs; but because it would be marginally cheaper to paint one color instead of two! Clearly, our authorities have fallen behind even while our people have surged ahead. But they don’t understand this. If they could mandate better cabs and higher fares, then the quality of life of cabbies also would improve. It would lead to better distribution of wealth from the rich to the poor. And if some people complained that cabs had become too expensive, they could always travel by bus or train. No one says traveling by cab is compulsory!

It goes back to my favorite crib that best professionals are no longer joining the government. If the cabinet secretary (the senior-most bureaucrat) makes less than Rs 1 lac a month (take home) after having cleared one of the toughest examinations in the world (the IAS exam) and after having put in 30 years of service, then who wants to join the government? (Well actually.....I think we are still lucky to have some really good bureaucrats in our country.....but their numbers are dropping). It’s the same with our political class.....none of the big thinking people professionals would ever win an election. The best people thus all work in the private sector or migrate abroad to greener pastures. With an intellectual shortage of this magnitude, what better can we expect from the authorities? Today, our bureaucrats simply don’t have the capability to plan big things. Besides, if there is someone who does think big, then the media, the CAG, the CVC, maybe the ordinary cop or the CBI or the ED or any of the tens of other “supervisory” bodies will make sure he falls in line. After all, thinking big involves taking risks....and does the political and media environment in our country allow the occasional failure that would come from thinking big? Does it allow big thinking at all? In reality, not only should it allow big thinking, it should encourage it.

The real truth is that thinking big is the biggest challenge facing the country. But for big thinking to happen, we need the best people to join the government. As happened at the time of independence. Just imagine if the current crop of politicians and bureaucrats were running the country at the time of independence.....we would not have had the Constitution; we would have split up into multiple nations and kingdoms......Today, our politicians and bureaucrats are experts at thinking small....many of them mistakenly believe that our society isn’t ready for big thinking. If our leaders and bureaucrats thought big, they would be surprised.....the people would reward them with their gratitude. We also need a more enabling environment. One that encourages big thinking and bold moves. One that condones the occasional (and almost certain) failure. We seem to put a premium only on fighting corruption. Fighting corruption is important.....but we must also fight small thinking. To help us achieve our rightful place in the sun, we need big anyone listening?

Wednesday, June 22, 2011

Outward Indian FDI rises to $44 billion.....shows how India has silently been capturing the world

Thank god for some space to write about non-political stories! Plodding away silently in the background over the last so many years has been the Indian economy and the Indian corporate sector. With a vibrant private sector, India and Indians have been busy capturing the world making an impact in terms of investments abroad, employment generated there as well as gaining respect internationally.

At a time when nearly everybody has been focused on inward FDI, what has escaped attention is the way in which Indian companies have been investing globally. We have heard of large ticket investments made by Indian companies.....for eg., Tata Motor’s acquisition of Corus and  Jaguar & Land Rover or Birla’s acquisition of Novelis in 2007......but we haven’t realized that as much as $44 billion could be invested internationally in just one year. In fact, RBI only recently put this number up. It even put up the outward FDI numbers for the previous three years.....$17 billion in 2009-10, another $17 billion in 2008-9 and $ 21 billion in 2007-8 in the year before the economic crisis hit the world. Also, what has missed the attention of most people is the kind of countries that we are making acquisitions in. The largest outbound investment last year was Gammon India’s investment of $ 1.8 billion in a Panama based subsidiary.....which is in the business of agriculture, fishery etc. And then just a few days back, Kumar Mangalam Birla closed the acquisition of a Columbian chemicals company for $875 million. Then there is a large land grab happening in Africa and private and government controlled companies are making an impact there. These are large investments abroad.....and its a telling and sad fact that all this exciting stuff has gone virtually unreported in the Indian media and instead. our attention has been drawn to the mindless politics being played out in the country.

To be sure, the tide for India’s economy changed in 2004 or so. Economic liberalization came around in 1991 and we just entered the third decade of reforms. But, in real terms, the benefits of the liberalization have been seen only from 2004 onwards. In the last 6-7 years, the economy has been growing at nearly 8% per annum on average. In fact, the piece by Swaminathan S Anklesaria Aiyar in the Economic Times yesterday should silence critics of the Indian economic growth. Not only has the GDP been making rapid strides, even per capital GDP – the real measure of a country’s progress – has been rising rapidly. Over the last 15 years of so, it has risen from some $350 to $1700 or so. Poverty rates have come down dramatically.....and Swami argues that the reported poverty rates are inflated since the measure of poverty doesn’t capture economic growth adequately. Today, India is the cynosure of global corporations. Today, all but one permanent members of the UN security council are willing to support India’s entry in that august body. Today, the US is bending over backwards to change the rules of the NSG (Nuclear Supplier Group) to grant India entry.....remember the NSG was set up specifically for action against India in 1974 when India exploded the nuclear bomb for the first time.

As part of the liberalization process, India joined the WTO in 1995. Since then, the Indian economy has been integrated in a big way into the world economy. Further, the rules to invest internationally were relaxed around 2004. Since then, many international investments have been made “automatic”.....not requiring the RBI’s permission. Companies can today invest up to 4 times their net worth automatically. More than this particular enabling regulation, it was the symbolic value of the move that was more important. The government was relaxing its control over forex. The strength in our forex reserves itself was a result of the measures of economic liberalization taken in 1991. From a precarious position of having just a few million dollars of reserves in 1991 (barely enough for a few weeks of imports), we today have close to $300 billion in our kitty (enough for more than a year’s imports). India has had a regular annual trade deficit (which means our exports are less than imports), but it is not as if this is a failing. This is an intended the RBI prefers to balance the deficit with the strong NRI remittance flows into the country. India could choose to depreciate its currency, increasing exports and reducing imports in the process.....and it could become a trade surplus country. But that would squeeze our growth rates. The RBI lets the currency fluctuate so that this balance is maintained. Many who don’t understand this well complain that India’s exports are less than its imports. The mere fact that China has a strong reserve fund and a trade surplus is not indicative of its strength (of course, it is much stronger than India.....but the measure of that is not its trade surplus). Even the US has a trade deficit as do much of the world’s biggest economies.

Much of the investments abroad are to fuel the growth within the country. Of late, a lot of acquisitions are in the domain of minerals....coal in particular....required for the expansion in the power sector. The tough environmental laws in the country – as well as easier access to mines internationally – have made it easier to import coal than to procure it locally. Since raising finances is not that big a deal (ok....its become tougher in the last two years.....but generally speaking, Indian companies don’t have much trouble raising finance given their good reputation), acquisitions abroad have become that much easier.

The Tatas today are now amongst the biggest international employers in the UK with a roster of more than 30,000 employees in that country. TCS is rated as one of the biggest employers in the UK. With Corus, Tetley and finally Jaguar and Land Rover in hand, Tatas have acquired a coveted status for themselves in the UK. Likewise, the Birlas, the Infosys’ and Wipro’s of the world are invited with open hands wherever they go.

If only we could realize our own worth and stay focused on business, we would grow much faster than we are at present. If only we realized that democracy is a luxury and we should value it rather than abuse it. If only we could remember that only if the Indian economy grows can the ills of the country be removed. If only we could manage to achieve both – economic growth and political reforms. It’s in these ifs that the future of India will get determined.

The real truth is that the biggest risk to India’s future is India itself. With irresponsible politicians and an equally irresponsible media, the country’s attention is being repeatedly drawn to useless things. A premium is being placed on removing corruption (and rightly so).....but no premium is placed on improving efficiency in work, making fast and bold decisions and thinking big. All these unnecessary fasts by Anna and his ilk has only made governance weak.....important reforms are being delayed. The government is scared to take decisions. Is this what the intention was? This is the real threat to India. Now if only Anna could fast for faster economic growth instead of what he is up to right no......

Tuesday, June 21, 2011

At the very minimum, the Lokpal should not have any judicial powers......

In the debate on the Lokpal Bill, it’s important for all of us to remember that populism cannot be the basis on which laws are drafted. For eg., the popular view may be that a known terrorist like Kasab should be hung immediately. But the more reasonable view must be that an independent judiciary should satisfy itself with the evidence against Kasab. What if the pictures were concocted by the cops? This may take time and it may be galling to common people. But if the due process of law were not followed, grave errors of judgment could happen. Pictures do lie (Refer the recent Vancouver kiss picture – people thought the couple in the picture were bravely cocking a snook at the police and the violence and kissing willingly; later it was found that they were just kissing as a means of reassuring each other out of fear). It’s a basic tenet in any civil society to judge the evidence calmly before pronouncing a verdict. And for that to happen, the judging authority must be different from the investigating body.

Likewise, the right of an accused to be heard by the judge is fundamental to modern civil society. What if the right to be heard were denied (that’s what Anna’s proposal is)? An investigating agency could pick up any person, charge that person with anything and pronounce him/her guilty without giving him/her any chance to defend himself/herself. This is what happens in Taliban controlled areas of Afghanistan. The Taliban picks up those who flout the laws and delivers justice as well. Make no mistake – the Taliban thinks it is doing the right thing. In its mind, it is not a terrorist organization. After all, it is following the tenets of the Sharia law. Modern nations find this unacceptable. But who can question the action of the Taliban? No one. They are a “law unto themselves”. People in India have reacted strongly against such behavior of the Taliban....I wonder whether people in India understand that this Lokpal proposal of Anna’s team could amount – very really speaking – to the exact same thing.

By demanding judicial powers for itself, the Lokpal has asked for making India into a Taliban state. Of course, the accused could go in appeal to the regular courts, but the point is that in a country where the judicial process is as slow as it is, what happens in the interregnum? What if the regular courts take years to hear an appeal against the Lokpal verdict? Merging investigation and the judicial process has never happened in India before....the accused has always had a chance to be heard and the judicial hearing has always been done by the judiciary. Even in the case of the infamous POTA (Prevention of Terrorist Activities Act) – legislated by the BJP government in 2002 and subsequently repealed by the Congress in 2004 – there was no provision for the investigating agency itself being the judge and pronouncing the verdict. Even there, the judgments were left to the judiciary. The main concession provided in POTA was that the accused could be held for 180 days without a charge sheet being filed (and confessions made to police officers were made admissible as evidence). Even this was considered to be too much and that’s why there were serious protests against it by human rights activists at that time. In fact, it became such a big issue that it was an important discussion point in the run up to the 2004 Lok Sabha elections.

Isn’t the Anna proposal amounting to the same? An accused is investigated by the Lokpal’s investigative wing; the trial is done under the Lokpal’s judicial powers. And a judgment is pronounced by the Lokpal itself. How dangerous is this? Let’s be clear – this could happen to any one of us. Also remember that the Lokpal will be manned by many thousands of people. Are we to assume that all of them would be as clean and committed as Anna himself? Even in the case of POTA, there were complaints of huge corruption against the police, who exercised the powers to settle other scores. This is not a hypothetical scenario, but a very real one.

What one tends to forget is that the Lokpal is going to be a huge body, not just a few “trustworthy” seniors. It could have 20-30 thousand employees. It would have a huge budget as well. As per Times Now’s figures yesterday, the Lokpal budget demanded by Anna is “less than 1% of GDP”. So the highest budget is 1% of GDP. Any idea what that comes to? Rs 65000 crores per annum. Wow! The Lokpal is going to be another huge government-like monster. Many of us think that each of those 20-30 thousand employees is going to be clean like Anna. We believe that because we want to believe it. After all, we are extremely angry with corruption and we believe in Anna. But the truth is that ordinary “government servants” will man the Lokpal. We should not forget how corruption starts in the government. Poor salaries and unlimited powers is a big factor. The same factors will start corruption in the Lokpal. Each of the Lokpal employees will get standard government salaries. Now this low paid government employee who wields enormous powers to investigate will behave just like any common government servant or policeman does...... It’s scary any which way, but just imagine if this corrupt employee was given the powers to judge as well. Imagine if the police had powers to judge and pronounce judgments......we would be like Afghanistan in no time. The only place where I think this is permitted is in the Armed Forces – where court martials are allowed. But do we want to have a court martial kind of system even in civil society? We know what happened to Pakistan when that system applied all over the country.....

Separating judiciary from the investigating wings is an essential requirement of any law in any civil society. Even in business, the same principle applies. When a government company competes with the private sector, the first thing that is needed to provide a level playing field is to have an independent regulator....the government company cannot be the regulator itself. So BSNL and MTNL are government telecom companies, but the regulator is TRAI and the appellate authority is TDSAT. In the old days, BSNL and MTNL were run by the government and DoT (the government itself) would be the law maker as well as the arbiter. This was found to be inadequate and self-serving. Hence today, we have independent regulators.

For the same reasons, judges cannot be probed by the Lokpal. There is a real fear that a corrupt and power hungry Lokpal body could pressurize the judiciary into giving judgments that it wants.

The real truth is that at the very minimum, the Lokpal should not have any judicial powers. Not even quasi-judicial powers. It should be a pure investigating agency. Maybe separate courts can be set up to try Lokpal cases....but those judges should report into their bosses in the judiciary, not in the Lokpal. Further, the Lokpal bill should be discussed by the intellectuals, not the masses of the country. The masses don’t understand the issues.....they are led by emotions. Opinion polls are irrelevant. The difference between a modern progressive state and a tyrant nation is quite small in reality. Separation of judicial process from investigation is a key difference.....

Monday, June 20, 2011

Times Now finally understands the BJP’s game plan.....

Last night was a moment of vindication for me. The “I told you so” moment. Times Now finally understood the game that BJP was playing and brought out a story which essentially stated that the BJP’s points of view on the contentious issues of the Lokpal Bill were the exact same as the Congress’s views. Yet of course, the party was publicly taking the opposite view. Two of my posts – “Political momentum against Anna’s panel growing (June 14th)” and “What’s happening? Is media now changing sides (June 19th)?” – had already predicted all that Times Now was now talking about! Of course, Arnab’s new spin was that all politicians were bound to make the Lokpal Bill weak.....while my position is that not all politicians are bad and the present Congress dispensation headed by Sonia and Manmohan are actually fairly evenly balanced people. But then, Arnab is Arnab!

Times Now “exposed” some “off camera” reports they had from “senior” BJP leaders that the party thought that many of Anna’s points were unreasonable. As indeed they are. On the inclusion of the PM under the Lokpal, while the BJP has been saying that they support “Anna”, they have never clarified their position on this specific point. Do they support the PM’s inclusion? All that they would say is “We are anti corruption.....we support Anna’s and Ramdev’s movements”. When asked for specifics, they would say “Why should we give our views.....we were not included by the government in the drafting committee (as if this is ever done)” and later “we will give our views only in Parliament” and much later “Let the Congress give its view first....then we will react”. Why do they need to react? Why can’t they just state their views? Surely, they have been ceased of the matter for the last several months and they have had the chance to firm up their views?

But the point is that the BJP is like this only. They believe that politics is fought in TV studios and this is where they like to take high and lofty positions. The best BJP politicians are found in TV studios.....not on the ground. I wonder if Advani, Arun Jaitley, Ravishankar Prasad, Rudy ever go to their constituencies at all. And when it comes to putting your money where your mouth is, they change colors. On the one hand they had stated that in 2001, when they had introduced the Bill, they had (apparently) wanted to include the PM. So why can’t they just say so now? Why can’t they just say that yes the higher judiciary should be included in the Lokpal ambit? Why do they have to wait for the Congress to first say it? In reality, the Congress has already said it. Kapil Sibal has clarified the points of differences with Anna. The Congress believes the PM must not be included and the higher judiciary must not be included. Even the other differences are known. So does the BJP now has to “read the draft” before it can “start thinking of its views” or does it have enough to make a statement already?

The Left was willing to make its position clear. It says that “for the last twenty years”, they have maintained that the PM must be covered. That the higher judiciary shouldn’t be. It’s that simple. Just speak what you stand for. But if you are a party that believes in deceit and want to simply “ride” on a wave of angst against politicians (which you misread as being a wave against Congress), then you are bound to try and take advantage. Why give your views if you can avoid giving them? And if you have a friendly anchor in Arnab, then you won’t even be pushed too much. It’s the same with the Indo-US nuclear deal. They supported the deal privately, but they voted against it in Parliament only for political reasons. They are in favor of the GST, but they are opposing it now only because of political reasons. Politics is supreme. Country comes last. That’s BJP for you.

The other interesting thing about the BJP is that when the going gets tough, the big leaders vanish! So there was no Ravishankar Prasad, no Nirmala Sitaraman, no Arun Jaitley and no Sushma Swaraj to defend the party last night. All that was left to a lightweight Siddharth Nath Singh. Nice!

So if the political parties are uniting against the Anna recommendations, does it mean that “all politicians are bad people” or that “they are bound to protect themselves”? I think that’s a very cynical view. If we have convinced ourselves that that is true, then nothing will change our perspective. Yes, there are horrible politicians in all parties.....but there are many good people who work selflessly for the country. I am told that more than 70% of MPs have almost no wealth. They genuinely live with the masses. (The cynics will say that their wealth is benami!). So I am not willing to tarnish all politicians with black paint. Sitting outside, what right do we have to criticize those who sit inside? If we believe we are better than them, why can’t we just stand for elections....go through the rough and tumble.....understand how much funding is required and how legally its not that we know for sure what politicians go through? Instead, we prefer to criticize. I for one don’t support many of Anna’s points.....and on some of those my views are similar to those of the politicians.....but I am not worried that I will be painted as a Congress stooge or a BJP stooge. I am comfortable with my intellect and I can make my views without help from anyone.

One has to remember that Anna’s views are extremely populist views. Anyone who stated those views would get support. On the face of it, why not include the judiciary and the PM? It seems like an obvious answer. But an intelligent person will be able to see what the ignorant masses cannot. For this person, it’s an uphill battle. How does he/she convince an entire battalion of people who understand only populism? Do they succumb? Or do they stand tall? Harish Salve chose to stand tall....and that’s one reason you don’t see him on Times Now much these days. BJP chose to succumb and decided to play along till they could....

Why did Arnab – an extremely intelligent anchor I might add – take so long to realize the real truth? I think it’s because deep down Arnab is an anti-Congress person. He believes (like many) that the Congress is responsible for all the graft that’s going around. I am not sure he is pro-BJP, but his anti-Congressim takes him to the BJP. It’s partly also because being pro-government hardly gets TRPs for your channel. Look at’s pro-Congress and its languishing in TRPs. Imagine a soap on Star Plus which had happiness oozing through and one would watch it. There has to be a vamp somewhere! It’s the same with news channels these days.

The real truth is a mix of many things. Firstly, many of Anna’s recommendations are pure balderdash. They should be scrapped. Secondly, the BJP is a spineless party and does not have the guts to come out into the open with its views. It wants to play politics and appear to be on the side of Anna....while in reality, they don’t like his views. Thirdly, the BJP is secretly hoping that the Bill will be defeated in Parliament so that the government falls and they can get a chance earlier than in 2014. I don’t have a clear “real truth” answer to the last two questions: Is Anna a BJP stooge? I still think he is. Because he has never ever criticized the BJP in public....while he is quite liberal with criticizing the Congress. Is Arnab pro-BJP. Well, he claims he isn’t. He knows very well that in public life, it’s your behavior that talks louder than your words. I for one will wait and watch!