Saturday, September 29, 2012

The demise of the Anna movement….

The Anna movement has died. Instead of achieving something tangible for the nation, the movement has died an embarrassing death, mired as it was in an intrigue of personal political ambitions, prime time TV fame, and a penchant for thuggery. I cant say I am happy with this end, but I think this end was perhaps better than what the movement could have ended up with – a dismantling of all that democratic India stands for.

From the moment the movement began, there were seriously doubts about its political affiliation. Rather than curb those doubts, considering how important it is for any such movement to be so, Team Anna went about the issue in a cavaliar manner. Focusing on attacking solely the Congress, Team Anna’s pathetic reasoning for doing so made matters worse. For if one believed them, the reason was that it was the Congress that ruled at the Center. Observers pointed out that most corruption happens at local, state levels, and that the team should equally focus on that aspect, but Team Anna didn’t want to understand. Even a political novice understood that the Congress was only heading a coalition government and that other parties had a role to play as well, but Team Anna did not want to understand this. Given the general level of intelligence in the team (not that Magsaysay awards are any evidence of that), one was led to believe that Team Anna knew everything and still did what it did.

The last straw – for the common man, not the Congress – was the campaigning in Hisar. It was clear by then that the man from Hisar – Arvind Kejriwal – had a different agenda for himself. The man from Ralegan Siddhi was merely a tool to pitchfork himself right to the top. If there was one other last straw moment, it would have to be Kiran Bedi’s “nautanki” on the stage at the Ramlila grounds. Her mockery of the entire political class – with no inclination to explaining her own “hand in the till” accusations – forced people to wonder if they were any different really.

There were many other things of course. Anna’s association with the very RSSesque Ramdev and his aversion to criticizing the BJP (the only lame excuse being that it was Justice Santosh Hegde – a Team Anna member – who had exposed the Karnataka mining scam) firmly established the movement’s political ambitions.

It now appears – and this is surprising – that Anna was unhappy from the beginning with Kejriwal’s political posturing. That he never wanted to associate with politics. But there is a problem with this approach also. For most have said that it is easy to criticize something from the outside, but the real test would be if someone could clean up the mess from the inside. Anna’s movement grew on the back of a huge public disenchantment with corruption, but it was fading because the movement appeared to lack any serious commitment to finding a solution. In fact, finding a solution was never the plan. The Jan Lokpal Bill was in fact the Jan Jokepal Bill; but the team attempted to give this description to the Government’s Lokpal Bill. No one was convinced with the provisions of the JLB, and yet Team Anna was unwilling to budge. Silly handling the issue in the early days gave Team Anna a huge lift upwards, and the government a quick burial. But as the truth emerged, people were fed up with the repeated acts of drama – fasts included – being enacted in the public domain. Enough was enough. The movement was damned.

Now, the two camps – Kejriwal’s and Anna’s – cannot badmouth each other enough. Kejriwal’s deceit is apparent again – claiming Anna had always supported his political plans and that he will come around eventually – though Anna clearly denies all this. Anna’s own credibility is suspect considering he was the fount of the entire movement which was orchestrated by Kejriwal. His own statements had always been raucous and destructive and similar sounding to Kejriwal’s. How could he now claim to be the innocent saint?

The mistake Anna made was that he surrounded himself with politically motivated bunch of narcissistic people. Those who valued TV prime time more than the success of the movement itself. But Anna had himself to blame also. He failed to recognize when the movement should have ended. He failed to be pragmatic; he should have taken the Lokpal Bill that the government passed in the Lok Sabha and then worked towards its improvement. But no, he wanted nothing but his own bill. In a democratic set-up, this was unfair and too much to expect. What else could the outcome have been. The wait for the Lokpal will now be much longer – though I for one have not been in favor of yet another law on curbing corruption; especially one that would have ended up creating another corrupt bureaucratic body.

The real truth is that Anna himself is responsible for the way his movement has got derailed. He is now trying to make amends. He has declared he wont fast again. Thank god for that. He will still engage with the movement. But the time has passed. The country has moved on. The golden moment has been lost for ever…..

Thursday, September 27, 2012

SC order wont save the telecom industry….

The order of the Constitution bench of the SC pretty much overturned the order of its own 2-judge bench which had canceled the 122 2G licenses issued earlier and ordered that auctions were the only way to allocate natural resources. It was always obvious that the judiciary had overreached and it could not dictate policy to the Executive. The order is a snub to the 2-judge bench. While it brings sanity to the resource allocation process itself, it does nothing to prevent the ongoing destruction of the 2G industry.

The one to blame the most is the government. It chose not to appeal against the order of the 2-judge bench for its own material considerations. Maybe the smell of the money got to the government’s nostrils and it found milking 2G to be the best way to fix its fiscal deficit problem. But if the government had opposed the cancelation of the 122 licenses, the SC’s Constitution bench would have found it very difficult to exclude spectrum from the ambit of its order. Today, it has said that only auctions should be pursued for spectrum allocation. This is a mistake. How can it order auctions for spectrum? That’s clearly in the government’s domain. It could have canceled the licenses that broke the policy; where there was foul play. But not all. But since the government didn’t challenge it, it managed to insert that bit in – perhaps to protect the dignity of the 2-judge bench. History will hold the government responsible for this.

The whole 2G “scam” (I never called it that) came into existence because of the so called “success” of the 3G auctions. Had 3G auctions failed to generate so much cash for the government, no one would have demanded that 2G spectrum also be given out that way. After the 3G auctions, the government became like a capitalistic blood-sucking warlord squeezing out every last drop from the private sector in the process. Whether the 3G policy has been a success or failure is clear from Kapil Sibal’s recent editorial in the TOI of 15th September: “Auction in 3G enriched the government by fetching over Rs 1 lakh crore, but since 2010, there is no evidence of the roll out of 3G services. Without the roll out, bank debt cannot be serviced. The telecom sector is now under heavy debt. It has not recovered since.

Sibal was right. 3G has been a dismal failure. The total number of 3G subscribers is less than 20 million. Tariffs are sky-high and it appears that India is missing the data revolution. As a desperate measure, telecom companies have slashed data rates, and while this has led to some growth in subscriber base, it is unlikely to help them recover their investments. Much of the pressure brought by 3G license fees is now being transferred to 2G subscribers.

Sibal was write in one more respect. In the same editorial, he wrote “Governments are not in the business of maximizing revenues. Instead of filling its own pocket, it is obliged, in a welfare state, to create an environment to fill the pockets of the ‘aam admi.’ Foregoing revenue in 2G helped tele-density and served a larger public purpose. Instead of the exchequer, the people were enriched.” The Supreme Court has ratified his views by stating clearly that “Maximization of revenue in the distribution of natural resources can't be the sole criteria in all situations and circumstances.” And further: “Each bit of natural resource expended must bring back a reciprocal consideration. The consideration may be in the nature of earning revenue or may be to "best subserve the common good". It is this “common good” that the cheap-spectrum 2G policy had served all along. That’s why India’s tariffs were the lowest in the world; that’s why teledensity grew from under 10% to more than 70% in the last eight years of the UPA government. People forget today – but in 2004 when the UPA took over, we had just 275 million mobile phones. Today we are nudging a billion. Nearly 75% of all mobile connections came because of the UPA continuing with the cheap-spectrum policy. Now all that is over.

But rather than focusing on the common good served by a cheap-spectrum policy, the government chose to fill its coffers. The signs of that are visible. The Reserve price for the forthcoming 2G auctions has been set at Rs 14000 crores for a pan-India license. And in a move that smacks of an extreme focus on “maximizing revenues”, the government has managed to get a higher revenue sharing formula in place as well by “lowering” the Reserve price from the earlier crazy number of Rs 18000 crores. The government’s gamble is that bidding will push up prices beyond Rs 18000 crores anyway (that is why it is releasing spectrum in small doses, creating artificial scarcity). It will end up with higher license fees and higher revenue share as well. Such motives of profiteering at the expense of the common good is despicable.

In anticipation, telecom companies have started “culling” low-ARPU customers, preferring to conserve costly spectrum. They have also raised tariffs by a whopping 25% in recent times. More tariff hikes are expected in the coming months. It is my estimate that teledensity will drop below 50% in the next few years. Is it “common good” when the government squeezes the private sector dry and makes them shrink services? Is it common good when 600 million people get deprived of this life-changing technology? Is it common good when the “successful” 3G auctions lead to a situation where usage of data in India remains at pathetic levels, and the country loses billions of dollars of growth opportunity as a result of that? Unfortunately, in the oneupmanship battle for popularity, the government has got sucked in. It’s been pushed by a reckless and irresponsible opposition, a politicized CAG and a recalcitrant SC bench into enacting a policy that is decidedly anti-common-good.

I would rather raise diesel prices and railway fares than increase 2G tariffs. The telecom industry’s low pricing represented the most efficient form of distribution of government goodies – far better than the subsidies program of the government, 85% of which is spent in the administration of the subsidy. In telecom, 100% of the benefits reached the end consumer. But does the government have the elbow room left to change its 2G policy? I doubt it. And that is why the telecom industry will falter. Investments will reduce. Job losses will happen. And a once proud sector of the economy will become another case of “failed policy”.

The real truth is that the government became greedy when it came to 2G spectrum. It decided to hoard it. It decided to overprice it. It decided on an ascending auction method – which leads to irrational price discovery – rather than the more rational e-tendering method. It became greedy. In the short run, the government may make large dollops of money. But in the long run, it has caused irreparable damage to the industry….

Wednesday, September 26, 2012

When will the BJP start proposing; rather than only opposing?

The BJP’s national executive meet currently on at Surajkand is going along predictable lines. A lot of leaders are meeting and a lot of leaders are making predictable “we oppose this; we oppose that” kind of statements. The only headline that emerged from the 1st day of that meeting was what appeared in the TOI “BJP to oppose FDI even if back in power”. Not one clear voice has emerged on what the BJP’s proposals are on various issues. We know all about what they oppose, but we don’t know anything about what they propose to do. All that we hear is anti-Congressism. The Congress is bad; the congress is corrupt; the congress is anti-people. Fine, we heard all that. Now can we please hear something about what the BJP is; rather than what the Congress is or isn’t?

But this is nothing new really. The BJP’s entire poll strategy has always been to criticize the Congress while staying coy about its own game plan. The current campaign running in Gujarat proves this point. While the Congress is harping on the good work its governments had done in the past when it was ruling the state; the BJP is going hammer and tongs on the Congress’s misdeeds. It’s not talking of one progressive thing its government has done in the last ten years. One would wonder if the party cannot find enough good things to talk about even in Gujarat – the state they believe to be the showcase for good governance and where they have achieved good economic growth under Modi. But then, criticizing others, rather than focusing on their own strengths, is ingrained into the BJP’s genes.

Take the opposition of the BJP has towards FDI in multi-brand retail as an example. There are enough stories about how the party was actually in favor of FDI in retail. There was apparently a cabinet note mooted in the NDA period; there was also mention of 26% FDI in its poll manifesto in 2004. But today, the BJP is not only opposing the FDI, it is also going so far as to threaten potential investors with a “we will cancel the policy if elected” statement. What we are not hearing is what the BJP’s views are of growing the retail sector. Do they have a game plan for building the supply links from the farm to the fork? Are they OK with Indian domestic retail giants expanding and grabbing a larger share of the retail market? Have they got an alternative plan to cutting out middle-men margins in the whole process? How also do they explain their CMs (Modi most prominently) going all out to woo FDI while at the same time opposing it where it suits them? Isn’t it similar to Mamata Banerjee opposing FDI whenever the Congress proposed it, but at the same time, proposing FDI in Railways on her own?

It’s the same story with the diesel price increase. We’ve heard the BJP’s opposition to the Congress decision. It’s anti poor, anti middle-class blah blah. But what we are not hearing is what the BJP would have done in a similar situation. Would they have cut taxes so as to reduce prices? If they did so, how would they compensate for the loss of tax collections? Would they have increased taxes elsewhere like they have done in Goa to recover losses on petrol price cuts? We still don’t know what the BJP’s view are on managing the fiscal deficit. We still don’t know their views on handling the trade deficit; on increasing exports; on reducing fuel imports; on managing gold imports; on anything.

It is because of not having any positive agenda of its own that the BJP is unable to grow its constituency. In states where the Congress and BJP are both weak (UP, TN), the BJP has no chances of making any inroads. Why should the people of these states vote for the BJP? They don’t even know the BJP views about anything. Likewise in states where the Congress is present but the BJP is not (AP, Kerala, Assam, Bengal, Orissa etc), they don’t have any hopes of opening their account for the same reason. Fed up they may be with the Congress, but that doesn’t help the BJP. For the people cannot turn to the BJP; they don’t even understand the BJP.

One would wonder why a party of such sharp shooters as Arun Jaitley and Sushma Swaraj would not be able to figure this simple truth out. But then, like I said earlier, it’s in the BJP’s genes to oppose, rather than to propose. That is why they lost power so quickly in 2004. All that they did in their six years was to show that the Congress rule was bad. That’s also why they were unable to show any smart GDP growth. The GDP growth achieved was higher in the period before the NDA rule, and after the NDA rule. In some ways, the BJP’s approach to politics is like Mamata’s is. She is a great opposition leader; for she can oppose anything. Maybe her style inspired Yashwant Sinha to say that “we are the opposition, so we will oppose”. This position doesn’t even require the party to propose something. The last time they proposed something (even though highly destructive as an idea) was to build the Ram temple at Ayodhya. Even this simple proposal got them the votes. They reached their highest Lok Sabha tally of 182 at that time. Since then however, the party has been in decline; not surprising considering that it has gone back to its days of opposing rather than proposing.

The big problem in always opposing is that the party invariably gets caught in its palaver. When it pointed a finger at the Congress for politically motivated coal block allocations, it got trapped itself since it had done the same. In Maharashtra, as NCP faces charges of corruption in the irrigation department, the India Against Corruption activist who brought this all out has pointed a finger at Gadkari himself. Not surprising then that Kejriwal and Anna are equal criticizers of the BJP now as they are of the Congress.

The real truth is that the BJP is in no position to ascend to power in 2014 if it continues with its “only oppose, don’t propose” approach. At its national executive meet, it would be better if the party worked at developing its own agenda, rather than criticizing some other party’s. It would serve itself much better if it did a little analysis of its last 20 years – since the Babri demolition in 1992 – and understood what has worked for it and what hasn’t worked since then.

Look who all are supporting FDI and reforms now……

Ten days after the “big bang” reforms announcement by the government, and ten days after big bang protests by the opposition, the real picture on who stands where is starting to become clear. The bad politics is separating from the good economics. The support for the government’s economic reforms agenda is growing, most of all for FDI in retail. Save and except for the whining of a sulking BJP, most others are coming around to accepting the truth about reforms.

Arun Shourie, senior BJP leader, and a gutsy ex-minister himself, was the first to come out openly and strongly in support of the government’s decisions to increase diesel prices and introduce FDI in several sectors including retail. By saying that the PM had taken tough decisions, he showed himself to be a statesman – abandoning petty politics for the national good.  

Then there is the Akali Dal – the party which initially wrote to the government expressing support for FDI in retail. Later under pressure, they joined the NDA in opposing the reforms. The Indian Express today reports that the party would be happy to allow FDI in retail in Punjab, provided the Center “addresses the fears of the stakeholders and provides a sense of security to them”. This is nothing but a face saver. The Badals realize the impact contract farming has had on the farmers and their preference for it. Having worked in Pepsi in the past, I fully understand how potato farmers in Punjab gained from the association with the company. The farmers of Punjab want FDI in retail – not because they like FDI per se – but because they want more facilities to be created.

And that is the crux of the FDI matter. It is not as if FDI in retail is the solution to all our problems. It is not as if we cannot create our own cold storage chains. It doesn’t matter whether Walmart is welcome in New York or not (Advani was misinformed as was made obvious by the statement of the Asia CEO of Walmart yesterday). What matters is that we need all the investment we can get. We need a trillion dollars for our infrastructure buildup and we should be keen to grab with both hands whatever is available wherever in the world. The days of “swadeshi” are over. The days of being global and being smart are here.

Not surprising then that the Punjab Farmer’s commission – a government advisory – is likely to meet Badal to ask him to allow FDI in retail. This could help small and marginal farmers move away from Paddy into other high-yielding cash crops likes fruits and vegetables. But this can only happen if the farmers are given marketing and pricing support, which FDI would help in. Not surprising also that Chengal Reddy, Secretary General of the Consortium of Indian Farmers Association (CIFA) has been crying hoarse in support of FDI in retail. Not surprising also that Rahul Gandhi had the gumption to support FDI in retail in front of a farmer’s gathering in UP back in Nov-Dec 2011 when the government had first announced the FDI decision.

There is also an informed view that Naveen Patnaik is not opposed to the reforms and specifically to FDI in retail. That’s why he didn’t support the bandh called by the Left and the BJP. Again, and very significantly, Raj Thackeray in Maharashtra has supported both the diesel price hike and the FDI in retail saying he understood the economic compulsions behind the moves. His only caveat: recruit more marathi manoos, a compromise the Walmarts will be happy to make! (Even today, most shop floor workers in modern format retail come from the state itself).

Likewise, in spite of the rhetoric of Mulayam Singh Yadav, son Akhilesh appears to be in favor of allowing FDI in retail into his state. I have a feeling that he may strike some sort of a compromise on the issue – restricting the Walmarts of the world to the NCR but leaving the rest of the state out of reach for the first few years. Akhilesh knows that NOIDA and Ghaziabad and even cities farther away like Agra and Meerut are dependent on Delhi for their economy. Having a Walmart there to attract the crowds from Delhi would make good economic sense. After all, if UP can have a Formula 1 racing track, why not a Walmart?!

Then of course the Chief Justice of India has given a backhand support for reforms, recognizing that it is only fast economic growth that can bring out the best in a democracy.

So support for reforms and support in particular for FDI in retail is becoming widespread. The only serious opposition is from the Left – which is a party with 18th century ideology. So its completely understandable. The BJP’s opposition is mere opportunism just as so much of its politics is. There is a strong feeling that Narendra Modi will be the first one to welcome Walmart into Gujarat. With the economic progress that one sees in Gujarat (no thanks to Modi!) and with the wide roads in the state (thx to the NHAI – a Central government undertaking!), and the generally progressive mindset of the Gujaratis, there will be pressure on Modi to allow FDI in retail. Let the Gujarat elections get over; and Modi will be scurrying to be the first to inaugurate a global retail biggie in Ahmedabad! I wonder where Advani will hide for cover at that time!

The real truth is that once we remove the opportunistic opposition to reforms, we find a very encouraging picture. The people of India are pro-reforms; some of the major parties are not. Ultimately, it is the will of the people that counts in a democracy. The BJP lost the 2009 elections because it made the mistake of opposing the Indo-US nuclear deal. The BJP had now better be careful in opposing the reforms….

Monday, September 24, 2012

Telecom policy change resulting in rate increases, customer attrition….

For those who thought telecom prices would not increase and tele-density not decrease consequent to the change in 2G policy, some statistics should prove to be an eye opener. In just two months – July and August – of this year, there has been a reduction of some 30 million subscribers. Some telecom operators like Reliance have also increased rates by as much as 25%. This post is only to highlight that every policy change has an impact on consumer lives. So far, almost all attention has been focused on the loss caused to the state exchequer by the old “cheap spectrum” policy, and alleged acts of corruption. Very little attention has been paid to the positive impact of the that policy on lower-end subscribers.

When the 2G “scam” (I never called it that) emerged and when it was labored in the public domain ad nauseum, everyone was focused on just the “loss” incurred by the Government of India. The CAG first raked this issue up preferring to call the loss “presumptive” – in other words this was revenue foregone by the government for preferring a policy of “no-auctions”. Everyone – most of all the BJP – jumped on the report and somehow made the creative leap from “presumptive loss” to “corruption of the Congress”. Ordinary folks today think that the Congress pocketed Rs. 1.75 lac crores. The BJP was successful in its political goal. But in the process, the truth got buried. The real truth is only now starting to emerge. And poor subscribers are having to pay the price.

No one pocketed that Rs 1.75 lac crores. That was indeed a presumptive loss. The government of India chose to incur that loss, just as much as it chooses to incur lacs of crores of loss on fuel subsidy or food subsidy every year. But such subtleties were beyond the CAG, and certainly the BJP. In a politically surcharged environment, no one was willing to look at the consumer side of the policy.

I have always argued that the cheap spectrum policy was a good policy. The government was right in foregoing auction revenues. It is this cheap spectrum that led to Indian telecom tariffs becoming the cheapest in the world. It is these cheap tariffs that led to the revolution in telecom in the country. Today, teledensity is upwards of 70%.....just in case anyone forgot, the teledensity was not even one tenth of this just ten years back. 2G is a “revolution” because it empowered the poor. Suddenly, all types of service providers (electrician, plumber….) who could not even afford to rent a cubbyhole were in business. Suddenly, all they needed was a phone number. Power shifted from those who had big shops to those who had big plans. This was the “inclusive growth” that everyone likes to talk about. For this inclusive growth, the GOI willingly sacrificed its revenues. How could this be called a scam? Why did this policy need to change? But who was there to understand this side of the story? Certainly not the intellectually starved BJP.

Well, the impact of the policy reversal is already starting to be felt – in anticipation of the auctions and thousands of crores being required to be paid to the government. More price increases are in the offing. More consumer attrition is in the offing. The reasoning is simple. If spectrum costs so much, then telcos will prefer to “cull” borderline subscribers – those who are economically unviable. After all, why should telcos take the burden of “inclusive growth”. Telcos are bothered only about protecting their investments. They care little about teledensity. By culling out such subscribers, telcos will use less spectrum and will have to invest less. The government can then put all the saved spectrum in a locker. Is this what the SC order of 1995 – which pronounced that airwaves were public property and should be used for consumer good – mean? Shameful to say the least.

More shameful that the change in policy is the idiocy of Indian politics. And the political nature of the CAG. By criticizing a policy that was good for the people, the CAG has forced the government to adopt a policy that harms the poor. Even the SC is complicit in this. Not understanding the impact of its “cancel all 2G licenses” order, the SC has contributed to the adoption of this anti-people policy. Further, by ordering that all natural resources should be auctioned, the SC has blundered massively. For if this were done, all resources would be sold only to richest capitalists; small businessmen who cannot compete monetarily, but who may be better equipped otherwise, will be given the short shrift. We complain about crony capitalism? Well….the SC and the CAG and the BJP should now be held directly responsible for crony capitalism.

The other shameful thing is the way in which media has failed to look at all the facts before putting out “breaking news”. No one in media wanted to look at the consumer’s interests. No one wanted to understand Kapil Sibal’s statement that there was a zero loss. Of if there was a loss, it was an intentional one. Everyone was mesmerized by the size of the “scam”. Everyone was happy putting up panel discussions on corruption. Till date, the only case of alleged corruption is the Rs 200 crores of loan given by DB Realty to Sun TV (a DMK associate). And for this, the country has had to change its policy. This is where media failed; becoming a victim of the political manipulations of the BJP.

The real truth is that auctions is a matter of choice. Auctioning everything would make India a totally capitalistic country. We object to FDI in retail on the one hand; yet on the other hand, we push for India to become totally capitalistic. If that were to happen, we should be ready to pay higher prices for everything. Unless of course, we want the government to pay for the poor by providing subsidies, again drilling a hole it is finances. In which case, what did we achieve through the auctions at all???

Mamata’s 19 powerful votes become 19 meek ones….

Mamata Banerjee will soon realize how drastically she has been cut to size. Her 19 MPs who mattered like they were 190 in the UPA will suddenly come crashing down to their numerical lowliness. In a 542 member Parliament, what is 19 after all? And as 19 becomes powerless, 23 and 21 will be the new power numbers to go by as Mulayam and Mayawati take over from where Mamata drops off.

They say timing is everything in politics. But what is not that well known is how important being on the “right” side is. Being on the right side gives enormous leverage; being on the wrong side can make it totally irrelevant. Mamata has switched from the right to the wrong side and the this truism will soon dawn on her.

From sitting on the high tables in the cabinet, her party is now reduced to being just another opposition party in the Parliament. In fact, its size suddenly looks puny. What must irk her even more is that her party is smaller than even her main foes, the Left parties, who commandeer 22-23 seats. And she’s even smaller than the JD (U) who has 20. Her 19 MPs don’t count for much now.

Remember also that her 19 MPs are now truly isolated and not a part of an alternate grouping. Not only are they opposed to the ruling UPA, they are as always, ideologically on the opposite side of the Left. Mamata is not welcome in the 3rd front, where the Left is the prima donna. Mamata is also on the opposite side of the BJP led NDA. Mamata doesn’t want to join the NDA, being seen as being on the same side as the Hindu brigade. She would lose the support of her Bengali muslim population. What does she do now? Sit in isolation, or maybe try and form a 4th front? But who else will join her in the 4th front? Jayalalitha and Naveen Patnaik? That’s completely impractical.

So Mamata’s trip has been well and truly taken. Everyone has conspired to make her irrelevant. The ones who have truly misled her are the BJP. When she was part of the UPA, Mamata was almost like a  representative of the BJP in the coalition. At that time, she was actively encouraged by the BJP to do their deeds. She provided the BJP with an “escape route” on many important issues. On including the Lok Ayuktas as part of the Lokpal Bill, the BJP could escape by pointing towards Mamata. On NCTC, the BJP could point towards Mamata. On FDI, they could point towards Mamata. Because, everytime the Congress proposed, Mamata would oppose, giving the BJP a convenient upper hand, pushing the Congress into policy paralysis – something that suited the BJP very well. The gullible Mamata failed to realize how the BJP was abusing her. Now she must realize how stupid she has been all along. Now that she has crossed sides and is out of the UPA, the BJP has no use of her. Mamata’s shelf life is over. She’s just another rag tag political outfit. Maybe one that can hiss……but she certainly cant bite.

The state of Bengal is likely to suffer the most as Mamata will soon realize how badly dependent she was on the Center. If she had any hopes of reviving the fortunes of Bengal, and making her government sustainable, she’s squandered that totally. Today’s papers talk about the loss to Bengal as the Railways moves away from the TMC. With CP Joshi being put in charge, there is no reason for this highly preferential treatment that Bengal got under Mamata. Mamata never realized it but she was already been solidly mollycoddled by the Congress because her 19 MPs were on the right side. Sometimes one doesn’t realize the good things in life until they are taken away. Mamata is now at that stage.

It’s a competitive market for the central government’s attention and largesse. With Bengal out of favor, there are other states that may appear politically more opportune for the Congress to tap. Bihar certainly looks attractive with the highly shrewed and pragmatic CM Nitish Kumar already making the first overtures. Nitish is shrewd because he realizes the slippery slope he is on in Bihar. People inside Bihar are not half as impressed with him as people outside the state are. Nitish is still on a strong wicket because of the TINA factor; but in politics, an upstart can suddenly emerge and upset an incumbent’s applecart. Nitish realizes that. He needs to secure himself politically. Ditching a communal BJP in a muslim-heavy state and siding with the “secular” Congress must surely give him a better story. Nitish is also pragmatic because he realizes that being macho the way Mamata was doesn’t help. It’s the people of the state who vote for the party; keeping them happy is more important that taking political potshots at the central government.

Then of course there are the Mulayams and Mayawatis whose power will suddenly increase. In any caase, they never cared too much about economic ideologies. All they care for are their narrow slivers of the electorate they call their constituency. By virtue of being nearly equally sized, both cut each other down to size. Both can easily be manipulated by the Congress. Net net, Mamata’s misadventure has ensured that the so called minority government of the Congress will survive a full term.

Just as Mamata’s 19 MPs lose their weight, the Congress’s 42 MLA in Bengal will gain some. As part of Mamata’s government, they hardly had any voice since Mamata had enough numbers on her own. But now, having crossed sides over to the opposition benches, the Congress has become the biggest opposition party. This will give it a chance to revive itself. Being the only “right of center” party in the state, it will get a chance to offer a genuine alternative to the people of Bengal for the first time. The Bengali muslims could swing to the Congress. Also, it’s my belief that after nearly four decades of Left ideologies, the aam aadmi of Bengal is looking for some more progressive thinking. A compelling argument promising more industries, more jobs, and less need to migrate out from the state could well swing the voters towards the Congress. Whatever happens, one thing is clear. The state Congress has finally found a place of its own; not having to stay limited to the shadows of a bigger daddy.

The real truth is that numbers have a strange quality about them. Numbers are just plain boring numbers by themselves. Put the numbers on the right side of the equation and they become powerful. Put them on the wrong side and they become irrelevant. Suddenly 19 will be a number that will feel very very small. DMK’s 18 will be much more powerful; and BSP and SP’s 21 and 23 massive!

Sunday, September 23, 2012

First lying….now threatening….is this the BJP’s pro-business face?

For some time now, the BJP has been spewing lies; and venom. Lies on Coalgate – failing to introduce auctions when it was in power but blaming the Congress when it did so. Lies on the diesel and LPG price hikes – calling it anti-people but refusing to instruct its state governments to pass on at least part of the “windfall” tax gains to the people. Lies also on what FDI in retail means to the aam aadmi and to the farmer – choosing instead to protect the small community of traders who in any case will adjust to the new rules of the game.

But today, the party moved ahead from lies to plain threatening. Threatening foreign investors who might consider entering the retail sector, now that they have been formally invited by the government. Today’s Indian Express story “BJP FDI warning to investors: what if government changes” is shocking and the BJP’s conduct most reprehensible to say the least.

This threat bears the mark of a loser who cannot accept that he has been outdone. For only losers issue threats. Most of these threats are empty threats; much like the barking of dogs that is seldom followed by an actual bite. The BJP’s angst is understandable. The BJP has lost face several times in the recent past. First on Coalgate where the BJP was shamed when Nitin Gadkari’s close friend Ajay Sancheti was shown to have “won” a bid in which he was the sole bidder. Then when it came out that BJP CMs had actively canvassed against coal block auctions and were responsible for at least some of the delay in the switch over to them. Then again on the Presidential election, the BJP lost face, putting up a candidate no one took seriously. And now, in the reforms issue, the party has lost its shirt. The angst is understandable. It’s brilliantly crafted strategy of tarnishing the government’s image – incorporating activists who were anything but civil, yoga teachers who were more political than anything else and even constitutional bodies who sometimes forgot their role in the scheme of things – was all coming unstuck.

Yashwant Sinha’s not-so-veiled threat to foreign investors considering investing in India’s retail sector is intended to create panic amongst them. By reminding them that elections are due soon in several states presently ruled by the Congress, Sinha is trying to put the fear of god in their minds. Sinha’s “what if” threat – raising the spectre of the BJP coming to power in these states and rolling back the permissions that may have been given to these foreign retailers – is intended to stop the investors in their tracks. The threat is intended to thwart the government’s policy initiative. The party realizes it has failed to convince the people, as the poor response to the recent bandh showed; it knows it may again fail in Parliament if and when voting takes place on the subject. But the one thing it is confident of not failing in is in threatening the investors and shooing them away. If the investors get jittery, why will they come? The policy will become a non-starter. The BJP would have succeeded. All along, we were made to think that the BJP was pro-investor. Is this what pro-investor means? How much difference is there today between the BJP and the Left?

Mr. Sinha needn’t have issued the threat. For the foreign investor already knows that policies get reversed when governments change in a certain type of countries. Such countries are called banana republics.  By issuing the threat, the BJP has taken India a step closer to becoming a banana republic. Why should investors enter India when they are not welcome; and when the rest of the world is welcoming them with open arms. Yes, the Indian market is big and attractive, and yes investors have the appetite for risk, but if the biggest opposition party issues a threat of this type, even the most committed of them will get dissuaded. Investors like putting their money in countries where the policies are stable. Where there is wide political consensus on key policies. Even without Mr. Sinha’s threat, investors were going to think many times before rushing in. Now, they might well decide to put their decision away. This will make the BJP’s “aam bania” (as Swaminathan Iyer calls traders so brilliantly) is safe for at least ten years. The aam aadmi is damned.

The party that disallows Parliament from functioning can hardly be expected to support the democratic way of working. To understand how in a democracy, the government of the day is expected to respect decisions taken by its predecessor. To realize that if this wasn’t the case, then the country would keep moving forward and backwards in a yo-yo fashion that would scare away investors. Just what would have happened if the Congress had reversed the Electricity (Amendment) Act that the BJP enacted in 2003; it would have put private power sector investors in a jam. They would have lost lacs of crores of rupees. Would the BJP have liked that? Would investors have ever given the Congress another chance if they had done that? Would they ever invest in India again? Would that be a nationalistic thing for any party to do?

The people of the country will respond to Sinha. Investors – and all of corporate India – are already urging the BJP to take a pro-business stance; to shed its obstructionist habit. If it doesn’t, Corporates may soon start preferring Mayawati and Mulayam to the BJP… least the two don’t threaten the corporate sector. Sinha may well want to consider what impact this will have on the party.

The real truth is that the BJP is behaving like a poor loser. Issuing threats to investors rather than welcoming them. A progressive party – a party with a difference as the BJP likes to call itself – should introspect about this. Because the party’s supporters surely are introspecting – is this the party they want to continue backing….?

Friday, September 21, 2012

Money doesn’t grow on trees! PM teaches people and the opposition some economics….

Only someone so knowledgeable in economics can talk to the nation in this manner. Only someone so intellectually honest can tell it so straight. Only someone so well regarded can teach – almost berate – the nation with his Money doesn’t grow on trees statement. The PM showed in his televised speech last night that not only is he a good economist, he’s also a great Professor who’s willing to teach his students (and the opposition) a good lesson!

The PM was so right. Each one of us knows it in our own personal lives. Money indeed doesn’t grow on trees. How many of us resort to deficit financing in our personal lives – spending more than we earn and then borrowing to cover the gap? None. And yet we expect the government to do precisely that. Now I know that there is a very rational reason for deficit budgets in economics, but there is a limit to which those deficits can be allowed. Stretching the elastic band of the deficit beyond that limit would make it snap. Most people understand that instinctively. But most people don’t know how the country has reached the precipice of fiscal imprudence. Most people don’t know how deficits cause inflation. The diesel price hike may cause a short term spike in inflation, but the deficit reduction will alleviate inflationary pressures in the medium term. The cacophony of politicians typically (and intentionally) tends to obfuscate the facts; hide the realities. Most people now know that diesel has gone up by Rs 5, but hardly anyone would know that the government will still spend Rs. 1.6 lac crores out of its pockets as subsidy.

The truth is intentionally obfuscated like I said. Sitaram Yechury appeared to be asking an innocent sounding question last night, except that it was anything but innocent. If there are so many losses on fuel, he asked, then how come the Oil Marketing Companies (IOC, BPCL etc) are making so much profits? The veteral politician – an MA in Economics – does not realize that the OMCs “make profits” because they get the subsidy from the government? That’s the Rs 2 lac crores that the government gives to the OMCs, so that the OMCs can report clean results. The government takes the hit in its own budget. Does Sitaram Yechury not realize this simple fact? Of course he does, but he is in the business of obfuscating the truth.

Or take the BJP which made so much noise about the diesel hike. The BJP always speaks with a forked tongue. So it also seeks to take credit for the fact that it had decontrolled diesel. Now how many people understand what decontrol means? Very few. And that is precisely what the BJP counts on in obfuscating the truth. In reality, if the decontrol had been continued by the Congress in 2004, the price of diesel today would have been another Rs 12 higher. But the BJP won’t say this. Incidentally, I think the BJP was right in decontrolling diesel. The 12 rupees higher pricing would have been spread over a much longer period of time and there would have been several ups and downs during those years. People would have got used to it by now. So the BJP was right; what it should rightfully be saying is that this method of increasing diesel prices (in jerks) is wrong; it should not be opposing the price increase itself. See the subtle difference? So easy to obfuscate!

No one of course brings out the other truth that the central government is out of pocket to the extent of Rs 50 thousand crores on account of fuels subsidy (it gave Rs 1.4 lac crores to OMCs last year. Got Rs 90 thousand crores as taxes. Net loss Rs 50 thousand crores), while at the same time, the states earn Rs 1.25 lac crores on account of the taxes they levy without having any matching liabilities. This is their “profit” as it were. This time around, the taxes pocketed a cool Rs 8000 crores more because of the Rs 5 hike. How convenient is this? Everytime fuel prices rise, the BJP gets a stick to wield the Congress with; and at the same time, the coffers of its state governments become even fuller. How nice! But such lies have to stop sometime right? A national party tasked with providing a responsible opposition cannot cheat in this grotesque way, right?

The truths about FDI in retail are similarly obfuscated. In this regard, Dr. Amit Mitra – a man I regarded a lot in his earlier avatar as a capitalist – sounded almost like a joker when he was questioned by Arnab Goswami about why he had changed his tune after becoming a politician. Amit Mitra’s answer was funny and silly. “Even you changed your tune from the time you were in NDTV”! What kind of an answer is that? Then he rattled off some poverty numbers in his constituency. So is Dr. Mitra saying that when he was FICCI Secretary General, he did not know that India was a poor country? Amit Mitra’s only lame duck excuse was that he has now become a politician. So he must change his tune?

So much misinformation is being spread about FDI in multi-brand retail too. People may not realize the kind of strides our domestic large format stores have made in the last ten years. The Aditya Birla group has 540 stores under the “More” brand and it plans to more than double that number by 2016. There are more than 200 Big Bazaars, more than 200 Spencers and more than a thousand other brands in the domestic organized market. In spite of such rapid growth, has anyone seen any kirana store shut down? Not even in the vicinity of these large formats. How many Walmarts and Carrefours and Tescos will come up? I can bet….not even 50 in the first ten years. What are we talking about here? The BJP intentionally spreads this misinformation to protect its money-extorting and anti-people trader community.

The BJP’s Yashwant Sinha again lies in today’s Economic Times. In “Why the Media and Pundits are wrong on reforms”, he complains that “our own impressive record of economic reforms during 1998-2004 did not help us electorally”. The stats reveal otherwise. The BJP delivered just 5.8% average GDP growth in these six years, down from the 6.7% in the Congress/UF period prior to 1998. The BJP had no impressive record of reforms – in fact, it had a very poor record. That’s why it lost in 2004. Yet, its easy for Yashwant Sinha to obfuscate the truth.

Only the PM with his enormous credibility could have done what he did yesterday. He explained the truth; he sought support from the people; he punched at the opposition; and he promised to do whatever it would take to get the country going. The mood in the country is with the PM. People understand that a Rs 5 increase in diesel is no big deal. They want a government that reassures them that it knows what it is doing. The opposition better realize this mood in the country. This mood is returning after 2 years of gloom. This mood will devour those who try to put a lid on it. Indians are happy people; and they are cheering the PM today.

The real truth is that the PM was honest and knowledgeable in his TV address. Honesty is the PM’s hallmark. Knowledge his forte. He’s been hemmed in by Mamata now and the Left in UPA-1. Give the PM 5 years of unfettered rule; and see how India changes. I remember in the 1980s (yes, before Modi!), how a single IAS officer and Ahmedabad’s municipal commissioner Keshav Verma changed the face of the city by his strong administration. Another municipal commissioner, SR Rao of Surat, made the city the 2nd cleanest city in India after the plague. All this in 5-10 years. But they had the backing of their political bosses. Let’s give the PM the backing and see what he does….

Thursday, September 20, 2012

Bandh and Mamata behind…..its time to zip, zap, zoom!

Yesterday’s bandh was an utter failure in most parts of the country. Except those where the ruling dispensation was itself the one going on the bandh. How quaint – and similar to Mamata’s own habit of protesting against her own people – that a state government which controls the police mechanism (which maintains peace ane prevents such bandhs) is also the one going on a strike! But now that all that is behind, the UPA must quickly move ahead….

But before going to the path ahead, a little analysis of the bandh helps understand how divided the opposition is and how political the entire protest against the UPA was.

Whatever impact the bandh had was limited to states like Bihar and UP – and that too in a very small way – where the ruling parties – the BJP-JD(U) and SP – were supporting the bandh. Ravi Shankar’s “arrest” in Patna was a charade meant only for the TV cameras. Being arrested by one’s own cops and then being released with samosas and garlands on offer can hardly be called an arrest!

Very interesting the way the bandh broke up different political entities. In TN, the NDA-sympathizing AIADMK was against the bandh and the UPA-ally DMK was the one on strike! The DMK was apparently against the cabinet decisions on FDI in multi-brand retail, diesel price hike and capping of subsidized LPG cylinders. If they had wanted to protest, shouldn’t they have just done it in the cabinet itself? Or should they not pull out support to the UPA and demand early elections? No….they want to protest on the streets, while they still enjoy the powers of being in the government!

Then there was Maharashtra where both the major opposition parties – the Shiv Sena and the MNS opposed the bandh – though for different reasons. The Shiv Sena hid behind the fig leaf of Ganesh celebrations. The MNS actually made a bold statement that they supported the central government’s decisions. The BJP was left alone to mark its token presence. Without the Shiv Sena, the BJP is indeed just that – a token presence! Life in Mumbai remained completely unaffected.

In Karnataka, where the ruling BJP has been reduced to a sham, there was no impact of the bandh at all.

But the most interesting of all was West Bengal. It was Mamata’s tantrums that started this entire political fraud in the first place. But she was the one opposing the bandh in WB! Now this must have felt very strange to Mamata. Usually she is the one rebelling in the streets – usually against her own government. This time around, in spite of being the one who pulled the rug from under the central government’s feet, she was the one opposing the bandh! We have always known that Mamata couldn’t see beyond her nose. That Mamata’s decisions are seldom made by herself. In this case also, Mamata’s decision to oppose was taken by the Left parties. The moment they called for the bandh, Mamata had to oppose! Poor Mamata – imagine being on the same side of the government while opposing it at the same time!

Elsewhere, and very interestingly, the Odisha government – though opposed to the Congress – decided not to support the bandh. There have been some stories in the papers about how Naveen Patnaik actually supports the center’s decision taken last Friday. If that is so, why doesn’t he just support them openly? If this is not putting politics before country, what is?

Of course in Congress ruled states, there was no impact at all. It was business as usual in Delhi, AP, Haryana and Rajasthan. Interestingly, in the industrial state of Gujarat, in spite of Modi, there was no impact of the bandh at all. Like I have always said, Gujaratis want dhandha, not bandhs!

Sensing the lack of enthusiasm in the bandh, the Congress did the right thing. It went ahead and notified the rules for FDI in aviation and multi-brand retail. In doing this a day before Mamata’s ministers are to resign, the government showed a rare nerve. Not only has it decided not to roll back its decisions, it has also decided to rub salt into her wounds. The Congress revealed that the TMC’s manifesto in 2009 had actually supported FDI in retail. Mamata was clearly fooling her people. Now, the Bengal financial package is off. So Mamata will have to stew in her own juices. Mamata’s decline has started.

The PM has also said that he will not close the gates for FDI in pharmaceuticals. He’s also pushing his ministers to move faster in other areas like land reforms. Every single person I have spoken to, and every single media outlet including surprisingly Scam TV, are behind the government on its reforms program. Hopefully, the Congress will not blink at this important stage.

The entire FDI issue and the fiscal consolidation initiatives have given the Congress a great political space for itself. It was always the original champion of reforms; it has now asserted itself confidently in this space. Everyone else – from the BJP to the Left and the TMC – has called the Congress pro-US – a euphemism for being pro-reform. By occupying this place, the Congress has managed to shove the BJP leftwards – into the same crowded space occupied by so many others.

The real truth is that the time for reforms is here. Like I mentioned in my post yesterday, Mayawati “officially” has no ideologies. If the Congress can “take care of her”, it can have its way on reforms. Mulayam too says one thing and does another. The government clearly has the tailwinds for reforms…..will it now zip, zap and zoom?!

Wednesday, September 19, 2012

Why the BJP so desperately wants to kill the Congress revival….

Just look at the scenario from the BJP’s perspective. It has fought a long and hard battle to put the UPA – more specifically the Congress – in the dock. It has relied on all means, fair and foul, to call the Congress corrupt. When it failed to put the blame for 2G on the Congress, it worked very hard to try and make Coal stick to it. After demanding the resignation of the PM some 30 times in the last three years, it made a demand yet again on coal. In this journey, it has had to struggle – fending off competition from Anna and Ramdev, allies initially who suddenly developed ideas of their own. But after all this effort, the BJP was beginning to succeed. The India Today and NDTV polls showed that the NDA would go ahead of the UPA if polls were held now. Things were starting to look good. Things were going as per plan. Anti-BJP (anti-communal) sentiments for once looked weaker than anti-Congress sentiments. Everything was hunky dory.

And then….all of a sudden, the Congress decided to wake up. To fight back. Whatever the reason – the BJP would like to tease the PM that it was the Washington Post article that did it – the PM suddenly appeared to be a Virat Kohli in super form. The “weak” PM started taking decisions like there was no tomorrow. And his partner-in-crime, Chidambaram – whom the BJP had desperately tried to involve in the 2G matter – was going ahead with reforms, completely ignoring the fault lines of his coalition government. This was a nightmarish situation for the BJP. All its work of the last three years was going to be waylaid by this new found gusto. Something had to be done. Someone had to stop the Congress. Who that someone would be….we all know!

The BJP’s worries were justified. Just read the stories that have emerged since the announcements of Friday last week:

Every single newspaper has praised the actions taken by the government; and the fact that the Congress finally bit the bullet and took bold decisions. None of the papers has criticized any of the decisions; if anything, some have said that the government should have gone further. That it was too little and too late. That it should do much more. The newspapers devoted pages and pages to explaining how Manmohan got his mojo back (ET, Sunday) and how this was his “nuclear deal” moment for him (most publications, tv channels). This nuclear deal moment comment was particularly hurtful to the BJP (remember how they had played opportunistic politics back then, misreading the public sentiment) and the Left (which was reduced to its lowest seats tally after opposing it).

The coal scam (imaginary mostly) was suddenly relegated to the inside pages. Even the extent of coverage diminished. Most of the coverage was on the work being done by the Inter Ministerial Group (IMG) which was looking into the 58 coal blocks audited by the CAG. The government was emboldened enough to cock a snook at the BJP’s demands – resignation of the PM, cancellation of coal blocks en masse. In fact, the IMG recommended only 7 blocks to be canceled – of which three were from the NDA period. A few other players had some minor financial loss as Bank Guarantees were encashed. This was a disaster for the BJP. It’s carefully crafted coal strategy was coming un-stuck. In fact, the bigger worry was that people were beginning to understand how the CAG had erred between policy choice and corruption. The CBI showed that actual cases of corruption were far fewer – and even on this front, the BJP’s Gadkari-Sancheti link was too glaring. Now documents were being produced which showed BJP CMs pitching for their chosen corporates and writing to the PM not to go ahead with auctions. Had the BJP badly miscalculated on coal? Not so in its mind. It believed all this was happening only because of the Friday announcements. Something had to be done to undo the Friday announcements.

The RBI too was playing along. Ignoring the inflation, it cut CRR by a further 25 basis points. And threatened to cut its bank rate in by Oct-end. For his part, Chidambaram stated that he would make his fiscal correction announcements shortly. The RBI governor was acting funny even on 2G. Apparently as per him, there was no loss in 2G – that it was a government choice and policy to give spectrum cheap. Now this was too much. The RBI was becoming a problem. If fiscal corrections were done, and the RBI lowered rates, the sentiment would life. Industry would bounce back. And so would the Congress. This had to be prevented at any cost.

As if on cue, the SBI announced yesterday that it had cut its base lending rates by 25 basis points. So the economy was indeed going to revive. In any case, corporate India was urging the Congress to stay the course. They were urging the BJP not to play spoilsport. If the Congress did indeed revive itself in the next two years, all the efforts of the first three years were going to go waste. This would end up like a T-20 match where some player suddenly started hitting in the last five overs to win the match! This couldn’t be allowed.

And then the stock market. It shot up as if to salute the PM. It looks like its going to cross 21K soon. This was crazy. And the rupee? It was making a comeback too. This was all very very bad news for the BJP.

What gave a ray of hope was that the ratings agencies all said that they were worried about “execution risk” and “roll backs”. They would wait to see what happened before commenting on their future plans. Now the BJP understood what was to be done! The Friday announcements had to be rolled back. The BJP knew it could not do anything on its own. In the past, it had deployed Anna and Ramdev to do its doing. Now it had to hope that Mamata played her “maa maati maanush” melody – cacophony to the Congress. And then the government would surely go back to being paralysed!

And true to form, Mamata did just that. The BJP heaved a sigh of relief. For while Mamata is generally predictable, sometimes she can be unreliable. The BJP was still hurting after she finally agreed to vote for Pranab Mukherjee. This time fortunately, there were no googlies from her. It was ok that she didn’t want to join the NDA. So what? At least she would help get rid of the UPA. The BJP reached out to Mamata. They nearly called her the biggest freedom fighter after Subhash Chandra Bose! Several phone calls and pujas later (remember it was the pujas of the BJP that got India some rains in September!), the BJP had what it wanted. She was withdrawing support, not just her ministers! Wow! The BJP could still win the game!

But problems still loom on the horizon. The leader of that blasted MNS in Maharashtra, Raj Thackeray, has said he supported FDI in multi-brand retail and the increase in diesel prices. Sonia Gandhi has instructed her CMs to give 3 more gas cylinders at subsidized rates – now the BJP CMs would have no option but to follow suit. All the extra taxes they were hoping to pocket from the diesel price increase would have to be squandered away. Further, the government was looking aggressive – refusing to bow down. In fact, the Ministry of Petroleum put out an ad which showed embarrassingly how the state governments were making Rs 1.3 lac crores a year on fuel taxes without any matching subsidy liability, while the central government was out of pocket by Rs 50000 crores. This was shocking. Such confidential figures should not be put out in the public domain! And then, that Nitish Kumar, the NDA’s Mamata Banerjee….what’s wrong with him. Why can’t he accept Modi as PM? What is all this “whoever supports Bihar’s special state status will get my support” nonsense? This is unacceptable. He has to fall in line. Just like the Akali Dal fell in line after the BJP reminded it that it’s state government depended on its support. Otherwise, the SAD was going to be crooning praises about FDI in multi-brand retail!

And then the permanent other problems; the corrupt, casteist and opportunistic Mulayam and Mayawati. They are the permanent bugbear for the BJP. Without any provocation, they start raising the communal card against the BJP. What is all this? Is this how UP parties behave? Oooffff!

The real truth dear reader is that the BJP is jammed. And it’s losing face big time. It’s clear that its opposition to the FDI proposals is opportunistic (in fact, it wanted 100% FDI in multi-brand retail during its time). It was clear that it was actively trying to destroy the UPA by wooing Mamata. The coal blocks matter was boomeranging. It’s Bihar ally was acting cocky. And Congress was stitching Andhra back into itself. It was all unraveling. Now you know why the BJP has been frantic in trying to pull the UPA down. Why there is the desperation in curbing the new found enthusiasm of the PM….

Tuesday, September 18, 2012

Good riddance….UPA better off without Mamata

Watching the TV news channels last night, one got the feeling as if the Congress had been caught off guard. That Mamata had given a “stiff blow” (as the TOI called it) to the Congress. But really, what happened was pretty much along expected lines. Mamata was under pressure to prove she was not one who just gave empty threats. It was this pressure more than any logical reason that made her do what she did. What happened last night could have happened at any other time in the last couple of years. Mamata was never a suitable partner for the UPA. Now that she has gone, the UPA should say Good Riddance and look at life beyond her.

Many things emerge from the political developments of last night.

The UPA government is safe. There won’t be any mid-term elections. Why? Because most parties don’t want elections. The Left, BSP and DMK for sure have no interest considering their most recent losses. The truth is that even the TMC, SP, and AIADMK (the “victors”) don’t want to take chances, the SP and TMC in particular. The first six month’s of SP’s rule has been one that the party would like to forget, with the law and order situation so bad that the people are starting to wonder why they threw Mayawati out at all. It’s the same in Bengal where nearly half the people have rated Mamata “below expectations”, in a recent poll, after just one year. The Left may well surprise Mamata if elections were held now. Voters are fickle at the best of times; who wants to take chances?

Mayawati is the most reliable option for the Congress at the moment. I remember a few years back just before the 2009 elections, the editor in chief and anchor of a prominent English news channel was extolling the virtues of Mayawati if she became PM, to an audience packed with India’s biggest industrialists. Half in jest, but half seriously too, he said that Mayawati would be the best for corporate India, since she “officially” has no fixed policies about anything! She was the most amenable to adopting a policy if “persuaded”. Everyone got the message! Mayawati may generate some soundbytes about diesel and FDI and all that, but really, she knows that her voters don’t care about such fine points. All they care for is their identity, and will do whatever Maya tells them to do. Such is her loyal following that even in the recent elections when she lost badly, Mayawati’s vote share eroded by just 4%. If the Congress can “persuade” her well (!), she may well find it a good option to support the UPA. Maya is on a comeback in UP, but she needs to give the SP a little more time… the meanwhile, she could do with a helping hand from the Congress.

Even the SP will provide support to the UPA, though its motivation to do so is a little lesser than Mayawati’s. It may feel that it can benefit from early elections, but it knows just how badly fragmented its own party has become after coming to power. Shivlal Yadav and Azim Khan are a nuisance for Mulayam and Akhilesh, who in his maiden innings would like to get a full term with a friendly party at the Center. Given the political realities, hitting out at each other in media may well be the practice, but pragmatic ground realities will make Mulayam think carefully. And Mulayam knows he cannot topple the government either; at least not as far as Mayawati is there to prop the UPA up.

Maybe this is why the TOI calls both of them “ultra pragmatic”!

As far as Mamata is concerned, I think she needs to be kept in quarantine for a bit, and left to stew in her own juices. She’s made a joke of herself, switching sides some 7 times in the last 15 years. No one wants to partner with her unless it become mandatory. It’s clear that she’s emerged as the real Left in Bengal leaving the whole Right liberal space open. Like I said yesterday, that space is open for the Congress to grab. Bengal wants reforms, not Mamata. Just give Mamata another year….she’ll self destruct. I however do feel sad for Bengal, a state of highly intellectual people, but one who have been cheated by all politicians, most of all Mamata. This is not why they voted Mamata to power. Now they will have to suffer for five more years. Forget industrialization and jobs; the Bengali will have to keep looking outwards – the brain drain from Bengal will continue. The Bengalis pride themselves for having led the country during the freedom struggle. Now they will have to live with the ignominy of being the leaders of a dogmatic economic world. How ironic that such an intelligent bunch of people only vote for the Leftists and the even-more-Leftists?!

So the Congress will survive. But what happens to reforms? If the Congress can win Mayawati over, the reforms will continue. The Congress realizes it is the only champion of reforms; if it can package the reforms well so that the people understand the benefits (and they do), it will continue. It must seize the opportunity to sue up many open issues. The Teesta waters deal with Bangladesh, the Pension reforms bill, the Railways modernization program must all be taken up in a hurry. The Congress knows what Mayawati really cares for. With the bill on reservations in promotions already tabled in Parliament, the BSP can claim credit for something that matters deeply to her constituency.

One thing is for sure. The Congress could not have been caught by surprise. It knew what Mamata could potentially do. It is this fear that prevented them from enacting reforms in the past. When policy making stagnates, unwanted  pain points emerge. It is as much the anger with policy paralysis that led people to support the Anna movement and for the scams to emerge as the other way round. In just a couple of days of policy action, people have forgotten much of that. People want reforms. They will support those who support reforms.

Clearly the one who is not supporting reforms is the BJP. Not surprising then that the BJP is the most unexcited by the developments. Posturing aside, the party surely realizes that its chances at coming to power in 2014 have drastically reduced with Mamata’s “bold” move. Mamata doesn’t want to tie up with the BJP. Maya and Mulayam don’t want to have anything to do with the BJP. And the BJP doesn’t even have a presence in the Southern states (Karnataka is already lost). With the Congress taking reconciliatory steps towards Telangana, it will not do so badly in AP as some believe. Surely the Congress has factored all this in when it finally bit the bullet last week. No matter what media reports suggest, I don’t believe the BJP will seek a no confidence vote in a special session of Parliament. If it did so, it will help the government prove its majority too soon. It would rather let the government be on tenterhooks till Jan next year when the next session is scheduled.

Net net, nothing unexpected in yesterday’s developments. And if handled well, the UPA can actually emerge stronger now. Reforms can get a big push; more than we’ve seen in the first three years of UPA-2. Of course, there will be more “vote for cash” kind of deals; but then we’ve to be clear. Do we want a new election and yet another unstable coalition or do we want reforms with a little “jugaad”??!

One last thing. Those of us who tend to forget history should remind ourselves of how difficult the reforms journey in India has been. Manmohan Singh first faced the challenges in 1991 when the BJP vociferously opposed reforms. The fact is no one wants reforms in India. This may offer some explanation for why introducing auctions in coal blocks took 7.5 years – no one wanted it. Only the Congress stands out in “majestic isolation” (to borrow a phrase from Arun Jaitley!). If we are happy with India today than before 1991, it is because of Manmohan Singh and the Congress. Let this message not get diluted. The BJP may give the impression it is pro-reform, but in reality it is just another version of the Left.

The real truth is that Mamata’s action was all too expected. She’s let the people of her state down, most of whom are already disillusioned with her. If they wanted Leftist policies, they could as well have continued with the Left. The Congress now has to be smart. With Mayawati, it can tango much better than it ever could with Mamata. So lets relax….its all going to plan!  

Monday, September 17, 2012

Bengal needs reforms, not Mamata Banerjee’s tantrums.….

Today is supposedly an important day in India’s politics. No, there are no general elections happening  nor the announcement of any election results. There’s no stormy Parliamentary session either (oh, we don’t care much about Parliament these days!). There’s no cabinet re-shuffle; no major cabinet meetings; no major announcements either. But today is still – supposedly – a very very important day. Because Mamata Banerjee – supposedly one of the 50 most powerful women in the world – is supposedly going to decide the UPA’s fate. I am sorry there is so much “supposedly” in this para, but that’s how everything about Mamata Banerjee is these days. Yes, Mamata Banerjee. Who with all of her 19 MPs will decide the fate of the UPA which has more than the requisite 272 required to run a government. Supposedly.

But then what’s new about this. There is a threat from Mamata every second month, when politics is on a slow burner, and every month when it’s running a little hot. People have never understood what drives Mamata, and I doubt if she has understood her well enough too. One thing is sure. Mamata is a very gifted person with great powers to see what no one sees (communists everywhere!) and do what no one dares do (protesting against her own cops!). But one thing that Mamata certainly isn’t gifted with is reading the mood of her state. For the truth is that Bengal is craving for reforms. For jobs. For the outbound migration to stop. And for Bengal to be rid of the “East of Kanpur” stigma (a jab at the poor states). But for all Mamata cares, reforms is a bad word.

This usually happens. When a new CM takes over from a tyrant regime that has ruled for several decades, he/she is put on a pedestal. No matter what he/she does, the people applaud. In the initial days, just minor steps can make a CM popular. In Mamata’s case, she has brought a semblance of law and order to a hitherto chaotic, even violent, state. And people have cheered. Not so much for what she is, or what she’s done, but because she’s the anti-thesis of the Left. For the moment, and for a few more years maybe, Mamata will continue to ride this wave of anti-Left sentiment.

The same thing happened for Nitish Kumar in Bihar in his first term. Coming after decades of misrule by Laloo, just providing a safer state made Nitish the darling of his people. But in his second term, there is a growing disenchantment with Nitish. People are now asking where the jobs are, where the electricity is, and where the governance is. Patna still resembles a rural village; and its economy looks like that of a 17th century village. There is also rampant corruption in the state. Nitish benefits from the absence of a viable alternative. People certainly don’t want Laloo back. And there is no other alternative. It’s the same with Mamata. Very soon, people will be disenchanted with her. In fact, a recent India Today poll indicated that people were already starting to rate her “below expectations”. Again, Mamata benefits from a lack of alternative.

This is where the reforms oriented parties must step in. In the past, I used to call both the Congress and the BJP reform oriented. But as the events of the last few days have shown, the BJP has given up the reforms platform. That leaves the Congress to take the reforms mantle forward in these two states. Bengal should be easier, since its seeking an anti-left government very eagerly. If the Congress can re-build its organization and go to the people with the promise of reforms, private industry, jobs and a promise to redeem Kolkata’s historical economic clout, the people could vote for the Congress. But the problem for the Congress no doubt will be that it may not have too many believers of reforms in its ranks. After 35 years of Left rule, and one more of a more-left-than-the-Left Mamata rule, even those who believed in reforms have become partial Leftists. Maybe an implant from outside could help the Congress in its revival.

With her constant anti-Tata tirade, and her constant anti-reforms push in Delhi, Mamata has ensured that no industrialist enters Bengal. In the last one year of her rule, there has been no progress towards development. If she continues this way, she might as well start counting her days. With the Congress in no position yet to revive, the Left will be back in Writer’s Building.

This then is the chance for Mamata to make amends. She should support the UPA’s reforms agenda. She can play her local anti-Left politics by passing on some subsidies from the state coffers a la Sheila Dixit. Sheila Dixit has been smart – she’s passed on the benefit of 3 extra subsidized cylinders only to the notified poor. Mamata surely realizes that the diesel price hike will give her state hundreds of crores of extra taxes. She could deploy some of those towards providing more subsidy on LPG cylinders. She could even cut taxes on diesel if she was so concerned with the same. But whatever she does, unless she openly supports reforms, she will fail to create jobs in her state.

Mamata has to realize she has no options at this point. Her bluff was called during the Presidential elections. The third front bogey is just that – a bogey. No one will even allow her into the 3rd front, what with the Left occupying prime position there. She cannot tie-up with the BJP, knowing that her state has 30% Muslims. Her only hope can be forcing a mid-term election, and hopefully picking up more seats in her state. But suddenly, that’s not such a certainty. Also, can she force a mid-term election at all? Has she forgotten what Mulayam did to her recently?

So just like everyone is predicting, Mamata is going to lose face today. She’ll do the most obvious. Throw some more tantrums. Pull out her ministers. Scream at the top of her voice. But that’s it.

In fact, I think it would be great if she pulled out her ministers. That would allow a new reforms-oriented minister to be put into the Railways ministry. Maybe the price hikes there can be taken; safety improved. Maybe that vital sector can be allowed to breathe.

The real truth is that Mamata is cornered. She’s damned if she quits; damned if she doesn’t. Some all-too-expected tantrums aside, there’s nothing much she can do. Life will continue as normal. And Bengal will continue to groan under her rule for some more time. Till – hopefully soon – a reforms oriented party smells the opportunity and makes a move….