GDP growth tumbles, but India hardly alone….

The GDP grew by just 4.8% in the 4^th quarter of the last fiscal. Though this was widely expected, it still caused a lot of shock. The stock market crashed by 450 points, partly because of the GDP growth rate, and partly also because of the comments made by the RBI, suggesting that rate cuts might be difficult in the near future. The whole thing has spread more gloom into the economy.

And yet, it’s important to see the picture correctly. Yes, the growth is down dramatically from the 9.3% we hit in FY11, just 2 years back. Yes, its even lower than the 6.2% growth we hit last year, in FY12. The 5% growth of FY13 is shocking, like I said earlier, but it’s still important to see it in the correct perspective. India is not alone in this gloomy scenario. Every country in the world has seen declining growth rates. Most importantly, all its peers in the BRICS grouping have seen growth rates plummet. And even Indonesia, the “I” that was being thought of as being a replacement to India in BRICS has seen its growth slow down to a 2-year low.

For the record, Brazil has grown by just 0.6% in the Jan-March 2013 period and by 0.9% in the full year (2012). Russia has grown by 1.6% in Jan-March 2013 and 3.4% in CY2012. South Africa has grown by just 0.9% in the Jan-March 2013 period and by 2.5% in the full CY2012. Even China, the indefatiguable behemoth, whose economy is driven largely by investments (not consumption) has seen growth slow down to 7.7% in the Jan-March 2013 period and probably lower in CY2012. What is worse for China is that this represents a fall from the previous quarter (7.9%), while for India, the solace is that the growth rate is marginally higher than the previous quarter (when it was 4.7%). Seen in the correct perspective, India’s results are not that bad.

Of course, India’s compulsions, and opportunities, to grow are much higher than those of other BRICS nations. All the other countries have a better per-capital GDP number than us. In fact, by a mile. India is the only poor country in this grouping, and hence we should worry about this development. It’s important to analyze the real reasons for this slowdown, so that suitable corrective actions can be taken.

In my mind, the biggest reason for the slowdown is the policy paralysis that gripped the country for nearly a year and a half between Anna’s first hunger fast and Chidambaram’s taking over. My complaint with Anna’s fast always was that it harmed India more than it benefitted it. It made bureaucrats wary of taking decisions. It put too much premium on “perceived” honesty, and too little on “decision making”. Bureaucrats, and politicians, who did nothing and took no decisions (like Antony) were rated much higher than those of the opposite kind (Praful Patel, hauled up for taking a “quick” decision on buing Airplanes for Air India – he took just 17 months). It brought in a culture where everyone was presumed guilty. It generated a mob frenzy, an assimilation of energy, but of the type that disintegrated the growth story, not made it stronger.

The other contributor to the policy paralysis of course was the unbelievably incompetent CAG. He brought out bizarre numbers….and even more bizarre concepts (notional loss)….and never heard of before calculation methods, giving even the most basic of accounting norms the go by. In an interview with Karan Thapar the other day, when it was pointed out that in 2004, the government had merely approved “in principle” that coal mines should be auctioned, but it took until 2012 to get the approval implemented, the CAG’s reply was “we go by the in-principle approval”. This alone should prove where the CAG’s heart lay. He has been a career bureaucrat. He should know how much he himself must have taken in getting anything through the bureaucracy after it had been decided on. The CAG is personally responsible for the miserable state of affairs in the telecom industry, and the coal sector.

Apart from policy paralysis, there was also the recalcitrant attitude of the RBI in its monetary policy. It never could understand that the inflation the country was seeing this time around was “beneficial” inflation – in the sense that the poor were getting more money in their hands and causing the inflation – and not hurtful inflation. The RBI Governor responded in the only way he has learnt. Clerically. He kept increasing bank rates, squeezing the industrial output down to near zero (and in fact, negative in some quarters). It’s impact on inflation itself was obviously zilch. Inflation continued to soar, and industrial output continued to plummet, leading to real fears of stagflation. Subba Rao may want to mull about the fact that inflation actually tapered off after he started cutting interest rates, though obviously, there were other contributing factors.

Then there is also the nature of our politics that had its role to play. The BJP opposed everything, under the pretext that it is the opposition party. What kind of logic is this? Then the compulsions of coalition politics, where regional allies want to dictate foreign policy, and where Anna-style “my way or the highway” politics is par for the course. India has a big struggle ahead. Ahead of 2014, since the political situation is not expected to improve. Coalition politics – and the most vicious forms of it – are expected to continue for some more time.

The government had its own failures. The environment ministry – no matter who heads it – has always been a roadblock towards economic progress. There are apparently hundreds of projects stuck in the pipelines because it looks like the planet’s burden of managing its environment is solely on India. Hopefully the recently constituted Cabinet Committee on Investmentts (CCI) will now twist Jayanthi Natarajan’s arms a little. There is a lot of good work happening in the background. The Aadhar program should make subsidies better targeted, and cut corruption. The Land reforms bill should give industry a clear policy on land acquisition. The cooling commodity prices worldwide should help ease pressure on the CAD, and help reduce interest rates. The good monsoons should help ease agricultural prices, and increase growth rates. In think the next year will be better, but we still have work to do.

The real truth is that FY13 GDP numbers are disappointing, but hardly disheartening. The world is in chaos, but is recovering. India is well placed to tap this growth opportunity. With or without its destructive political set-up.

Media attack on Srinivasan has gone too far; must stop now.….

Srinivasan of the BCCI is no saint. His defiance, which which borders arrogance, makes him easy to hate. It would have been good if he had quit as BCCI President on his own, and I was generally one who believed he should have. Not because he was guilty, but simply out of propriety. But over the last several days and because of the way media has personalized its attack on him, my feelings have turned. He’s suddenly become the victim, who is being targeted. I now think he shouldn’t quit; if only to show media its place. If the issue earlier was one of BCCI’s abuse of power, it has now become one of the media’s abuse of its powers.

How right is it for media to attack Srinivasan for so long and in such a vengeful way and paint him as some dark devil? He is no terrorist for god’s sakes. Or a murderer or even a convicted fraudster. At best, he faces a conflict of interest charge, on which the Madras HC found no merit, and on which a SC 2-judge bench was divided.  The larger SC bench is now expected to start hearings in July. Srinivasan is not in violation of any law. Like I said, good propriety would require him to step down. But good propriety would also require that media conducted itself in a reasonable, restrained manner. But the way it has gone after him, it looks more like an ego issue and an assertion of its power than anything else. What does media have as evidence against Srinivasan? Have they produced any document (any “scoop”?) that shows Srinivasan was involved with his son-in-law in the betting scandal? Either personally or as CSK owner? And more importantly, even if he was involved in the betting, is there anything at all that shows that he “fixed” the matches in any way? Nothing. Then why is media going so strongly against him? It did the right thing by raising the issue. Now the right process must take over.

But media in our country loves to play god. To be the moral compass of the nation. If we find the BJP and Shiv Sena’s moral policing in Mumbai to be unacceptable (public display of affection in Bandra, dress code for mannequins etc), then we should find media’s moral politicing unacceptable too. Besides, its not just moral policing. Media also abuses its powers in other ways – by character assassination of whoever it wants to. It uses this power routinely with politicians when TV anchors become judges and pass verdicts. And now media has started using its power against private institutions as well.

For BCCI is a private body. It is because it is a private body that cricket has developed so magnificently in India. Had it been a government outfit, we would probably have been at the bottom of the list of the world’s cricket playing nations just like we are in every other sport. Incidentally, all cricketing associations worldwide – be it Cricket Australia or the England and Wales Cricket Board or even Cricket South Africa – are non-government “private” bodies. Just like BCCI is. Because BCCI is a member of the ICC, “India” gets to play matches worldwide. If media believes BCCI is a private fiefdom, then so are the other bodies. Media has to pull back now. Those who support this type of media vigilantism should worry that it may soon start to attack private individuals as well. It’s Srinivasan this time. It could be any of us the next time.

Besides, I have never understood how we can be so naïve about family relations, and assume that family members flock together all the time. I simply cannot understand how a person can be held responsible for the activities of his nephew or niece or mother-in-law or father-in-law. Or in case he lives away from his “close” relatives like his mother and father, or brother and sister, be “presumed” responsible for their conduct. All of them would be acting independently, doing what they do as they choose, without anyone knowing what they do. Is it anyone’s point that when one family member assumes a public office, all others must stop doing whatever they do because they would all be presumed to be beneficiaries of his public office? Bizarre.

Media can surely demand that the probe panel members be chosen by a court, not by the BCCI itself. That would be fair. That would eliminate any influence Srinivasan could wield on the results of the probe. Or media could file a PIL and ask the court to sack Srinivasan. The court would dispassionately hear all sides of the argument, and figure out if there was merit in his resigning. Or media could find at least some shreds of evidence, and then demand that he quit. Right now, there is evidence against Srinivasan’s son-in-law, but nothing that links him to the scandal himself.

To me, this appears to be a witch hunt, orchestrated perhaps by the powerful politicians’ lobby to wrest power back. Maybe they don’t like a corporate honcho running the country’s most powerful sports body. Cricket has hundreds of millions of followers. Politicians would love to bask in the glory of the hugely successful IPL. That is why all politicians – with the notable exception of Narendra Modi, who also will fall in line soon – are arraigned against Srinivasan, while cricket stalwarts like Kumble are supporting Srinivasan, preferring him to the wily politicians.

Media seems to want a different set of rules for itself than for others. When the Nira Radia episode broke out, Barkha Dutt was squarely implicated, but she didn’t resign. In fact, hardly anyone in the media demanded her resignation. She organized a pathetic looking “courtroom drama” on-air with other journalists “grilling” her with their questions. How convenient. Likewise, when a Zee journalist was stung by Naveen Jindal, and it appeared that the media group had tried to extort Rs 100 crores from him, the Chairman/promoter of the channel was not asked to resign. Why? What happened to the propriety then?

Srinivasan must be praying that another story breaks and the media spotlight goes off him. If another corruption episode breaks for example, media interest would shift. That’s what happened with Anna. He was the darling one day, and then the tide suddenly turned. Media got distracted by other developments, and now he is no where. Kejriwal attracted much media attention with his serial press conferences, but very soon media got onto something else. Srinivasan must be sincerely praying that media gets distracted and he be spared. And so am I now. Honestly, how long can media keep flogging the same horse, which now looks increasingly dead.

The real truth is that whoever has power in India abuses it. We know that politicians and the bureaucracy abuse their powers. But media is no different. It is powerful and it knows that. One news channel in fact took much pride (in fact it ran a promo) in claiming that it had made a CM resign. For media, Srinivasan has become an ego issue. Srinivasan should have quit long back, but maybe now he shouldn’t…..

Now BJP wants a dress code for mannequins!

The more BJP members speak, the more we realize just how much of an antiquated party it is. The latest example is the most startling. A BJP corporator from Ghatkopar, Mumbai, Ritu Tawade made the proposal and the Shiv Sena/BJP run BMC “unanimously” passed a proposal to ban the display of bikini-clad mannequins outside lingerie shops in Mumbai” (source: website Niti Central). The ostensible reason: women’s safety!

But honestly, this BJP corporator is no different from the hordes of other BJP leaders who have gone on record to say that women must dress modestly, or stay indoors, or some such garbage. The BJP ideology stems from the RSS’s, and that in turn brings images of khakhi chaddi clad fogies, who are determined to take India back into the midieval era. I am not sure but I think that the RSS itself doesn’t allow women members. It has a “zenana” like organizational culture, with a separate outfit “with the same ideology” called the Rashtriaya Sevika Sabha, where women can join and participate. It’s hardly an important organization, though it does have 55000 “shakhas” around the country. It’s “pramukh sanchalika” (I guess, President!) is one V Shantha Kumari, and its “pramukh karyavahika” (I guess, Vice President or something) is an equally unknown Sita Annadanam (Sita, mind you!). Now what can one expect from a “parivar” in which women are organized separately from men? I guess this is what makes the RSS think that men will necessarily rape women if they as much as see them!

This other RSS – the Rashtriay Sevika Sabha – is quite an interesting organization. A story titled “Inside RSS women’s wing: Yes to wife beaters, no to divorce” on Firstpost.politics caught my attention (http://tinyurl.com/bydhar4). The website in turn quotes an Outlook magazine article (Holier than Cow - Wisdom on women from a Rashtriya Sevika Sangh camp) written by Neha Dixit (available on http://www.outlookindia.com/article.aspx?283593). Here is what the Firstpost writes “The article traces how the pracharikas or the workers of the group take pride in the fact that they are not backing or demanding women’s rights. Rather, they seem to be content with the fact that they are working towards the creation of a ‘Hindu’ nation. The women’s wing also seems skeptical of the feminist movements working their way against patriarchal domination in the country.”

And here is what Neha Dixit writes in Outlook while visiting a camp organized by the Rashtriya Sevika Sabha “I turn to Sharda from Jabalpur. In her late-20s, Sharda has been a whole timer for five years. She tells me that apart from the shakhas, the Samiti also counsels women in their respective areas. When I ask her, “What advice would you give to a victim of wife beating?” she answers, “Don't parents admonish their children for misbehaviour? Just as a child must adjust to his/her parents, so must a wife act keeping in mind her husband's moods and must avoid irritating him. Only this can keep the family together.” Similarly, divorce is also a non-option for women. She says, “Our task is to keep the family together, not break it. We tell the women to adjust.”

Sushma Swaraj, the leader of the opposition in the Lok Sabha, and a potential PM candidate has been reported to have called a rape survivor a “zinda laash” (a living corpse). Narendra Modi, another PM aspirant had famously taunted Shashi Tharoor as having a “Rs 50 crore girlfriend”. If the seniormost leadership of the BJP carries such views on women, even god cannot save India or its women once the BJP comes to power! Not surprising then that other members of the Sangh parivar have suggested that women should not put their pictures on Facebook. The Outlook article also states “The Rashtra Sevika Samiti holds camps and indoctrinates thousands of girls-toddlers, adolescents and old— to propagate the idea of a ‘culturally sanitised’ Hindu rashtra and the patriarchal roles it offers women to conform.” Some cultural sanity!

That explains why Ritu Tawade moved her resolution in the BMC! But what about the rest of the fogies in the BMC? Why did they not stop such an atrocious proposal? I guess in the race for orthodoxy, none of them wants to be left behind! How can one expect such a grouping as the RSS or the BJP to discuss the several orthodox elements in the Hindu religion, and suggest ways to contemporarize them? We know that religion never changes, but can the orthodox parts not be kept “on the side”? Can we at least avoid actively propogating ancient beliefs in a modern society? I think deep down, RSS/BJP members pray that a Hindu cultural revolution will sweep the nation, and everyone will start wearing saffron and reciting the “Saraswati Vandana”. That’s why it starts this kind of ideological propaganda with school kids. Catch them young…..before they get exposed to a more liberal, a more reasonable, a more heterogeneous world.

Who will explain to the BJP/RSS/Shiv Sena that skimpily dressed mannequins don’t cause rapes. Ritu Tawade may feel that the mannequins are sex toys. But they aren’t. Removing mannequins cannot be seen as a “women’s safety drive”. Educating our people to be more liberal can be. It is the dirty mindset of our people that lead to rapes. When men see a woman alone, or vulnerable, some of them are unable to hold back their pent up lust. They use their stronger physical strength to attack women. The solution is not to remove mannequins, the solution is to teach our people the basics of humanity, and a more tolerant, liberal philosophy. It’s not to segregate men and women like the RSS does, but to encourage more inter-mingling. But who will explain all this to these 17^th century morons?

The real truth is that the mannequin removal idea is just one more hare brained idea from a party with a 17^th century mindset. It’s hardly surprising. We blame our cops for “moral policing”, but the real culprits are these political lunatics. But will anyone go on a dharna against these butchers of liberal values? Naaaah….Why, they may even end up ruling us!

Vinod Rai’s “notional loss” transforms into higher consumer prices, subsidies….

Vinod Rai, the ex-CAG, will now get to see the consequences of his politicized reports. He will get to see how wrong he was in his “notional loss” theory. How this notional loss is transforming into higher consumer prices (a huge burden on the poor) and higher subsidies (a burden on the government). In the end, he will realize that at a “net” level, there was indeed “zero loss” that the government and the nation suffered in both coal and 2G. He will realize how little he achieved as a CAG after all. And in all of this, he will prove that the CAG is nothing but an accountant, something that he didn’t feel happy accepting.

If you missed all that’s been happening in telecom and coal-related sectors, here’s a summary. Telecom tariffs have gone through the roof. Most telecom companies have increased “voice” rates by 50 to 100% over the last couple of years. The days of the half-paise-per-second rates are over. Pricing at those levels is simply not affordable any longer, what with huge spectrum fees being the new way of doing business in telecom. There has also been a concomitant reduction in competition, first as the Supreme Court canceled Raja-issued licenses, and then as those who lost refused to bid preferring to simply exit the politically destroyed sector. Lesser competition always leads to higher consumer prices. Then there is also the burden of 3G license fees which telcos have to reckon with. Fees so high that not only have 3G prices become unaffordable, but 2G also. In hindsight, it was silly of Vinod Rai to benchmark 2G on irrational 3G prices, and call it a notional loss. Thanks to Vinod Rai, the whole telecom sector is in a spin now. Profitability seriously compromised. Debt piles visible afar and loan re-structurings quite the norm. What was essentially a case of last-mile corruption has ended up becoming a monster that strangled the entire sector.

Vinod Rai’s poor wisdom has cost the country dearly. Banks are facing the brunt of debt non-repayments and consequent re-structurings. Thousands of employees have lost their jobs. Most importantly, the poorest of the poor, the dhobis, electricians, locksmiths, vegetable vendors – those who made their mobile phone a substitute for a “kholi” or “shop” otherwise required to do business – have been left high and dry. Tele-density has started falling. Between them, telcos have lost nearly 50 million subscribers. Agreed, they were mostly 2^nd numbers or maybe even defunct numbers, but still, a reduction in numbers doesn’t augur well for the industry. Company valuations which were linked to subscriber numbers, have started to fall, with the earliest operators, Airtel and Voda suffering the most. It’s a matter of time before the “culling” of customers extends to the fringe sections of our society. They will be pushed back into oblivion and poverty, with no recourse to business opportunities and hopes for an improvement in quality of life. Two years after Vinod Rai played his accounting tricks, the telecom sector has gone from being India’s show-piece to one of its worst performing sectors.

Sectors dependent on coal are in no better shape. Coal prices are going through the roof, as the country is having to rely more and more on imports, a strange situation considering that India is one of the biggest beneficiaries of god’s gift to mankind. But coal mining is in the pits (no pun intended), first with exploitation being limited largely to one company (CIL) and second, with the private players in cement, steel, electricity and fertilizers being made to pay top dollars for their mines. Nothing comes free Mr. Rai, and all that the government “appears” to lose is not really a loss. That loss could also be called “sharing of wealth”. Or “inclusive” growth.

Today’s papers report how electricity tariffs are expected to shoot through the roof, as coal prices climb to higher levels. Fertilizer prices are also expected to follow suit. Cement prices are already up by Rs 15-25 a 50-kg bag. Steel prices are also up by as much as Rs 1400 per tonne, as the full impact of Vinod Rai’s reports is felt on foreign exchange rates, electricity prices and railway freight rates. Vinod Rai should be happy that the country’s exchequer will make tons of money. So what if the corporate sector suffers.

If he had been a little wiser, Vinod Rai might have realized that along with it’s “topline” (auction revenues), the government’s “middle line” would also increase proportionately. The middle line here is the subsidies budget. The government will have to pay a lot more for fertilizer subsidy, since it has no intention of burdening the farmers with higher costs. It will also lead to higher electricity subsidies, since most governments like to keep electricity prices low, a habit they find politically rewarding. State Electricity Boards have increased prices by 15-30% over the last year, but that’s not enough. They are having to provide more subsidies as well. Here’s an interesting fall-out of the CAG’s reports – the notional loss has shifted from the central government’s books to the state governments’ (who have to bear the higher subsidy bill)! If only the opposition had thought of this earlier….

What’s been the net impact on the bottomline of the government? Zilch. Higher toplines (auction revenues) yes…..but higher costs (subsidies) as well. But this was perhaps much too evolved for the Harvard educated Rai. Kapil Sibal was right after all – in net terms, the government suffered “zero loss”.

Vinod Rai did not realize that the private sector made no “windfall” gains as a result of cheap resources. Actually, the citizens made the windfall gains. Cheaper resources leading to cheaper consumer prices is a philosophy that the Congress is comfortable with. The BJP perhaps prefers higher government earnings and higher consumer prices (a more elitist way of governance). The two parties have different electoral constituencies. The Congress is much more focused on the rural and urban poor; the BJP on the urban, middle class “baniya” class. Thanks to Vinod Rai, what should have been an interesting debate on the styles of the two parties, has ended up becoming a reason for Parliamentary lock-down, policy paralysis, and a very fundamental change in India’s economic model. From socialism to capitalism.

For we are becoming an out and out capitalistic country where all resources are priced at market rates. Auctions are conducted in a “revenue maximizing” manner, something that favors the big players. The smaller guys – the Sunil Mittals, the Kishore Biyanis, the Captain Gopinaths and other beneficiaries of Manmohan Singh’s 1990s reforms – can forget their dreams. It’s soon going to be back to the Tatas, the Birlas and the Ambanis. This is the new capitalistic India, where the rich will become richer and the poor poorer. The Left may want to think about this.

The real truth is that Vinod Rai’s “notional loss” is now transforming into higher consumer prices and higher government subsidies. So one form of loss (auction revenues) is converting into another form of loss (subsidies). This is Rai’s lasting legacy. A book-keeping jugglery. Vinod Rai has finally learnt that the CAG is nothing more than a book keeper, an accountant. Does this make him a Seshan? Far from it….

Women using rape laws for vengeance…

Before the women folk jump at me, let me clarify that this is not a statement I have made! It’s a statement credited to the High Court of Delhi. The story was carried on the front page of TOI’s Sunday edition. I must add though that I have often been worried about this aspect of rape for long. I have always believed that our laws must be strong, but they must also be just. Many times, our laws swing like a pendulum, from one extreme to the other; and in their quest to do justice to one set of people, they hugely wrong the other set.

“Observing that many women, after consensual sex, accuse their boyfriends of rape if the relationship ends, the HC said”. No where was this more evident than in the bizarre rape charges filed by a wannabe “star” Preeti Jain against successful film director Madhur Bhandarkar. If the woman was to be believed, she was raped “16 times between 1999 and 2004” by Madhur over a 3 year period of time. How is this possible? She was not his wife, or living with him, that he could just grab her and rape her every time he felt like doing so. She must have voluntarily come to meet him and indulged in whatever they did consensually. It’s possible that Madhur may have given her the lure of a role in a film, and she could well accuse him of cheating or something, but how could she accuse him of rape? Yet, the woman must have thought that cheating and all are difficult to prove. Besides, the punishment is nothing more than a rap on the knuckles. What better way to “fix” him that to file rape charges?

This is far more common an occurance in our country that we would like to believe. An exact similar statement was made recently by Neeraj Kumar, Delhi’s embattled Police Commissioner to the Indian Express. I wrote about him and his interview in my piece titled “Delhi Police Commissioner Neeraj Kumar deserves a patient hearing….” on 12^th May this year. Here’s his specific observation ““If you are in a live-in relationship, the sexual relationship you are having is of a consensual nature. If the man says at some stage that I do not intend to marry you, the woman then says, OK I will register a rape case against you. Then she says she has been raped continuously for three years. A large number of cases fall within this category”. Did you find anything wrong in this? How many women will come forward and accept this reality?

It’s a truth that women in our country are a battered lot. With the kind of mindset our men have, which is pretty much medieval, it’s not surprising. We see this happening all around us. We see our maid being mistreated by her drunk husband. And even in higher-rung society, we see men conducting themselves as if they were superior to women. This is the reason many of us get so upset and angry when a crime against a woman is reported. This is also why a police chief is derided for making some frank statements. But we have to be clear here. There are battered women, and there are vengeful women. The law unfortunately is so stupid that it gives the vengeful types a bazooka in their hands to shoot anyone and everyone.

This is not the first time we have seen the handiwork of such vengeful. Nor is the Delhi HC the first court to make such an observation against women. Even the Supreme Court has made a similar observation on section 498(A) of the Indian Penal code, which deals with dowry harassment cases. Here’s what I wrote in my piece of Dec 20^th, 2012 titled “Section 498(A) of the Indian penal code was designed to protect women from dowry harassment. It was designed poorly, maybe under pressure of some lobby groups. As a result, a man or his family can be arrested merely on the complaint of a woman. In August 2010, Justices Dalveer Bhandari and K S Radhakrishnan of the SC expressed concern at the rise in number of complaints under Section 498A, "We come across a large number of such complaints which are not even bona fide and are filed with oblique motives." Can anyone deny the truth of this observation of the Supreme Court? The scourge of rapes is bad enough. We don’t also want the scourge of the vengeful women.

The problem in our country is that our laws swing from one end to the other like a pendulum. Our lobbyists, our civil society activists, our society itself, are all responsible for this. Take the recent Anna agitation against corruption. Now corruption is a huge problem in India. But not once during that entire episode (spanning more than a year), did we hear a single voice of reason and moderation. Anna wanted the corrupt to be hanged. Hanged? For god’s sakes, was he out of his mind? But still, the hordes swung to his beats. And our media, instead of being the correcting force against such excesses, freely indulged in sensationalizing the issue. It forced me to write a piece called “License Raj, Police Raj….now get ready for the draconian Lokpal Raj….” on the 13^th of December, 2011. Thank god, Parliament didn’t pass that kind of a law. Thank god, media lost interest in Anna.

Or take the sexual harassment law recently passed. As per the law, only men can sexually harass women. Apparently, its unacceptable only when men use four letter words. What kind of archaic mindsets do the drafters of such a law have? Have they worked in today’s world, where the casting couch is as commonly deployed for men as it is for women? Or where women are as free with language as their male counterparts?

The real truth is that in trying to bring justice to battered women, we must not end up creating a battalion of battered men. Laws cannot be written with a vengeful mindset. In reversing an evil, an opposite evil cannot be committed. And lets not forget the most fundamental of all laws of justice: a man is innocent until proven guilty. Who remembers Madhur Bhandarkar’s acquittal? Very few. How many remember him as a rapist? Almost everyone. This is what motivates a few to do what they do….

BJP directly responsible for Maoist attack on Congress leaders….

Two issues crop up when discussing the brazen Maoist attack on a Congress party rally in Chhatisgarh last night, in which several leaders of the party, including the state party chief, were killed and injured. One is that the goons who killed so many people deserve no sympathy from us, no matter what the reasoning, and must be immediately declared as domestic terrorists. The second, and more important one, is that the BJP is directly responsible, having repeatedly opposed the setting up of a strong NCTC on flimsy grounds. Besides, the state has been ruled (or misruled) by it for the last ten years, in which the matter has only become worse. Now the party must apologize to the nation, sack its CM before the people throw him out later this year when elections take place, and support the setting up of a strong NCTC as originally conceived by the Center.

Many elite Indians like to romanticize the Maoists’ fight as a struggle of the oppressed classes against a powerful, uncaring state. The time for such romanticism is over. Maoists are called Maoists because they draw their inspiration from Mao Zedong, the Chinese leader best known for his belief in armed class struggles. So “Armed” is part of the core ideology of Maoists. It’s the starting point of the Maoist struggle. Maoists are just another type of plain vanilla terrorists. Conceptually, they are no different from the Khalistani terrorists we had twenty years back. The lesson we learnt then was that a strong fightback is what is needed to eliminate such elements, not some romantic embrace.

The BJP makes too much of our federal structure. That law and order is a state subject. That the NCTC as proposed is a bad idea. That it impinges on the rights of the state. Blah. Blah. Blah. The BJP conveniently forgets that Maoism is hardly a state subject. Maoists operate across states. That alone should be enough to make it a Central responsibility. Maoists get most of their funding and weaponry from countries across our borders. Maoist attacks are the equivalent of a foreign invasion on our country, but using local people. It’s terrorism in simple English, if we consider the “foreign invasion” angle. It’s treason if we consider the “local people” angle. Either which way, the central government should be responsible. If current laws disallow that because law and order is a state subject, then it’s time we branded Maoists as terrorists, and handed over the responsibility to the Center. But instead of supporting this, the BJP in fact works in the opposite direction – demanding that the NCTC be weakened.

We need a strong NCTC to prevent terrorist attacks. Today, we don’t have a counter terrorism body. Arun Jaitley wrote an open letter against the NCTC’s planned powers on Feb 26^th, 2013, arguing “Why should the central government not trust the states” and “Is there any reason to doubt that the state police in India cannot be trusted for anti-terror functions?”. Great political rhetoric. But we’ve seen what happens when the IB passes on intelligence inputs to states. Most such intelligence is not “specific” and the state police neither has the capability nor the resources to investigate the leads. As a result, many preventable attacks go undetected. The same thing happened yesterday. The Chhatisgarh government did nothing about the tip off it received from the Center. If the NCTC had been tasked with such responsibilities, it would have directly probed the tip.

Clearly, we need the NCTC, with all its powers. Powers of search and seizure. Powers of acting directly without keeping the state police informed. Powers of doing whatver it takes to prevent terrorism of any form and color. The NCTC was conceived under the UAPA, amendments to which were passed in Parliament after the Mumbai attack of 2008. At that timie, perhaps sensing the public opinion, all political parties had supported the amendments. The BJP had taken a strong stand against terrorism in justifying its support for the amendments. But today, its back to it’s usual political double-speak. Today, it wants to embarrass the Congress. It hasn’t allowed the NCTC to get set up. Who knows, the NCTC could have prevented the attack last night. Who knows? Can the BJP, and its savvy ivory-tower lawyer-leaders give conclusive arguments that the NCTC would not have prevented last night’s attack?

Here’s what I wrote last year on Feb 19^th (2012) which is still so true: Fighting terror requires a unified response. Just look at the politicization of the fight against the Maoists. Again, the Central government can do pretty much nothing except request the states to up the ante. Because all states don’t coordinate their efforts, Maoist attackers often jump across from one state to another to escape their capture. Most of the Maoist affected states are poor and don’t even have the sophisticated arms and the trained forces required to take on the Maoists. And yet, when the Center wanted to plan a bigger offensive, it had to tamp it down under similar excuses – that law and order is a state subject. The next time a Maoist attack happens, lets all wring our hands in anger and shame and despair. And let’s make more political attacks on each other.

Well, the “next time” happened last night. This time, it was the Congress rally that was attacked. Next time, it could be some other party’s. Maybe we will have to lose a few more lives before we wake to the reality. The BJP accuses the Congress of policy paralysis. But the BJP itself stands accused of paralysis of ideas even when it is not in power.

In another piece on May 6^th, 2012, I had written that “The same is the case with the fight against Maoists. A few years back, there was expectation that the Union Home Ministry was launching a new strategy to eliminate the internal threat. The Army was to be used in a minor or major way as the reports indicated. Activities of various states were going to be co-ordinated by the Central government. But again, the pressure from the CMs – who were worried that the Center would take over in the name of fighting the Maoists (in reality they were worried that some of their dubious political friends could be arrested) – put paid to any such plans. Today, the scourge of Maoists has only increased. Every now and then, Maoists capture someone or the other – and a swap with kidnapped Maoists follows – rendering the entire fight irrelevant”. It’s clear. The BJP is directly responsible for last night’s attack.

The real truth is that the BJP must deliver on its tough rhetoric on national security. It must support a strong NCTC with all its original powers (of search and seizures) intact. It must agree to branding Maoists as terrorists. And as an important symbolic gesture, it must sack Raman Singh, the incompetent CM who has stood by as the Maoists gained strength in his state over the last ten years of his rule….

Is there anyone not corrupt in India at all?

The IPL spot fixing issue has brought back a question that I’ve asked often, mostly during the Anna hunger strike two years back. In those days, I used to look at all those protesters and wonder how many of them were not guilty of the same acts of corruption that we were accusing politicians of. The IPL scam, more specifically the apparent (though not proven) involvement of the CSK owner/BCCI President, is distasteful. What is even more distasteful however is my question: Is there anyone in India who is non-corrupt?

Before IPL, we’ve seen Pawan Bansal’s nephew fixing Railway Board appointments (or at least masquerading as someone who could fix them). We still don’t know if Pawan Bansal was involved or whether his bragging nephew fixed him. We’ve also seen Nitin Gadkari invest ill-gotten monies into a whole bunch of companies. Where did the money come from? Why did it all get invested in such a benaami way? There’re corruption cases against all politicians belonging to all parties.

What really irks me is the double standards of our society. We point fingers at politicians as if they were our society’s lepers. As if they were monsters from the outer world who have somehow invaded us good, clean, honest people. The fact is that politicians are just a reflection of all of us. We are all corrupt to the core, “all” being the operative word. It is as difficult to find an honest Indian as there is finding an India-loving Pakistani politician. Each one of us pays bribes to get our work done faster, to get a wrong admissing into an engineering or medical college and to get off the hook. At least the politician has an excuse for his corruption – he has to fund his elections. Why are so many of us corrupt?

It’s not as corruption is the preserve of the government sector. Corruption infests even the private sector. I have heard of senior professionals taking money, getting caught and wasting an otherwise rich career. Virtually anyone who is in a position to “purchase” anything for his company is a prime target of anyone who is called a “seller”. Almost all private companies that deal with the government or bureaucrats in any way are used to paying bribes. There are even innovative ways available to mask the bribe and make it look like something innocuous. Private companies get bills from vendors who convert want to convert their black money into white. Free foreign trips to senior decision makers, lavish Diwali gifts, “the recruitment racket” (where one spouse funnels candidates to the other’s company to pocket the recruitment charges) and much more….it’s all there in the private sector.

We’ve even figured out a way to keep it all under wraps. Even give it an honorable description. During a recent trip to Kolkata, I asked my cabbie if the corruption of traffic cops had reduced after Mamata Banerjee came to power. His answer: No. It’s the same. Then he said something that I have never heard before. It even put a whole new spin to corruption. He had no angst against the corrupt cops. The way he saw it, they had “invested” their money into securing their posting; now they were just getting the “returns”. If it hadn’t been so sad, it would have been funny! It’s not too difficult to imagine that this cabbie would be willing to bribe a PSU bank official (sorry invest in him) to avail of a taxi loan. Maybe all such spends should be called investments; then maybe India’s 36% investments rate would become much bigger!

Corruption has even entered spheres that should never have been penetrated. It is common knowledge that the judiciary has its corrupt elements. Corruption in lower-rung judiciary is massive. Even the High Courts are not spared. There are also allegations that SC judges are corrupt. It’s equally true that members of civil society are corrupt. During Anna’s struggle, Kiran Bedi was caught with her hands in the cookie jar (airline ticket fraud). We saw that the two Bhushans were beneficiaries of the UP government’s cheap land handouts. We saw Kejriwal unable to explain why he was never transferred out of New Delhi’s profitable Income Tax office. If our judiciary and civil society are corrupted, we have to recognize we are in a deep pile of crap.

If we the common people get off our high moral high horses, we may still be able to extricate ourselves from this mess. The first thing we should do is accept the truth: that we’re all corrupt. We need to cleanse ourselves first.

In my view, we should agree on a “cut-off date” (say April 1, 2015) beyond which we will not tolerate corruption. Yes, everyone should be given amnesty for everything they have done in the past. The witch hunting won’t help. Once the cut-off date comes, we should have a “zero tolerance” towards corruption. The guys who indulge in even small levels of corruption would have done it with full knowledge; they would have no excuses, no explanations for their misdeeds. Our politicians – all of whom publicly express their keen desire to remove the scourge – should be forced to make new laws in the interim period until the cutoff date. Laws that treat corruption like treason; an attack on the country. At the same time, we should increase the pay scales of government servants to levels that are at least half reasonable. We cannot expect bureaucrats who are worth crores in annual salaries in the private sector to work in government jobs for a few lacs (note: even the Cabinet Secretary, the seniormost guy, “takes home” less than Rs 1 lac a month, a salary an MBA with 5 years experience makes in the private sector). If this needs reducing the size of the government, so be it (we needn’t sack people; we can let natural attrition do its job). We must also remove “reservations” from critical departments which handle corruption – the CBI, the parts of the police that handle corruption cases, the judiciary.

We also need a lot more transparency. Aadhar cards must be made compulsory. No entitlements should be allowed without them. Bank accounts must be compulsorily opened; even if there are only small balances in them. Centuries-old laws should be amended and made simple and logical. Much of the corruption emerges because common people don’t know how to wade through the complicated maze of such laws. Stupid laws should be abolished. Take the “drinking permit” required in Maharashtra. The permit costs just Rs 10 a day, but most restaurants don’t have enough of them to give to their patrons. If the police swoops down, so many people are liable to be jailed. Money changes hands to avoid that. All processes should be simplified and put on the net. Take passport issuance, which is so complex you need to go to a tout. The process should be simple and clear. If the UK can issue passports via remote submission of documents, why can’t we?

The real truth is that the solutions are readily available. Corruption doesn’t exist only in India. The developed world has seen enough of it. And overcome it in the most part. We can learn, adopt and adapt. Provided we want to. And provided we acknowledge we are all corrupt. Each one of us. With no exception….Are we up to it?

Vinod Rai was no Seshan….Good riddance to a very bad auditor

Vinod Rai, the CAG, retired yesterday. His fans often compare him with the great TN Seshan, the Chief Election Commissioner between 1991-96. I fail to understand why. Seshan was a dynamo who functioned within his Constitution defined mandate, bore no political preferences, and stayed focused on the issue (electoral reforms), never the personalities (the politicians) involved. He left India better. If anything, Vinod Rai is the exact opposite; one who breached the constitutional limit, played political favorites and focused on personalities (see his attack of Sibal yesterday), not issues. Rai was out and out, a political animal. Manmohan Singh may have failed to arouse the animal spirits of India’s business class, but it appears he certainly aroused Mr. Rai’s.

Seshan cleaned up elections. Rai messed up auditing. Seshan steered clear of politics. Rai basked in it. Seshan (ironically) united the politicians into attacking him; Rai divided them between the ruling dispensation and the opposition. Seshan didn’t go about checking with politicians if they were on the right path. Rai did exactly that (Murli Manohar Joshi). Seshan was intellectually honest. Rai intellectually bankrupt. Seshan was successful. Rai will go down as being a failure. Where’s the comparison?

Lets be honest. Rai basked in breaching constitutional propriety. He probably found accounting boring and decided to become the one-man PAC itself, combining the job of maker of the audit reports with that of the checker of the same. He did what no other auditor does – go to the shareholders (voters) directly – through much publicized press conferences, flashing copies of his report and even smiling for the cameras. He was intellectually dishonest because he intentionally failed to understand that making policy is not his domain; that the cheap spectrum policy had several downstream benefits; that the intention of every government policy is not to maximize revenues (a point the Supreme Court later re-affirmed); and that his “innocuous” naming of something as “notional loss” would be spun by his favorite political party into “mota maal”.

Vinod Rai was surely a smart man, who played his political cards right. He knew that he was above the reach of any politician; his impeachment nearly impossible because of the divided Houses. He used this to the hilt. He must have wrung his hands in joy as he saw the Executive go into policy paralysis; stopping any activity that it was contemplating, good or bad; even seeking his “pre-approval” for new policies, turning topsy turvy the basic principles of there being a distance between the executive and the auditor. Vinod Rai was smart. Rumor is that he has negotiated a cabinet posting with the BJP should the NDA return to power in 2014.

Vinod Rai was happy to ignore even basic accounting standards. He pretended not to understand that when a company invests in another company’s equity via the issuance of new shares, the capital infused goes into the company, not into the original shareholders’ pockets. Issuing new equity is not the same as selling equity. Original promoters don’t make a profit. Unitech did not take home a single paisa from Telenor; all the money that Telenor invested went into the joint venture – and was used for rolling out the network, building the Uninor brand, running operations, funding the losses. As became clear later, the investment proved a bad one for Telenor; it lost everything that it had invested. Unitech also lost all its original investment. But what’s so surprising in this? Did Rai not know that a majority of investments go bad? Did he not see that Vodafone declared its maiden profit some 15 years after being in India, and even after it had got its spectrum cheap? Did he not see that because of the cheap spectrum, India’s mobile penetration climbed from 150 million to 900 million? Where was there anything illegal in this? Which joint venture doesn’t follow this exact same model?

If “notional loss” was his claim to fame, why did he not bring out a report on the loss caused by fuel, fertilizer and food subsidy? The notional loss due to fuel subsidy alone since 2004 would be more than Rs 10 lac crores. That would have made even bigger headlines. His party, the BJP, would have loved the fuel scam, because it had disbanded all administrative controls on petrol pricing. Maybe Rai didn’t do the fuel scam report because it would have ensnared the BJP in LPG and Kerosene subsidies. For the same reason maybe, he left fertilizer and food subsidy out as well. I still cannot understand how he projected telecom subsidy to be haraam, but fuel and fertilizer subsidy to be kosher.

Or take coal. Countless economists have argued that the calculations that Vinod Rai made were baloney. He applied CIL production costs to private companies (even though CIL mines are much cheaper to operate than the ones given to the private companies because of their better locations), refused to adjust for “time value of money” (something even a first year commerce student knows), and refused to take into account that power producers had in fact “reverse bid” for electricity keeping zero mine acquisition costs in mind. Given Rai’s rich academic background, it is difficult to believe that he didn’t understand all this. It had to be his political biases then. Why was he always focused on the period starting 2004 after the UPA took over? Probably because if he had gone into the NDA tenure, he would have found the same “scammy” things there as well. The coal allocation process has been going on since 1993, and the Kalyan Banerjee led Parliamentary committee stated that all governments since 1993 – including the NDA’s – were equally guilty. The same observation was made by the telecom JPC led by Chacko that a Rs 40000 crore loss took place during the NDA tenure. Rai was a smart man; he intentionally kept these periods out of his reviews.

Rai caused a lot of harm to India. It is because of his flawed reports that the telecom sector is in the doldrums. 3G has failed because operators bid too high. 2G is now starting to fail because Vinod Rai has made the government substitute cheap spectrum with expensive ones. Vinod Rai used the wrongly established 3G pricing to determine 2G pricing. Telcos have responded by culling low value subscribers – those on the bottommost rungs of our society. They may well get disempowered again, and they can owe that to Rai.

Rai will be missed only by the BJP supporters. He was the one who gave a depressed, diffident party (after the 2009 loss) a new charge. He is the one who put the government into a policy paralysis. He is the one who gave the BJP a baton to hit the squeaky clean PM with; the very man who cleaned up a flawed coal allocation system and replaced it with auctions. Without Rai, where would the BJP be today? So if anyone is going to miss Rai, it is the BJP. The rest of the country – especially those who care for audits and accounting – will say “good riddance”.

The real truth is that Rai’s legacy will be a political one; not an auditing one. He will be remembered not as one who fought the entire political class, but only one, the Congress. He wont be remembered as someone who cleaned up telecom; but as one who dealt it a fatal blow. Make no mistake, Rai will be remembered as the opposite of Seshan, not as Seshan….

“Soft” Indian diplomacy proves its worth….

The successful visit of the Chinese Premier Li Keqiang to India should be a slap on the face of hardliners, who just a few weeks back, were preaching that India should escalate tensions with the neighbor. Had we gone down that path, we would have got embroiled in an unnecessary spat with a China that even the West fears to engage militarily. Fortunately, the hot heads were kept out of the diplomatic process, and restricted to irrelevant TV shows. If these people had the guts to admit mistakes ever, this would be a good point to start.

There is a huge symbolism in the Chinese Premier making his first international stop in India. He could have gone anywhere he chose. He could have gone to the US, which would have been natural, considering how much trade the two countries share, and the amount of US debt China holds. He would have been given a warm welcome, and even the US would have gloated that it was the first country to be chosen by Li for a visit. He could have gone anywhere in Europe where the sinking economies would have surely rolled out the red carpet, with an eye on the billions and trillions that Li could splurge. Li could have gone to Pakistan, even though that was less likely, considering the terrible reputation of that country, as also the solid control China already exerts on it. Or it could have made a grand “visionary” statement by visiting an African country, sending an emotional “this is the African century” kind of message; at the same time protecting his country’s huge economic interests in the continent. But no, Li chose India. Li came trooping in to India, even if that warranted an almost humiliating withdrawal from a “daggers drawn” position in the Himalayas just a few weeks back. Why, is the question the hardliners will fail to answer.

Oh, of course its for reasons of trade, they’ll argue. But wait a moment and think about this. The “target” for two-way trade between India and China is some $100 billion by 2015. Assuming China has an advantage, its export to India could be $60-70 billion out of this. For a country that exports nearly $1.5 trillion worth of goods every year, this is loose change. It cannot be trade then. Could it be investments that Chinese companies seek to make in this fast growing market? After all, media reports indicate that many of the people traveling with Li are those who can be called “sellers” of Chinese wares. Fair enough. Chinese companies want to expand their presence in India. That’s what bonds countries together. India is bound to be suspect of Chinese investments, but it is satisfying that the neighbor is here paying obeisance to the Indian “economic dynamo” and wooing India to allow it to grow its presence.

Yet another reason could be that China doesn’t want any diplomatic fracas with India at a time when it is already engaged in an eye-for-an-eye push in the South China Sea. Or it wants to keep India out of the US-Japan-Israel grouping and thus nip a growing “surround China” strategy being orchestrated by these countries. If that’s true, India has played its diplomatic cards right, putting pressure where it matters. Again, this has been achieved “softly”, without much noise, especially on Indian TV news channels.

Either way you look at it, the symbolism of the first Chinese visit is enormous. With this visit, China has extended a warm hand of friendship. It would be stupid for India to fall for the “affectionate” rhetoric; but it surely helps that there is peace on the borders. India needs to focus on mending its economy, and pulls hundreds of millions more out of poverty, and anything that helps it do that is welcome. After all, the whole purpose of diplomacy is to protect a country’s larger interest. There is no place for a hot head in diplomacy; only a cool master.

Further, its not as if India has skirted the main issues aside to appease China. It has “strongly” raised the border issue, and the two countries have expressed a willingness to resolve the same through talks. Both countries have shown a maturity that is only possible between two partners who respect each other. This kind of maturity is pretty impossible with Pakistan. But it is with China. India has also forcefully stated that trade and all that is fine, but trade imbalance needs to be sorted out too. And on Brahmaputra and other river waters, China has reassured India that it will take care of our concerns, not doing anything that disturbs the downstream potential of the mighty rivers. Lets be honest here. China has done its bit, even going farther than we could have expected, behaving with the maturity required of a large neighbor. The ball is now in the Indian court. Thankfully, we have a government that understands diplomacy, and not one that behaves as if its brains were located in its loins.

The real truth is that soft diplomacy is the only type of diplomacy that exists. Those who argue for India to take a hardline – meaning that we should force a military conflict with China or Pakistan, or threaten them with adventurism – are plain foolish. The BJP is at the forefront of such demands. Of course, the BJP’s demands are all opportunistic; it would practice nothing but softness when and if it came to power….

Ex-BSP member Kushwaha indicted for corruption; but spotlight should be on the BJP….

It was in Jan 2012, just a few months before the UP state elections, that the BJP had “recruited” Babu Singh Kushwaha from the BSP. Kushwaha was accused of corruption in several cases, but the BJP had had no qualms in making this “opportunistic acquisition”. They would have fielded him for the elections, hoping that his candidature would get the party some extra support, except that there was an all-around furore about this issue. Don’t forget that at about the same time, the BJP’s central unit was “solidly” supporting Anna’s movement to cleanse public life of corruption!

Sensing trouble, Kushwaha had put his BJP membership in “abeyance”. Interestingly, it was not the BJP that had rejected Kushwaha’s membership, it was he who had stepped aside. Looks like there indeed is honor amongst thieves!

Well, the same Babu Singh Kushwaha has now been indicted by the UP Lok Ayukta in a Rs 1400 crore scam. Incidentally, this figure of Rs 1400 crores is the Lok Ayukta’s figure. Had the CAG investigated this scam, the figure would have publicized (through a press conference, even!) as being a Rs 4500 crore scam; because that was the scale of the overall spending. The CAG has often forgotten that corruption figures are usually a % of the total spend figures! But returning back to Kushwaha, the former mining minister of the BSP government (along with another senior ex-minister) skimmed off Rs 1400 crores from a public project. The man didn’t even spare the project so valuable to his party (the erection of five dalit memorials in Lucknow and Noida). In fact, he showed that anything – and I mean, anything – is gair ground for corruption!

The focus of this piece however is not on Babu Singh Kushwaha. It is on the BJP and its “extreme comfort” with corruption and corrupt leaders. At the time the BJP inducted Kushwaha into its cadre, the UP Lok Ayukta’s report was not out. Yet, what was known about him was damning enough. This is what Wikipedia reports about him “On April 7, 2011, he was forced to resign after being implicated in the murder of two Chief Medical officers BP Singh and VK Arya. It was alleged that their honesty was coming in the way of a political mafia who were skimming off large sums from the Health services.” So corruption escalating into murder is something that the BJP is comfortable with. That’s not reason enough to remove a member from the party; nor to stop the “acquisition” of new members!

The focus of this post is also on the comfort of the party with political double speak. I wrote a few days back about how the party had no qualms in first inducting gun-toting Gujarat MP Vitthal Radadiya into the party, and then nominating him for the Porbandar bypoll. It was the same MP that the BJP had derided (BJP spokespeople speak very forcefully!) a few months back when he was caught on camera threatening a poor toll-booth ticketing clerk…..because Radadiya then was with the Congress. Yet, when an election opportunity beckoned, the party welcomed him with open arms.

My complaint is not that the BJP is ok tolerating corruption. Every party has its share of the corrupt and the criminal. But only the BJP makes a big deal about corruption and pretends that it is a party with a difference. If it really was so different,  then what compelled it to induct Kushwaha in the first place? And what compelled Advani and Sushma Swaraj and co. to tolerate, and in fact encourage, Yeddy and Reddy and co. in Karnataka? And what action will they take against Chouhan in MP who appears to have doled out large parcels of land at cheap rates to his “parivar”?

What really irks me is that on issues of corruption, the BJP stalls Parliament. Worse, it claims that stalling Parliament is a legitimate way of running a democracy. It holds the government responsible for the policy paralysis that follows. There are more than 100 bills awaiting Parliament’s approval. What can the government do if these bills are not discussed and passed in Parliament because it is stalled? The BJP forgets that while these bills reflect the political ideology of the ruling party (and hence it feels compelled to skuttle them), they also reflect the desperate needs of the people. Food security may not be something that the BJP’s affluent and well fed members understand, but surely – if they stepped out of TV studios and air conditioned offices – they would see the poor wanting these measures?

Besides, some of the actions of the BJP are absolutely brazen. It assumes a “do what you can” attitude. Take an example. The BJP appointed Modi’s trusted man Amit Shah in charge of UP. Now Amit Shah is an under-trial, for the Sohrabuddin fake encounter case. This is what Wiki says “He is currently under judicial bail as one of the accused for kidnapping and encounter killing by the State Police of Sohrabuddin Shaikh, his wife Kauserbi and their friend Tulsiram Prajapati. The Supreme Court has directed that while his bail is under challenge, he is not permitted to enter his home state of Gujarat where he may influence the investigations as he was the Home Minister during the encounter killing”. The BJP claims to respect the SC. At least that’s what it publicly states. Then did it not understand the real intent of the SC’s words? If Amit Shah cannot be trusted not to tamper with evidence, can he be trusted with leading a clean campaign in UP? Isn’t the SC’s directive fairly clear – that this man should “rest” until the charges against him are proved one way or the other? But Amit Shah is Modi’s personal favorite. Amit Shah is capable of turning UP into a cauldron of communal hatred, the way he has made Gujarat one. Amit Shah is invaluable in BJP’s politics; the SC can be ignored for a bit.

The real truth is that the Kushwaha indictment by the UP Lok Ayukta stings the BJP as much as it does the BSP. By admitting the man into its party – as also Radadiya in Gujarat – it showed just how comfortable it was with corruption and double speak….

Karnataka MLC’s letter exposes Advani/BJP’s hollowness on corruption….Modi responsible for leak????

The letter written by Lehar Singh Siroya to Advani got him sacked. What was there in the letter that made the party take such a drastic step? Does it mean that there is zero tolerance in the party for “viewpoint plurality” (rather than for corruption)? Can the party simply not discuss its internal problems, and handle charges against its seniormost leadership without exerting authoritarian measures? The answer is that the contents of Lehar Singh’s letter are indeed damning; and shows both Advani and Swaraj in poor light. While the letter is damning enough, it also begs me to ask another question: Who is behind the leak of this internal letter? Is it Modi, considering how much he benefits if Sushma Swaraj and Advani are cut to size? There is more than a small reason to believe this theory.

What has Lehar Singh written that has embarrassed the BJP so much that they had to sack him? Check out some of the most explosive stuff (reproduced verbatim from the letter available at http://pastebin.com/XCHNUbas):

“Since you talk so much about corruption, can I ask you if you ever asked Yeddyurappaji as to where did the money come from for the elections that brought us to power in 2008; the many by polls that were a result of ‘Operation Kamal’ that ensured a majority for the government; as well as money for your earlier rallies and yatras? Why were you silent when all this was happening without hindrance?”. Good questions indeed. Of course Advani knew there was illegal money funding his party’s election in the state in 2008. What is Operation Kamal? How did this operation ensure a majority for the BJP in Karnataka? Did they buy out the voters, and their leaders?

“In 2009 again, Karnataka delivered the biggest contingent (of 19 MPs) to the Lok Sabha. You were the ‘Prime Minister in Waiting’ and we were all working untiringly to make your dream come true. Even at that point you never bothered to check where the money was coming from to get MPs elected. You seemed to be focused only on your life’s ambition”. Aha. This is a direct attack on Advani. So were the 19 MPs “funded” by illegal money power? All this illegality to make Advani PM? Is this not the real cash-for-votes scam? And they accuse the real PM of it?

“Then came the infamous ‘Hyderbad revolt’ within the government and the state unit of the party. You may recall, this was led by the mining mafia. The negotiations to end the impasse were held not in the party office, but at your residence. The entire nation watched the reborn ‘Ironman of India’ succumb before the mining mafia, who ran an illegal and immoral empire in the state. Didn’t that look like ‘corruption’ or ‘compromise’ to you”? And then a little later “Advaniji, you always take a self-righteous position on corruption, without putting your own actions under the scanner”. We need details, but clearly the man (and the party) that wants to take a higher ground on corruption is itself soaked in it. Looks like Advani has been part of the mining mafia since long.

Its not like it was just a single incidence of condoning corruption. “I also take this opportunity to remind you that when a delegation of 10 senior leaders met you in early 2011 at your residence to tell that it was becoming impossible to run the government due to misdemeanour of the mining mafia and sought your intervention, you refused to intervene. Your silence at that time was deafening”. So while Advani was holding up Parliament over corruption, he was meeting his leaders at his home and condoning corruption repeatedly?

“You always speak of ‘zero tolerance’ towards corruption. But ironically, the compromise with the mining mafia was offered to you, then, as a ‘birthday gift.’ Have you ever questioned Sushmaji on her long association with the mining mafia and the nature of that association which is a subject of drawing room and newsroom gossip? The mining mafia referred to her always as their mother and she basked in that affection for years”. And then later in the letter “We know you have a very special corner for Sushmaji in your heart, that is your private affection, but kindly desist from comparing her to an icon like Atal Behari Vajpayee in future. This is because she is perceived as the ‘god mother’ of the mining mafia in Karnataka by the entire nation”. So this is the kind of birthday gift Advani likes?! Also, everyone knows Swaraj has been a big part of the mining racket. Do keep this attack on Swaraj in mind, for a later discussion on Modi’s possible role in the leak of this letter.

And then the most direct and damning evidence of the cash used by the BJP to impact the Indo-US nuclear deal vote in Parliament: “May I also take this opportunity to remind you that when the party decided to oppose the UPA government’s nuclear policy in 2008, a couple of MPs from Karnataka were unwilling to toe the party line. Forget toeing the party line, they were even unwilling to board the plane to Delhi to attend Parliament. You are aware that the party had to buy the support of these two MPs. Your pointsman in Karnataka was the one who was negotiating their support. You highlight Yeddyurappaji’s deeds of corruption, but was this any less corruption? Was this not about sabotaging the democratic system? If you endorsed this, then how can we claim that a moral gap exists between the Congress and us”. Oh my god. This is outrageous. Clearly shows that the party used money power. Clearly shows that it was using its Karnataka unit and Yeddy as some sort of an ATM. The BJP’s first government in Karnataka was corrupt to the core….

And then more attacks on Advani’s tolerance for corruption: “You speak of the party being cleansed after Yeddyurappa’s exit. But do you realise how many tainted people were given tickets by the party during the current elections? Do you also realise that you sat next to some of these tainted people during your lacklustre rallies when you came down to campaign in the state? As a former home minister you should have had sufficient intelligence input to avoid these tainted characters. It was this kind of intelligence failure that affected your tenure as India’s home minister”. So much for the party’s stand on keeping the corrupt out….

One last point. The BJP often asks this question when discussing the Congress’s alleged deeds of corruption: “Who gains from all this?” pointing a finger at the Congress. Well, I want to ask “Who gains from this leak” and the finger can only point at Modi. Two of Modi’s fiercest internal competitors for PMship are Advani (who refuses to retire) and Swaraj (who is keeping low while Modi burns himself up). With this leak, Modi surely hopes that Swaraj will be cut to size. And now that Gadkari and Shivraj Singh Chouhan (in both of whose cases, Modi’s hand is suspect) have also been condemned, Modi’s the lone candidate left for the top job? Clearly, Modi is one scheming politician; one who cannot tolerate dissidence, and competition….

The real truth is one that I have made often. There is a huge credibility gap between the BJP’s public posturing on corruption and its reality. This comes out again and again. When its two Presidents had to be sacked for corruption; when its most vaunted CM Modi conspired to not have a Lok Ayukta in his state for 8 long years; when the MP CM doles out land at concessional rates to his family members…..it comes out again and again. Its time the BJP introspected…..but can it with leaders like Modi around????

Dipping inflation shows how wrong RBI has been all throughout….

The RBI adopted a hawkish stance on interest rates all through FY11 and half of FY12, taking cover behind what all central bankers do – high inflation. I’ve written several times about this. India’s inflation was not a worrying thing. It’s structure and reasons were different from what the classic factors and reasons are. And hence the response of the RBI Governor should have been different from what the classical response would be. Instead, Subba Rao continued with his mechanical ways, refusing to apply his mind to crafting a specific response; one that addressed the unique nature of Indian inflation. As a result, he contributed extensively to the GDP collapse of FY12 and FY13.

What is it about Indian inflation that was unique? Well, fundamentally the inflation was coming from food items, not manufactured goods where the RBI’s writ works better. But why were food prices rising? The RBI’s mechanical answer obviously is because of a supply demand mismatch; because farm productivity was lagging behind etc. Even if we accept this argument, the question that arises is: what can the RBI do to control this inflation via its bank rate mechanism? The answer is: precious little. But I’ll return to this later. Coming back to food inflation, the real reason was that there was more money in the hands of the poor, thanks to MNREGA and faster growth in the poor states of Orissa, UP and Bihar. For the first time, the poor were able to afford food. A hint of this was visible in the nature of the food inflation. Protein-heavy food products – like eggs, meat, pulses – and vegetables were on fire while cereals like wheat and rice and coarse grains were all sub 5%. The poor were finally starting to buy proteins and vegetables. So if the food inflation was because the poor were actually better off, then what was the worry? Conventionally, inflation is a tax which hurts the poor the most. That wasn’t the case in India.

But the RBI chose to go with a mechanical response. It increased bank rates 13 times in 18 months from April 2010 to Nov 2011, hardly helping food prices, but severely denting India’s manufacturing growth. The GDP growth plummtted right through FY11 and FY12, from 9.4% in Q1, FY11 to 4.25% in Q4, FY13, in tandem with the RBI’s rate increases. This was a case of a doctor giving medicines for malaria because he had been taught that even though the problem was actually a fracture in the arm! Or in today’s context, this is like looking for a cricket bookie in India when everyone knows that they are actually sitting in Dubai! But the RBI did exactly that. They kept increasing rates, because that’s all they know how to do. They’ve been taught in classic Keynesian economy terms that when inflation increases, banks must increase rates.

Not once did they consider that “core inflation” – essentially non-food, non-fuel inflation (or “manufacturing inflation” in other words) – on which they had some control through the interest rate mechanism was never the problem. In fact, in June 2012, Subba Rao was quoted in Mint: “although core inflation was moderating, a persistently high overall inflation, in the face of sharp slowdown in growth, pointed to “serious supply bottlenecks and sticky inflation expectations.” Exactly! Core inflation was moderating. There was a sharp slowdown in growth. And there were serious supply bottlenecks. So what should the RBI Governor have done? He should never have increased rates, but having made a mess, he should have dropped rates real fast. But Subba Rao is still a reluctant rate cutter. Even today, bank rates are at 7.25% way above the April 2009 number of 4.25%. I think the RBI owes an apology to the Indian corporate sector; and to all Indians.

The world over, central bankers are concerned with both inflation and GDP growth. Yet, Subba  Rao has chosen to ignore the latter and make the former his mission. His ignorance on the former made him do what he did; but his ignorance took a toll on the latter. Today, Subba Rao has realized his mistake as the May 2013 RBI statement admits “growth has decelerated continuously and steeply, more than halving from 9.2 per cent in the fourth quarter of year before last, 2010-11, to 4.5 percent in the third quarter of last year, 2012-13”. Subba Rao pretended – almost like a politician would – that inflation and the care of the poor was his only concern. Growth was someone else’s baby. And in order to prove just how “independent” he was, he was happy to give the cold shoulder to successive FMs – Pranab Mukherjee and Chidambaram – when they nudged him towards a better understanding of the subject. Subba Rao was determined he was there for the poor. But the poor were not the victims here. The poor were the ones who were driving up food inflation; a subject on which his rate hikes had very little impact!

Today, after four successive rate drops over the last year, inflation has actually come down, not gone up. Subba Rao never reduced rates voluntarily or out of conviction. It was like he was under tremendous pressure from Chidambaram and the industry. His was a grudging lowering of rates; not a wholesome belief. Today he’s been proven wrong conclusively. Today, headline inflation is down to below 5%; thanks to food inflation coming down. Food inflation, on which he has very limited, if not zero, control. In the process, manufacturing inflation has come down to below 2.5%, way below his own target of 5%. All this is happening in the backdrop of rising fuel prices – especially diesel. All those – mostly the BJP and opposition parties – who were complaining of diesel price hikes out of “concern for the poor” may want to re-calibrate their knowledge of the subject!

There are many factors that have helped inflation cool down. One of them is cooling petro prices and the consequent strengthening of the rupee (slight). But again, RBI’s rate increases has had no influence on global crude prices! India is just a lucky beneficiary of that fact. There is also a significant cooling of global commodity prices, as a result of which input costs have reduced, and in a hyper competitive slowing market, industry has dutifully passed on some of that cost saving to the people, pulling down prices. And finally, thanks to the drastic trouble that several sectors find themselves in – real estate, auto, durables, mobile handsets – they too have been forced to cut their margins and pass on price concessions in a desperate move to stay afloat.

The real truth is that Subba Rao messed up the Indian economy in the last two years. He increased rates without trying to understand the real underlying issues. He acted mechanically. He devastated Indian GDP growth, while hardly helping the inflation cause. If this is how “independent” regulators behave, I think we need less, not more of them…..