The RBI agrees.

All of 2012 we have been banging on about how the economy is teetering on the edge of a cliff and could fall off. Seems that the Reserve Bank of India agreed at last. In its Financial Stability Report the RBI says," The overall macro-economic risks in the Indian financial system seem to have increased since the publication of the previous FSR in June 2012." TOI, 29 December. Economic slowdown, high inflation, ballooning fiscal  and Current Account deficits, slowdown in domestic savings and investment demand and moderation in consumption are all threats to macroeconomic stability. So, according to the RBI every economic indicator points downwards. The main threat is inflation which is cutting household spending which, in turn, reduces sales and investment demand. Rising costs of basic materials, such as food, leads to less savings so banks have less money to lend and forces interest rates to stay high. The remedy should be straight forward - bring down inflation and everything will fall into place. That is where the trouble is. Inflation is being caused by high wasteful spending by the government and will probably get worse in the next budget to win the elections in 2014. High spending results in ballooning fiscal deficit which leads to very high levels of taxes on all goods and services increasing inflation and costs of exports which, in turn, reduces exports and increases Current Account Deficit. A significant portion of foreign exchange exposure of companies remain unhedged. " This is especially disquieting given that the exchange rate volatility has been higher in India in comparison to other emerging market currencies as well as those of advanced countries," says the report. Which is the RBI way of saying that the rupee has fallen against every currency and there is scope for more falls. Companies which have borrowed in foreign currency will have to pay more in rupees which will increase the risk of defaults. Falling currency has meant a rise in the value of oil imports and frantic buying of gold by the people as they looked to hedge against inflation. If prices rise and spending falls it results in the rise of bad loans. Non Performing assets of banks, as bad loans are known, have risen from 2.9% of assets at the end of March to 3.6% at the end of September and could rise to 4%. The RBI predicts a fall in tax and non-tax revenue increasing the risk of over spending by the government leading to a rise in fiscal deficit. However, even as the RBI was publishing such a gloomy report our most revered Finance Minister was exuding confidence about the economy while speaking at the National Development Council. He was saying that the fundamentals remain strong, there is a high savings rate, a growing services sector and a growing middle class so everything is first rate. Someone is clearly living in cloud cuckoo land. Question is, who?

Zero tolerance for whom.

A young woman of 23 years of age gets up on a bus in Delhi on 16 December accompanied by a young man. She is molested and when the man objects he is severely beaten up. She is then raped by 6 men and violently beaten because apparently she bit one of them in defense. Both are then thrown off the bus. She is admitted to hospital where she undergoes surgery to remove most of her small intestines which had become gangrenous. Even doctors, who are used to seeing injuries, are shocked. Her plight shocks the nation and people come out in protest against the constant assaults on women in the national capital. So the police beat up the protesters, arrest several and shut down metro stations to inconvenience all the citizens. One policeman, Subhash Tomar is found dead near India Gate and is taken to hospital. Doctors try to revive him but fail. They do not notice any injuries on his body but police allege that he was beaten to death. A postmortem apparently shows injuries. So who is lying? During resuscitation of a cardiac arrest patient ribs may be fractured during vigorous cardiac massage and defibrillator shocks may produce burns on the skin. Any medical intern knows that. One Congress minister compares protesters to Naxal terrorists and another Congress fellow says all the women protesters were " dented and painted ". According to the Congress only the aam aadmi can have any rights because they can be bribed by handouts into voting for the Congress. The educated middle class are an inconvenience because they ask too many questions and expect politicians to behave with propriety. After the operation we are told that the lady is improving, talking and is able to take small amounts of liquids. Unfortunately she develops an infection which is not uncommon in a patient with severe trauma and paralytic ileus. She is put back on life support and then suddenly 2 days back she is shifted to a hospital in Singapore. Why? With all the state of the art hospitals in India which are earning vast amounts through medical tourism do we not have facilities and doctors with training in intensive care to treat her? But better is to follow. The doctors in Singapore immediately announce that her brain is affected. What does that mean? Is it a subtle way of saying that she was already brain dead when she was shifted? Was this whole drama stage managed to show that the government was trying everything? With taxpayer money anything is possible. A day later she dies and her body is flown here in the early hours of the morning and police force the family to perform last rights at 7.30 AM. Ostensibly to reduce protests. Ten metro stations are shut down to stop people from moving. Trouble is that rage is letting the villains off the hook. The government will pass tougher laws, a couple of the rapists will be hanged and we will be back to normal. We should demand an end to the police state and the end of VIPs. Hang politicians. The real villains.

The sage has spoken.

The great Indian sage, Mr Montek Singh Ahluwalia says that India could grow by 8% in the 12th Five Year Plan. That is provided the governments at the center and the states can get their acts together. Which seems to be enormously doubtful since they have been unable to agree on a nationwide Goods and Services Tax for years and the Chief Minister of Tamil Nadu walked out of a meeting of the National Development Council in Delhi protesting about the " shabby treatment " meted out to her and saying that the Center was " stifling the voices of chief ministers ". TOI December 28. Mr Ahluwalia said," I would like to emphasise that achieving an average of 8% over five years, following a first year growth of say 5.8% ( 2012-13 ) and say something over 7% in the second year, will involve a sharp acceleration in the last three years of the Plan." What he is saying is impossible because even if growth is 7% the second year we will need growth over 9% for the remaining 3 years to get near an average of 8%. Almost before the Great Sage had stopped speaking than the Prime Minister was in action saying that 8% growth over the next 5 years is " ambitious ". He said," We cannot change the global economy, but we can do something about domestic constraints which have contributed to the slowdown." He goes on to say," Unfortunately, energy is underpriced in our country. Our coal, petroleum products and natural gas are all priced below international prices. This also means that electricity is effectively underpriced.......some phased price adjustment is necessary." Not the whole truth is it? Today petrol is selling at an average price of $3.20 a gallon in the US where there is no subsidy and the price includes tax at 12%. One US gallon is 3.8 liters so if we calculate @ Rs 55 to the dollar we find that petrol is selling at less than Rs 50 a liter. Diesel is somewhat more expensive. Here we are paying Rs 76 per liter for ordinary petrol and Rs 79 for premium so petrol, at least, is extremely overpriced. As for coal, according to the Geological Survey of India we have reserves of around 293.497 billion tonnes. Why in God's name are we importing 70 million tonnes every year from Australia and Indonesia? Diesel is selling at Rs 48 per liter which is low so he wants to increase the price gradually by Rs 10. The effect will indeed be electric because inflation will instantly shoot up preventing the RBI from reducing interest rates that everyone is begging for so desperately. At the same time he is under orders to increase handouts to the " vote bank " in the coming budget to have any chance of winning elections in 2014. We are entitled to ask what the hell he has been doing since 2004 that he has been clinging on to his kursi so shamelessly. He was built up as a World Famous Economist but will leave behind a broken economy. What a legacy to have!

Grease pole economics.

The government has announced a number of incentives to spur exports and a 2% interest subsidy scheme, which was to expire in March 2013, has been extended for another year. Why? Because exports have fallen by 5.95% between April and November to a total of $189.2 billion while the trade deficit has jumped to $175.5 billion between January and November. If the deficit is not reduced quickly our credit rating could be reduced to junk status. TOI 27 December. " With these measures, we should be able to give a push to our exports in the last quarter of this financial year. The objective is to stabilise the situation and try and move from the negative territory to positive," said Commerce and Industry Minister, Anand Sharma. We would like to ask what he was doing in the first 3 quarters. The same minister is on another page this time saying," In a month's time, that is by January end you can expect the revised or the new SEZ guidelines which will  definitely be a positive mood booster for the investors." The government had imposed Minimum Alternative Tax and Dividend Distribution Tax on these Special Economic Zones or SEZs. They are also thinking of imposing income tax but giving some tax relief on investments inside these zones. Earlier the zones were exempted from almost all taxes and the imposition of duties has seen a drop in exports from these zones. The government is also working on how to reverse the retroactive taxes imposed under the General Anti Avoidance Rules or GAAR introduced in the last budget without losing face. This was designed specifically to claw $2 billion from Vodafone on its purchase of Hutch telecom from Hutchison Whampoa in 2007 after the government lost the case in the Supreme Court but had such a negative effect on Foreign Direct Investment that they panicked. Why does the government impose taxes and then announce their withdrawal while pretending to do something clever? Because it is caught in a trap of its own making and does not know how to get out of it. This all stems from the measures taken in 2008 to win general election in 2009 when the Congress forgave all loans to farmers, increased salaries of worthless civil servants by 80% and started the NREGA scheme which pays the rural poor for fictitious work. The effect was 10% inflation and zooming fiscal deficit. The RBI reacted by raising interest rates 13 times, increasing borrowing costs for industry, but has failed to control inflation. To contain deficit the government increased taxes indiscriminately worsening inflation and hampering exports. Falling exports led to rising Trade and Current Account deficits so they panic and want to cut taxes. The impression is akin to the monkey we read about in school that climbs 3 feet up a greased pole and slips back 2 feet. This with the World Class Economist in charge. Absolute disgrace!

They killed the goose.

The government had hoped to award contracts to build 8800 km of roads this year but has found bidders for only 705 km. TOI 26 December. The projects are awarded on a Build, Operate and Transfer basis which means that the company which is awarded the project raises money from the market either through bank loans or through sale of equity and then recoups the money by charging toll from motorists and commercial vehicles over a period of 30 years. The road is transferred to government ownership after that. Last year 8000 km of roads were awarded with 31 of the 51 projects going at a premium which means that the companies actually paid the government large sums of money to be awarded the projects hoping to make huge gains because they would have monopoly to charge toll over 30 years. Trouble is that the calculation of earning potential was based on entirely erroneous traffic density. Whether civil servants had willfully duped them by showing projected traffic growth at unrealistic levels we do not know but most of these projects are now making losses. Companies are desperate to sell off these projects in the secondary market. Companies want to dump 50 projects for 5000 km of roads worth Rs 500 billion because the they are unable to pay off their debts. If you drive on our so called highways you will find very few cars except on certain stretches. Traffic mainly consists of trucks and occasional buses. Petrol is very expensive because of taxes and the addition of tolls makes a car journey more expensive than first class train fare. There is complete absence of police patrols on these roads so villagers drive the wrong way to save time making it extremely hazardous. If a car breaks down no help will be available and you maybe robbed by locals. A distance of 1000 km will take around 20 hours of driving whereas it will take around 12 hours by train in much greater comfort. It is impossible to understand why when politicians keep going abroad on taxpayer money they cannot understand that driving has to be safe and pleasurable for people. On the other hand if lots of people took to driving our oil bill would jump and the Current Account Deficit would be unsustainable. " Most of the private sector infrastructure firms are themselves trying to find a buyer for their road projects. How can you expect them to bid for new projects? They have already bitten off more than they can chew," said an industry analyst. The same for airlines. High taxes are killing the industry. International Air Transport Association CEO, Tony Tyler said," As long as high taxes prevail, high airport costs and congestion, high cost of operations exist, you are not going to get a lot of people to invest in airlines." Infrastructure is for the future but the Congress wants to loot now to win elections. The goose is dead. No golden egg.

The spoils of victory.

Since Obama became president in 2009 the Republicans were determined not to cooperate with him. During Obama's speech to a joint session of the Congress on 9 September 2009 a Republican Congressman, Addison Graves " Joe " Wilson shouted " you lie " twice when Obama said that healthcare would not cover illegal immigrants. Subsequent fact checking revealed that Wilson was wrong. The Republican hatred gave rise to the Tea Party with whose help they won the House in 2010 and, under Speaker John Boehner, refused to raise the debt ceiling in 2011 just to try and humiliate Obama. Eventually the debt ceiling was raised with an agreement that $600 billion worth of tax rises and spending cuts would kick in if there was no deal on fiscal reform. Their tactics of obstructionism backfired to give Obama a second victory in last month's elections. Now Obama is demanding tax rises on people earning more than $400,000 per year but the 51 members who belong to the Tea Party caucus are refusing tax rises on anyone. So Boehner came up with plan B which would allow tax rises on people earning more than $1 million per year but was humiliated by the caucus into withdrawing the bill. Boehner may be thrown out as Speaker and if $600 billion are suddenly withdrawn from the economy the US may go into a recession. In Egypt President Muhamed Morsi forced through a referendum on a hastily written constitution which he won with 64% of votes cast. However, only about 35% of people voted which means that only around 18% of people supported the constitution. Liberals and religious minorities are opposed to the constitution because it is based on the Sharia but that will not stop Morsi and the Muslim Brotherhood from hailing a great victory and going ahead with parliamentary elections in 2 months time. If they win that, which is not guaranteed, they will have total power over Egypt but that is when their troubles will start. Muslim hardliners, like the Salafis, will demand  complete Sharia law like in Saudi Arabia and will protest violently if refused. In May 2011 Salafis attacked 3 Coptic Christian churches in the Imbaba neighborhood of Cairo killing 15 people and injuring 232 others. On 7 August, 2012  militants attacked a Border guard post as they were sitting down to break their Ramadan fast killing 16 guards. They stole 2 security vehicles and drove through the Israeli border fence. One vehicle exploded and the other one was blown up by the Israelis killing 7 militants. In the 1980s Zia ul-Haq increased the number of Madrassas in Pakistan from 893 to 2801, supplied arms to Khalistani militants and actively helped terrorists to fight the Soviets in Afghanistan. Today the Khalistanis have gone but thousands of Pakistanis are being killed by terrorists. Our fascist government wins by beating us up. It should remember what happened to Mussolini. The spoils of victory maybe poisoned. 

Paper instead of gold.

The government wants people to stop buying gold because it costs $80 billion per year to import gold and worsens the Current Account Deficit. There are only 2 assets you can buy to hedge against inflation and the falling rupee - gold and property. However, property prices are so high that you can buy nothing with, say, Rs 50,000. After all you cannot buy one sq inch of land. But you can buy 5 or 10 grams of gold which makes it an ideal investment . To stop purchase of gold taxes were increased but this has not deterred people so now they want to tempt people to buy shares. The first bait was the Rajiv Gandhi Equity Scheme which reduced the Securities Transaction Tax on first time investment of up to Rs 50,000 in shares. This found few takers. So now they are thinking of changing the Equity Linked Savings Scheme which allows you to deduct a maximum of Rs 100,000 from your taxable income every year by locking your money in the scheme for a minimum of 3 years. This means that no matter what happens to the stock market you cannot sell out. They want to increase the amount people can invest in this scheme. TOI 19 December. There are 2 reasons behind the government's actions. The first is that the government is broke and the Congress wants to raise money to bribe people to win general elections in 2014. The next budget is its last chance so it wants to raise as much as possible to give away. One way is to sell parts of Public Sector companies. In March they wanted to sell 427.7 million shares in ONGC at a floor price of Rs 290 per share to raise Rs 120 billion. Sadly there were no offers so the Life Insurance Corporation of India, a government controlled company, was arm twisted to buy up shares at Rs 303 per share to raise Rs 127.47 billion. This was proclaimed as a big success but was a rip off of the public because the share closed at Rs 256.20 yesterday. In November sale of Hindustan Copper shares raised Rs 8.08 billion again with a large chunk of LIC money. On 12 December 40 million NMDC shares were put on the block at a floor price of Rs 147 per share. Seems that the offer was over subscribed 1.7 times but strangely the Bombay Stock Exchange allowed the sale to continue after the closing time of 3.30 PM. Apparently the RBI bought back gilts worth Rs 116.50 billion on 5 December from the LIC and government banks to allow them to buy NMDC shares. TOI, 24 December. The second reason that the government wants to lock our money in shares is because it is terrified of what happens in the US. If the fiscal cliff is averted and the US Congress reaches a deal the US economy and the Dow will zoom up. All the money that has come here from the Fed's Quantitative Easing will vanish and our market and the rupee will go into free fall. If our money is locked in for 3 years the market will not fall as much. They want to give us worthless paper for our gold. How sinister is that?

The joke is on us.

Various former VIPs are illegally occupying government houses which were given to them while they were in office, of which the former governor of Bihar, Buta Singh is one, despite previous Supreme Court orders for the houses to be vacated. Last week the Court gave them 4 more weeks to vacate the properties. TOI, 7 December. On 4 August 1989, 8 men were convicted of second degree murder by a court in Bihar and sentenced to 10 years in prison. They appealed to the High Court in Patna which allowed them out on bail till 10 November 2000, that is for 11 years, when it decided to uphold the appeals. On 17 June 2008 the Supreme Court overturned the High Court's order and upheld the earlier sentence of 10 years in prison. It was not until 9 May 2012, that is a full 23 years after the first sentence, that a local court issued arrest warrants for the accused. By this time 3 of the criminals had died. TOI, 23 December. Thus so called VIPs and murder accused are able to flout orders of the Supreme Court with impunity but God help if anyone dared to criticise our judges. Vengeance will be swift and you will end up in prison on charges of contempt of court. It is against this background that we have to try to make sense of the horrific attack on a young woman in a bus in Delhi. The rapists were so confident of not being punished that they made no attempt to flee and went about their normal business. They would probably have been out on bail by now if the public anger had not boiled over and thousands come out in angry demonstrations. So what has been the police response to the demonstrations? They allege that " vested interests " are inciting people and have resorted to water canons in the biting cold and beating up people with sticks, also called " lathi charge ". This extreme brutality is all they have been taught as a police state seeks to maintain its absolute power on its citizens. On 4 June 2011 the same Delhi police brutally beat up Baba Ramdev's supporters who were asleep at 2 AM and claimed that they were rioters. One woman died. They had dared to ask for a Lok Pal bill to rid the country of corruption. Needless to say the bill has not been passed. The most surprising fact is that India today is ruled by women and yet no woman is safe in our capital city. Trouble is that a lot of politicians are rapists and if they were to be jailed the balance of power might change. Also women in power are just as corrupt as the men and want to protect their children who have amassed enormous wealth through rent seeking. All it needs is an independent police force, women police to care for rape victims very gently, lady doctors who will examine the victims and collect samples for analysis and judges who will restrict corrupt lawyers from endless delays. Will it ever happen? No. The entire justice system is a joke and the joke sadly is on us.

We love contracts.

Indian politicians love to sign contracts. Our government signs endless Memorandums of Understanding with foreign countries, dishes out contracts for various projects that never get built and signs bilateral trade deals with trade blocs all over the world which end up benefiting other countries. After a 2 hour meeting our Coal Minister, Sriprakash Jaiswal and Power Minister, Jyotiraditya Scindia have decided to sign pacts between power producers and the government owned Coal India Ltd to supply coal to power stations. After a " freewheeling and positive discussion " Mr Jaiswal said," Most of the issues related to Fuel Supply Agreements have been addressed. The FSAs ( between power companies and CIL ) are likely to be signed in a month's time." TOI, 22 December. The coal is in India and India needs power. Ergo, dig it out and supply it to power stations. What is the need for signing pacts and why should it have to wait one month? Since India has huge reserves of coal and CIL is a government company there is no need to look at international prices. Cover the cost of mining and transport to keep it cheap and supply cheap power to manufacturing companies so that our economy grows. After the massive blackout at the end of June the then Power Minister, Sushilkumar Shinde said," We got electricity in a matter of hours....people should appreciate how work is done at the grid." Comparing with the USA where an accidental shutdown of the grid in 2003 took 4 days to restore in some parts he said,".....in the USA light does not come for 4 days, here we got it in a matter of hours." Not quite. In the US such instances are rare whereas blackouts, euphemistically known as load shedding, is a daily occurrence in India. Google alone uses more electricity than a small city does in India. Mr Anil Aggarwal, CEO of Vedanta group writes," Our import bill stands at $485 billion of which oil is $150 billion, close to 10% of the GDP. Gold, silver, coal and fertiliser are the other main items. With 3.5 billion tonnes of bauxite we produce 1.5 million tonnes of aluminium while China with no bauxite produces 20 million tonnes. We could add $1 trillion to our economy in 3-4 years." Between 2010 and 2011 the government awarded 42,932 km of highway projects of which 1781 km was actually constructed. For 2011-12, 60,396 km of roads were awarded but only 2248 km were built. As of April 2011, 101 oil and gas exploration contracts have been awarded. Only 6 have started production. The reason is that there are 47 ministries so any company wishing to build a road, mine coal or start a power plant has to go round begging for hundreds of licenses. Meanwhile illegal mines are operating merrily and exporting our national resources while we continue to sign pacts. With mountains of paper we may have a paper mine someday.

Indian lives are cheap.

There has been a lot of breast beating in newspapers regarding the gang-rape of a young woman in a bus in Delhi. She was so badly beaten up that she was on life support for many days and most of her intestines had to be removed. Angry citizens are claiming for the death penalty for rapists. But will anything be done? The answer has to be a resounding no. Police are under control of politicians who will never let go. In the US, House Majority Leader, who would be equivalent to the leader of the Lok Sabha, Tom DeLay was convicted of money laundering and sentenced to 3 years in prison in January 2011. His crime? He diverted corporate donations to Republican candidates for election expenses. Illinois governor, Rod Blagojevich is serving a 12 year sentence since March 2012 for corruption in public life. He had wanted to sell Obama's state senate seat to the highest bidder. Since all our politicians are scumbags they will never risk an independent and efficient police. Who has ever heard of criminals cheering the police? Instead the police are used for useless activities like immigration check at the international airport, for giving out driving licenses and for standing around bored at random barricades set up on busy streets for no purpose. The biggest waste of the police is in guarding VIPs, the same criminals they should be locking up. At least 7315 policemen guard 416 VIPs of which 968 are at the Rashtrapathi Bhavan alone. But it is not just the police. The entire justice system is slanted towards helping criminals escape justice. On 15 February 2 marines on the Italian ship, the Enrica Lexie shot and killed 2 fishermen off the coast of Kerala. They were arrested and charged with murder. The Italian government argued that the marines could not be tried in India because the murders took place in international waters. In April the central government told the Supreme Court that the Kerala police were not empowered to detain the ship and questioned the right of the state to investigate the incident. This is our government arguing for Italian murderers. An upset Supreme Court said," We do not expect such a stand of the central government. It is unfortunate when person killed on February 15 were within Indian territorial waters." Despite this the High Court in Kerala allowed the 2 marines to fly home for Christmas yesterday on bank guarantees of Rs 60 million and unconditional joint undertaking to return by 10 January. We can assume that they will never return. Instead the Italians will waste court time by filing endless specious appeals. Would the Italians have dared to make such a ridiculous request in any European country, in the US or in China? They know that Manu Sharma was allowed out on parole to attend nightclubs, Amarmani Tripathy is holding darbars in Gorakhpur and the pedophile Rathore was let out after 6 months. When mother India is being raped everyday what price our daughters? 

FDI in retail will make us all rich.

The freeloading press cannot stop lauding the Congress after the passage of the bill allowing Foreign Direct Investment in multi brand retail which will allow companies like Walmart to hold 51% in retail business in India. It is being described as " big bang ", " bold " and " game changer " in the press. But is it? On 19 December dairy farmers blockaded Muller Wiseman Dairies in Droitwich which is the largest dairy in the UK producing 2 million liters of milk daily for supply to Tesco, Sainsbury and Coop, some of the largest grocery supermarkets in Britain. Mail Online 20 December. The next day they planned to blockade Arla Dairy in Stourton in Leeds which produces 1.75 million liters of milk daily for supply to Asda and Morrisons. Reason? These large chains are forcing price cuts on farmers to protect their own profits. One organiser, Paul Robottom said," The point is it costs a farmer a minimum of 32 pence/lit to produce their milk. They want to be covering their costs but some are getting as little as 26 or 27 pence. This is no good for anyone. People are in financial embarrassment, they can't pay their bills. Many are just giving up on dairy farming." Workers at Walmart across the US went on strike on 23 November, which is known as black Friday as it is the biggest sales day after Thanksgiving, but it did not affect sales. Demos, a think tank, says," Walmart has used its power to lower wages, cut hours, and deny benefits to its workforce, reducing the quality of retail jobs as a whole." McDonald's pays $9 an hour to its employees which comes to a total of $18,500 a year, which is $4,500 less than the Census Bureau's poverty income threshold of $23,000 per year for a family of 4. Staff have to work a second and even a third job to manage. There are class action lawsuits against Walmart in several states in the US for alleged mistreatment of employees. The US Supreme Court dismissed a class action lawsuit brought by 1.5 million women employees against Walmart, the largest of its kind. A New York Times investigation has revealed systematic bribery of officials in Mexico by Walmart de Mexico to get round zoning laws, planning permissions and protests by locals in 2003-04. TOI, 19 December. A former Walmart de Mexico lawyer contacted Walmart executives in Bentonville, Arkansas and told them how Walmart was bribing officials in Mexico with examples. This alarmed Walmart officials at the highest level prompting an internal investigation but this was shut down in 2006. We do not know whether the FDI bill was passed after our politicians were bribed but seeing that we are cursed with the lowest sleazeballs in the world it would not be surprising at all. We can expect Indian companies to sell out, making billions and our farmers being squeezed by foreigners instead of by local middlemen. But who cares?

Indians are financial magicians.

A research organisation based in the US, Global Financial Integrity issued a report which claims that India has lost $123 billion between 2001 and 2010 ( equivalent to Rs 6.765 trillion which is one trillion higher than the government's yearly budget ) due to illicit outflow, which is another name for black money. India is eighth in the list of countries behind China, Mexico, Malaysia, Saudi Arabia, Russia, Philippines and Nigeria. GFI Director, Raymond Baker said," Much focus has been paid in the media on recovering Indian black money that has already been lost. The focus is for naught as long as the Indian economy continues to haemorrhage illicit money. Policymakers and commentators should make curtailing the ongoing outflow of money priority number one." ET, 18 December. Who is taking so much money out of the country and how? Between 3 June 2009 and 30 April 2012, that is in 35 months, one member of parliament traveled abroad 29 times which comes to once every 37 days. The country most visited was Switzerland. What is really worrying is what happens to the money if the account holder suddenly dies without revealing details to anyone. We may assume that the bank would quietly confiscate the entire amount after waiting for a suitable period for a claimant. After all, this is what they did with gold and art looted from Jews by Nazis, many of whom died in hiding or were executed after the Nuremberg trials. Swiss banks have admitted to only 4.18 million Swiss francs in dormant accounts when estimates run into tens of billion of dollars. No wonder they guard their banking secrecy laws so jealously. However, that is not the only black money in India. A similar around is floating around inside the country invested in properties. Today our most revered Finance Minister said that only 35 million out of 1200 million people file income tax returns of which only a paltry 1.46 million pay tax on income above Rs 1 million. Any 2 bedroom apartment of around 600 sq feet in a small city will cost in excess of Rs 3 million and prices are rising. So if no one is earning anything why are properties so expensive? Another sector doing really well is the share market. Partly this is due to easy monetary policies in western countries leading to excess of liquidity in the west. Some of that money is coming into our markets which is a similar situation that prevailed before 2009. In 8 months to October investment in Indian debts, derivatives and equity stood at $32 billion. This money has come through Participatory Notes which is the preferred route of hedge funds and a way of investing without declaring the source of money. The total investment stands at Rs 1.83 trillion. Worryingly this money could suddenly flow out if the fiscal cliff is resolved and the US economy surges. India is the only country where money multiplies when no one earns anything. Magic!

Cripples cannot fight.

Yesterday 4 women in Karachi and another woman in a village in Peshawar, involved in distributing polio vaccines to children, were shot dead by gunmen. The day before a volunteer with the WHO was also killed in Karachi. The Taliban claim that the polio campaign is organised by the US government to spy on Pakistan and that the vaccine contains material banned by Islam. Some militants in tribal areas want drone attacks to stop before they will allow the vaccine program to function, although what the connection is between drones and protecting little children against a terrible scourge is anybody's guess. Their suspicion is based on Shakil Afridi, a Pakistani doctor who helped the CIA gather DNA samples to pinpoint Osama bin Laden's location through a fake vaccination program. Afridi was charged with treason and sentenced to 30 years in prison and fined $3500. The reasoning is stupid because the present program is organised by the Pakistani government and so many thousands of volunteers cannot possibly be spies. Anyway, if the Americans want to they can easily bribe people, who are dirt poor and would be extremely grateful for a handful of pennies, to spy for them. To condemn little children to a lifetime of hobbling around on withered legs just to take revenge on Americans is perverse in the extreme but then what reasonable person would join the Taliban. On 9 October, 2012 a 15 year old girl, Malala Yousafzai was shot in the head and neck by a gunman while returning from school in the school bus. She remained unconscious for a long time but improved enough to be transferred to a hospital in Birmingham in UK where she is recuperating at present. In early 2009 when just 11/12 years old she started writing a blog under a pseudonym on the BBC in the Pashto language describing life under the Taliban in Swat valley. When government forces pushed the Taliban out of Swat she became widely known after a documentary by the New York Times. She became chairperson of the District Child Assembly in Swat and continued to campaign for education of girls. This made her a target for the Taliban who want women to remain illiterate to stay at home and look after their families. Why does Pakistan tolerate vicious killers like the Taliban within their territory? Surely it is a loss of sovereignty if a militant group controls large swathes of territory where the army dare not venture? The reason is that the establishment sees these terrorists as useful tools against India and the west and a useful leverage to prize more aid out of the US. We saw how the Pakistani Foreign Minister, Rehman Malik taunted and insulted India while on an official visit to India. Pakistan should not be so sanguine. What is happening in Syria could easily come here. However, if there is an epidemic of polio in Pakistan it may bring peace. After all you cannot terrorise on withered legs.

The poor understand the system.

Use of condoms in 2010-2011 has fallen in 22 out of 34 states. TOI, 12 December. It has risen by 38% in J&K, by 8% in Bihar, by 35% in Andhra , by 44% in Assam and by 7% in Bengal. However, condom use has fallen in highly populous states of MP by 39%, Kerala by 33%, Haryana by 31%, Uttarakhand by 27%, UP by 11%, Rajasthan by 23%, Odisha by 22%, Chattisgarh by 22% Jharkhand by 24% and Himachal Pradesh by 20%. This is despite a program to make contraceptives available at the door of every villager. Apparently the politicians hoped to bring down birth rate to 2.1 per woman by 2010, at which level the population stays at the same level, and limit the population to 1.65 billion by 2060. In 2008 the number of births fell by 42000. Out of 26 million births that take place each year 45% are to women with 2 or more  children already. Why do people continue to produce so many children when the cost of food is rising by more than 10% year on year, school fees have become unaffordable, property prices and rents have risen by 1000% and transport costs have jumped because of the rise in oil prices. One reason is that rural people live in huts on vacant land and do not have to pay rent, children do not go to school, food is cheaper in rural areas and they do not have to commute to work. The main reason is that high birth rate is encouraged by myriad schemes doling out money to the poor, to win elections. This starts at the hospital itself where a woman is paid Rs 2000 after delivery. This is available only in government hospitals where the poor go and not in paying nursing homes where taxpayers deliver. Then they have ration cards for cheap food, free school meals for children, fictitious employment schemes, Below Poverty Line cards for free healthcare and many schemes that we do not know about encouraging the poor to sit at home and produce children. Naturally a vast fraction of all the money is stolen by politicians and civil servants which has provided the Congress with an excuse to invent a new wheeze to win the next general election in 2014. Everyone in the country is being forced to acquire a biometric identity card with prints of all 10 fingers and iris scans called Aadhar and money will be paid to the poor on the basis of such cards directly through bank accounts. The reasoning is that by avoiding local civil servants there will be no wastage. However, if there was a Nobel Prize for corruption Indian politicians and civil servants will win every time. The government has already set aside Rs 990 billion for such programs this year and we can imagine that the total will keep on ballooning every year. The poor understand the system perfectly. Produce a lot of children, send them out to work as soon as they are 10 years old and collect money from both sides. It is a bonanza. Who cares for India?

Guns save lives.

On 2 November 1853 a student, Mathew Ward in Louisville, Kentucky killed schoolmaster, Mr Butle with a  self-cocking pistol for excessively punishing his brother the day before and even though he committed his crime in front of his classmates he was acquitted. On 14 December 2012 Adam Lanza shot his mother Nancy at home before going to Sandy Hook Elementary School in Newtown, Connecticut and shooting 6 teachers and 20 children between the ages of 5 and 7 years to death. He then shot himself. Nancy Lanza was apparently a " prepper " which means that she prepared herself for a complete breakdown in civil society by stockpiling guns, food and water. Adam used an AR-15 rifle which is a civilian version of the military M-16 and M-4 and is capable of firing multiple high-velocity rounds rapidly. This is the most popular gun in the US. Adam also had 2 handguns, a 10mm Glock and a 9mm Sig Sauer and thousands of rounds of ammunition. He also had a shotgun in the car. Why would any ordinary person know about these weapons let alone posses them? At a service yesterday President Obama said," No single law, no set of laws can eliminate evil from the world or prevent every senseless act of violence in our society." That is the most craven cop-out that you could hear and is totally untrue. On the same day, a 36 year old man, Min Yingjun stabbed an elderly woman before entering Chenping Village Primary school in Henan Province in central China and stabbing 22 children. Not one child died. The intent or " evil " was the same but the stark difference was that guns are not available in China. " Are we really prepared to say that we are powerless in the face of such carnage?" asked Obama. Apparently yes. A lawmaker has already suggested that had the headmistress of the school been armed with a machine gun she could have shot Adam's head off. It is hard to imagine that anyone with the slightest sense could actually say something so crass and insensitive at a time like this. But it is to be expected in the US because lawmakers are terrified of the gun lobby which has managed to brainwash people with the lie that guns are for self defense. Their logic is that guns do not kill but people do. By the same logic drugs do not cause deaths but people do. Why then does the US finance a war against drug gangs in central and south America which has killed thousands of people? In fact, whether to take drugs is a decision that you make but you can have no say in whether you will be shot by another person. What is amazing is that the same people are pro-life and would ban abortion, even in a case of rape. Wonder how the makers of guns will celebrate Christmas. They will probably buy expensive presents for their children and have a very satisfying meal with family and friends. All financed by the blood of beautiful, innocent little children. Merry Christmas.

The end of the world is nigh.

Believers in the Mayan calender seem convinced that the world will end on 21 December. Many theories abound - a large meteor, like the one that wiped out the dinosaurs, will hit the earth, a rogue planet called Nibiru will collide with us or there will be a nuclear war wiping out all life. Cataclysmic events have occurred in the past and may well happen again but there are more earthly reasons for widespread devastation. People are voting in a referendum on a new constitution in Egypt. The first round took place yesterday and the second round is next Saturday, 22 December. If the Muslim Brotherhood loses to the opposition or if it stuffs ballot boxes to win by a large margin civil war could break out in Egypt. Basher al-Assad sees that his defeat is imminent and the Alawis move north into Lebanon and the hills of Latakia province in Syria. Sunni fighters chase him into Lebanon and into a confrontation with the Hezbollah. Heavy weapons looted from the Syrian army move into Jordan to support the Muslim Brotherhood in that country. War breaks out in Jordan drawing in Palestinians from the West Bank. Al Qaeda fighters and arms support the Sunni minority in Iraq in a showdown with the Shia government. Iran supplies arms and fighters to the Shias while the Gulf countries support the Sunnis. The south of Iraq, which is Shia territory, shares a long border with Saudi Arabia and Shia fighters move into the country in an attempt to capture Medina and then Mecca precipitating all out war between Shias and Sunnnis. Seeing a golden opportunity Israel decides to bomb nuclear centrifuges in Iran enraging Hamas which attacks Israel with support from the Muslim Brotherhood in Egypt. US and the Security Council are helpless, not knowing who is fighting whom. Meanwhile oil jumps to $200 a barrel or even higher and Europe collapses. People are unable to afford heating in the middle of winter as fuel and electricity become rapidly unaffordable. Food prices sky rocket. Greece, Spain, Ireland and Italy crash out of the Euro and even France is close to collapse. China, Japan, Korea and Taiwan come to a standstill. Air flights and shipping stop. Japan is forced to restart its nuclear power plants to keep going but it is not enough to continue its factories. As food becomes scarce vast numbers of people from north Africa try to move into Europe prompting European countries to bomb all shipping vessels in the Mediterranean enraging Turkey which decides to send its fighters to bomb European air fields. Starving people kill off all animals to survive and as all animals are wiped out people start eating each other. Billions die. What happens to us in India? God alone knows. However, if these events do not take place then our economy could really take off as the US becomes self sufficient in oil leading to falling oil prices by 2015. The end could be nigh, or maybe not.

Compromise is weakness.

The Pakistani Foreign minister, Rehman Malik is in India to ease visa restrictions between Pakistan and India which will make it much easier for terrorists to cross into our country. Asked about Captain Saurabh Kalia who was captured, tortured and then murdered by Pakistani troops he said,"...we really do not know whether he died of a Pak bullet or he died of weather." Will the weather pierce a man's eyes, burn him in places and cut off his genitals? He knew exactly what he was doing. By mocking a dead man he was deliberately humiliating us, showing that he thinks Pakistan can commit any outrage and our government will bend over and offer more rewards in friendship. In November Pervez Musharraf was invited to an international conclave by the Hindustan Times. The Indian embassy in Abu Dhabi issued visas to him and his wife, Sehba which carried the words " not exempted from police reporting ". This made Musharraf so angry that he said," I do not know whether it was done to humiliate me or it was a slip-up.... Even if it were a slip-up, I certainly would expect the Ambassador to take the official who committed such a great error to task." Who does he think he is? Why does he think it a " great error " that he be asked to report to a police station? He is the fellow who ordered the attack on Kargil in which Indian soldiers died which makes him a war criminal as far as India is concerned. He has admitted openly to allowing terrorists to train and launch attacks against us. Not only that, there is a warrant for his arrest in Pakistan for failing to cooperate with the investigation into the assassination of Benazir Bhutto in 2007. Pakistan has made 2 requests to the Interpol for his arrest and deportation to Pakistan. This criminal should never be allowed into India and if he manages to sneak in somehow he should be promptly arrested and handed over to Pakistani authorities. Maybe he would be made to enjoy their " weather " like Captain Kalia did. Yet here the Pakistani High Commission informed the External Affairs Ministry and conveyed their displeasure and our lackeys ran all over the place to make him comfortable. Why did the HT invite him knowing him to be responsible for Indian deaths? Mir Jafar is not dead, is he? There are more of him now. There are 2 reasons why our fellows are always grovelling to Pakistan. Firstly, terrorism is very useful. It allows the scoundrels to pass ever restrictive laws against Indian citizens. We are constantly being hounded for KYC, which means Know Your Customer, being forced to acquire biometric cards and our phones and internet are being constantly monitored. But the Lok Pal bill will never pass. Second, our foreign affairs is dictated by the US. The US uses drones to blow up Pakistanis everyday while telling us to be friendly and we obey. We compromise because we are weak and we are weak because we are run by traitors.

How long will the bluff work?

The new Chief Economic Adviser of India, Raghuram Rajan said today," After the initial policy burst in the immediate wake of the of crisis, stimulus both on the fiscal side and on the monetary side, we ourselves in India are reaching the limits of stimulus and we must contemplate ways of generating growth again." It is not easy for us mere mortals to understand the pearls of wisdom dropping from the lips of economic gurus. " Initial policy burst " means the naked bribery of the electorate that the Congress adopted in 2008 to win the general elections in 2009 when they forgave all loans to farmers, increased salaries of worthless civil servants by 80% and started the NREGA scheme which pays rural folk for fictitious work. " Limits of stimulus " on the fiscal side means that the government cannot spend any money because it is broke, with both the fiscal and the Current Account deficits beyond control. Any wild spending will see deficits jump, a credit rating downgrade and a free fall of the rupee. The government hoped to raise Rs 5.7 trillion in taxes but will fall short by Rs 750 billion. The reason is double digit rise in the Consumer Price Index and the punishing increase in taxes on everything across the board. This has hit consumers so hard that they are unable to spend, as shown by a fall of 8.25% in sales of cars in November. The government blames the lack of growth on the RBI keeping interest rates high in an effort to reduce inflation but this is belied by a 10% increase in property prices. If interest rates were a hindrance to growth how are property prices, dependent on mortgages, increasing at a scorching pace. The reason is that the property market is financed by black money which is independent of the RBI. High tax rates have prompted the rise of hawala transactions within India. Previously hawala was run by smugglers in foreign currency. Expatriates would hand over dollars to gang members and someone in India would pay in rupees. The smugglers used those dollars to smuggle gold, guns and alcohol. Now there is a thriving hawala market inside India. You pay cash in one city and an equal amount is paid to a person designated by you in another city. It is instant and the fee is Rs 200 per Rs 100,000 remitted, which is the same a bank would charge for a demand draft. " Limits of stimulus " on the monetary side means that inflation is out of control and if the RBI reduces interest rate inflation would zoom and consumer confidence will collapse. The economy runs on consumer spending and not on exports. Exports were down by 4% in November to $23.2 billion which means that we are not going to achieve a target of $300 billion for this year, an amount that China exports every month. Instead of saying that we are in a pile of steaming dung it is so beautifully expressed. Love these gurus. 

Justice, American style.

A couple of months ago Rajat Gupta, who was on the board of Goldman Sachs, was convicted of insider trading and sentenced to 2 years in prison and a fine of $5 million. The charge against him was that he passed on information to his friend Raj Rajaratnam, founder of the Galleon Group hedge fund although Gupta made no profit himself from his knowledge. Rajaratnam is already serving an 11 year prison sentence. Couple of days back HSBC agreed to pay a fine of $1.921 billion on charges of laundering money from Mexican drug cartels, terrorists and tax cheats. They were also laundering money for Iran which is under US sanctions. Not a single officer of the bank was held individually to account. " We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again," said CEO, Stuart Gulliver. HSBC makes billions of dollars in profits so the fine was a minor irritatant and an apology costs nothing. In July the pharmaceutical giant Glaxo agreed to pay a fine of $3 billion after admitting criminal charges of promoting Paxil in children, misrepresenting data from a clinical trial and failing to report heart risks with Avandia. There were also charges regarding Wellbutrin. Again not a single officer of the company went to prison. Glaxo made $10.4 billion in sales from Avandia and $11.6 billion from Paxil so the fine was a minor inconvenience. Drug wars in Mexico have killed thousands of innocent people and hundreds of Americans, including Whitney Houston, have died of drug overdose. Wrong use of medicines kill thousands every year yet officers of both these companies go scot-free while Rajaratnam is 11 years for trying to make his investors richer. Wonderful! Now we have the strange story of John McAfee, founder of the anti-virus software company of the same name. He was living in San Pedro on the island of Abergris Caye in Belize. McAfee's neighbor Gregory Faull, also an American, had a disagreement with him about his dogs. Faull had filed a complaint with the mayor's office that McAfee had fired off his guns and exhibited " roughish behavior." On 11 November Faull was found dead in his home, shot through the upper rear part of his head. There was no forced entry and a computer was missing. Police in Belize wanted to question McAfee regarding the murder, which is reasonable, since he lived next door and had was known to be quarreling with him. McAfee crossed over into Guatemala where he demanded asylum, accusing Belize police of trying to kill him because he refused to pay a bribe to a local politician. Asylum was refused and yesterday he was deported, not to Belize, but back to the US. Guatemala just got rid of him knowing the US would bully them. After all, the US forced Pakistan to release Raymond Davies after he had shot 2 in cold blood and Italy to overturn a guilty verdict on Amanda Knox of murdering British student Meredith Kercher. And they keep lecturing everyone else.

Religion cannot be restricted.

Events in Egypt have reached a very interesting phase. The Muslim Brotherhood was not part of the initial uprising against Mubarak but joined it when they found that there was a chance of victory. They promised not to contest all the seats in parliament but went ahead anyway. They even put up candidates as independents for seats that were not for parties. The Supreme Court cancelled the election of these candidates thereby annulling the parliament. So they accuse judges of bias because they had been appointed by the old regime. They promised not to contest the presidential election but did and Mohamed Morsi became president. An assembly was constituted to write a new constitution for Egypt but this was packed with Muslim Brotherhood representatives and the hardline Salafists and so was boycotted by people opposed to the Brotherhood and by people of other religions. Last month fighting broke out between Israel and Hamas because of incessant firing of rockets into northern Israel from Gaza. Morsi acted to bring about a ceasefire earning a great deal of praise from other countries. He quickly utilised his new found popularity to announce that he was going to rule by decree, that the courts could not interfere with his decrees and that the assembly drafting the constitution could not be annulled by the judges. There was an immediate and enormous backlash by people enraged by the Brotherhood hijacking the revolution. Thousands of protesters gathered in Tahrir Square and many thousands marched on the presidential palace. Morsi was forced to flee by the backdoor but returned after one day. He has now ordered the army to protect the palace with concrete blocks and barbed wire and given the army powers to arrest protesters. A constitution was hurriedly agreed by the assembly within days. This gave rise to fears that the constitution is based on Sharia enraging opponents even more. They are now demanding the withdrawal of the draft document and greater consultation before a referendum but Morsi is determined to go ahead with a referendum on 15 December. To show that he is reasonable he has withdrawn his decrees and says that he wants to further democracy. His argument is that remnants of the old regime are trying to hold up the transition to democracy so he is enhancing the process by getting a constitution is place so that a parliament with real powers can be elected. The Brotherhood will win the referendum and the constitution will be adopted and a new parliament loaded with Islamists will be elected. That is when the trouble will start. Hardliners will demand more powers, restriction on other religions and restriction on women. They will demand cancellation of plays and music, which are extremely popular in the Arab world, because women work freely. It is easy to use religion to gain power but impossible to restrict it. Ask Pakistan.

We want to survive.

In an article titled The Backlash Against Equality one Mr Dipankar Gupta rages against rising violence against women in India. He compares this to the lynching of blacks following the abolition of slavery in the US. Till then blacks were apparently very safe but once they started demanding equality the whites saw them as a threat and started lynching them. From there he jumps to honor killings taking place in India and concludes that women are being killed because they are challenging male supremacy by marrying whoever they want to. So, in his erudite opinion men in India see their daughters and sisters as slaves of a distinctly different race seeking freedom. Killing for any reason is abhorrent and cannot be condoned but unless we examine the social conditions that give rise to such crimes the situation cannot improve. There are 3 reasons why a marriage is deemed to be of such dishonor as to warrant an act of murder. The first seems to be  restricted to north India and is marrying someone within the same " gotra ". Gotra is a house headed by a rishi or sage from ancient times. So we have kashyap, shandilya or balmiki gotras. Marriage within the same gotra is forbidden to prevent consanguinity which can give rise to the most hideous genetic defects. This is born of lack of knowledge. Your mother's side of the family will have a different gotra but consanguinity with someone on that side may give rise to the same problems. This can be cured by education. The second reason is marriage with a different, usually lower, caste person. Hindus in India have been selectively divided into various castes and tribes by politicians so that some maybe bribed by reserving 50% of higher education seats and government jobs for people with less merit. So, 65 years after so called independence some sections of the society face more discrimination than they faced under British occupation. The government is trying to force private companies to practice reservation which has been resisted till now. Even today the BSP is demanding that people should be promoted based on reservation and not on merit. This gives rise to a sense of injustice and rage and people react by trying to preserve their caste superiority even as they fall behind economically. The third reason is marriage to someone of a different religion. In recent months leading up to assembly elections in Gujarat acres of newsprint have been devoted to the demolition of Babri masjid and the Godhra riots by the freeloading press pouring hatred on Hindus. At the same time the same newspapers are promoting increasing trade, friendship and greater tourism with Pakistan. In Pakistan meanwhile school children are still being taught that Hindus are inferior and must be eliminated and terrorist training is going on at full speed. Every animal has an instinct to survive. That is all we Hindus want. Is it too much to ask for?

It does not smell right.

About one week ago, the Duchess of Combridge, Kate Middleton, wife of Prince William was admitted to King Edward VII private hospital in London with uncontrolled vomiting. The Palace was forced to admit that the Duchess is pregnant when the formal announcement was supposed to be at Sandringham Castle during Christmas. During early morning, around 5 am, the next day a couple of DJs from the 2Day FM radio station in Sidney, Australia called the hospital and, after 5 attempts, managed to get the duty nurse on the line. The DJs put on fake accents supposed to resemble Queen Elizabeth and Prince Charles and asked to be put through to the Duchess. The call was transferred to another nurse who answered questions from the DJs about the Duchess saying that she had slept fitfully and was being administered fluids. The radio station broadcast the hoax call as a joke. Following this there was a huge uproar in the British press and the following morning the nurse who first answered the call, Jacintha Saldanha was found dead in her room at the hospital nurses residence in a case of suspected suicide. Ms Saldanha was originally from Mangalore in India and lived with a husband and 2 teenage children. Following the discovery of her death the uproar in the British press has reached a crescendo, the 2 DJs, Mel Greig and Michael Christian are in hiding and the police in London have been in contact with the police in Sidney in the course of their investigation.  These are supposed to be the facts, but they do not make sense. The pregnancy of the Duchess was no secret and was being announced on every news bulletin by the BBC here in India where it is of no significance at all. India has not reached a population of 1.2 billion without an epidemic of pregnancy. Secondly, imitation of royalty is very common in the UK. Indeed, a woman dressed as the Queen arrived at the official opening ceremony of the London Olympics recently on a jet powered backpack as in a James Bond movie. Third, the call was just a prank and the nurse fell for it. Coming from abroad she would not have had the guts to refuse a request from someone she took to be the Queen. Fourth, the information given out was nothing at all. The patient had slept through the night showing that she was comfortable and was receiving fluids. What else was she supposed to receive? Any idiot would know that doctors would administer intravenous fluids to prevent dehydration to someone who is vomiting and unable to retain anything by mouth. Fifth, why did the nurse commit suicide? The hospital says that she was not reprimanded and was counselled instead. The family say that she died of shame because she is a Catholic. Surely suicide is forbidden in religion and she had 2 children to think of. Finally, why the hysteria in the British press? Is it to divert attention from the recommendation of stricter control by Lord Leveson? Something just does not smell right. Does it?

Fascism is an Italian word.

In an article titled the Rise of Fascism In Indian Politics, one Mr Kanti Bajpai accuses regional political parties of fascist tendencies. " India is halfway to becoming a fascist state - halfway because the central government is still relatively liberal and tolerates checks and balances while the states are increasingly in the grip of fascist political parties," he writes. By central he of course means the Congress because it is the largest party in government supported by a number of the same regional parties that Mr Bajpai calls fascist. The questions that immediately arise are 1. Why do people vote for such parties? When Nehru was alive you could put up a chair as a candidate and it would win, such was the reverence for the Congress. Now it is despised and wins elections by bribing the electorate with trillions of taxpayer money bringing the economy to its knees. 2. Why is the Congress hand in glove with these fascists? A lot of these parties are dependent on the Congress for survival, having been wiped out in their respective states, and a lot of these regional thugs are supporting the Congress in return for their crimes being suppressed. Indeed so keen is the Congress to somehow hold on to power that they have created 47 ministries when the US has only 22 people of cabinet rank and China actually reduced the politburo membership from 9 to 7. " Everything they do is ostensibly in the name of the people..." Mr Bajpai writes of the regional parties. They have learnt from the aam aadmi slogan of the Congress. While Korea, Taiwan and China have become immensely rich we are still a poor country because without hundreds of millions of hungry aam aadmi to bribe with freebies they would be thrown out. The Congress or those who started life in the Congress and then left it to join the Janata Dal have ruled India for 59 out of 65 years of independence. Out of the 14 Prime Ministers we have had only Mr Vajpayee was never in the Congress, having started in the Hindu Mahasabha and then forming the BJP. " A fascist party must have an all-powerful, charismatic leader before which party members, and later everyone else, must bow," he says. Absolutely. Every party has just one such person but the Congress has The Family. To rise in the Congress everyone has to genuflect to The Family and acknowledge its absolute right to continue in power forever. So powerful is The Family that the BJP, when in power, did not dare to investigate the Bofors scam even though the Argentine government had detained Quattrocchi for extradition. The BJP also gifted a free government accommodation to Ms Priyanka Gandhi with security at taxpayer expense even though her husband is an immensely rich businessman with properties worth at least Rs 3 billion around Delhi. Mr Bajpai should be careful before accusing people of fascism. After all " fascismo " is an Italian word.

A pain called the CAG.

If a man steals Rs 50 he will be arrested and remanded in custody because of his inability to put up bail money but when politicians, civil servants and businessmen collaborate to loot billions of rupees they get off scot-free. The Comptroller and Accountant General has published a report into how men posing as diamond exporters took loans from Public Sector banks against shipment of diamonds to Hong Kong and then disappeared. This resulted in a loss of Rs 5 billion over a 3 year period. TOI, 7 December. To make matters even more interesting the banks claimed their losses from the government owned insurance company, Export Credit Guarantee Corporation of India which provides cover to banks against " unforeseen losses ". This company paid out 200% of their losses to 13 PSU banks. The CAG has warned that the banks may lose their credit worthiness due to lack of due diligence in customer identification. It also said that the insurance company repeatedly ignored warnings about banks' failure to update customers list. The report says that the same individuals were owners or CEOs representing more than one buyer. How were the same people able to borrow repeatedly using the same wheeze without rousing suspicion? Were bank officials and/or politicians involved? When we have to undergo the torture called KYC or Know your Customer, where we have to provide photographs, photo identity, proof of address and bank account details, to obtain a lousy bottle of cooking gas why were the identities of these people not established? The Consumer Courts are inundated with complaints about government owned insurance companies which regularly refuse to honor claims for legitimate medical expenses but here the insurance company not only reimbursed the losses but dished out double the amount claimed as if it is Santa Claus. Why? Fed up with the CAG discovering more and more financial crimes the government is planning to dilute its powers. At the moment the CAG is headed by one individual, Mr Vinod Rai who has become a hate figure because of his zeal in focusing on crime. The government wants to create a tribunal to head the organisation so that it can put its stooges in to act as Trojan horses. To counter constant criticism the CAG requested a peer review headed by the Australian National Audit Office with representatives from Canada, Denmark, Netherlands and the US. TOI, 3 December. They found that that the CAG's work " is conceptually sound " although there is a " need to strengthen it to increase the level of assurance provided to the CAG that these auditing requirements are consistently being met ". Hard to argue against such support especially as the CAG very prudently chose only " white " nations that no Indian politician will dare argue against. A really acute pain in the whatsit.

India is so reasonable.

Yesterday the government won the vote on Foreign Direct Investment by 253 votes to 218 in the Lok Sabha because both UP based parties, SP and BSP staged a walkout. That way they supported the bill by not supporting it. Now they can truthfully tell farmers that they supported the bill because FDI will increase their incomes by eliminating middlemen and, at the same time, tell small shopkeepers that they rejected the bill because it will be harmful to their trade. Ingenious. However, the leader of the opposition BJP, Ms Sushma Swaraj had a third explanation for their walkout, saying that their action was governed by their fear of the CBI. " It is not a question of the BJP, this is not a communal issue.....but the problem is the issue has now become FDI vs CBI," said she. TOI, 7 December. Why should such eminently respectable leaders such as Mr Mulayam Singh Yadav and Ms Mayawati be afraid of the Criminal Bureau of Investigation? Does it mean that they have done something or many things that could be deemed naughty? Surely not. " We have never been afraid of the CBI," declared Ms Mayawati and then voted with the Congress today in the Rajya Sabha where the government was in the minority. The SP staged another walkout ensuring the government won. All those who were moaning about policy paralysis have been firmly put in their places. Paralysed people cannot walk out. So there! Question is that if Ms Swaraj is able to accuse such stalwarts of criminal behavior why was Aseem Trivedi bunged into jail on sedition charges for drawing a few harmless cartoons. Why was Ms Shaheen Dhanda arrested for  hate speech for asking why there was a bandh in Mumbai following the death of Mr Bal Thackeray on her Facebook page? The reason is that there are 2 classes of people in India, namely the aam aadmi, which is us, and the khas aadmi, also called " lal battis ", because they go around in cars with rotating red beacons on the roof telling the aam aadmi to get out of the way or get an AK47 jammed up his backside by the accompanying fellows, terrifyingly known as " black cats ". While we are a for aam, which means common, they are k for khas, which means special, with Z+ security. You cannot argue with the alphabet. This was in evidence recently at the funeral of the former Prime Minister, IK Gujral when all of Delhi came to a standstill. Senior Supreme Court advocate, Harish Salve was not amused at being stuck in traffic. He is threatening to file a case in the Supreme Court to stop such practices in the future. " It is clear from the attitude of the Delhi police that it has not shaken off its pre-colonial attitude of serving the Raj - just the masters have changed," he said. TOI, 3 December. He should be grateful that Mr Gujral passed away in December and not in May. Everything has a reason.

Poverty is a killer disease.

For all of us who can see blindness would be a devastating condition. It is terrifying even to think about it. On World Disability Day, Dipak Shapariya, a 47 year old blind professor of history at Gujarat College said," ....My only regret is that I cannot read books for 12 hours a day. Instead, I have to settle for audio books. Anyway, I wish the same life in the next birth. I would choose blindness over poverty any day. For me, being in despair is defeat in itself. Facing the situation is victory." TOI, 3 December. We have always been told the health is wealth but here is a man who thinks that poverty is a far greater curse than blindness in a country that is callously indifferent towards disabled people. In western countries blind people have guide dogs who are trained to lead their masters on to buses or underground trains, traffic signals give out loud beeps to indicate when it is safe to cross roads and recorded messages in trams and underground trains announce stops coming up. So why do we still have legions of poor people in our country 65 years after independence? Why are 47% of children malnourished? Why are we debating whether poverty starts at Rs 28 per day or Rs 32? Because poverty helps to win elections. How else will politicians compete to give freebies with taxpayer money. In Gujarat the Congress promised free apartments to the poor under the " Ghar nu Ghar " scheme so now the BJP is giving away free apartments. One woman who works as a housemaid applied twice and has been offered a 3 bedroom apartment on the outskirts of the city and a smaller one inside the city. She is trying to keep both. This massive spending by parties to win elections has led to the fiscal deficit, the current account deficit, inflation and the falling rupee. But surely the recent US presidential elections was the most expensive in history where both parties spent a combined total over $6 billion. True, but it was not taxpayer money but raised through private donation which would not affect  government finances. The only way to combat poverty is by reducing the population and cutting corruption. The one child policy in China prevented 400 million extra births and led to improved education of children, improved health of women, less stress on health services, less stress on farmland and reduced labor costs as millions of women were able to work. India, being a democracy, cannot enforce such a rule but if aid to the poor is linked to less children we would instantly see less births. The Congress has started direct subsidies to the poor linked to Aadhar cards in an effort to cut corruption. The government should also start giving salaries to employees through such cards. That will prevent billions of rupees being stolen by millions of " ghost " employees. Good acts do not win elections. Patriotism is for losers.

The politics of food.

Seems that the central government has still not moved around 4 million tonnes of grain from Haryana that it has procured between 2009 and 2011. TOI, 3 December. According to documents with the Department of Food and Supplies over 6 million, which is a massive 65%, out of a total of 9.5 million tonnes of grain, are being stored out in the open which means that one heavy rain shower and most of it will rot. Vijay Setia of the Rice Exporters' Association, Haryana said," Storage plays a key role as far as nutritional value of grain, especially rice, is concerned. Poor storage has resulted in downgrading of quality of rice by countries which buy rice from India." This means that when ministers say that 10-12% food inflation is being caused by supply side problems they are lying. The price of food is being pushed up by the Minimum Support Price, which is higher than the market price, that the government pays to farmers irrespective of the quantity being produced, by the NREGA scheme, which has pushed up wages of rural labor, and by hoarding by the government, which would be considered highly illegal if practiced by private merchants. What is impossible to understand is why the government is hoarding so much food when lowering inflation by selling most of it would earn votes or exporting a large fraction would earn billions of dollars and ease the Current Account Deficit. It maybe that the Congress calculates that the price of food will not affect the poor who can be supplied through the Public Distribution System, also called ration shops. The middle class would suffer but then the Congress sees the middle class as its enemy. A lot of the middle class people do not vote and a large percentage of those that do vote for the BJP. Middle class people see politicians as universally corrupt and the Congress as a cross between the mafia, only interested in looting the people, and the KGB, unleashing its dogs of the CBI on anyone daring to criticise. It was the massive middle class support for Anna Hazare that resulted in politicians reluctantly taking up the Lok Pal bill and Manu Sharma, son of a Congress fellow and murderer of Jessica Lal, being sent to prison for life. Not good at all. The Congress is probably banking on a quick passage of the Food Security Bill, which guarantees free food to the poor amounting to some 70% of the population, because no party will dare oppose it for fear of losing votes. Once the bill is passed the Congress can rush extra food through the PDS and take all the credit. Trouble is that the PDS is a broken system and a vast quantity will be diverted to the open market. A lot of grains will rot and become unfit for humans. As long as the naked aam aadmi is properly grateful the Congress is happy. It cannot lose. Only problem is that doling out borrowed money ultimately leads to bankruptcy. Question is how long it will take.

It is poison, but not for the US.

Yesterday President Obama warned President Bashar al-Assad of Syria against using chemical weapons against his enemies. " Today I want to make it absolutely clear al-Assad and those under his command, the world is watching," he said. " The use of chemical weapons is and would be totally unacceptable and if you make the tragic mistake of using these weapons there will be consequences and you will be held accountable. We simply cannot allow the 21st century to be darkened by the worst weapons of the 20th century," he went on. Wow! Noble words indeed. However, on the same day victims of the worst chemical mass murder in the world by Union Carbide in Bhopal on 3 December 1984 were demonstrating outside the Prime Minister's Office demanding justice. What justice? It was a Congress Chief Minister, Arjun Singh and a Congress Prime Minister, Rajiv Gandhi who escorted Warren Andersen to the airport. While leaving Andersen said," House arrest, no arrest..... bail, no bail.....I am free to go home. There is a law of the United States. India.....bye, bye. Take care." Even while 8000 people lay dead, thousands of others gone blind and still more thousands gasping for breath through rotten lungs Andersen was taunting his victims while still on Indian soil. With Congress in power is it likely that anyone will listen to the victims, after 28 years? Union Carbide was sold off to Dow Chemicals, renowned for producing Dioxin or Agent Orange which was sprayed over Vietnam and is still causing malformed babies to be born. There is a law of the United States. Indeed there is, and it says that the US can poison, nuke or blow up as many as it likes but no one will be held accountable. But if you were to harm any marauding American soldier on your own soil to liberate your country then you will be abducted and flown to Guantanamo prison camp where you will be tortured and locked up under inhuman conditions, forever if they so desire. All these crimes may have been in the last century but the victims are still suffering and dying with no apology, compensation or justice against the perpetrators. However, if Obama wants chemical warfare in this century then there is the use of depleted Uranium in Iraq since 2003 which will cause stillbirths, deformed babies and cancer for generations to come. The murderers, Bush, Cheney and Rumsfeld are doing just fine, thank you. Yet, even though thousands of Indians died at Bhopal or have been killed by Pakistanis with arms supplied by the US, millions of Indians survived because of American food aid under the Public Law 480 program in the 60s and 70s. This brought on the green revolution which made India self sufficient in food. Now food is used to buy votes and an artificial scarcity is driving malnutrition. The US can do whatever it likes only because we allow it to.

Inflation is a serious illness.

At a panel discussion between present and past governors of the Reserve Bank of India, former governor, YV Reddy said that the target for inflation in India should be 4-5%. In response the current governor, D Subbarao said," I am not saying that we would definitely change the number, but we will certainly revisit our strategy." If India is to really become rich the rate of growth must be higher than the level of inflation. A growth rate of 7% with a Consumer Price Index of 10% is no growth, but is a fall of 3% in the Purchasing Power Parity which makes the country poorer. The target for inflation should be 2-3% as in every developed country. In China inflation went up to 6.5% in July last year and the government acted fast by increasing interest rate to 6.6%. As the rate of inflation fell interest rate was cut twice to 6% but even though inflation in November was down to 1.7% the government is in no hurry to cut interest rates further. The economy is predicted to grow by 7.5% this year, much lower than 10% in previous years, but much higher than India where our most revered ministers are praying for 5.5% growth. The HSBC Purchasing Managers Index for manufacturing in China in November was 50.5%, up from 49.5% in October showing that it is starting to grow again despite relatively high interest rate. So why is our government frantically pressuring the RBI to lower interest rate when inflation is still out of control? Because growth in India is not based on manufacturing and exports but on the rise in property prices. Since half of any property is paid in cash, or black money, this cannot be invested anywhere except in property again resulting in an upward cycle where prices keep rising continually. Those who are not rich and villagers sell off ancestral land or houses at undreamed of prices and suddenly become fabulously rich. They then spend money on buying luxuries such as fancy cars, expensive clothes and extravagant weddings giving a boost the economy. The problem is that this boost is based on the unproductive activity of sale of property and so does not add to the wealth of the country and since it results in an expansion of black money the RBI is unable to control money supply and so, in spite of raising interest rates 13 times in the past 2 years, has been unable to control inflation. The most worrying fact is the irrational rise in share prices with the Sensex above 19,000 when all the gloomy news should be acting as a dampener. The reason is that Foreign Institutional Investors have poured in more than Rs 1 trillion in 2012 into Indian shares. This is because of historic low interest rates in Europe and the US and Quantitative Easing by the Federal Reserve which is pushing money into our market and propping up the rupee. As soon as those economies start to recover this money will disappear overnight and the rupee will collapse. Inflation is like fever. It shows ill health of the economy. Sadly politicians are only interested in growth to win elections.

Divide and rule coming home.

Western countries perpetuate their power by dividing others so that they become weaker. India was divided, Kuwait was carved out of Iraq and Israel was established in Palestine. More recently the Soviet Union fell apart, Yugoslavia was broken up by inciting others against Serbia, Czechoslovakia became 2 countries and the Kurds have become a semi-independent part of Iraq. Libya is still hanging together but how much longer is anybody's guess. However, it now seems that division maybe coming home to western nations. On 25 November nationalist parties, which want independence from Spain, won 87 of 135 seats in the parliament of the Spanish region of Catalonia. Catalonia is unable to raise money from the markets because Spain is surviving on loans from the EU. It represents 8% of Spanish territory, 16% of its population, 20% of its GDP, 25% of its tax revenue, 35% of its exports and 45% of its high tech exports. In return it receives only 11% of government investment. It has a GDP of 200 billion euros and a debt of 160 billion euros and the Catalans feel that they are not responsible for the recession in Spain and would be much better off as an independent country within the EU. The Basque region of Spain has been agitating for independence for a long time and even had an armed resistance group called ETA. Even Galicia and Aragon may want to leave Spain. In Italy the Lombard League won 26% of votes in regional elections recently and wants more autonomy for the industrial north of the country. Belgium is effectively divided into Dutch speaking Flemish and French speaking Walloons who can hardly stand each other. The monarchy is somehow holding the country together but it is only a matter of time before they go their separate ways. Scotland is to hold a referendum in 2014 on independence from Westminster according to an agreement signed between the British Prime Minister, David Cameron and the Scottish First Minister, Alex Salmond in Edinburgh recently. At present a majority of Scots are against independence but Salmond has managed to include permission for 16 and 17 years old to vote for the first time because the young are more keen on independence. A canny Scot? Corsican nationalists want separation from France but the French government takes a hard line to any talk of independence. On 5 November 2012 the Texas Nationalist Movement held a Texas Independence Conference in Washington-On-The-Brazos in the US where speeches were made. No one seriously thinks that the US is going to fall apart but the recent presidential election showed that white men feel that they are being outnumbered by non-white people and some are very angry. This could increase confrontation and with 250 million guns floating around in the US results could be noisy. As you sow, so you shall etc etc.

Congress cannot be beaten.

In the next few days we shall get to see a game of chicken in our parliament. Foreign Direct Investment or FDI, which will allow foreign investors to hold majority stake in multi-brand retail and increased share in insurance, airlines and broadcasting, will be debated and voted on. Congress sees this as one of its main weapons to win the next general elections to be held by 2014. As opposed to Foreign Institutional Investors,  who invest in the stock market, bonds and the property sector and can sell out in an instant, FDI is seen as stable long term investment which will help in reducing the Current Account Deficit, improve infrastructure and create thousands of jobs. However, many parties are against FDI because they say that companies like Walmart will destroy small grocery shops, also called kirana stores, and create enormous job losses. After resisting for a long time the Congress has agreed to a debate in the Lok Sabha, followed by a vote. Here is where the fun starts. The Congress needs 273 votes to win but has 206 itself. It can definitely count on the DMK with 18 seats, NCP with 9 seats, RLD with 5 seats, National Conference with 3 and others with 7 seats giving it a total of 248. The DMK tried to play cute but was brought to heel easily because Ms Kanimozhi, daughter of Mr Karunanidhi, is implicated in the 2G scam and the Congress has the power to get all charges dismissed. It probably has the BSP with 21 seats in the bag because the BSP was thrashed in the recent UP elections and will be keen on avoiding a drastic reduction in the number of seats which will rule out Ms Mayawati's prime ministerial ambitions. Also, all charges in the Taj corridor case against Ms Mayawati have been dropped recently and she would be keen not to see them revived. This means that the Congress can count on 269 votes and needs just 4 more to scrape through. The SP won the recent elections in UP with an overall majority so logic dictates that it should be keen to have early parliamentary elections so that it can increase its tally from 22 at present. However, it has come in for strong criticism lately for the increase in violent crime in UP and needs a lot of money to balance the budget. The Chief Minister promised free laptops to every student and has recently forgiven loans of up to Rs 50,000 from rural co-operative banks to 720,000 farmers on his father's birthday, for a total of Rs 16.5 billion. Besides the SP would like a Congress led government at the center because the Congress is always likely to be generous to UP as it elects 80 MPs to parliament and Ms Sonia Gandhi and Mr Rahul Gandhi stand from UP. The Congress wants elections as late as possible to bring down inflation, stimulate growth and create a feelgood effect. The cards seem to be stacked in its favor and it seems that it cannot be beaten. However.......