Coalition dharma is the worst adharma.

On 19 March the DMK withdrew its support from the Congress led government because it wants India to declare that genocide and war crimes were committed on Tamils in Sri Lanka by the Mahinda Rajapaksa government in 2009. It also wants a credible international commission to investigate these crimes against Tamils. Coincidentally the CBI raided 19 places in Tamil Nadu, including MK Stalin's home, on 21 March apparently looking for evidence of tax evasion on imported cars. Mr Stalin just happens to be the son of the DMK chief, M Karunanidhi and the designated future chief. The DMK naturally assumed that the black hand of Congress was behind the raids as a part of " political vendetta ". Our most revered Prime Minister thought that," The timing of the raid is most unfortunate." That the DMK was whipped into line was proved when it vowed to continue its support of the government. Its excuse - "... we cannot allow communal forces to form a government." It means the BJP which is seen as Hindu party. We would like to know whether the DMK has any members other than Tamils and how many. Surely it is a racist party and the worst thing is that its racism is directed against Indians who are not Tamils. Following this, on 29 March, Mr Mulayam Singh Yadav, MP and Chief of the SP accused the Congress of acting only to win elections saying," They are so clever and such cheats that people believe them all the time." Then on 30 March he does an about turn saying," Now there is no question of SP withdrawing support to the UPA government." Why not? If he knows the Congress to be cheats why is he continuing to support it? Surely it makes him an accomplice in the cheating? Meanwhile Mr Nitish Kumar, Chief Minister of Bihar wants special status for his state which will entitle it to higher plan allocation. He has support of the BJP but is uncomfortable because he wants more " minority " votes. So dump the majority to suck up to the minority. And these people keep spouting about " democracy ". However, if Bihar is to get more money surely it will mean less for other states. Bengal has debts of Rs 2 trillion because of the criminal waste by the previous Communist government. The Chief Minister, Ms Mamata Banerjee wants relief from the debt burden but the Congress is deaf to her pleas. But it has promised to make Bihar a special case and dish out Rs 120 billion of taxpayer money even though Bihar has a growth rate of 12% as compared to the national growth rate of 5%. This spending will be in addition to the Rs 2.5 trillion for the Food Security Bill and the Rs 750 billion to be spent on the Backward Regions Grant Fund. There is a proposal to distribute one tenth of an acre to the rural poor but we have not been told how much it will cost. Political gangs looking for partners for the next government. Damn the country.

1991 or worse?

In 1991 our Current Account Deficit was 4.2% of GDP. Our GDP was $288 billion. From October to end of December, 2012 the CAD was 6.7% of GDP compared to 4.4% a year ago. It was 5.4% from July to September. Our GDP is around $1.9 trillion. In 1991 our foreign exchange reserve was $5.8 billion, enough for imports for 3 weeks, now it is $290 billion, enough for 7 months of imports. In 1991 the government borrowed $2.2 billion from the IMF and pledged 67 tonnes of gold with the Bank of England and the Union Bank of Switzerland to raise another $600 million. The rupee was devalued by 24% in 3 days to increase exports. At that time Mr Narasimha Rao of the Congress was the Prime Minister who had the guts to do what it takes and start reforms which has seen high growth rates in recent years. Sadly the present government resorted to massive wasteful expenditure to win elections and has brought us to the brink again. CAD was $32.63 billion in the third quarter compared to $20.16 billion a year ago. Short term debt has risen from 23.3% of GDP to 24.4% and our total external debt is $376.3 billion, which means higher interest payments and worsening of CAD. The trade deficit has increased from $48.6 billion to $59.6 billion and desperate attempts are being made to somehow contain the fiscal deficit to 5.2% of GDP. To finance the rising deficit the government has imposed taxes on every good and service that it can raising inflation and hurting the spending power of consumers resulting in falling sales which, in turn, reduces tax collections. This has also reduced Foreign Direct Investment which is long term investment in businesses in India. In desperation the government has increased the levels of investments in debt instruments by Foreign Institutional Investors and encouraged Non Resident Indians to save in fixed deposits in Indian banks by giving them very high interests while forcing the RBI to reduce interest rates for citizens. Thus FIIs and NRIs can borrow at 0% in the US and get returns of 9% here while our money is losing value because inflation rate is above 10%. This is shown in capital money flows of $8.6 billion compared to $1.8 billion a year ago. Livemint, 29 March. Rajesh Chakrabarty, Exec. Director of Bharti Institute of Public Policy and faculty member of Indian School of Business said the CAD is alarming. " For two consecutive quarters the numbers have come in at more than 5% of GDP. These numbers reflect that the rupee is becoming a weaker currency. It may in turn fuel gold purchases which could again worsen trade deficit. Spurring exports maybe the only option left with the government since it has not been able to curb imports, especially gold." But how? Weakening the rupee will increase inflation and reducing taxes will worsen deficits. The World Famous Economist is no Mr Rao. Is he?

Banks are sick.

The credit rating agency, Moody's has downgraded the Bank Financial Strength Rating of Indian Overseas Bank, Syndicate Bank and Oriental Bank of Commerce from D to D minus. Being public sector banks they are supported by the government and hence this standalone credit rating is not as significant as it would be for a private or foreign bank. Still it shows the level of stress in our banking system. Moody's says that Non Performing Assets or bad loans for PSU banks have risen to 4.18% from 3.22% a year earlier. But that is not the complete picture. Banks have reduced their NPAs by restructuring loans, which means issuing new loans to cover the bad ones and showing them on their books as new business, or resorting to " compromise write offs ". TOI, 23 March. Allahabad Bank has written off 78.7% of gross NPAs, Andhra Bank 75%, Bank of Maharashtra 65.8%, Bank of India 58.8%, Canara Bank 57% and OBC Bank 52.4%. In total PSU banks have written off 32% of bad loans. We do not know to what extent this was influenced by political influence or bribery. The combination of restructured loans and bad loans has risen to 11.5% at the end of December 2012 from 6.7% in 2011. For Central Bank it has risen from 4.9% to 18.1%, for PNB from 4.5% to 15.5% and for OBC from 8.9% to 14.7%. If banks have been willingly forgiving hundreds of billions of rupees in bad loans why did they not restructure loans of Kingfisher Airlines amounting to a paltry Rs 45 billion? Clearly some people conspired against Mallya to force him to sell majority stake in United Spirits, controlling 40% of the Indian drinks market, to a foreign company. PSU banks are sitting on another bombshell. For the last 10 years they have been lending for long term projects with money from short term deposits. ET, 27 March. In March 2002 infrastructure loans comprised 4.5% of non-food credit of PSU banks but this has risen to 15% at the end of December 2012. At the same time deposits maturing in one year has risen from 29% to 50% of all deposits while loans maturing in one year fell from 42% to 34%. This is called Asset Liability Mismatch which has risen from 4% of bank assets in March 2002 to 17.5% in March 2012. Thus banks need to pay a higher interest rates to attract large numbers of depositors to have sufficient cash for daily business. This is probably why politicians and bank chiefs have been bullying the RBI to reduce rates. Unfortunately for banks domestic savings rate has been falling from 36.9% in 2007-08 to 34% in 2010-11 to 30.8% last year as uncontrolled inflation reduces people's power to save. Salaries are predicted to rise by double digits this year as people expect inflation to continue at this rate. In all this dismal news the good thing is that no one has a clue as to what to do. Especially the World Famous Economist.

Little Cyprus causes panic.

Reacting to the constant howling by selfish politicians and bandit businessmen the RBI reduced interest rates by 25 basis points on 19 March. This should have caused enormous rejoicing and rallied the markets but the opposite happened. The Sensex fell for 7 days to around 18,600 level. Surely if a lower interest rate was going to get the " animal spirits " roaring again this was a damp squib. The reason was events in faraway Republic of Cyprus which is about 60% of a tiny island in eastern Mediterranean, a member of the Eurozone with a GDP of just 18 billion Euros. Cyprus was an offshore tax haven, especially favored by Russian oligarchs. At the end of January banks in Cyprus had deposits of 68.4 billion Euros or $89 billion, nearly 5 times its GDP, of which Russians owned 19 billion Euros or $25 billion. However, the troubles for Cyprus started far away in Brussels at 3 AM in late October 2011 when Eurozone leaders and the IMF agreed to write down 50% of Greek bonds. This meant that Cyprus banks holding Greek bonds would lose 50% of their value. In reality it was 75%. New York Times, 27 March. Cyprus banks lost a total of 4 billion Euros which was an impossible sum for a GDP of 18 billion Euros. To add to their troubles the EU also raised the amount of capital a bank needed to hold to be considered solvent, known in India as the Cash Reserve Ratio. Depositors started a run on banks and a property bubble collapsed leading to further trouble for the banks. Cyprus tried to avoid a bailout by borrowing 2.5 billion Euros or $3.2 billion from Russia but this was not enough. In fact it may have given time to Russian oligarchs to withdraw their money from foreign branches of Cyprus banks. When eventually Cyprus asked for EU help the terms were severe because Germany sees it as helping to avoid taxes and in money laundering. Deposits up to 100,000 Euros would be protected. Anyone with more than that would face a 40% haircut. The second largest Cyprus Popular Bank, also known as Laiki Bank which lost 2.3 billion Euros, would close leading to the loss of 2,500 jobs. Unemployment, which is at 15%, is expected to rise sharply. Ordinary people will lose jobs, see their salaries and pensions cut and many will face real poverty. Banks in Cyprus were closed for 2 weeks and are opening today. However, no one will be allowed to withdraw more than 300 Euros per day and there will be strict controls on money being transferred to other countries. It remains to be seen whether Cyprus can remain in the Euro or is forced to leave, resulting in runs on banks in countries such as Greece, Spain and even Italy. Government banks in India have enormous bad loans and the property bubble is a humongous abscess waiting to burst. The panic caused by little Cyprus should be a warning. But is anyone listening?

Election contortions.

Having allowed the 2 Italian marines accused of murdering 2 Indian fishermen in February last year to escape back into Italy the Congress got into acute difficulty. The memory of Ottavio Quattrocchi leaving India on 29 July 1993, 2 years after the assassination of Mr Rajiv Gandhi, to escape arrest is still fresh. The Supreme Court took a dim view of events and held the Italian Ambassador, Daniele Mancini responsible since he had personally guaranteed the return of the marines. The Ambassador's claims of diplomatic immunity was rejected by the Court and he was ordered to remain in India. The court ordered all airports to be watched to prevent him from escaping as well. This put both the Italian and Indian governments in a quandary as the neat little plot was beginning to unwind. So on 22 March both marines were returned to India after the government promised that they will not receive the death penalty and that they will not be arrested. In reaction the Foreign Minister of Italy resigned yesterday because of criticism of the decision by the Italian press. How can the government preempt the law. If Kasab was hanged for killing Indians then why should an exception be made for the marines? Does it mean that our law is tailored to suit a criminal depending on the color of his skin? Does a man deserve to be hanged because he is called a " terrorist " and these 2 are immune to our laws because they are called " marines "? Either the law should be changed to ban capital punishment or it should be applied equally to all. Trouble is that if the law is uniformly applied a lot of our politicians and government officers would face the rope. Amarmani Tripathi, murderer of Madhumita Shukla, is allowed to roam around in Gorakhpur on parole. Manu Sharma, son of a Congress politician and murderer of Jessica Lall, was out on parole enjoying himself in nightclubs. The Yadav brothers, sons of a UP politician and murderers of Nitish Katara, are allowed to roam around outside prison to attend hospitals for frivolous complaints. Bitti Mohanty, son of the retired Police Chief of Odisha, BB Mohanty and convicted rapist, went on the run for 7 years after getting out on parole. Raghuraj Pratap Singh or Raja Bhaiya, who has 47 criminal cases, including murder, registered against him, has been elected 5 times as independent MLA from Kunda in UP. He was serving as Minster of Food and Civil Supplies and Minister of Prisons in UP but has had to resign his post because he is accused of involvement in the shooting and killing of Deputy Superintendent of Police, Zia-ul-Haq who went after illegal sand mining by the local mafia in Pratapgarh District. The problem for the Congress is that it does not want Italians to be held to justice, but with elections looming, it cannot be seen to be soft on Italians. Hence the contortions. Love it.

Same to same.

Go away for 9 days, no newspapers, no news on TV, not even radio and when you return everything is just the same. A Member of the Legislative Assembly in Maharashtra was being driven along the Bandra-Worli Sea Link on 18 March when his car was stopped by a police officer for speeding. Politicians in India think that winning an election allows them to commit any crime with complete freedom. They should not be questioned, let alone be arrested for the most disgusting offence. So this particular MLA must have become incandescent and abused the officer with the usual introductory line - " Do you know who I am?" The officer must have made the suicidal reply that he did not care whereupon 10-12 MLAs beat him up so badly that he is in hospital. This crime was committed inside the Assembly Building. Since no one came to help of the hapless policeman we can conclude that they would have been applauding this cowardly outrage proving our impression that all politicians are criminals. Now the Home Minister of Maharashtra has suspended the police officer for misbehaving with a politician, which proves that police are under the control of politicians and are actively restrained from carrying out their duties. Maharashtra has a Congress government. Also immune are Italians. The Delhi High Court has asked the Chief Metropolitan Magistrate at Patiala House Court to set up a special court to try the 2 marines on the Italian ship Enrica Lexie who shot and killed 2 fishermen off the coast of Kerala for fun in February of last year. The only problem is that the marines have vamoosed back into Italy and Italy has categorically refused to return them, offering friendship instead. So, will they use cardboard cutouts of the marines in the defendants' dock? We are not allowed to snigger as this will be construed as Contempt of Court and invite severe punishment. The marines were allowed to go home to celebrate Christmas with their families and again for one month, to vote in last month's elections. Who needs one month to vote?  No other country in the world is so full of love for killers of its citizens as we are. Caligula is reputed to have fought against the sea and ordered his soldiers to gather seashells as trophies and now we are trying the shadows of a couple of Italians. History, as they say, repeats itself. Only in this case we are trying to repeat Roman history for some unknown reason. Meanwhile, our most revered Defense Minister has said that the Augusta Westland VVIP helicopter deal was rotten. He is positive that " somebody has taken money " and said," The CBI is probing the case in detail. I stand by the commitment given to  Parliament that severe action will be taken against the culprits." But the culprits are likely to be in Italy. So how will we catch that " somebody " and will Italy offer friendship once again. Nothing changes.

Election economics will end in tragedy.

The Congress us ready to sacrifice the country to win general elections again. To win in 2009 they started the NREGA scheme which pays rural people for 100 days a year of fictitious work, increased salaries of useless civil servants by 80% and forgave loans of farmers. That increased the Non Performing Assets of public sector banks, caused the  Consumer Price Index to rise by over 10% every year, the fiscal deficit to balloon forcing the government to borrow more driving up interest rates and levy punishing taxes on all goods and services, increasing inflation and reducing consumer demand. Elections are due again next year and the Congress is trying to find new ways of bribing voters to win again. They have already passed the Right to Education Act which forces private schools to reserve 25% of seats for poor children in their area which is a sly tax on the middle class, who have to pay more for their children, to compensate. That this is nothing but a cynical ploy to get votes was highlighted by an article in the New York Times of 26 February according to which at least 26 million children between the ages of 6 and 14 years are working in shops, kitchens, farms, factories, constructions sites and mines in spite of a law passed in 2010 which mandates that children of that age group must be in school. In Meghalaya children work in " rat hole " coal mines, owned by politicians, without any safety equipment. Many die regularly. The Food Security Bill will be passed soon and will add Rs 2.5 trillion to government expenses and a Backward Regions Grant aims to spend Rs 750 billion over the next 4 years, of which Rs 450 billion will be spent in the first 2 years. Already 150 backward districts have been covered. Now the government is working on a National Right to Homestead Bill which will guarantee 10 cents or one tenth of an acre of land to the rural homeless. This will enable a homeless family to build a shelter for themselves, grow vegetables and rear poultry or goats for food supplement. There is a thundering silence on how the government intends to pay for all this without adding to the already dismal fiscal deficit and without increasing already unbearable taxes. " Based on the available investment data, we estimate that savings will plunge even further to a 10-year low of 27% of GDP in FY 13," said Sonal Verma, Nomura India Economist. ET, 4 February. Domestic savings has been falling from a high of 36.9% of GDP in 2007-08 to 34% in 201-11 to 30.8% last year. The fall in domestic savings will push up the Current Account Deficit which will lead to a fall in the rupee and rocketing inflation. Sadly all these laws, ostensibly to help the poor, are not because of altruism, economic calculation or even due to ideology but a totally selfish sacrifice of national well being just to win elections. Thus it is naked treason. Sadly we are powerless to stop it.

Infrastructure is ours.

When Indian companies are desperate to get out of highways projects why are foreign funds and equity investors keen to buy stakes in such projects? Seems that Uniquest Infra Ventures, a joint venture between Malaysian Government sovereign wealth fund, Khazana National and IDFC wants to buy stakes in a dozen road projects. TOI,12 March. SBI Macquarie Infrastructure Fund wishes to invest Rs 200 billion in projects nearing completion, Tata Realty is interested in 4 projects and Morgan Stanley wants to buy into KMC Construction and has a 15% stake in the Surat Hazira project. Even the Canadian Public Sector Pension Board wants a share of the Panipat-Jalandhar highway project. It is well known that companies had bid for projects based on wildly optimistic prediction of traffic flows and revenue collection through tolls which have not been fulfilled because of extremely high taxes on petrol and uncontrolled inflation. Companies are unable to service their debts and desperate to get out. So, why are foreign funds interested in buying into such projects? They are not doing it to benefit Indians, that is for sure, so they must be looking to making handsome profits on their investments. Apart from some sections highways are not used by private cars but mainly by trucks which carry most of the goods, especially fruits and vegetables, from one part of the country to another. To get good returns on their investment foreign companies will jack up toll charges to many times the present value, adding to prices and sending inflation even higher. Strangely, no one is worried about foreign control of a monopoly business. A top government official said," It will not only free up capital for Indian developers but increase overseas participation. In addition, the Indian players will have resources to bid for new projects and help revive interest in the sector." He does not explain why it is a good thing for foreigners to control vital infrastructure. These funds are not interested in building highways but want to buy completed projects or those nearing completion. Clearly their sole interest is in making profits by controlling toll collections at our expense. Apparently politicians in Andhra, Jharkhand and the BJP have stakes in such projects and would undoubtedly make handsome profits. Also public sector banks will be able to recoup their loans and reduce their Non Performing Assets. Meanwhile auction of CDMA licenses raised only Rs 36.39 billion when the government had expected 10 times that amount. Only one company, Sistema Shyam Teleservices bid for 8 circles out of 11 it had applied for. It will now shut operations in Maharashtra, UP and Mumbai for which there were no bidders. Infrastructure belongs to the people and must be state of the art and cheap to use. Sadly the scoundrels see this as a way to make money to buy luxuries for themselves. 

It is nothing new.

On 15 February, 2012 two unarmed fishermen were shot dead off the coast of Kerala by 2 marines aboard the Italian ship, the MV Enrica Lexie. The ship was impounded and the marines arrested on a charge of murder. The Italians first said that the marines were innocent because they thought the fishermen were pirates and then said that since the incident occurred in international waters the marines should be tried in Italy. On 18 April the government of India told the Supreme Court that Kerala Police were not empowered to detain the ship and that Kerala had no jurisdiction to probe the shooting because the crime was not committed in India's territorial waters. The Supreme Court was not amused, saying," We don't expect such a stand of the central government. It is unfortunate when persons killed on February 15 are within Indian territory." It is therefore surprising that the same court allowed the marines to go home to Italy to celebrate Christmas with friends and family and then again last month to vote in the Italian elections. Not surprising that the marines have now refused to return and Italy has shown its contempt for India by saying that it hopes to resolve issues in a " friendly " manner. Yesterday in Parliament our Fearless Leader warned Italy of " consequences " for " violating every rule of diplomatic discourse ". Really? What consequences are we talking about? Is he threatening members of the Italian government with death due to uncontrollable laughter? Did he not sign a memorandum on " bended knees " in Sharma al Sheikh on 16 July 2009 after the Mumbai massacre on 26 November 2008? But even this pales in comparison with the Bhopal disaster of 2-3 December 1984 when Warren Andersen, the chief of Union Carbide was personally escorted to his private plane by the then Chief Minister of Madhya Pradesh. If all these are Congress crimes it is because the Congress or its stooges have been in power for 58 out of 64 years since independence. The BJP did not cover itself in glory in the 6 short years that it was in power. After the attack on our parliament on 13 December 2001 large numbers of soldiers were dispatched to the border with Pakistan but after huffing and puffing they returned home at great cost. Even worse the hijacked Indian Airlines flight number IC 814 was allowed to take off from Amritsar  Airport on 24 December 1999 and fly to Kandahar where one hostage was stabbed to death and several injured. Contrast this with the treatment of Indian citizens at Kudankulum where 6800 have been charged with " sedition " and " waging war against the state " for peacefully protesting against a nuclear power plant. Telecom companies have been fined Rs 28 billion for issuing 1.9 million SIM cards against forged identity papers because they want to keep tabs on citizens. Our politicians have been waging war against us while supping with our enemies. It is definitely nothing new.

The economy cannot be forced.

If force could make a country rich the former Soviet Union would not have collapsed and people would not be eating their own children out of hunger as in North Korea. China, a one party Communist state, does not hand out cash to its poor for doing nothing. Following the sub-prime crisis in 2008 the US cut taxes and has been reducing entitlements to reduce spending while supporting businesses, such as General Motors. The US has managed to grow, albeit slowly. In Europe, on the other hand, taxes have been raised, government spending slashed and social security reduced leading to increasing poverty, falling consumer demand and contracting economies. In India the Congress is shackled to increased social spending which it started in 2008 to win elections in 2009. Increased government spending led to increased borrowing, increased fiscal and Current Account Deficits, very high inflation, falling consumer demand reducing tax collections and increasing deficits further. The remedy is simple. Reduce deficit by cutting wasteful social spending, reducing the numbers of useless ministries from 53 to 15 and stimulate demand by reducing taxes. The survival of the present government is dependent on bribery. First it increased its seats by bribing voters and then formed a government by bribing various two-penny politicians by making them ministers. Problem is that elections are not due till May next year and the economy is going to collapse long before then. The Congress could have announced new social schemes in this year's budget and called early elections before the crisis hit but politicians of other parties would be most unhappy. They could lose their seats and want to loot the maximum before having to face voters. Also the Congress betrayed the DMK in Tamil Nadu to divert attention away from the Commonwealth Games scam and has fought with the Trinamul in Bengal and so is not sure of holding on to power. Hence it is trying desperate measures to carry on with high social spending without going bankrupt and facing a credit downgrade to junk status. It has increased taxes on every kind of service, levied huge taxes on petrol and increased charges of all utilities such as electricity and water. This has increased inflation and further depressed consumer spending. Car sales have fallen by 25.7% in February from 2,13,362 units last year to 1,58,513 this year. Predictably the response of the Congress has been to use force. First the RBI is being bullied to reduce interest rates, which will only make inflation worse, and second, the Finance Minister is going to meet chiefs of public sector banks to force them to increase lending. Already Non Performing Assets of some banks have crossed 4% to a total of Rs 1.84 trillion. If a whip was the answer to every problem there would be no difference between a race horse and a donkey.

No peace or closure for victims.

What to make of the drama going on with Bitihotra Mohanty, a convicted rapist who went on the run with the help of his father BB Mohanty, one time Director General of Police in Odisha. He was arrested by police in Kerala on 8 March after a tip off while working at the State Bank of Travancore in Kannur on a false identity as Raghav Rajan. This being India the first question that comes to mind is whether this is a genuine arrest or whether it is part of a deal to make a big song and dance and then losing the case in court to allow Biti to get off with a token punishment to go back to enjoying life in the bosom of his loving family. According to the police at least 3 of his uncles kept in touch with him through 7 years, helping him obtain forged identity papers with which he obtained a management degree from the Chinmaya Institute of Technology in Kannur, proving that he is so adored by everyone in his family. A quick recap. TOI, 11 March. Accused of raping a German tourist in Alwar, Rajasthan on 26 March, 2006. Convicted and sentenced to 7 years in prison by a fast track court on 12 April. Allowed out on parole for a fortnight to see his mother on 20 November. In every civilised country in the world parole is at the end of a sentence and only for good behavior and genuine remorse. Manu Sharma, son of a Haryana politician and murderer of Jessica Lall, was allowed out on parole also to see his " sick " mother and was caught enjoying night clubs in Delhi. On 4 December Biti disappears. BB Mohanty denies all knowledge of his son and loses a paltry Rs 50,000 as surety. On 24 August, 2007 a Jaipur court issues a non-bailable arrest warrant for BB Mohanty following which he goes on the lam. He is suspended from his post by the Odisha government. Apparently he was masquerading as Rajeev Rajan with Biti as Raghav Rajan at Puttaparthi in Andhra. On 10 January, after 5 months on the run and after a warning by the Supreme Court BB Mohanty surrenders and is given bail the next day. On 13 May 2009 the Odisha government revokes his suspension and he rejoins his post, presumably getting all his past dues in a huge lump sum as a reward for his criminal behavior. He retires on 30 April, 2010 as Director General, fire Services and Commandant General, Home Guards, again presumably with full pension and perks. How sad that chiefs of police in India are common criminals. They are immune because of their knowledge of the crimes of politicians and civil servants. Simple blackmail. Even the press protected Rathore who was Inspector General of Police in Haryana. They hid the fact that he is a pedophile by continuously saying that Ruchika Girhotra was a teenager. A 19 year old is a teenager but is an adult. Ruchika was just 14 when she was molested. Rathore has presented his wife with a new Mercedes. Criminals laugh. No peace for victims.

If only words could save the patient.

A few days ago our Great Leader asserted fearlessly that the economy is going to grow at over 8%, secure in the knowledge that he will not be around to pick up the pieces when it tanks and will be able to pass on the blame to his successor, to global weakness or to the tooth fairy. Now his trusted lieutenant Mr Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission has charged in with his own prediction. " It will be reasonable to assume that the growth rate would be 7-8%, which I would call passing grade. I am reasonably confident that over this four-five year period, that is going to be the growth rate of the Indian economy," said he. ET, 11 March. Oh, wow! We are assuming a passing grade when all the figures are showing miserable failure. The calculations must have been done by government school teachers whose salaries have been increased to Rs 35,000 per month when private school teachers are getting half that amount. " If you take the 10-year period, the average ( economic ) growth comes out to be 7.5% and if you use the statistical method, it still comes out to be 7.4%. So, the conservative estimates based on the past ten years, indicated that Indian economy has demonstrated a capacity to grow at 7.4%," he opined. People think that economists are somewhat cuckoo at the best of times but even by their standards this is completely illogical. What happened in the past is no indication of what is going to happen in the future. The world is not static and events have a habit of suddenly catching everyone unawares. No one foresaw the east Asian crisis of 1998, the dot com crisis of 2001 and the sub-prime crisis of 2008. The growth of the past 10 years were due to very low interest rates in the west which led to a flood of cheap money leading to a strong rupee and an astronomical growth in property prices and in share prices. In 2007 the rupee was 39 to the dollar, oil was at $54 per barrel and inflation was at around 4%. The same Finance Minister, who is shamelessly boasting of somehow containing the fiscal deficit, wasted vast sums of money on social programs to win elections. Today interest rates are at zero percent in the west which is again leading to hot money increasing asset prices but the Consumer Price Index is at over 10%, oil is at around $95 per barrel and the rupee is flirting with 55 to the dollar. On 8 March the RBI Governor, D Subbarao told bankers that the government does not have the fiscal capacity to continue with entitlements and welfare programmes at the current level. TOI, 11 March. " Key to our collective national aspiration for sustained high economic growth is low steady inflation," he said. Will the Congress cut social spending before elections in 2014? And commit electoral suicide? Our politicians are not known for patriotism.  As long as they do not bore us with words.

Who is right?

Our most revered Finance Minister thinks that having kept the fiscal deficit within 5.2% this year ending on 31 March he has fulfilled his duty and the Reserve Bank must now reduce interest rates. Firstly, we are doubtful about his figures because they have been changed drastically in the past. Secondly, since there is no one in India to tell the truth, so we do not know whether he has merely postponed government expenses to next year and that there will not be a sudden spurt in spending to bribe the electorate to win general elections in 2014. " On the fiscal consolidation path, the government has walked the talk. RBI, of course, will take into account the overall broad economic situation and what happens between now and March 19 and take a call ( on interest rate ).... we have delivered on the fiscal consolidation path," he said. Not true at all. The NREGA scheme was started with Rs 100 per day for 100 days a year for the rural poor. That has now been  increased to Rs 214 per day to adjust for inflation. So a man may earn Rs 214 for 100 days in a year giving him Rs 21,400 and his wife can do the same giving the family a total income of Rs 42,800 in one year, for doing nothing. This works out to Rs 117.26 per day for the family which is well above the government poverty level of Rs 30 per person per day. When people can earn so much for doing nothing why will they work? The result is an explosion in the cost of agricultural labor where farmers are having to compete against government charity paid for by the taxpayer. This is behind the food inflation which is running at over 10% despite bumper crops and cannot be controlled if labor costs keep running ahead. Salaries of useless civil servants were increased by 80% in 2008. Their Dearness Allowance is paid as a percentage of the basic salary. It was 58% of the basic salary in 2011 but has now been increased to 80%, again as a hedge against inflation. As long as inflation continues uncontrolled these unproductive expenses will keep on rising. Lowering the interest rates will penalise savers, especially pensioners, who depend on returns from their savings to survive. The government will be able to borrow more cheaply to finance its spending. Thus the Finance Minister wants to sacrifice the middle class and pensioners to finance unproductive spending. He is also hoping that lower interest rates will help people borrow more to spend on buying cars and houses. This cannot happen. Inflation has killed off the purchasing power of consumers and high circle rates have brought the property market to a standstill. Perhaps he should do his job properly instead of arm-twisting the RBI.

He could be the greatest Gandhi.

The heir apparent in the Congress Party, Mr Rahul Gandhi said recently," Asking me whether you want to be PM is to ask me the wrong question." TOI, 6 March. In a country where a man can simply walk into the Prime Minister's post whenever he wishes just because he happens to be born into The Family, to be told that " Parliament is the light pillar of democracy " becomes a joke. Congress creepy crawlies immediately rushed out from under various rocks to claim that he would definitely be the Prime Minister someday. Congress spokesperson, Rashid Alvi said," That he does not want to be the PM is his thinking. But as far as workers of Congress Party are concerned, they want him and I am sure one day he will become the PM of the country." This is no different from the Kim family of North Korea or the Assad family of Syria. Large numbers of sycophants gather round, like flies around a honey pot to gain money and power from their proximity to The Family. They will refuse to accept his abdication of power because by themselves they are nothing. Mr Gandhi also refused to get married saying," If I get married and have children, then I will become a status quoist and will be concerned about bequeathing my position to my children." That is noble indeed but his sister, Priyanka already has 2 children and the Congress will cling onto anyone from The Family. If he really wants to serve the country he would try to make sure that there is a limit to the shelf life of politicians and that one person can never stick around for decades as at present. Hugo Chavez could have remained the President of Venezuela for life but he died at the age of 58 years. Pope Benedict resigned at the end of February to retire to a private life. Queen Beatrix of the Netherlands has said that she will abdicate her throne on 30 April this year at the age of 75 years. She became queen 33 years ago on 30 April 1980. The President of the US is limited to 2 terms of 4 years each and, except Franklin Roosevelt who was elected for a third term during World War II, no one can even dream of breaking that rule. Sadly in India we are unable to get rid of our corrupt and immoral politicians. In spite of their lives of crime and debauch they seem indestructible. The same ugly faces have been hanging around for over half a century and have brought their evil spawn into politics to take over from them so that our suffering seems to be unending. If Mr Rahul Gandhi can enforce term limits on politicians in India he will have rendered such a service to the country that he will go down in history as the greatest Gandhi.

Nothing seems to change.

The Comptroller and Auditor General has checked 90,576 cases of farmer loans forgiveness and found serious discrepancies in 20,216 cases or 22.32% of the total. This was a Rs 520 billion scheme enacted in 2008 to win general elections in 2009. The CAG has raised " serious concerns about the implementation of the scheme ", especially about Rs 1.646 billion distributed through microfinance institutions in contradiction to the guidelines which specifically forbade distributing through any agency. The loans were to be forgiven by banks working with individual farmers. We may conclude that most of this money was pocketed for use as election expenses. In India elections are very expensive. Candidates need money to travel through their constituencies, which may not have proper roads, necessitating the use of helicopters and large numbers of SUVs. While the government is able to fund voter bribery schemes with taxpayer money candidates need cash to  bribe voters on the ground with bottles of alcoholic drinks, in the case of men, and saris or cooking utensils, in the case of women. This is clearly shown in 21,000 of 61,800 cases checked by CAG in which  there is no acknowledgement from farmers of the relief they had received and no certificate of debt write offs were provided to farmers. We can safely assume that all this money was pocketed which is the main aim of starting such schemes. In another scheme touted by politicians called the Integrated Child Development Services to supplement nutrition in children the CAG noted that more than 40% of children in 10 states were malnourished. 49% of children in Andhra, 82% in Bihar, 43% in Haryana, 40% in Jharkhand, 50% in Odisha, 43% in Rajasthan, 41% in UP and 50% in Delhi showed signs of being malnourished. Funds were being diverted for paying salaries and there was a lack of toilets and drinking water. 33-47% of children were not weighed for growth between 2006-7 and 2010-11. TOI, 6 March. With elections due in 2014 we wait to see what the Congress will come up with this time. A drive is under way to provide Permanent Account Numbers, needed for filing tax returns, to everyone, including housemaids and sweepers who will never earn enough to be liable to pay income tax. Meanwhile everyone is being forced to apply for Aadhar cards which incorporate photographs, iris scans and prints of all 12 fingers. This is apparently to supply government assistance to people. Since taxpayers are not eligible for any government assistance there is fear as to what nefarious tricks the Congress is up to. The Congress will remain a criminal organisation.

RIP Hugo Chavez.

A megalomaniac, a buffoon, a consummate performer, a soft dictator who raided his country's oil wealth for personal power, Chavez was all those things but his legacy will be what happens to his country now after 14 years of his rule. Born in a poor family he hated the rich and believed in Socialism where the country's wealth is distributed to the poor. In his 14 years in power the Venezuelan currency the Bolivar lost 90% of its value, being devalued 5 times. Inflation is still running at 30% and violent crimes have boomed. There are 20,000 murders every year and people are kidnapped from bus stops in broad daylight. On 1 January, 2008 the government brought in the Bolivar Fuerte or the strong Bolivar at the rate of 1:1000 of the old Bolivar. At that time it was 2.15 to the dollar, devalued to 4.30 to the dollar on 4 January 2011 and to 6.30 to the dollar early this year. Chavez changed the constitution so that he could stand for a third term, forbidden under the previous rules. Since 2011 he had been suffering from cancer and had been to Cuba for operations and chemotherapy. In October last year he won a third term in office and in December he was back in Cuba for another operation. Nobody knew his diagnosis but he clearly knew even as he was running for his third term. He left his vice president, Nicolas Maduro in charge while he was undergoing treatment and could not attend his own swearing in. However, a supine Supreme Court said that he could be sworn in later. He supplied Cuba with 100,000 barrels of oil daily at very attractive rates and in exchange some 40,000 Cuban doctors provided free healthcare to the poor. Education was free and even houses were given away. While espousing the cause of the poor he traveled in a luxury Airbus A319 and blamed foreign forces for his country's dire economy. Numbers of civil servants multiplied as there were unknown numbers of ministries and corruption boomed. " It's a big deal here when a girl turns 15," said a Caracas designer, Giovanni Scutero. " If the father is with the revolution he doesn't care about the fabric as long as it's in red. Something simple, $3000 - more elaborate $250,000." nytimes.com, 6 March. The similarity with India is disturbing. Our Commandante was not elected but sneaked in through the Rajya Sabha. The NREGA scheme gives money to rural poor for doing nothing, Rs 100 in 2005 but Rs 214 today. The CPI is over 10%, 53 ministries looting the exchequer, billions spent on luxury aircraft and murders and rapes every minute. Chavez at least had the grace to go at the age of 58 years. Sadly our lot are immortal.

World's worst police state.

Indians do not realise the noose that is gradually and inexorably tightening round our necks. For decades since the mid 1960s, when India was threatened with famine, everyone possessed a Ration Card which bought you subsidised rice, flour and sugar and served as an all purpose identity card. From the rich industrialist to the poorest laborer everyone possessed a Ration Card which was used for identity and address proof for everything from registering a vehicle to getting a passport. Then the sly, slimy politicians introduced another card called the PAN or Permanent Account Number card for filing tax returns but promised that it would be voluntary. This has 5 upper case alphabets followed by 4 numbers and then one upper case alphabet. After a few years it was made compulsory with the excuse that this was to eliminate black money. You needed a PAN number to register your car or your property and to open a bank account or to invest in shares or mutual funds. However, this was not enough for the Congress which is friendly to terrorists and servile to Pakistan and China. They started another number, a 12 digit one with photographs, iris scans and prints of all 12 fingers, called Aadhar which was apparently to prevent pilferage from subsidised food grains and various social schemes supplied to the poor. As honest taxpayers we are not entitled to any help from the government even if we are unable to pay medical bills for a serious ailment or need help in old age so a lot of people chose to ignore it. No longer. We are now receiving letters from banks asking us to provide our Aadhar number so that we can receive help from the government. Why, when we do not get any help? After a while the letters will start to threaten us with cancellation of our accounts and loss of whatever money we have if we do not comply. Already it has been announced that all reservations for train seats will require an Aadhar number. That is still not enough for the Congress which wants to nail down every citizen in the country for whatever it may choose to do to us. There is now a National Population Registry Card which has similar biometric features like the Aadhar card but has a 27 digit, that's right, a 27 digit Taxpayer Identification Number. As always this is to help us take advantage of double taxation treaties with other countries. Since only politicians, their relatives and friends have money stashed abroad and we, the people, are struggling to survive with double digit inflation this is another nail in our freedom. Even China does not force so many identity cards. How long before they demand our DNA? 

Do not fear the sequester, fear the recovery.

Unable to agree on taxes and cuts to government spending the US has enacted what is known as " sequester ", where compulsory cuts of $85 billion went into effect on 1 March. For a $15 trillion economy a reduction of $85 billion is really peanuts but over a period of time these cuts will have a multiplier effect. As salaries are delayed and national parks close consumer spending will gradually fall which will impact retail and other industries thus intensifying the effects. The good thing for India is that imports from China may fall causing real harm to that economy, hopefully leading to internal strife and civil war. The bad thing for us is that our meager exports will also be hit and foreign investment will fall. The Federal Reserve in the US has resorted to tremendous monetary easing to kick start the economy, pouring money to buy up government bonds and mortgage backed securities. With interest rates at 0% and house prices still cool avenues to investing in the US are limited so investments funds have pumped in $30 billion in Indian stock market since the beginning of 2012. Although the sequester has so far not had any effect on our stock market there are fears that a prolonged paralysis in the US could ultimately result in less money flowing into India with a consequent fall in share prices. " At the outset, it looks like this can impact the flow of FII money into the Indian market," said Arun Kejriwal, Director of an investment advisory firm, KRIS. TOI, 4 March. That maybe true but what they should be really terrified about is what happens if the US politicians are able to solve their differences and are able to agree on gradual reduction in government spending with increasing the revenue base. Once an agreement is in place the US economy will start to improve and inflation, due to years of loose monetary policy, will start to rise which will cause the Fed to start tightening. The Dow is flirting with the 14,000 level and is looking to break the record. Once that happens US funds will withdraw money from risky emerging markets to get better returns from the safety of home markets. Trouble is that the Indian government is using the investment dollars to reduce its Current Account Deficit and if there is a sudden outflow of foreign money our CAD will rise precipitously, the rupee, which is already weak due to inflation, will plunge and inflation will soar. The looming elections in states this year and the general elections in 2014 means that the Congress is locked into a high spending / high deficit mode and will be completely helpless should this happen. Thus, we should not fear the sequester but the eventual recovery in the US. Hopefully, it will kill off the Congress.

The white man says so.

The Heritage Foundation, a right wing think tank, says that the budget will fail to stop India sliding into failure. TOI, 3 March. Derek Scissors, a member of the Washington-based organisation, said the budget " leaves India on the same, failing course it's been on of undisciplined spending and unrealistic expectations". In his opinion the economy is in dire straits because inflation remains uncontrolled, income growth has slowed and manufacturing, which could add jobs for young people, is not growing. " Services lead in large part because the labor market is more flexible in services industries than in manufacturing. Rather than labor market reform, the Indian government offers a state-led infrastructure program. But the infrastructure program has no chance to succeed while property rights to land remain so ill-defined," he said. He should have added that even here the government is set on the disastrous Private Public Partnership model which inflates expense because of delays and are so costly to use that people find them much too expensive to use. He goes on," The proposal for this year is a triumph of hope over courage: Spending is to increase by 17%, yet the deficit is to fall to 4.8% of GDP. This won't happen. Spending will have to be curbed or deficit will balloon again." Mr Scissors is bold enough to tell the truth probably because The Heritage Foundation has no business interest in India. Indian business tycoons are always effusive in their praise, so obviously oily to please the government that it makes you slightly nauseous. We can understand that in this most corrupt of crony capitalism they think they can make easy money by being allowed to grab public land, be gifted with lucrative public contracts, providing easy ways of skimming off the top, or be allowed to exploit natural resources without sharing with the people. It is difficult to understand why bosses of foreign banks or hedge funds are usually so diffident. Are they also partners in the extensive loot of the country's wealth? " Without a sustained reform process, which will take considerable time, India will not return to the days of fast growth. Government revenue and GDP will continue to be high, deficits will continue to be high, and consumers will continue to suffer. This is the path India remains on," he added. A junk credit rating beckons, he did not say. This is what we have been saying repeatedly for a long time but no one listens to us. Now a white man has come out with the most bitter of truths. And we know that on an international scale an American trumps an Italian every time. That is the cruelest cut of all.

An exercise in irrelevance.

Weeks of speculation in the press, assorted pundits spewing out miles of print, top civil servants locked up for weeks to preserve secrecy, and for what? For the annual exercise in moronic irrelevance called " The Budget ". Every year it is the same ritual. A list of goods and services on which taxes are being raised. Taxes are never lowered or rationalised, occasionally the basic income on which income tax becomes applicable maybe raised by a few measly thousands but even that fig leaf was dispensed with this year. The criminal extortion of the people goes by the name of " big bang reform "  and " reduction of subsidies ", cheered on by a freeloading press. We can nail one lie straight away - there is no subsidy on petrol and yet the price of petrol has been increased by Rs 1.40 today to around Rs 78 per liter. How do we know that there is no subsidy on petrol? Because petrol, or gas as it is known, is sold in the US at international prices with a tax of 12%. Even today the price is an average of $3.80 a gallon which works out to $1 or Rs 55 per liter. Tax on cigarettes has been increased by 18% but there is no attempt to cut the use of bidis or khaini which are responsible for the highest rate of oral cancer in the world.  While rich countries are trying to encourage increased use of bicycles to cut down on obesity and pollution excise duty on bicycles has been raised from 1 to 2%. This is a multiplier on the excise duty on raw materials at 12.36%. Anyone earning more than Rs 10 million a year will have to pay a surcharge of 10% on their tax. Rich people have not become rich by being stupid and paying their share of taxes. They will only send more money to foreign tax havens. Surcharge on domestic companies have been raised from 5 to 10% and on foreign companies from 2 to 5% on income of Rs 100 million. They will pass on the costs to consumers increasing the already soaring inflation. A 1% tax has been added on the sale of any property of over Rs 5 million. Registration charge and stamp duty vary from 6 to 12% across states which is one of the highest in the world and the reason for half the price being paid in black money. Even a tiny one bed-room flat in any major city costs more than Rs 10 million so we can expect a complete paralysis in sales of properties with resultant collapse of prices. By bringing down inflation that would be good in the long run but in the short term the recession will be brutal. Having made set top boxes mandatory customs duty has been increased from 5 to 10% and from 1 to 6% on mobile phones costing more than Rs 2000, which is almost all.  Our most revered Finance Minister said," I believe there is a little bit of Azim Premji in every affluent taxpayer." We are searching for a little bit of Gandhi in politicians. Walk instead of spending Rs 37 billion on luxury choppers. If only we could chop the lot!

Crimes against children.

An article in the New York Times of 26 February describes the shameful practice of child labor in India despite a law in 2010 which mandates that all children between the ages of 6 and 14 years must go to school. It says that 28 million children between 6 and 14 years of age are working in houses, farms, construction sites, tea shops, mines, factories and in many hazardous occupations. In Meghalaya children go to work in coal mines without any safety gear. The Mines Act forbids anyone below the age of 18 from working in mines but here little children are made to work mining coal. They have to crawl through holes a few feet across to get to the mine face. Many die. Suresh Thapa, 17 years old, works in such a " rat-hole mine " while his 3 younger siblings go to a government school. His mother, Mrs Thapa said," It is necessary for us that they work. No one is going to give us money. We have to work to feed ourselves." A mother without any sense of responsibility or tenderness towards her children. Why did she and her husband give birth to so many when they do not have the means to feed them? Why is no one reaching out to them to explain that having children exacerbates and perpetuates poverty from one generation to the next, forever? Suresh's boss, Kumar Subba agreed that mines are dangerous but said that they were owned by a state lawmaker. He said," Mostly the ones who come are orphans." He employs about 130 people who produce around 30 tons of coal daily. " People die all the time," he said. " You have breakfast in the morning, go to work and never come back. Many have died this way." Brutally honest. Bindo M. Lanong, Meghalaya's Deputy Chief Minister for Mining and Geology said," There is no child labor in Meghalaya. These allegations are totally absurd. These are not based on facts." Typical Indian politician's response - deny everything even if it is in front of your face. Such brutality is made possible because mines are owned by local lawmakers who control the police and so are above the law, poor people are encouraged to go on breeding to provide a constant supply of cheap labor and children are helpless to resist. It is no surprise that children who grow up in an atmosphere of violence become criminals, ready to use extreme violence against others because they have seen no different. What use is it enacting a plethora of laws if no attempt is made to enforce them? Yet, it is so easy. Pass a law that anyone who is born after 1997, that is 16 years or less, will not get any help from the government if they have 2 children or more. They will get 100% if they have only one girl, 80% if they have only one boy and nothing after that. That will remove the reward for having children. Publicise it on radio, on TV and through SMS. The poor are not fools. They will protest but crimes against children must stop if the country is to survive.