Our justice system is broken.

A brigadier in the army is an extremely high post. Above that is major general, then lieutenant general, who heads a command, and finally, the commander-in-chief. So when a brigadier steals a couple of 400 year old " chhatris ", which are ornate canopies, from Sultana village in Jaisalmer it really is shocking and makes you very sad.  These are 10 feet long and 7 feet wide structures which villagers used to visit for prayers as they stood next to a small yellow monument, considered a home for their gods and goddesses. Brigadier Vijay Mehta got the 2 chhatris dismantled and transported to his home in Gurgaon where they have been reassembled. He does not deny taking them, with the excuse that they are old and he would pay for new replacements. What does it say for our nation when a man just takes something that he likes? Does he think that he can do what he likes because of his high rank? Or does he have such contempt for our justice system that he knows that he will get away with it? It is a fact that our politicians are criminals. The Supreme Court has just passed an order to the Election Commission to incorporate a button on electronic voting machines which will give a choice to voters to reject all candidates on the panel. This has been labelled the None-of-the-above or Nota button. However, the judgement does not say what happens if a majority of voters go for the Nota button. We have a first-passed-the-post system meaning whoever gets the maximum number of votes wins, even if it is by one vote. So we could imagine a situation where all the voters press the Nota button except one person, who votes for one of the candidates. Our politicians are so shameless that this person will claim victory and resist all attempts at a repeat vote. In 2009 half the candidates won by getting up to 40% of votes and 29% won by getting less than 30%. Of the total number of voters only 58.19% exercised their right to vote. Which means 29% of MPs got elected with 30% of 58% of voters which works out to 17.4% of registered voters. Not a ringing endorsement by any means. To make it effective, if a majority of voters reject all candidates the election will be repeated and they will not be allowed to stand. Will it happen? Doubtful. A pedophile has been jailed for 10 years in Australia, Rathore got only 1 year and was out in 6 months. Our justice system is loaded in favor of criminals.

Beware of sycophants.

On 10 July the Supreme Court said that politicians convicted of serious crimes, punishable by more than 2 years in prison, must resign their seats. Previously such politicians were given a grace period of 3 months in which to file an appeal and while that was ongoing the politician could continue in office. Since appeals take years it meant that politicians guilty of murder, rape, banditry and kidnapping have stood for elections and even held important ministerial posts. Naturally, the Supreme Court judgement caused a lot of heartburn across parties so the government decided to pass an ordinance to negate the verdict and allow politicians to evade justice. This caused enormous public anger. The ordinance was agreed by the entire cabinet and sent to the President for signature. So far, so usual. Then the bombshell. On 27 September Congress spokesman, Ajay Maken was defending the ordinance in the Press Club in Delhi when he received an " important phone call ". A few minutes later the Congress heir apparent, Rahul Gandhi pops in and launches a tirade against the ordinance. " I'll tell you what my opinion on the ordinance is," he said." It's complete nonsense. It should be torn up and thrown away. That is my personal opinion." An almighty uproar has ensued since then. People are saying that Mr Gandhi has destroyed the credibility of the Prime Minister by humiliating him while he is abroad and some say that the Prime Minister has no option but to resign. Not true on both counts. The Prime Minister was never a choice of the people because he was not elected to the Lok Sabha. He was imposed on us by Ms Sonia Gandhi only because he has no political base and would not be a threat to her son. His credibility was based on 1. his supposed honesty and 2. his knowledge of economics because he has a doctorate from Oxford. He has not just presided over, but by knowingly allowing criminals a free hand, the most corrupt government in our history. Also by supinely following orders to waste money on the most shameless bribery of the " vote bank " he has destroyed the economy. He has no credibility, honor or respect left. The nuclear deal which he forced through by threatening to resign would also have been under orders. Apparently he has already denied any talk of resignation while he is still in the US. As for Mr Gandhi, his antics were clearly scripted. Did some people knife him in the back? Only time will tell.

Indians are cheated daily.

The National Highway Authority of India has complained that it has been cheated out of Rs 240 million by, DGSCL, the company collecting toll at the Gurgaon Expressway. Apparently the DGSCL has reported an average of 181,000 cars out of 255,000 cars passing through the tollgates everyday over a 10 month period and pocketed the difference. The Telecom Regulatory Authority has triumphantly announced that within 6 months people will be able to retain their present phone numbers even when they go to a different part of India. This has been grandly named Mobile Number Portability. The whole thing is an absolute con trick. We can use our phones anywhere in India even now and pay roaming charges. Portability only means that your number will stay the same if you decide to change your operator. However, the country has been divided into different " circles " and if you go out of your present circle you still have to pay roaming charges. Your present operator will refuse to charge you at local rates even if this place is likely to be your residence for a long time. Since companies in India operate as a cartel to cheat customers why would you bother to change operators? Why are citizens routinely cheated by businesses? Because the government is the biggest cheat. The government has blamed the recent rise in the price of onions on hoarding and threatened severe punishment. Yet the government is gouging billions of rupees from us by hoarding common services. It is called " tatkal ". If you apply for a passport you may have to wait for months but if you are willing to pay an extra Rs 1500 for tatkal you will receive your passport in one week. The same applies to train tickets. Air fares are too expensive because of outrageous taxes so most people are forced to travel by trains. Because of the demand you have to reserve your seat 2 months in advance but the Railways creates an artificial scarcity by not declaring a large number of seats. These are sold at high prices 24 hours before departure. You have to pay the full fare from one terminal to another even if you are travelling only half the distance and you get not one paisa in refund in case you have to cancel. Only Indians pay extortionate taxes to be cheated and looted by their government. Aren't we lucky?

Will the Congress ruin the nation to hang on to power.

The government has announced the setting up of the Seventh Pay Commission to bribe public sector employees before next year's general elections, just as they did in 2008 to win in 2009. Salaries of useless civil servants were increased by 80% which only increased their " bribe price ". If a man is earning Rs 10,000 per month he will not dare to demand more than a few hundred thousand rupees in bribes but if his salary is increased to one hundred thousand rupees per month he will start demanding in tens of millions. And that is what happened as scam after scam has shown. This year the government has budgeted Rs 1.15 trillion to pay salaries of 3.41 million civil servants. 10 years ago it spent Rs 310 billion on 3.22 million employees, almost the same number. The government has also been increasing the Dearness Allowance of its employees which has now reached 88% of basic salary. While every citizen is suffering the effects of inflation, especially the poor, the taxpayer is having to subsidise this useless bunch. This when clinics in villages have no doctors and schools have no teachers. A reduction of just 5% in employee numbers will save Rs 60 billion a year and a reduction of 10% will save Rs 120 billion. Combined salaries and perks of employees of public sector banks now cost 150% of those in the private sector. This is as per the Reserve Bank of India. At a time when the government is cutting spending on infrastructure to limit fiscal deficit to 4.8% of GDP this will be a disaster for the country. Last time the Congress also waived all loans to farmers, at the cost of Rs 700 billion. Guess what? Loans given to farmers on the Kisan Credit Cards reached Rs 1.6 trillion till March 2012 and will surely have crossed Rs 2 trillion by now. Banks do not show these as bad loans on their books as they are just rolled over including rising interest. The State Bank's exposure is Rs 440 billion, that of Central Bank Rs 82.48 billion while that of the Bank of Maharashtra is Rs 20.45 billion. Farmers are no fools. They can recognise a gravy train when they see one. They know that come elections all debt will forgiven once more. So they pile it on. This is financial terrorism by the Congress. Ruining the nation's economy just to hang on to power. Will the people survive?

Do we really deserve this lot?

In order to protect their political masters freeloading journalists frequently preach that we, the citizens of India, deserve the government we have. What they mean is that since politicians come from our society it follows that the great majority of people are as corrupt as politicians. After all, vast numbers of people do vote for the them while fully aware of the crimes they have committed. We do not agree. We think that ordinary people are completely helpless and have no choice. If proof is required we would ask people to watch videos of the people of North Korea when it was announced, in December 2011, that the then President Kim Jong Il had died. Grown men and women broke out in heartrending sobs. People walking on streets, going to work in buses or in offices were sobbing. Groups of school children, too innocent to understand the implication of the news, were crying in front of the statue. What they understood was fear. That if they did not pretend to be overcome they would be in serious danger. Yet the people of North Korea are no freaks. They are related to South Koreans who enjoy a free and wealthy democracy. Although not as bad India is also a police state controlled by criminals gangs masquerading as political parties. Readers Digest ran a " wallet test " in 16 cities across the world. Wallets containing the local equivalent of 30 pounds sterling were dropped at 12 different points in each test city. Each wallet also contained family photographs and contact details so that it could be returned to its owner. Helsinki in Finland came first with 11 out of 12 wallets returned. Mumbai, yes Mumbai, came second with 9 wallets returned. Rich Berlin came joint 7th with Ljubljana of Slovenia with a score of 6 and London was joint 9th with Warsaw with a score of 5. Zurich in Switzerland, which is the center of banking, was 11th with a score of  just 4. So, 9 out of 12 ordinary people in India are honest and the journalists are lying. Why? To make politicians seem as one of us. " The banality of evil ". So shameless are they that the government has prepared an ordinance to allow criminals to stand for elections despite a Supreme Court order. All charges against Ms Mayawati and Mr Mulayam Singh Yadav have been dropped and Mr Jaganmohan Reddy has suddenly obtained bail after 18 months in prison. All to win the general elections in 2014. We, the people, are not like them. We certainly do not deserve the government we have. 

Corroded fundamentals, not trilemma, is the problem.

The previous Governor of the Reserve Bank, D Subbarao complained about managing the policy trilemma in the economy by which he meant how to control the monetary policy with a convertible capital account and and a flexible exchange rate. Or, how do you set interest rates when foreign currency can flow in and out freely and the value of the rupee is determined by the market. What he forgot to mention, perhaps intentionally, is that markets take their cue from the government, especially completely irresponsible fiscal spending to buy votes. This has led to an explosion of black money, inflation and a fall in the rupee. Since black money can only be invested in properties an enormous property price bubble has developed. A duplex apartment in the posh Malabar Hill area of Mumbai has just been sold for Rs 570 million @ Rs 135000 per square foot. This works out to about $2000 per sq foot while apartments in Manhattan in New York start at $1000 per square foot. The average price of apartments in New York works out at $1300 per square foot with Brooklyn and Queens starting at $150 per square foot. If the US is a $16 trillion economy while we are at $1.9 trillion surely prices of comparable properties here should also be one-eighth of those in the US. So, either property prices should come down by 80% in India or the rupee will fall to compensate for the discrepancy. The new Governor of the RBI has increased interest rates by 25 basis points to 7.5% to bring inflation under control. If the cost of borrowing goes up people will stop buying properties and prices will fall. However, high interest rates make all borrowing expensive thus making it expensive for businesses to borrow money to expand. India desperately needs its economy to grow to create jobs for millions of young people who are coming of age. To get round this problem a new instrument called Asset Based Reserve Requirements has been proposed. In this the RBI could ask banks to hold higher reserves for loans on properties thus selectively increasing interest rates on properties without affecting the rest of the economy. Also this cold be applied to selected areas, say in North and West India, where there is more black money. Of course, there is the danger that the economy could collapse completely if all the black money is drained out of the system. How do you build when the fundamentals are corroded.

Ignoble intentions create ignoble laws.

Anyone who still thinks that throwing money at the poor is good for them should read a well reasoned article by Arvind Panagariya, Professor of Indian Political Economy at Columbia University in the US. The Land Acquisition Bill has made it almost impossible for companies to buy agricultural land because of all the clearances required from different ministries. This is supposed to protect farmers from predators but, at the same time, it has made it impossible for farmers to sell land if they want to start another business. The Food Security Bill is going to add so much expense that the government is starting to cut other programs to finance it. If essential expenditure, such as on infrastructure, is reduced it will reduce long term growth. The Right To Education act has added an extra tax on the middle class because they are having to bear the burden of private schools being forced to reserve 25% of seats for children of poor people. Of course, most of the teaching is done at home and all these children would be at a serious disadvantage because a lot of their parents are illiterate. If a large number of these children start failing their exams the scheme would be seen as a failure so all exams till class ten Boards have been eliminated, so no one knows if their child is learning anything or not. Without exams there is no pressure on teachers to teach so standards, which were abysmal to start with, have dropped even lower. The NGO Pratham reports that in rural government schools the proportion of children in the third grade who could identify numbers from 1 to 100 have dropped from 70% in 2010 to 54% in 2012. To mask the terrible standards of our schools the government has not signed up for the Programme for International Student Assessment test in 2015, having opted out in 2012. This is a test for 15 year old children, held every 3 years, which tests their abilities in maths, science and reading. In 2009 we came second last, just above Kyrgyzstan. Prof Panagariya thinks that all these laws were enacted out of noble intentions. But we know different. We know that our politicians are scum and to prove it they are trying desperately to overturn a Supreme Court judgement which bans politicians convicted of serious crimes from holding on to their seats. Dishonorable politicians create ignoble laws.

Why do India and the US react differently?

When, in June, the Fed Chairman, Ben Bernanke predicted that he would start tapering the asset purchase program we saw a huge sell-off in Indian shares and a collapse of the rupee to 68 to the dollar. This was because funds expected interest rates to rise in the US which made the US more attractive. Interest rate on housing mortgage rose to 2.6% which led to a slow down in construction. On 20 September the RBI raised interest rate in India by 25 basis points. One would have expected the rupee to strengthen, as happened in the US, but the opposite happened. The rupee weakened. Not by much, but it definitely did not become stronger. If globalisation has linked economies so that they are supposed to rise and fall in tandem why does India react in an opposite manner to the US? Experts tell us that high interest rates make borrowing more expensive for industries, thus making it difficult for them to expand, thereby creating jobs and stimulating growth. So, lower interest rates would be good for us. Why they consistently ignore the most important financial data, which is inflation, is beyond comprehension. Inflation in the US is below 2% whereas in India it is above 9%. Wholesale prices were falling but the WPI has jumped to 6.1% in August. Harvard University Professor, Gita Gopinath says," When countries are in recessions characterised by low inflation, like the US and Europe, then demandside measures can work. If on the other hand slowing growth occurs alongside high inflation ( as in India ), exclusive reliance on demand-based measures cannot be the solution." Why then have the politicians been howling for lower rates. We know that high rates are at last beginning to bring down property prices where most of the black money is hidden. Possibly a lot of the black money was sent outside through the hawala route and then brought back into the share market as foreign investment. A process called " round tripping ".Thus a fall in both property and share prices is a double whammy on politicians and civil servants. After all it is not easy to take bribes and loot the exchequer. Poor fellows. The new Governor of the RBI is not a civil servant and perhaps not so easily intimidated by political bullies. Worse, he may even be a patriot. Whose idea was it to make him governor? Could be a very bad idea.

What makes a politician?

How does any human being become a politician? We know that politicians are liars. They have extremely thick skins and are completely unmoved by criticism or insults that would make anyone else cry. They have no loyalties and will switch allegiance in a fraction of a second if it suits them. They are extremely ruthless and will use any method to destroy anyone they see as a credible opponent. They are ambitious without any principles and will embrace anyone to grab power, even if they have been critical of their new friends in the past. Indian politicians are some of the worst in the world. They smile even when implicated in grand theft, murder or rape. They are masters of sycophancy and will suffer any humiliation to get a ticket for elections. Their sole purpose in life is to somehow get elected so that they can steal hundreds of billions of rupees to make their families rich for generations to come and hopefully get their stinking offspring into politics so that the loot can be maintained indefinitely. They have been betraying India since independence and have destroyed the economy by spending massive amounts of money to buy votes. Of course, if you ask any politician in the world they will tell you that they are public servants and have dedicated their lives in the service of the people. Now for the first time one politician has at last spoken the truth, but only after she was ousted as Prime Minister of Australia. Julia Gillard became the Prime Minister after ousting Kevin Rudd as leader of the Labour Party on 24 June, 2010. Unable to reconcile himself to his defeat he kept challenging her leadership of the party, eventually managing to oust her on 26 June of this year. Gillard decided to bow out of politics. In a recent interview she said," Losing power is felt physically, emotionally, in waves of sensation, in moments of acute distress." " Losing power hits you like a fist," she said and speaks of a pain " so strong you feel it in your guts, your nerve endings." What she is describing is a powerful addiction, exactly as you would see in someone addicted to hard drugs. Once you are a minister in India you get a huge official bungalow, hundreds of menials to do your bidding, commandos guarding you, no one to question how you spend our money, flying off to foreign lands at will and making us wait for hours as police clear streets for you. No wonder Indian politicians do not die. Question is where do these scum come from?

Indian politicians can get away with anything.

Has he lost all respect? Having bullied the RBI into lowering interest rates 3 times this year, in spite of soaring inflation created by him, our most revered Finance Minister is finding out that he may have to " walk alone " after all. At a meeting with chiefs of public sector banks on 3 July he told them," Someone will have to take a bold move or things will not improve. But if banks lower rates, even if it is a token rate cut, it will send a strong message." This was as shameless an effort to protect black money in properties, at the cost of savers and pensioners, as you are likely to see.  Guess what? Even before yesterday's RBI policy statement the State Bank and Andhra Bank had raised rates. Then the new Governor of the RBI announced a tiny increase in interest rate of 25 basis points, although he sweetened the pill by cutting the Marginal Standing Facility rate by 75 basis points and the daily maintenance of the Cash Reserve Ratio from 99% to 95% to increase liquidity in banks. Why such disregard for the Finance Minister? He is the man who is solely responsible for the dire condition of the economy. He created fiscal and current account deficits and double digit inflation by starting the MNREGA scheme, increasing civil servant salaries by 80% and forgiving all loans of farmers to win the general elections of 2009. When the disaster became apparent he tried to cover his culpability by forcing the RBI to keep interest rates low in the hope that growth will somehow revive and he will be able to cover the deficits through increased tax collections. Of course, you cannot treat a machete wound with a band-aid. The economy crashed. So what is our revered Finance Minister doing to repair the damage he has caused? He has asked civil servants to reduce rip-roaring meetings in 5 star hotels by 10% and asked them not to buy new cars. What sacrifice, poor fellows! So to mitigate their sufferings he has allowed useless civil servants to seek treatment abroad, with one companion, for 2 months. Not only that, he has increased Dearness Allowance of 5 million Central Government employees and 3 million pensioners by 10%, backdated to 1 July. What a nice bonanza just before the festival season. Already the DA is 80% of salary. Very soon it will more than the salary. What fun. However, the greatest irony is that we are not even sure that he won his election last time because it is languishing in a court. How can they get away with it?

Politics can corrupt anyone.

Despite a 20 minute phone call by Obama begging her to change her mind President of Brazil, Dilma Roussef has postponed her state visit to the US, scheduled to start on 23 October, because of cyber spying by the National Security Agency of the US. Brazilians are furious that the NSA was monitoring phone calls and emails of all citizens including those of the president and are debating a bill that will force American giants, such as Google and Facebook, to store data on Brazilian citizens in Brazil. What is the reaction of the Indian government? Nothing. A senior official is quoted as saying," Everybody does it....there is nothing to get worried." Why should they get worried when the Congress is carrying out a sinister Stalinist project which aims to record photographs, finger prints and retinal scans of every individual in the country. Every citizen will have a card called aadhar, with a 12 digit number, which will be unique for that individual. While other countries maintain a database of criminals only, in India everyone will be a criminal with their biometric details stored by the Unique Identification Authority of India, controlled by the most criminal civil service in the world. Ostensibly this is to ensure that social schemes are targeted only at the poor and prevent false claims. In that case only those who are poor enough to be eligible for government handouts should have been told to avail of these cards and not the entire population, as in North Korea and Communist China. Most surprising is that Mr Nandan Nilekani agreed to be the Chairman of this nefarious project and make it successful. Graduating from IIT, Bombay in 1978, he worked at Patni  Computers before leaving it to start Infosys, one of our most successful IT companies, in 1981. He was Chairman of Infosys from 2001-2007 and received the Padma Bhushan in 2006. Why would an erudite man with such a glittering career agree to develop a system like the Stasi had in East Germany? Turns out that he could stand for a seat in Parliament from Karnataka. On a Congress ticket. The Congress has made India one of the most corrupt countries in the world and betrayed India in Tashkent, Shimla and Sharm al Sheikh and yet the temptation of politics is irresistible. Shows that politics can corrupt even the most educated and talented individual.

Time to book your profits.

Chairman of the Federal Reserve, Ben Bernanke has delivered a shot of LSD to markets around the world by announcing that there will be no tapering of the bond buying program. Markets had factored in a small cut in the purchase of treasuries by around $10 billion per month. Anything more than that or any cut in mortgage backed securities would have seen severe falls in stock markets around the world. The Indian stock market is up 650 points and the rupee has risen to below 62 to the dollar. Already there are predictions that the rupee will strengthen to 58 to the dollar and the government can breathe a sigh of relief. We hope not. Giving his reasons for postponing the tapering Mr Bernanke said that the recovery in the US economy was not yet strong enough especially in housing constructions and fall in unemployment. He said that the Fed wants to see a broad based recovery before starting the reduction of buying bonds. What he did not say is that the US economy could be in for a shock next month when Republicans, especially in the House where they have a majority, intend to bring the government to a standstill by not raising the debt ceiling. If the government is unable to borrow it will not be able to pay salaries and will not be able to pay its debts. That may even lead to a credit downgrade. In states controlled by the Republicans they have created right wing ghettos by naked gerrymandering, so as to guarantee election victories. Trouble is that the extremely right wing Tea Party has become very powerful in these constituencies so that moderate Republicans are in danger of losing their primaries if they are seen to compromise. These people want any increase in the debt ceiling linked to a repeal of the healthcare act, they have named Obamacare. Democrats will not compromise on the act so a deadlock seems inevitable. If that happens markets will fall and the rupee will slump. There are other dangers. The Congress has embarked on a dollar borrowing binge to somehow shore up the rupee. It had an agreement with Iran to purchase Iranian crude by paying in rupees instead of dollars but the new government in Iran is refusing to continue with that arrangement. While paying Iranians in rupees the RBI has forbidden NRIs to take even one rupee out of India. If you have shares this maybe the last opportunity to book your profits. Come October you may mistakenly think that Diwali has come early.

Why enrich foreigners at our cost.

The new Governor of the Reserve Bank is being hailed as the sex symbol of finance who has single-handedly raised the rupee by the scruff of its neck and set the stock markets on fire. Now he is said to be planning a " funding for lending scheme " under which the RBI will lend money to banks at 1-2% lower rates of interest for housing and auto loans. People are reluctant to take loans because uncontrolled inflation has eroded purchasing power and, with a credit downgrade creeping ever closer, they are not sure of their jobs. Petrol is at Rs 80 per liter and property prices are so high that only about 1% of people can afford to buy them. Instead of trying to entice people into higher debts the government should lower taxes but this is impossible because the Congress has committed itself to massive bribery to win the coming elections and is desperate for increased revenues. Also, with elections looming, politicians cannot afford to lose all the black money they have invested in properties. Hence this attempt to raise taxes and protect black money. Another short term measure that the RBI has already taken is to swap Foreign Currency Non-Resident deposits at a fixed rate of 3.5% which is much less than market rates. This measure will allow banks to raise dollars from NRIs at 400 basis points above Libor rates. Yesterday Libor rates on US dollars were 0.25195% for 3 months, 0.37640% for 6 months and 0.65160% for 12 months. Rates are so low because interest rate in the US is at zero percent. The RBI move allows NRIs to borrow at these low rates and get an additional 4% from Indian banks. Naturally foreign banks, such as Citi, DBS and Standard Chartered, are preparing to take advantage of this scheme. " Client equity in these deposits is just 10% and the client effectively makes between 18% and 21% on the dollars," said a banker with a European bank. Thus although this scheme is supposedly raising money from Non Resident Indians 90% of the money is coming form foreign banks who are making windfall profits at no risk at all. Apparently a similar scheme was adopted in 2000 to bring in dollars after the Asian financial crisis. So, while the government is happy to enrich foreign banks there is constant whining to reduce domestic interest rates which will hurt savers inside the country. Whose side are they on?

The moral imperative.

Politicians are consummate liars, able to justify extremely wicked acts by attaching high sounding labels to them. Just as the Congress in India uses " inclusive growth " to rob taxpayer money to bribe voters so the US uses the phrase " moral imperative " to test new weapon systems on Asians, slaughtering millions in the process. The latest victim of this " moral imperative " is Syria where the government stands accused of using chemical weapons on 21 August on the rebel held suburbs of Damascus. We have been saying for a long time that the one country which has committed more genocides and crimes against humanity, than all the other countries in the world put together, is the US. At last Brahma Chellany, Professor at the Centre for Policy Research in New Delhi has written a scholarly article providing support for what we have been saying. The UN published a report yesterday which established that sarin was found in blood and tissue samples taken from victims and from remnants of missiles found at the scene. While the US, UK and France see it as a proof of the culpability of the regime Russian Foreign Minister, Sergei Lavrov has slammed attempts to " retouch " the report and the Syria's UN envoy, Bashar Jaafari said that his government will not accept a " politicised " report. The UN Secretary General, Ban Ki Moon was born in Korea on 13 June 1944 and would have been 6 years old when the Korean war started on 25 June 1950 and 9 years old when it finished on 27 July 1953. Surely he has memories of Americans burning his own people with napalm and would be aware of the use of white phosphorus on Fallujah in Iraq in 2004. He is immensely qualified to speak out against the hypocrisy of the US " moral imperative " if he has the " moral courage " to do so. As for India, the Congress which is in power should remember that although we have always supported the Palestinian cause the Arabs have consistently supported Pakistan with money and arms. During Nehru's time the Indian passport did not allow travel to Israel. Even today Gulf countries, who are supporting the rebels, are the main financiers of terrorism in India. Chief of Al Qaeda, Ayman al-Zawahiri encourages Jihad in Kashmir. If it is wrong for Syrians to kill each other it is doubly wrong for cowardly Americans to do so.

High taxes lead to cascading failure.

To bribe its way to election victory the Congress has decided to pay subsidy on gas cylinders directly into people's bank accounts. Families are entitled to 9 cylinders of subsidised gas every year, after which they will have to pay the full price for every cylinder they buy. Normally people just paid the delivery man thinking that they were paying the actual price. By paying directly into their accounts the Congress thought it would be linked with the subsidy and that would translate into votes come the general elections. Trouble is that many of the states are controlled by other political gangs who have seen through the game. They decided to neutralise the scheme by increasing the Value Added Tax on every cylinder of gas thereby increasing its price so that people are refusing to give their bank details for direct payment. High taxes are killing the airlines. Airlines in India have collectively lost Rs 536.50 billion between 2007 and 2013 so that the cumulative debt burden has reached Rs Rs 950 billion. Kingfisher became bankrupt as it was unable to pay interest on its debt because of falling numbers of passengers. Tax on Aviation Turbine Fuel is among the highest in the world. This is based on the belief among politicians that flying is a luxury that only the rich may enjoy and therefore it is moral to tax it highly. Gujarat levies tax at 30% while Bihar, Tamil Nadu and Delhi levy at 29%. This leads to a cascade of subsidies. High air fares mean that more people travel by trains which are always full. High fares on air conditioned first and second class train tickets subsidise cattle class trains where people travel without reservations, often packed together like sardines, with no air conditioning and filthy toilets. Treating people worse than cattle is supposed to be public service and, of course, keeps the poor in their place. On average an Indian flies once every 10 years while an American flies 1.8 times every year. Business people need to fly to save time if they want to grow their businesses. Is it any wonder that the US is a $16 trillion economy while we are at just $1.8 trillion and struggling to stay at that level. That business is falling is seen in the fall in truck rentals and a 20% drop in the numbers of trips trucks are making. Truck sales of Ashok Leyland are down 25% while those of Tata Motors are down 44%.  It is not the interest rate but taxes that should be reduced.

Justice is show biz.

Everyone has breathed a sigh of relief at the death sentences passed on the 4 " rapists " who are actually brutal murderers because the young victim died a most hideous death. However, there is no guarantee that these subhumans are actually going to hang. Their lawyer is certainly going to appeal and our judges are brimming over with the milk of human kindness for criminals but have little sympathy for victims. A recent 2 judge bench of the Supreme Court said," Poverty, socio-economic, psychic compulsions, undeserved adversities of life are thus some of the mitigating factors, in addition to those indicated in Bachan Singh and Machi Singh cases." This concerns a tailor who killed his wife and 2 children with a pair of scissors because he could not afford to feed them. " A change of heart is discernible from the fact that he had given water to the injured daughter. After this he no longer used the weapon for finishing her. He tried once again by taking her to his lap and stifling her with the aid of a pillow," said the justices. How is it a change of heart if he tries to smother his own daughter instead of stabbing her? If they visit a morgue the justices would learn that a person is equally dead whether stabbed or choked. They did not ask the man why, if he could not afford it, did he breed 3 children. In other countries parole maybe granted at the end of a sentence for good behavior and genuine remorse but in India not only are murderers allowed to be pampered in hospitals without any illness but they are allowed out on parole to nurse their mothers. If they go around drinking in nightclubs then so what? Thus Manu Sharma, murderer of Jessica Lall, was out for one month whooping it up and Amarmani Tripathi, murderer of Madhumita Sharma, was holding darbars in a hospital in Gorakhpur. Not just the judges but our press also actively conspire to protect dastardly criminals. The fifth rapist was 17 years old in December when the crime was committed. He was the most brutal and disemboweled the victim with an iron rod, leading to her death. The media kept referring to him as a " juvenile " and he has been given a laughable 3 years in prison. Yet Ruchika Girhotra was consistently referred to as a " teenager ", when she was only 14 years old, when molested. This was clearly done to protect Rathore from a charge of pedophilia because a 19 year old is also a " teenager " but is an adult. When the system protects criminals innocents die.

There is no policy paralysis.

In the opinion of every pundit the first 5 years of Congress rule from 2004 to 2009 was extremely successful but the second term has been a failure because of " policy paralysis ". By policy paralysis they mean a lack of action on the part of the government which is engaged in extricating itself from numerous charges of corruption. The experts are wrong on both counts. The success in the first term was the result of reforms undertaken by the previous BJP government, which were working into the system, and cheap money flooding in from richer countries because of very low interest rates. Secondly there has been no policy paralysis at all. In fact the Congress has been very busy preparing for the elections in 2014. The telecom scam, the Commonwealth Games scam, the coal mines allocation scam and others have netted the Congress trillions of rupees for elections expenses. We can expect copious amount of alcohol for men and sarees and other goodies for women to be distributed just before elections. The Congress has passed NREGA, forgave all loans to farmers, increased civil servant salaries by 80%, passed the Backward Areas Grant, the Food Security Bill, Right to education bill, which is a direct tax on the middle class, the Land Acquisition Bill, which makes land acquisition impossible, and is now working on a Right to Housing Bill. This is socialism at its most virulent and a most cynical bribery of the poor by wasting taxpayer money, never mind the inflation, the increasing fiscal deficit, the plunging rupee and the threat of downgrade to junk status. To get the support of other political gangs and civil servants the Congress is planning laws to protect them from prosecution for any crimes they commit. The Prevention of Corruption Act prescribes severe punishment, including jail, for anyone paying bribes. HT, 13 September. This coupled with the laws that prevent prosecution of any civil servant without government permission and guaranteed pension benefits, even if convicted, means that only we will be punished and not the scum. Remember BB Mohanty? The Congress is planning to pass an Ordinance to protect MPs from having to resign if convicted of a serious crime by allowing time to appeal. TOI, 13 September. This is to nullify a Supreme Court order. This is no paralysis. In fact, the Congress has been extremely active. But only for itself, let the country go to hell.

Tunnel vision leads to errors.

Industrial production increased by 2.6% in July compared to July last year. IIP decreased by 1.8% in June, revised figure from 2.2% earlier, and by 2.8% in May, decreasing 1.1% in the April to June quarter. Livemint, 12 August. Retail inflation has fallen to 9.52% in August from 9.64% in July and 9.87% in June. The downward trend in retail inflation coupled with very good monsoon rains, which may bring down food prices, has prompted many experts to predict that the economy has bottomed out and that a V shaped recovery is to be expected. We certainly hope so but we are not sure of how much truth is behind such predictions. The economic growth since 2004 was almost entirely due to enormous amounts of foreign money flooding into developing economies because of very low rates of interest in developed countries. Following the sub-prime collapse interest rates were reduced to zero in western countries prompting Indian companies to go on a borrowing binge. That maybe coming to an end if the Federal Reserve decides to start reducing its bond buying program. To win elections the Congress started many social schemes purely to bribe voters which increased inflation and the fiscal deficit. As prices of goods increased people cut down on their spending which reduced company revenues and tax collection. Regardless of consequences and prodded by a foreigner, with no patriotic feeling for India, the Congress increased social spending and piled on taxes to pay for them. This only added to inflation and reduced consumer demand even further. To hang on to power the Congress bribed other parties with ministerial posts, resulting in 77 ministers with their complement of useless civil servants, each with huge salary and perks. To keep the various parties happy the CBI was forced to drop charges of serious corruption against various thugs, thus encouraging them to steal even more. National resources such as telecom spectrum and mines were gifted to friends and relatives. We imported 12.02 million tonnes of thermal coal in June, up 52.5% from 7.88 million tonnes last year. Livemint, 26 August. Total imports to March 2014 could be a record 165 million tonnes from 137.56 million in 2012-13. For any real growth taxes must be reduced so that people have money to spend. Sadly our pundits look at only a few figures ignoring the rest. That is why their predictions are wild.

To win elections any which way.

One reason for the soaring Sensex is that a large portion of revenues of our large companies come from abroad and the fall in the value of the rupee increases their profits when repatriated from abroad. One measure is the Transnationality Index which shows how much of a company's revenues come from abroad. The Tata group leads in this but most of our largest companies earn more from abroad than from India. Now Kiran Mazumdar Shaw, Chief of Biocon Ltd has revealed that she is going to invest $200 million in setting up a plant in Malaysia. ET, 9 September. " If India had better infrastructure and more availability of power I may not have gone abroad," she said." We don't have enough power, we don't have enough water. So some of these projects where we need water and power, I will do it in Malaysia because that is where it is abundant." While the Congress is desperate to increase Foreign Direct Investment to attract precious foreign currency Indian businesses have invested, including bank guarantees issued to overseas units, $21 billion in the first 7 months of this year. In June Apollo Tyres agreed to pay $2.5 billion for US based Cooper Tire and Rubber Co, Chief of Cipla Ltd, Yusuf Hamied paid $460 million for Cipla Medpro of South Africa in July and the $40 billion Aditya Birla Group is to spend $1 billion to set up a chemical plant in the US. The reason is that the Congress has spent trillions of rupees on social schemes, in a cynical ploy to buy votes, instead of on infrastructure. Infrastructure takes years to build and the benefits may come when the Congress is not in power whereas giving alms to beggars is quick, creates instant gratitude and keeps them poor so that they remain vulnerable to bribes in the future. In the absence of power and roads companies diversified overseas and fiscal deficit ballooned bringing a threat of credit rating downgrade. In panic the Congress has cut capital expenditure further and increased taxes, further increasing inflation and reducing demand. The Airport Authority is clamping down on foreign trips by officers to cut expenses because travel numbers are down by 2.5%. Airlines are Rs 950 billion in debt and looking to cut jobs. TOI, 2 September. The Aviation Ministry is begging states to cut VAT, which ranges from 22 to 30%, on jet fuel. HT, 10 September. This is economic treason and we lose. The Congress does not care.

What if or when.

A few days back it seemed that it was only a matter of time before the US bombed Syrian government forces. Everyone was nervous because even the US did not know what to bomb. If they bombed chemical weapons stockpiles they could cause release of deadly gases with untold consequences. They would have to bomb delivery systems which the regime would hide in civilian areas as the Hezbollah did so effectively when Israel attacked Lebanon in 2006. If they bombed Assad's forces, as they did to Gaddafi in Libya in 2011, they could precipitate a collapse of the regime but then they would have no control over who came to power. Saudi Arabia is backing the Islamists and would not mind if the al-Nusra front came to power but they hate the Muslim Brotherhood, which is why they are helping the Egyptian Army with oil and money to crush the Brotherhood. For Israel either option would be dangerous. Israel would like to see a bloody stalemate where the regime and the Islamists weaken each other so that neither can mount any attack on it. Putin came up with a plan which allows everyone to save face. Under his plan Syria would hand over all chemical weapons to international monitors who would keep them secure and presumably destroy them. Oil dropped by 7 dollars a barrel and stock markets around the world rejoiced. But what if the regime demands that rebels should also have to give up their stock of chemical weapons which they are known to have? What if the Islamists refuse? Would the US then bomb the rebels? What if Assad hands over some but hides the rest? How will they know? And then there are the Christians. Muslim Brotherhood members are forcing 15,000 Christian Copts in the village of Dalga in Egypt to pay 200-500 Egyptian pounds per day as Jizya. Jizya is the money, or tribute " that conquered non-Muslims historically had to pay their Islamic overlords with willing submission and while feeling themselves subdued ". About 10% or 2 million of Syrians are Christians. When rebel fighters gained control of the Christian town of Maaloula they destroyed churches and ordered people to convert to Islam or be killed. Christians allege that government troops deliberately withdrew from the town and allowed the rebels to gain control. The middle-east is a cesspit of fanatics who always have reasons to kill. Perhaps it is not a question of what if but when.

Houdini Rajan.

Verily, the new Governor of the Reserve Bank is a magician. With one wave of his wand he has brought ecstasy to our markets. The rupee has strengthened from 68 to 64 to the dollar, the Sensex is up nearly 2000 points and the pundits have reemerged from their burrows to predict that the from now on the economy will start booming and the rupee becoming stronger because the old " fundamentals " have been injected with a huge shot of testosterone by " big bang reforms ". You wonder if it was so easy what the devil were they waiting for? The Food Security Bill will add another trillion or so rupees to the government expenditure and increase fiscal deficit. The Land Acquisition Bill mandates that you have to pay 4 times the market value for rural land and twice the market value for urban land. Also there are stringent rules for environmental and other clearances. Already manufacturing is contracting in India, this will bring it to a standstill. The only gainers are builders who are sitting on " land banks ", because the price of land will rise even higher and the Leader's Son-in-law because he has Rs 4 billion worth of properties. Since the only route for investing black money is in properties builders will be hoping for very fat gains. The Pension Bill allows 26% holding for foreign investors which is to bring in more dollars. Earlier it was hoped that foreign investors will be rushing in with suitcases full of dollars to invest in retail stores and airlines but not one penny has come in so far. Meanwhile India has fallen to 60 in the Global Competitiveness Index, published by the World Economic Forum, from 56 in 2011-12 and 59 a year ago. We rank 137 in women in the labor force, 130 in the inflation rate, 128 in tax rate and 128 in trade tariffs sub-indices. Livemint, 4 September. At the G20 summit our most revered Prime Minister agreed a $50 billion currency swap with Japan and a $100 billion BRICS Bank on the lines of the World Bank. Or course the money is yet to be raised. On top of that Mr Rajan has instituted dollar swaps with oil companies and committed the RBI to hedging Foreign Currency Non Resident deposits in banks at the rate of 3.5%. Earlier rates were higher. Since these are effectively dollar loans why it is producing such euphoria is hard to understand. Santa Banta economics with a dash of Rajan magic. Who can resist?

That's the way the money goes.

Exactly one week back, on 2 September the price of petrol in the US,including tax at 12%, was $3.608 a gallon. A US gallon being equal to 3.8 liters and the rupee at 65 to the dollar the price works out to around Rs 60 a liter whereas in Delhi ordinary petrol sells at Rs 75 and premium petrol at Rs 84 per liter. Yet politicians, supported by the freeloading press, say that petrol is subsidised and the price will be increased further. One minister suggested that pumps should be forced to close at 9 pm to reduce consumption. Since mainly trucks move at night, because they are prohibited from entering cities during the day, it would have brought commerce to a standstill. Genius. Vast majority of Indians have no time to wonder where all this money is going, engaged as they are in a life and death struggle just to survive in the face of constantly rising prices of essential goods, lack of water and electricity and the hours spent in commuting over broken roads. Wonder no more. Rivers of petrol are flowing freely into free cars provided to politicians and civil servants. A Secretary of the Central government gets 700 liters of petrol every month for free, enough to travel from Delhi to Mumbai and back 8 times a month. TOI, 5 September. There are 77 ministers ( the US has only 22 ), 70 Secretary rank officers, 131 Additional Secretaries, 525 Joint Secretaries and 1200 Directors. That makes a total of 1926 officers. Add spouses going to kitty parties, children going to school or movies and servants going to buy daily groceries and these fellows need swimming pools of petrol. In 2000-01 travel allowance for 3.2 million government employees stood at Rs 11 billion, today its is Rs 35.19 billion. HT, 8 September. Whether this figure includes free unlimited travel on trains for railway employees and free travel on planes for Indian Airlines employees we do not know. Civil servants are allowed to book air tickets at full costs so that they can take a " companion " for free when travelling abroad. From 2010-11, 40 ministers racked up Rs 6.78 billion on junkets overseas. Politicians fly off to the US for medical treatment paid for by us. One woman has been many times with family, son-in-law and grandchildren but looks as healthy as ever. Rs 356.30 million for upkeep of bungalows of 77 ministers. That's where the money goes and pop goes the economy.

Keep your eyes only on your duty.

In his speech on becoming the Governor of the RBI, Mr Raghuram Rajan said," I talked about the primary role of the RBI as preserving the purchasing power of the rupee, but we have two other important mandates; inclusive growth and development, as well as financial stability."  For us Indians it was a terrifying statement. Any central bank must use monetary policies to control inflation, which keeps the currency stable and reduces government borrowing, thereby keeping fiscal deficit under control. The bank may keep an eye on commercial and high street banks but growth and development are definitely not the responsibility of any central bank. " Inclusive growth " has been adopted by the Congress as an excuse for regressive socialism which only wastes money, increases corruption, as we have seen with a succession of scams, and increases poverty. Politicians conveniently point to the US and Japan where central banks have resorted to massive bond buying to flood banks with liquidity to increase lending and thus stimulate growth. However, they take great care not to mention the most important fact and that is inflation, which was 2% in the US and 0.7% in Japan in July, whereas it was 9.64% in India. After years of deflation, which saw the Yen strengthen to 78 to the dollar last year, the Japanese bank is deliberately trying to engineer inflation up to 2% to weaken the Yen and so increase exports. As usual the freeloading press is trying to protect our politicians by writing that other BRICS countries have also seen their currencies fall, although not by as much as the rupee. Not true. The Brazilian Real was 2.5 , strengthened to 1.5 in 2011 and is now at 2.3 to the dollar. The Russian Ruble was 36 in 2009, went up to 28 in 2011 and is now at 33.27 to the dollar. The South African Rand was 10.5 in 2009, 6.5 in 2011 and is now 10.03 to the dollar. This means that all these currencies have fallen against the dollar recently but are still stronger than what they were in 2009. The Indian rupee on the other hand was 39 in 2007, 45 in 2009, 45 in 2011 and is now at 65.24 to the dollar. This is only because the previous governor failed in his primary duty of controlling inflation by submitting to Congress bullying. Mr Rajan is not a pen-pushing civil servant and that maybe his strength. We hope he is brave as well.

An economy built on the sand of debt.

While ministers were swanking about at the World Economic Forum in Davos, Switzerland on our money, our business fellows were living it up on borrowed money. After the dot com collapse of 2001 interest rates were in low single digits in the US and Europe. Looking for higher returns foreign fund managers poured money into India stocks and real estate companies. After the sub-prime crisis of 2008 interest rates fell to zero in western countries allowing the RBI to keep our rates at very low levels. Property prices rose to levels higher than in the US, share prices were zooming and our fellows went on a borrowing binge. The outstanding debt of 10 large corporate groups multiplied six times to Rs 6.3 trillion or Rs 6.3 lakh crores which is $100 billion. Mint, 6 September. Needless to say politicians were also guests at the party. Firms were allowed to borrow $500 million under " automatic approval " route and this was later raised to $750 million. Our external debt has risen to $390 billion on 31 March 2013 compared to $345.5 billion last year. ET, 7 September. Short term debt rose to 24.8% compared to 22.6% last year which would amount to $80 billion. However if we add long term debt which will be up for repayment then our external debt goes up to 44% of total external debt which would be around $170 billion. Our foreign reserves have fallen to $275 billion because of the RBI's efforts to support the rupee by selling dollars. Non Performing Assets of banks have risen to 5% of total loans. Banks have restructured Rs 2.5 trillion of loans under the Corporate Debt Restructuring route. HT. 6 September. They are now asking business fellows to provide personal assets as collateral before agreeing to restructure loans. As usual the biggest villain is the Congress led government which continues to burn taxpayer money regardless of consequences to win the coming elections in 2014. In 2008 they increased salaries of useless civil servants by 80% permanently saddling the nation with a huge annual expense. This time round they have just amended rules so that the government will bear expenses for 2 months treatment abroad, including air fares. ET, 7 September. Air fares of the person accompanying will also be paid. Like a house built on sand our economy is built on debt. We will feel its fall.

Santa Banta economics.

Though the economy grew only 4.4% in the first quarter and is not expected to grow more than 4% for the entire year various branches of the government seem believe in the proverbial pot of gold at the end of a rainbow. Economic Survey sees growth at 6.1-6.7% in 2013-14 even after allowing for global slowdown and high oil prices. ET, 4 September. But that is nothing. Economic Survey 2011-12 said," Preliminary calculations suggest that the growth rate of GDP in 2013-14 will be 8.6%." Even that is nothing. After saying growth will be 9% in 2010-11 the Survey of 2011-12 said," Looking further into the medium to long term, the expectation is that India's pace of economic development will pick up even more...the next two decades should see the Indian economy growing faster than at any time in the past and faster than the growth in the next two years." If that is magic mushroom stuff The Prime Minister's Economic Advisory Council says in a report in April 2013," The expected pick-up in the pace of economic activity in the course of 2013-14 should be able to take growth from the present level of around 5% in 2012-13 to about 6.4% in 2013-14." After taking elections into account it says ," Overall for the economy, the Council thus assesses that an average growth of 6.7% in 2012-13 can be realistically expected." What of the learned Planning Commission? The approach paper of the Twelfth Plan, published in October 2011 says growth during the plan period will be 8.2% after taking into account all external factors." This in effect is the scenario underpinning the Twelfth Plan growth projections of 8.2%, starting from 6.7% in the first year to reach 9% in the last year and the second scenario ' Insufficient Action ' describes the consequences of half hearted action in which the direction of policy is endorsed, but sufficient action is not taken. The growth scenario declines to around 6.1 to 6.5%. The third scenario ' Policy Logjam ' projects the consequences of Policy Inaction persisting too long. The growth rate in this scenario can drift down to 5 to 5.5%." There is supply side economics, demand side economics, Keynesian economics and even Ronald Reagan's voodoo economics but under the guidance of the World Famous Economist and the Deputy Chairman of the Planning Commission we are the proud owners of Santa Banta economics. How lucky we are.

The economy has become a gamble.

After falling 650 points when the US and Israel test fired 2 missiles in the western Mediterranean the Sensex jumped 333 points yesterday, it is up 405 points today. The rupee fell to 68.62 to the dollar, not far from its lowest level of 68.86, but finished the day at 67.69 after the RBI intervened in the market. Today it has strengthened to 66.2 to the dollar. The gains are being attributed to the the speech by Raghuram Rajan who took over as the Governor of the RBI yesterday. As usual he talked about the strong " fundamentals " and outlined a few steps he would take to improve the economy but nothing else has changed. The economy grew 4.4% in the first quarter and growth will be even weaker in the rest of the year. Some economists are predicting growth as low as 2% next year. Both S&P and Moody's have threatened a rating downgrade to junk status if there is no improvement. The HSBC Purchasing Managers' Index for manufacturing for the month of August fell to 48.5 from 50.1 in July. Any reading below 50 indicates contraction while greater than 50 indicates growth. This is the lowest in 4 years and the first below 50 since March 2009. The HSBC PMI for services has dropped to 47.6 in August from 47.9 in July, the weakest since April 2009. Livemint, 4 September. Retail inflation continues to be above 9% and the Wholesale Price Index will also rise because of the falling rupee. Most alarming for India, the US Senate has voted for a limited strike on Syria with " no boots on the ground ". Obama does not want to be remembered as a gasbag and is desperately looking for a " legacy ". And what better way to prove your mojo than to bomb another country in Asia to get rid of an evil dictator by killing hundreds of women and children and then dismissing them as collateral damage. It is not just the bombing that is frightening but what the reaction to it will be. The Hezbollah will see it as an existential threat as its arms supply will be cut off, Iran will see it as a dress rehearsal for bombing its nuclear facilities and the Muslim Brotherhood wants revenge for its losses in Egypt. Will they retaliate against Israel, Saudi Arabia or oil shipping in the Gulf we do not know. So why are the markets behaving as if they are high on ecstasy? Perhaps, like a gambler who puts his last rupee on a 100:1 outsider in the hope of recovering his losses, these punters are praying for anything to celebrate.

No economy without roads or power.

In October 2011 we wrote about how we are being forced to pay toll on so called highways when they were little more than broken tracks. A drive from New Delhi to Vadodara in Gujarat, a distance of around 1000 kms, which should not take more than 10 hours, took around 23 hours because several stretches of the road were extremely broken, construction of flyovers without providing for traffic flow and absent road signs. Yet we were stopped 18 times and made to pay Rs 751 in toll charges. Despite collecting money from us there were no repairs of the road, no first aid stations and no traffic control. Trucks and tractors were driving the wrong way, bullock carts blocked one lane and villagers took herds of animals along the road. From Delhi to Jaipur, a distance of around 250 km, which should have taken no more than 4 hours took over 6 hours, Now suddenly there is an outcry about the National Highway 8, which is the high sounding name for the road connecting Delhi to Jaipur. TOI, 3 September. People are angry that the company charged with widening the road is way behind schedule while blithely charging tolls from drivers. The National Highway Authority has suddenly woken up to the blatant ripoff and written to the construction company to stop charging toll. The company says that it was not provided with land for widening the road. So why did it not stop work and stop collecting toll? Half the price of any car is made up of taxes, the more expensive the car the higher is the proportion of taxes. A lifetime road tax has to be paid on delivery and taxes constitute half the price of petrol. Yet even after paying such immense taxes we are forced to pay tolls on poor quality roads called highways which are no match for the autobahns of Germany or the Interstate highways of the US. Seems that the Congress ignored warnings from the former Coal Secretary, PC Parekh in July, 2004 that captive coal blocks could provide " windfall profits " for private firms. TOI, 29 August.  Officials warned that the alternate committee route was legally flawed and even counter productive. The government says that allocations were made to cover urgent demands for power and steel. Yet only 2 out of more than 160 blocks are producing coal. No roads and no power. So no rupee as economy tanks.

He is lucky but does he have courage?

The new Governor of the Reserve Bank, Raghuram Rajan is a very lucky man although he may not agree seeing the rout on the Sensex, the steep dive of the rupee and the threat of a credit downgrade to junk status. Wherever you look the news is grim. Inflation continues to increase without control and the impending rise in oil prices, due to the threat of missile strikes on Syria and the fall of the rupee against the dollar, may take it to record levels. GDP growth fell to 4.4% in the first quarter of the current financial year, bond yields are rising to 10% and the Purchasing Managers Index for manufacturing fell to 48.5% in August compared to 50.1% in July, the lowest level in 4 years and the first sub-50 level since March 2009. So, amid all this doom and gloom how can Mr Rajan possibly be a lucky man? The reason is that for the first time property prices are beginning to come down. Commercial real estate prices are at their lowest level in 7 years. Livemint, 3 September. According to an index by Cushman and Wakefield, a property consultant the index is down to 278 after reaching highs of around 450. Residential property prices are not down to the same extent. That is because builders collect 40% of the price upfront and build with that money so they are not under the same pressure to sell. Even so the National Housing Bank's residential housing index, the Residex shows a fall in prices in 22 out of 26 cities, that it tracks, in the first quarter. ET, 2 September. Hyderabad is down by 4.56%, Kolkata is down by 4.06%, Chennai by 2.26%, the National Capital Region by 1.49%, Bangalore by 0.92%, Pune by 0.90% and Mumbai by 0.45%. Not much but the trend is encouraging. The reason why this news is excellent for India is because it was the humongous property price bubble generating black money which is responsible for all our troubles. Since every man and his uncle is dishing out free advice to Mr Rajan on how to manage the economy we should add our 2 paisa's worth. Mr Rajan should allow the rupee to find its level. Keep the interest rate at 7.25%. The inflation will peak and then start to come down because of low demand. He should bring inflation down to 2% and keep it their by keeping interest rates 100-200 points above that level and not allow property prices to increase more than 2% per year. That will encourage savings, reduce the demand for gold, strangle black money and generate genuine growth. The politicians will howl but he should tell them to get lost. Question is does he have the courage?

A collection of failures.

The present Governor of the Reserve Bank, Duvvuri Subbarao is stepping down on 5 September. Although he is not responsible for policy or spending, which unfortunately are controlled by politicians, his primary responsibility should have been to protect the rupee. This could only have been done by strictly controlling inflation and in this he has been a total failure. Consumer Price Index is still around 10% while the rupee has fallen by 15% to around 66 to the dollar. In his last lecture as Governor last week he admitted," With the benefit of hindsight, I must admit in all honesty that the economy would have been better served if our monetary tightening had started sooner and had been faster and stronger." Livemint, 30 August. We were saying this since 2009 but of course we have no power. It is true that he had to cope with severe pressure not to increase interest rates because the Congress wants growth at any cost to increase tax collections to waste on harmful social schemes to win elections. Even in October last year our most revered Finance Minister said," Growth is as much a challenge as inflation. If the government has to walk alone to face the challenge of growth, then we will walk alone." Being a very rich man, and with every expense paid by the taxpayer, he does not realise that inflation is killing the middle class and will eventually kill growth. Mr Subbarao does not have to stand for elections and so should have stood up to the bullies. What is the point in saying now," At its root, the problem is that we have been running a current account deficit well above sustainable level for three year in a row and possibly for a fourth year this year. We were able to finance the CAD because of the easy liquidity in the global system." What he failed to say was that all the growth between 2004 and 2008, during the first term of the Congress, was due to massive liquidity caused by very lax monetary policy by Fed Chairman, Alan Greenspan. The next day the Prime Minister said in Parliament, " The depreciation of the rupee and rise in dollar prices of petroleum products will no doubt lead to some further upward pressure on prices. The Reserve Bank will therefore continue to focus on bringing down inflation." Livemint, 31 August. Is that a promise or just hot air as usual, we wait to see.

A puppet has no responsibility.

Our most revered Prime Minister was apparently most aggressive in parliament on 30 August. He blamed the tapering of Quantitative Easing in the US for the fall of the rupee, blamed the opposition for not allowing reform bills to pass, the Supreme Court for the fall in exports of iron ore and blamed the states for not cooperating with the Goods and Services Tax bill. In short he blamed everyone but himself, the man who has been consistently lauded as a World Famous Economist by the freeloading press. What about the so called " big bang " reforms passed amid much self-congratulations last year. Except for increasing prices of diesel and electricity, and thus adding to inflation, it has been the biggest damp squib possible. Not a single domestic airline has tied up with a foreign one, although Jet has been flirting with Etihad for months. Not one foreign retailer has shown any interest in opening a multi-brand retail store in India because of exorbitant land prices, huge costs of setting up back-end infrastructure and uncertain political future. He has no explanation for the fall in growth rate to 4.4% in the first quarter of this fiscal after consistently claiming that the economy will grow at more than 7% through the last year. HT, 31 August. The rupee fell to below 68 last week but has bounced back to 65 when the RBI announced " single window " to provide dollars for Indian oil companies. What this means is that instead of buying from the market these companies are buying dollars from the Reserve Bank which means that the RBI is selling dollars to support the rupee. This is a dangerous step because instead of occasionally interfering in the market to prevent precipitate falls the RBI is taking on an open-ended sale of dollars for buying oil. Since we bought $144 billion worth of oil last year it will take a large chunk from our reserves of around $277 billion. He said that the fall in the rupee is " natural " because of the high inflation in India. Really? Who kept forcing the RBI to reduce interest rates to stimulate growth? The Prime Minister seems puzzled as to why everyone is blaming him for the looming disaster. After all he was never elected but sneaked in through the Rajya Sabha and has hung on to his seat by strenuous foot-licking and a massively thick skin. Cannot blame a puppet, can we?