Why worry when we have full employment.

The RBI expects the economy to grow by 4.8% in this financial year which is down from its previous forecast of 5.7%. Some foreign experts reckon that growth will be below 4% but the government is still very optimistic, insisting that it will be 5.5%. They never explain what these growth figures mean. Have they taken account of inflation? This growth could be based on higher corporate earnings which have been caused solely by rising prices and not by higher sales. In which case the economy is shrinking and we are in a recession. On the other hand according to the National Sample Survey Organisation urban unemployment in India is lower than that in the US of A. In 2009-10 unemployment among women was 5.6% while it was just 3.4% in men. In other countries an unemployment rate of around 4% is considered full employment because there will always be some people in between jobs. While unemployment in Patna was 13% among men and 24% among women, unemployment among men had fallen to 1% in Bhopal and 1.4% in Howrah. These are very strange figures indeed because manufacturing industries lost 5 million jobs between 2004 and 2010.  Even stranger is the fact that companies are unable to find suitable candidates to recruit. The reason is that our education system churns out tens of millions of poorly educated graduates who are unemployable. The artificial scarcity of trained labor results in very high wages which means that our industries cannot compete globally and our exports amounted to a paltry $300 billion in the whole of 2012-13, an amount that China exports every month. Naturally our trade deficit was a massive $190 billion last year. However, since the Congress thinks that our economy is booming it is piling on tax after tax on the people. The Department of Telecom has decided that telecom companies have to pay a separate license fee of 8% of revenues for cell phone towers, never mind that they have paid billions of rupees for licensing spectrum. Since CEOs of theses companies cannot go around with a dish clamped to their heads saying, " Beep, beep " it is assumed that towers are part of the business, just as offices are. And tolls on " expressways " will increase. These would be considered normal roads in civilised countries. Predatory taxes will kill off growth. We can only hope that they kill off the Congress as well. Forever.

The RBI shows some purpose.

Seems that everyone has accepted that inflation is the biggest enemy of growth. While a few months back politicians, civil servants and business fellows were howling for lower interest rates, claiming falsely that it will increase investment thereby leading to growth through higher job creation, yesterday there was not one peep as the RBI raised the cost of borrowing by 25 basis points. The previous Governor of the RBI, Subbarao succumbed to intense pressure form the Finance Minister who said," I have tried to argue that while I acknowledge that the central bank mandate is price stability, price stability must be seen as a larger mandate of growth and employment." Not true. We have consistently argued that policy and spending is decided by the government without consulting the RBI. Therefore, it must be the function of the RBI to act as a protector of the rupee by regulating government spending and keeping a lid on both the fiscal and the current account deficits. Since the government is the largest borrower a high cost of borrowing would force politicians to limit wasteful spending by making it expensive to borrow. During World War I ( 1914-1918 ) the Kaiser and the German Parliament decided to finance the war entirely by borrowing. The German Mark fell from 4.2 to 8.91 to the dollar. The Congress has financed a string of social schemes, costing trillions of rupees, through borrowing. The rupee has dropped from 39 in 2007 to 62 to the dollar today. Germany came out of the war with its economy and industries largely intact but was undone by the " London Ultimatum " which forced Germany to pay 132 billion gold Marks as war reparations. In the first half of 1921 a Mark was 60 to the dollar but fell to one third of one cent, leading to hyperinflation. Germany has never forgotten the trauma of those years and that is why it is insisting on austerity for Greece. India faces a flight of tens of billions of dollars when the Federal Reserve starts to taper its bond buying program, as it must, which will lead to further fall in the value of the rupee. It is imperative to control inflation now to prevent it becoming completely out of control. Our so called experts are craven stooges who blame the weather, oil prices, Europe but never the true culprits. The new Governor seems to have brought some spine and purpose to the RBI.

Bad laws lead to fat lawyers but no business.

Seems that companies in India have spent around $1 billion on legal fees in 2012. The Tata group has around 400 lawyers and the $27 billion Essar group has a legal team for each of its 8 businesses. The reason is that there are too many laws in India, laws are designed to be oppressive so as to extract massive bribes and our courts are almost somnolent so that cases drag on for years. On the one hand it allows convicted criminals, such as the former telecom minister,Sukhram, to evade justice for decades while on the other it denies justified recompense to an injured party. Thus, the Australian mining company, White Industries, fed up with the dilatory tactics of the government owned, Coal India, obtained a judgement from an international arbitration tribunal in Singapore overriding both Delhi and Calcutta High Courts. Russian telecom company, Sistema has already sent a notice to the government threatening arbitration proceedings unless it is compensated following cancellation of all 2G licenses by the Supreme Court. In 2007 Vodafone bought a 67% stake in Hutchison Essar for $11 billion through an entity based in Cayman Islands. As per Indian law Vodafone should have withheld $2.5 billion in tax from the seller Hutchison Whampoa of Hong Kong so the government rightly demanded compensation from Vodafone. Either the law is vague or the government lawyers are totally incompetent because the Supreme Court found in favor of Vodafone. Instead of making the law clear and fair the government decided to introduce a law called General Anti Avoidance Rules under which tax fellows can impose taxes retroactively, going back to 1960. Foreign companies set up a huge outcry saying that they would stop investing in India. At about this time the economy went into a tailspin which spooked the Congress so now the law has been delayed till 2016. The mobile maker, Nokia is fighting a tax demand of Rs 20 billion on royalties it receives on software while Vodafone and Shell are contesting taxes on transfer pricing. Even Indian companies such as Reliance have threatened to go for arbitration on the pricing of gas from the Krishna Godavari fields. Bad social schemes need bad taxes which need bad laws which cannot be enforced by bad lawyers. Is it any wonder that we remain poor?

The majority die in the name of democracy.

In the general elections of 2009 the average turnout across the country was 59.7%, of which the Congress received 28.55%. So, in effect the Congress received votes from just 17% of the total electorate. However, our first-past-the-post system meant that the Congress increased the number of its seats in the Lok Sabha to 206 which made it the largest single party and allowed it to cobble together a coalition by creating over 70 ministries, a straightforward bribery to politicians just as it had bribed the electorate with disastrous social schemes. That is how democracy works, which basically means rule by the majority. Sadly, when it comes to the people the Congress chooses to persecute majority Hindus in favor of minorities in the name of Secularism, which is as false as it is cynical. In some parts of the country minorities form up to 20% of the population so politicians of other parties also tend to pander to them to get votes. These politicians divide Hindus by appealing to members of their own castes and this, added to minority votes, sees them through to victory. One such is Mr Nitish Kumar, Chief Minister of Bihar. He came to power with the support of the BJP and together they formed a coalition government but since Mr Narendra Modi was elected the Prime Ministerial candidate by the BJP he has broken with the BJP and is now governing with the support of the Congress and RJD of Mr Lalu Prasad Yadav. His excuse is that Mr Modi did not protect Muslims during the riots in Gujarat in 2002 and is therefore Hindu nationalist. It is true that around 1500 Muslims did die in 2002 but everyone chooses to forget that over 500 Hindus were also killed. This is nothing compared to the killings of over 8000 Sikhs after Indira Gandhi's assassination in 1984, orchestrated by the Congress.
The numbers of Muslims in Bihar are far larger than the numbers of Sikhs so Mr Nitish Kumar has clearly calculated that pandering to Muslims would outweigh any grievance that Sikhs may feel. That is mind numbingly cynical. Yesterday Mr Modi addressed a crowd in Patna in Bihar. There were 6 explosions resulting in the deaths of 6 people with over 100 injured. Mr Nitish Kumar had refused personal security for Mr Modi but is now crying " conspiracy ". And it is all in the name of democracy.

High taxes are an extortion.

From Chyavanprash to bricks and cement. Seems that the Burmans, promoters of the $1 billion dollar company, Dabur, have surrendered to the lure of the windfall profits of the property market. As the Tatas, Godrej, Mahindras, Wadias and every other business group have done before them. The risks are minimum. Borrow a few billion from banks and buy land. Banks are always happy to lend against immovable collateral. Quickly put up a sample apartment and start advertising. High Networth Individuals, as the wealthy are called, deposit booking amounts for apartments. Start building with the money collected and keep asking for further installments as the work progresses. At no time does the builder incur any risk. Sure, bribes have to be paid to officials and politicians for innumerable permits required by law but these are built into the price. These poor fellows are then left with mountains of cash which cannot be deposited in their bank accounts or invested in mutual funds and constitute a security risk. They buy properties from the original investors at a premium, paid in cash. It is a real win-win situation. The builders make huge profits, banks get their money with interest, the HNIs make a quick buck and fellows with black money sleep in peace in the knowledge that their money is safely invested in properties. Thus, the rich and the crooked have an interest in ensuring that property prices keep on rising. However, to earn their fortune politicians have to win elections and the easiest way to do that is to bribe the electorate. For that they need to collect taxes. Vast amounts. With prices of properties in tens of millions it is naturally a juicy target. The central government has imposed a 1% tax, which must be collected and deposited by the buyer or his property will not be registered. Now UP is to levy VAT on buildings under construction. Property prices have risen so high that 99% of people cannot afford them. People are thus forced to live in rented apartments which is one of the main reasons for poverty as rent money is a total waste. A kind of mutual fund, called Real Estate Investment Trusts, could allow ordinary people to invest in the real estate market and profit from the boom. Effective tax on such funds will be a bloodsucking 43.6%. This will only push up prices even higher. Until one day they crash. Lots of people will be wiped out.

India has become a pathetic nation.

How do we understand what is going on in India? Our stock market index, the Sensex is on fire. It closed on 20,683 yesterday, within sniffing distance of its highest close of 21,004 on 5 November, 2010. The highest intraday high was 21,228. Experts are divided on how high it will reach, from 22,000-26,000. Foreign investors have put in $2.09 billion into Indian stocks between 2 and 27 September and taken out $965 million from the debt market, despite rising yields. In 2013 they have invested a total of $13.7 in our stock market while taking out $5.7 billion from our debt market. Why are they running away from debt? Is it because they do not trust our government's ability to to repay the loans? Figures are certainly bad. The September wholesale inflation rose to 6.46% from 6.1% in August while retail inflation rose to 9.84% in September from 9.52% in August. Food inflation rose to a blistering 18.4% from 18.18% in August. Industrial production rose by a paltry 0.6% in August while the HSBC Services PMI dropped to 44.6 in September from 47.6 in August. Anything below 50 denotes contraction. So, services, which comprise over 60% of the economy, is contracting and cutting jobs. This is partly due to inflation which is reducing demand and partly to the introduction of new taxes on every service. Instead of reducing and rationalising taxes the central and state governments are devising new taxes to levy on people. The European Commission published a list of 20 top destinations for direct investment in the world and India does not feature on the list.
Since the EU had direct investments of 5.6 trillion Euros in the rest of the world this is a great loss for us, especially because our infrastructure alone needs investment of $1 trillion. German newspaper Frankfurter Allgemeine recently wrote," Stealing in government has never been this brazen....Crime rates are up and security of life....is at its lowest ebb. India must then be more than qualified to be called a failed state." A failed state, thanks to Congress. One of our top newspaper crows how the US has snubbed Prime Minister of Pakistan, Nawaz Sharif while choosing to forget that the Obama administration has quietly resumed $1.6 billion of aid to Pakistan. Begging for approval. How pathetic is that?

The reaction hits the people.

Newton's third law states that every action has an equal and opposite reaction. When you float on water the downward pressure of your weight is matched by the upward resistance of water. In economics it is different. The reaction usually surfaces after sometime, may be surprising in its manifestation and need the courage of patriotism to control. Instead of recognising the growth in the economy between 2004 and 2009 as due to very loose monetary policy in the west, resulting in a flow of cheap money, and taking steps to prevent excessive corporate debt the Congress chose to take credit for the growth. It allowed its coalition partners in government a free hand resulting in massive scams. To win elections in 2009 it resorted to a huge increase in spending which increased fiscal deficit and resulted in double digit inflation. To plug the big hole in its finances the Congress resorted to an extortionate increase in taxes, leading to further increase in inflation and a drop in demand. When people stop spending corporate profits fall. Kingfisher Airlines has already gone out of business and now Jet Airways has declared a loss of Rs 9.995 billion in the June to September quarter. When companies make less money they maybe unable to repay loans they have taken from banks, which means banks see a rise in bad loans. Non Performing Assets are set to rise from 3.4% to 4.4% by 31 March next year but we do not know how many loans have been quietly restructured by giving fresh loans so that they do not reflect on banks' balance sheets. Some experts believe that NPAs could be more than 10% of total loans. Our most revered Finance Minister has urged state-run banks to " closely monitor 30 largest defaulters ". On the other hand the government is giving Rs 140 billion to PSU banks to lend at lower rates to people to buy cars and other goodies to boost consumption and tax collection. With elections due in 2014 the Congress thought it could repeat the bribery of 2009 and passed the Food Security Bill which seeks to distribute rice at Rs 3 a kg and wheat at Rs 2 a kg. The Minimum Support Price it pays is higher than market prices which probably led to diversion of land to growing cereals. Which has resulted in a surge in the prices of vegetables with onions selling at Rs 80 a kg. Trouble is politicians act but we suffer the reaction.

We must have confused our enemies.

It was an Ahhh moment for Britain yesterday as Prince George, the 3 month old son of Prince William and Kate Middleton, was exhibited to the paparazzi for his christening ceremony. Dressed in, what looked like, a white frock he exhibited the typical British bull dog spirit as kept a stiff upper lip throughout and seemed to resemble a miniature Winston Churchill. Without saying a word his haughty disdain for the cooing assemblage seemed to suggest," We are not amused." Back in India it was a case of same to same. Our most revered Prime Minister is on another foreign visit, this time to Russia and China. He has really creamed his tenure in the kursi by travelling abroad more than 70 times since 2004, at a cost of Rs 6.40 billion, more than any other Prime Minister in our history. He has traveled abroad 37 times in his second term and, in a show of contempt for our elected representatives, a total of 15 times when the parliament was in session. It maybe argued that since he is more ceremonial than executive, allowed to warm his chair as long as he obeys orders, it does not matter where he goes. However, after Sharm al-Sheikh it is terrifying for Indian citizens what he is signing away wherever he goes, especially with our most dangerous enemy, China. What the boss does crooked civil servants are sure to follow. Three unnamed senior officials in the Home Ministry have taken off for a foreign jaunt to Cairo, Istanbul and Dubai. Two pilots and 3 engineers were supposed to fly an Embraer jet back from Lisbon in Portugal to India. How it reached there we do not know but the trip was to be for 9 days which was to include training. The 3 Home Ministry fellows offloaded the 3 engineers, extended the trip to 14 days and added Cairo, Istanbul and Dubai to the itinerary. Wonder if they have taken their wives with them or are travelling solo to study the anatomical expertise of belly dancers and other artistic delights. Would they be returning with the usual gold biscuits, bottles of Scotch and toys for grandchildren or will they be filling their suitcases with various types of onions? Wish we knew. While our fellows are on their junket abroad a Pakistani fellow continues to earn money in India even though his visa expired last week. Are we surviving because our enemies are as confused as we are?

Foreign Direct Investment is the key.

Scared by the precipitous fall in the value of the rupee when Fed Chairman, Ben Bernanke hinted at tapering the bond buying program in the US the government, along with the RBI, has initiated a number of steps to build up foreign exchange reserves and shore up the rupee. Levels for Foreign Direct Investment have been increased in various sectors. Up to 100% in telecom and single brand retail, 51% in multi brand retail, 49% in insurance and defense. Instead of buying from the market oil companies have been allowed to buy dollars from the RBI, reducing pressure on the rupee. To attract money from overseas Indians the RBI has reduced financing rates of banks. $9.6 billion of NRI deposits have already come in. Hit by the fall in the rupee and high inflation imports have fallen by 18.1% while exports have risen by 11.2%, bringing the trade deficit to just $6.8 billion in August. There are plans to allow rupee trading inside India. At present Foreign Investors are not allowed to hedge their rupee exposure in over-the counter or exchange trading markets in India. They must go through Category 1 banks which is expensive. So a Non-Deliverable Forwards market has developed in other countries over which the RBI has no control. It is hoped that allowing rupee trading inside the country will be controlled, thus preventing wild fluctuations in the value of the rupee, and deepen the credit default swaps market. But will it not make it even more dangerous? It was the collapse of the credit default swaps that led to the sub-prime crisis in the US and what is to prevent foreign investors from playing games both inside and outside the country. The daily foreign exchange market runs at over $4 trillion so the entire foreign exchange reserves of India amount to loose change. Most of these measures are short term to attract hot money and could reverse in an instant. The only real remedy is to increase Foreign Direct Investment. FDI did increase by 6% between January and June to $10.87 billion but this is nothing. Our infrastructure alone needs $1 trillion. Trouble is that our politicians are good at passing laws but self interest prevents implementation. Walmart has already left, along with Posco and Arcelor Mittal, and now the mining giant, BHP Billiton has surrendered 10 oil and gas fields because of failure to get clearance. The money is out there. But can we get it?

The people must remain ignorant.

Common Cause, a NGO has filed a Public Interest Litigation in front of the Supreme Court challenging the ban on news broadcasts by private FM channels. Only the government owned channel Prasar Bharati has the license. Bangladesh, Nepal and Sri Lanka do not restrict private channels from broadcasting news and current affairs. " India is perhaps the only democratic country in the world where the dissemination of news and current affairs programmes on the radio remains a monopoly of the government-owned broadcaster," argued advocate Prashant Bhushan. Wrong. India is definitely not a democracy. It is a police state run by political gangs, controlled by mafia families, for their own benefit. Criminals and cockroaches love the dark which conceals their repulsive presence. Not just radio. Our government tries its best to censor the internet. According to Google India is second only to the US to ask for information on accounts of users and for removal of any criticism of the government. In the recent stampede on a bridge leading to a temple at Datia in Madhya Pradesh police threw dead and living people into the swollen river. Eye witnesses insist that not only were the police were robbing dead bodies and then throwing them into the river to decrease mortality rates but they threw living people, including children, into the river. The Information and Broadcasting Ministry is right in claiming," What is material is the way of presentation. The same event can be sensationalized or put in a sober manner taking care of the sentiments and sensitivities involved." Absolutely. If a private channel were to broadcast the truth with eye witness accounts people would be outraged and may resort to rioting. With the government controlling news everything can be sterilised until it appears in newspapers and since vast numbers of people cannot read the event can be suppressed. See what trouble Edward Snowden has caused, and is still causing, the US government. The Brazilian President, Dilma Rousseff has cancelled a state visit to the US to show her anger at the National Security Agency spying on Brazilians and yesterday the American ambassador to France was called for a dressing down. What did our government do? Our most revered Foreign Minister actually defended the US spying on Indians. Let other countries spy on our citizens. As long as the people stay ignorant the politicians are safe.

The waiting debt trap.

Every so often Financial Services Secretary, Rajiv Takru starts spewing fire and sulphur against bad loans, called Non Performing Assets, incurred by banks.  The reason for his ire is that banks have referred 549 cases of defaults of loans to the Corporate Debt Restructuring Cell with a total value of Rs 3.38 trillion till 30 June of this year which is 49% higher than Rs 2.27 trillion last year. " Every bank in any particular lending consortium will have to file an FIR ( first information report ) against a borrower who is found to be a wilful defaulter," he said. He is right to be worried. Loans through Kisan Credit Cards are over Rs 2 trillion and total loans to the agricultural sector is more than Rs 5 trillion. Before the 2009 elections the Congress bribed farmers by waiving repayment of all loans, costing banks Rs 750 billion. Farmers are no doubt waiting to be forgiven again before 2014 elections. In a really weird case of reverse bribery infrastructure companies actually paid a " premium " to the government to build roads, airports and power plants. The companies were expected to recover costs from the people through higher toll charges on roads, extremely high airport charges and constantly rising electricity prices. The Congress thought that, like the compulsory reservation of 25% of seats in private schools for poor children, it would gain credit for getting poor children into private schools and collect huge amounts of money upfront to spend on wasteful social schemes to bribe the " vote bank " while blaming companies for the increasing prices. In a case of breathtaking dishonesty the Congress took the money and then failed to provide land for building roads, environmental clearance or captive coal mines to provide power. The companies took loans believing that the government would honor its side of the bargain and are now landed with massive debt. In a report Credit Suisse says that 10 large business groups which are Adani, Essar, GMR, GVK, Jaypee, JSW, Lanco, Reliance Group, Vedanta and Videocon have a combined gross debt of Rs 63.10 trillion. They were also encouraged to borrow abroad to take advantage of historic low interest rates which has jumped in value because of the falling rupee. These companies are now having to sell assets to decrease their debt load. But will it be enough to reduce the NPAs?
 

Will someone explain what is going on.

We maybe citizens of India, we maybe educated with post graduate degrees and we may have traveled to other countries but it is astonishing how little we know about our own country of India. And we cannot be informed if we are ignorant. In 2005 a government company, Neyveli Lignite was allotted a Talabira II coalfield in Odisha by a screening committee, headed by the then Coal Secretary, PC Parakh. The committee said that Hindalco, a company owned by Mr Kumar Mangalam Birla, had been provided adequate coal stocks from Mahanadi Coalfields ltd but had failed to utilize the offer. They said that Hindalco and Neyveli could jointly develop Talabira II and III to produce an extra 30 million tonnes of coal. However, the Odisha government wrote to the Prime Minister's Office recommending that Talabira II should be given to Hindalco which the PMO accepted, overruling the committee's recommendation. Now the CBI has filed FIRs against Mr PC Parakh and Mr Birla. Why? In India politicians have the power to use all natural assets and taxpayer money as they please without giving any explanation or having to account for their actions. Out of 160 captive blocks allocated between 2004 and 2009 only 2 have started production so that India is now having to import coal despite having reserves of more than 270 billion tonnes. The CBI should have asked the Prime Minister and the Chief Minister of Odisha as to why Talabira II was allocated to Mr Birla. If Mr Birla had written a letter requesting for the coalfield then surely that is not a crime. The Prime Minister has defended the allocation. To prove how politicians think they are feudal lords with the power to do what they please our most revered Finance Minister said that Public Sector companies must invest Rs 1.4 trillion in new projects or they will be forced to pay very high dividends. " Dividend payments by PSUs will not be less than last year's. In no case we will accept dividend less than last year's," he said. Last year PSUs paid Rs 554.43 billion in dividends, this year the government is expecting Rs 738.66 billion. Companies are not investing in new projects because demand has collapsed due to scorching inflation. So, either these companies have to waste money on projects for which there is no demand or hand everything over to the Congress which they will use to bribe the electorate for the coming elections. Wish we were clever enough to understand what is going on.

We are all bottom experts now.

The great sage of India, Mr Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission is the latest expert to expound on the bottom. " I think the economy has bottomed out and will now move up, though one has to be cautious on the pace of recovery," he said in a recent interview. When asked about the IMF projection of growth at 4.3%, it has since been reduced to 3.75%, he said," The IMF forecast is based largely on recent performance. They are not factoring in the possibility that the positive features I have listed may have a significant effect in the next six months." What he actually means is that the IMF has been consistently wrong in the past and his wild guesses could actually come true because no one really has a clue. Surely, if any of them had a clue they would not be swanking about in the millionaire Swiss resort of Davos while we, with no knowledge in economics, could see the economy teetering on the edge. In its forecast the Planning Commission predicted an average growth rate of 8% between 2012 and 2017. The IMF was totally wrong about the Argentinian and Russian debt crises. They started to grow only after defaulting on their debt and stimulating their economies. The IMF said that austerity will make the Greek economy contract by 5.5% between 2009 and 2012. In fact, it contracted by 17% which has devastated the country. The IMF forecast that the British economy would be plunged into recession by the policy of austerity being pursued by the Tory government. It has just revised its growth forecast of the British economy from 0.9% to 1.4%. The present Governor of the Reserve Bank, Raghuram Rajan was the Chief Economist at the IMF from 2003 to 2007.  Thing is that it is very difficult to make macroeconomic forecasts because of so many variables. From the weather to earthquakes to internal politics to external economic shocks it is almost impossible to calculate the combined effect of all of them. However, while the others are unpredictable politicians should always behave in the national interest. " The food inflation is because of high inflation in cereals, and a short term spike in onion prices. The government is working on ways to offload substantial volumes of stocks of food-grains,..." said Mr Ahluwalia. In short the Congress has generated food inflation and will bring it down before next year's elections to gain credit. Is that the bottom he means.

Three cheers for India.

Three cheers for us. The first is for the highest level of malnutrition in the world despite the fact that India exports food grains. Globally under-nutrition falls by half the rate of GDP growth but in India an average GDP growth of 4.2% between 1990 and 2005 has resulted in malnutrition falling by only 0.65%. Experts are unable to explain this enigma. The reason is that successive governments have concentrated on increasing production of grains, such as wheat and rice, by a device called the Minimum Support Price which pays farmers more than the market price encouraging them to produce even more. Since we do not have adequate storage space vast quantities are left to rot in the open or be eaten by vermin. As a result grains become more expensive, land is diverted from producing fruits and vegetables to producing grains, which is why vegetables have become so expensive fueling food inflation, and the government incurs a huge expense, raising the fiscal deficit. Food inflation rose to 18.4% in September from 18.18% in August. Many experts recommend genetically modified foods. Which is nonsense. Adding genes to plants to produce bacterial proteins which are toxic to insects, such as BT Brinjal, could have unknown harmful effects if taken long term. Also foreign companies would come to control India's food production which would be dangerous for our security. The second cheer is for being the country with the highest number of slaves in the world. There are an estimated 29.8 million slaves in 162 countries in the world of which India has 14 million. China is a distant second with 2.9 million, Pakistan has 2.1 million and Nigeria is fourth with 701,000. Bonded labor, child labor, children sold by parents to gangs who chop off limbs to turn them into beggars and women trafficking for prostitution, we are first in every form of inhuman monstrosity that one can think of. But why do we get such headlines? This brings us to the third cheer which is that condom use has dropped by 40% in 5 years. Population has grown by 1.43% from 2005 to 2010 and is set to surpass that of China by 2025. China has prevented 400 million births since 1979 with its one child policy which is one of the reasons for its phenomenal growth. To reduce malnutrition, slavery or crime we must reduce poverty and to reduce poverty we must reduce the numbers of the poor. But then there will be no " vote bank " to bribe.

The bottom is yet to be reached.

Has the bottom been reached? Those who look at uncontrolled inflation, uncontrolled spending, which will increase fiscal deficit, and the way that the rupee is being shored up with increased borrowing are fearful of what will happen if the US starts to withdraw its stimulus rapidly or growth in the world economy falters. The Congress is still trying to push its delusion of growth at all costs, arguing that the IMF forecast of 4.25% growth, despite robust farm production due to fantastic monsoon rains, in this financial year is wrong and growth will be between 5-5.5%. " I know that the World Economic Outlook report does not share my optimism, but I may tell you that we do not share their pessimism," said our most revered Finance Minister. Pity politicians cannot be punished for economic treason. So what should we believe? The HSBC Services Purchasing Managers Index is down to a dismal 44.6 in September from 47.6 in August, the lowest in 4 years. Any figure below 50 denotes contraction. That is no surprise because retail inflation rose by 9.84% in September as compared to 9.52% in august while wholesale prices rose by a 7 month high 6.46% in September compared to 6.1% in August. When people are being hammered by rising prices and taxes they are likely to cut expenses in eating out and travelling. If services, which constitute 60% of the economy, start cutting jobs then demand is likely to fall further. Surely manufacturing is growing because Indian products have become cheaper due to the fall in the value of the rupee? The index measuring both manufacturing and services has gone down to 46.1% in September from 47.6% in August and 48.4% in July. Both sectors are shedding jobs. After expanding by 2.7% in August industrial production grew by a microscopic 0.6% in August. The solution surely is to let the rupee fall to its true value, reduce taxes to stimulate demand and push exports by spending on roads, ports and electricity. The good monsoons will hopefully bring down food prices and limit the rise in inflation. But the Congress cannot do that. It has earmarked massive spending in social schemes to bribe its vote bank to try to win the coming elections. This will raise fiscal deficit and invite a credit rating downgrade. And so the bottom keeps dropping.

Inequality is part of rapid growth.

According to Credit Suisse global wealth has increased by 112% since the year 2000 to $241 trillion. Wealth of Indians has increased by 300%, from $1.2 trillion to $3.6 trillion. The report predicts that global wealth will grow by 40% to $334 trillion by 2018. Just 32 million dollar millionaires own 41% of all assets while 68.7% of people control just 3% of the wealth with assets less than $10,000 each. In India 2.8 million are high net-worth individuals while 90% are below the $10,000 mark. In India the bottom 70% of the population hold 20% of private wealth while in China it is 29%, in the US it is a paltry 7%, in Germany 13% and in Norway the bottom 70% hold 12% of private wealth. It is difficult to know how they have calculated the wealth of Indians. Anyone with income over Rs 180,000 per year should be paying income tax but only 35 million people declare income above that level. At today's rates shopkeepers, artisans, such as plumbers, electricians and masons, maid servants and even beggars earn more than the taxable threshold because it is set so low. However, nobody does. All income from farming is exempt from tax and 50% of the price of any property must be paid in cash or black money. Politicians, business fellows and civil servants cannot declare their main sources of income, which are illegal, so the parallel economy is probably greater than the GDP. The failure of communism and socialism has proved that any economy can grow only through exploitation. Colonialism was pure exploitation of resources of other countries. The attacks on Iraq and Libya were to gain control of their oil reserves. However, western countries are restricted by a vociferous section of their people who object to exploiting the poor. China has no such reservations. Its Communist Party practices a most aggressive form of capitalism where it grabs land and resources from its own people while gifting billions of dollars to dictators to exploit resources of African countries. The stalemate over raising the debt ceiling in the US is being financed by the billionaire Koch brothers while Richard Branson has sold his house in Britain to his children so as not to pay any taxes in his homeland. Only growth with low inflation, low corruption,low birth rate and rigidly controlled election financing can eliminate poverty. Or else inequality will continue to grow.

They have been turned into monsters.

In 1991, 22 years ago, the body of a 4 year old girl was found beside a Manhattan highway in New York. The body was naked and bound and weighed just 20 pounds which was half the weight of an average 4 year old. There was no name and no child was reported missing. They named her Baby Hope. The police were very upset for the little girl and arranged a funeral for her, attended by hundreds of mourners. " This case really touched us, because she was just an innocent child, we all have kids or know them," said retired Detective, Jerry Giorgio. " I know it haunted me." For 22 years New York police kept her memory alive by visiting her grave. On the 22nd anniversary they again put up posters and announced a reward of $12,000 for information leading to the identity of this little girl. Finally, they received a tip off which led them to identify the mother of the child and match her DNA. Conrado Juarez, 52, a distant cousin of the father, was arrested for the murder of the little girl 3 days ago. He has confessed to raping her, suffocating her to death and then leaving her beside the highway in a cooler under cans of soda with the help of his sister, who has since died. Last week Assistant Chief of Police, Joseph Reznick went to her grave, as he has done many times before, and replaced a placard on the headstone which said, " The identity of this little girl is unknown " with another placard which read " Angelica Castillo ". This story is at once heart rending and heart warming, showing that New York police are human underneath all the guns they carry. Surely our police are just as caring? Two days back there was a stampede at a bridge leading to a temple at Datia in Madhya Pradesh, over 110 people died. Nothing new in that. Such tragedies happen regularly in India and the huge population means that hundreds die. What can the police do? Turns out that instead of helping people the police were throwing the dead and injured off the bridge to reduce the body count. Teenager Ashish, 15, told the police that his 5 year old brother, Golu was dead. The police told him," Now your brother is dead, why should you live on?" and threw him off the bridge. He was found unconscious with one leg broken. If Rathore and BB Mohanty were police chiefs we can imagine what officers under them will be like. Politicians control the police to cover up their own crimes thereby turning them into monsters. What hope for our children?

Public sector banks need protection.

There was a time not so long ago when you would expect to spend half a day to withdraw a few thousand rupees from an Indian bank. At that time a couple of thousand rupees were enough to meet the expenses of a family of 4 for one month. Then came reforms and inflation and banks improved their services so that you could be in and out in a few minutes, which is good because now you need a thousand rupees a day to survive. Large numbers of private sector and foreign banks have opened branches in all cities, offering a range of services in beautiful air conditioned comfort, very attractive to younger people. Older people still prefer public sector banks because they are considered safe, have much lower charges and and have the comfort of a passbook which can be updated at one's own convenience. To reduce costs private sector and foreign banks prefer to send monthly statements through couriers, which go back if no one is at home to receive them, and then charge large amounts for a replacement copy. In 2008 public sector banks received a large inflow of funds from both people and businesses because the government will never allow a public sector bank to fail. Of course, government control means that two penny politicians can and do force public sector banks to lend to high risk businesses owned by family and friends or to produce a spurt in spending to produce a false growth in the economy to win elections. That is what happened in 2008-2009 when the Congress forgave all loans to farmers at a cost of Rs 750 billion, kept interest rate very low to encourage borrowing and borrowed vast amounts to increase salaries of useless civil servants by 80%. They won the elections but have left public sector banks with huge Non Performing Assets as companies find it difficult to service their loans in a slowing economy and falling demand due to high inflation. Last year Rs 750 billion worth of loans were officially restructured under the Corporate Debt Restructuring scheme. In an effort to control bad loans banks have now been instructed to get tough with borrowers. Business owners will be asked to furnish personal guarantees as collateral if they ask for their debt to be restructured. Banks will also be watched to prevent them rolling over bad loans on the sly. The economy is so unforgiving.

Wealth is an illusion.

Seems that wealth in India has increased by 300% from $1.2 trillion to $3.6 trillion in the 13 years since the year 2000. This wealth is not for the people however. More than 90% survive on less than $10,000 a year while 2.8 million are High Networth Individuals. This does not tally with the the figures put out by our tax fellows. They say that only about 35 million people declare taxable income of which 28.84 million, or 89%, declare income under Rs 500,000 per year. Only 406,000 declare income above Rs 2 million per year which, with very high prices and retail inflation at 9.5%, is considered middle class. The discrepancy is explained by the fact that in India all farm incomes are free of income tax and there are extremely wealthy people who call themselves farmers so as to pay no tax. Also 86% of the wealth in India is held in properties and only 15% in financial assets. In China 45% of wealth is held in financial assets and 54% in non financial assets. Property prices in India have increased by 1000% since the year 2000 making anyone who owns any property into a multi millionaire. Owning a property worth tens of millions of rupees does not translate into higher tax collections. At least 50% of the price of any property is paid in cash or black money to evade the stupidly high rates of taxes and millions of people own ancestral properties, which may have increased in value, but do not add to disposable incomes. There are not many avenues for financial investments in India. Term deposits in banks are a losing proposition. The rate of interest is less than the rate of retail inflation so your money is losing in value and the interest is clubbed with your income so you may end up paying 30% tax on it. Our stock market is highly manipulated. Foreign investors hold a large proportion of shares in our companies which makes our market dependent on what is happening in the US and hence highly unpredictable. Having no other avenue of investment Indians put their faith in gold despite increasing taxes. That is why businesses borrow money from banks to finance new projects. High interest rate to control inflation means that companies are finding it difficult to service their debt and banks are fearful of bad loans. 10 companies have gross debt at Rs 63.10 trillion which is 60% of GDP. Wealth is not some esoteric calculation by clever economists. It should be owned by the people.

Spending first leads to poor economics.

Our most revered Finance Minister said that the government will be recapitalising banks with Rs 140 billion so that they can lend at lower rates to those who want to buy vehicles or consumer durables, such as TVs refrigerators. Government spending is made up of what it raises from taxes and borrowing the rest from banks. The amount it borrows is called the Fiscal Deficit and is added to its total debt burden. It makes little sense, therefore, to borrow money from banks to give it back to them to lend to people at lower rates. This is just another form of subsidy. The same man said recently that subsidies on food and fuel must be reduced to balance books. So the Congress wants to reduce subsidies on some goods while raising them on others. Another desperate attempt to somehow boost demand to create a few more jobs before elections next year.Trouble is that food subsidies cannot be reduced because the Food Security Bill promises wheat at Rs 2 per kilo and rice at Rs 3 per kilo to 700 million people and only state owned companies are allowed to sell fuel and we are told that they are being forced to keep prices low to help consumers, thus running up huge losses. Truth is that the government collects vast amounts of taxes on crude and then claims it is subsidising end products and having to bail out the losses of these companies. The attempt is always to grab as much money from us right at the beginning so that they can bribe the " vote bank " with wasteful social schemes which increase inflation and harm the poor. Anyone buying a property costing more than Rs 5 million, which is virtually every property in cities, is forced to deduct 1% as tax and deposit it at the relevant office. Knowing how government offices function it means wasting days standing in queues and having to pay bribes to submit the tax. If we are being forced to act as agents of the government surely we should be given the same perks as the crooked civil servants, such as free healthcare and pensions. Banks deduct 10% from the interest they pay on term deposits. You then have to file tax returns to claim a refund at the end of the tax year. Which means having to pay an accountant and paying service tax on that. Thus we vote for and pay for a feudal government which exploits us 24/7. Is it any wonder criminals are attracted to politics?

From BRICS to BIITS with the Congress.

So much for " big bang reforms " of the Congress led government which was greeted as some sort of economic bonanza by the freeloading press last year. With much fanfare the government announced increase in the prices of petrol, diesel and electricity, 100% foreign ownership of single-brand retail, 51% foreign ownership of multi-brand retail and 49% foreign ownership of domestic airlines. At that time we predicted that apart from a rise in inflation, which would further depress growth rate by killing demand, there was nothing to get excited about. Sadly, we have been proved right one year on. The Swedish furniture maker Ikea not set up a store because its desire to sell coffee in its stores would make it multi-brand. 48% of IndiGo, India's only profit making domestic airline is already foreign owned. Jet and Etihad are still talking. Multinationals such as Walmart and Tesco have refused to open any store here because of abysmal infrastructure, open hostility from states controlled by other political gangs and the requirement to source 30% of products locally. Lately Walmart has broken off its partnership with Bharti in the cash-and-carry business which sold in bulk to shopkeepers. The result is that growth rate has fallen from 7.4% in 2011 to 4.3% in 2013. Current Account Deficit can only be curbed by reducing imports of essential goods. Imports of project goods are down 38% compared to last year while imports of machinery are down 12.4%.
Exports have risen on the back of a weak rupee but that could be undone by the Congress trying its utmost to make the rupee stronger by increasing the flow of foreign currencies in stocks and bonds. This could result in a collapse of the rupee if the Federal Reserve decides to taper its stimulus and foreign investors decide to exit suddenly. The Congress is only looking to produce a mirage of stability until the general elections of 2014 and does not care what happens after that. It is calculating that if it somehow manages to win another 5 year term it will have time to reverse some of the damage while blaming foreign countries for the disaster, as it has been doing till now. Meanwhile, BRICS is said to be dead and India is now a part of BIITS which are countries with low growth, high inflation and high CAD. Thanks to the Congress and the World Famous Economist.

Criminals thrive in secrecy.

Andrew Parker, Chief of British spy agency, MI5 thinks that the Guardian Newspaper has done a great disservice to the country by exposing how GCHQ in Britain has been recording all phone and internet traffic from all over the world. In his opinion this is absolutely essential to protect Britain from terrorist attacks. Of course, he would say so because secrecy gives him enormous powers to do as he likes without having to account for his actions. Apparently Prime Minister, David Cameron sent thugs to destroy hard drives from Guardian computers to keep the British public from knowing what their government is up to. There are doubts about whether scientist Dr David Kelly was murdered and the British spooks covered it up. Mr Parker claims that there are hundreds of Islamic fanatics living in Britain who want to target the country and some of those fighting in Syria could return with extensive knowledge of firearms and explosives. The British government actually allowed 2 chemicals, used in the production of Sarin, to be exported to Syria. Even now the British are supplying weapons to Syrian rebels who could turn against them in future, just as the Taliban turned against the west after receiving arms from them. Scotland Yard is now investigating whether Princess Diana was killed by an elite unit of the SAS as claimed by one Soldier N. Apparently Princess Diana's driver was " lamped " by " dazzler lasers " which blinded him causing him to crash against a pillar. People like Mr Parker would definitely not want all this information to be in the public domain because not only will it cause widespread revulsion but he could feel the snap of handcuffs on his wrist. While newspapers in the west are ready to expose official misconduct here in India newspapers openly act as agents of the Congress. In a disgusting and offensive article Rahul Kansal, Executive President, Bennet, Coleman & co ltd, publishers of the Times of India, compares Mr Narendra Modi to Nazis, Khmer Rouge, North Korean regime and all the murderous scum of the world. Not a word about how the Congress has betrayed this country time and again and continues to do so till today. Secrecy covers up crimes against the citizens. 

How to fool foreigners?

Our most revered Finance Minister is fond of lecturing us on what needs to be done but never spells out how he is going to do it. " On the government side, sooner ( rather ) than later we will have to address the issue of higher subsidies than budgeted, on both fuel and food," he said, as he jetted off to the US in one of the luxury planes bought with taxpayer money. But how? The Food Security Bill was passed during the monsoon session of parliament and he did nothing, knowing full well that once a subsidy is started it is virtually impossible to stop it. With the population still growing more food, not less, will be required. Since the NREGA handout is linked to inflation, and inflation continues to grow at 10%, budgetary support will only continue to balloon. As for fuel, no one knows the amount of subsidy because the taxes on petroleum products are so varied and confusing that we do not have any idea as to what the right price of sale should be. The price is calculated as 80% Trade Parity Pricing and 20% Export Parity Pricing. Then customs duty, import charges and imaginary costs such as Trade Premium and Ocean Freight Charges are added on. All this is probably done to deceive the people because we cannot understand such gibberish. It is stupid to collect huge taxes up front and then claim that oil companies are losing money and need government support. It would be much better to simplify and reduce taxes on oil and allow a level playing field for private companies which would stop cartelisation by state owned companies and bring down prices through competition, as has happened in telecom. On the one hand, subsidies cause distortion in trade, angering other countries, while on the other, high taxes hinder free trade agreements. Thus, talks with the EU on a FTA are held up because of high taxes on alcoholic drinks and cars while food security subsidies could fall foul of WTO rules. The new Chief of WTO, Roberto Azevedo said," They ( India ) would soon be breaching their, what we call AMS ( Aggregate Measurement of Support ) commitments in the WTO. So, they are asking for some kind of actions in Geneva that could allow those programmes to continue to work." In short," Be prepared for trade sanctions." But before that Treasury Secretary, Jacob Lew lies in wait. And Americans are not known to be diplomatic. You can fool the people but foreigners are tough nuts.

Lightning strikes are a sign of things to come.

Although they look fearsome lightning strikes are usually far away from populated areas and very limited in range. That is why fatalities are rare. But not in India. Our population density is so great that 32 people, including 9 children, were killed over the weekend in Bihar and Jharkhand. Of course, when people breed like rabbits poverty keeps on rising which is good news for our politicians who can easily buy votes by bribing them with a plethora of social schemes. Unfortunately, social schemes have to be paid for by increased government borrowing which increases fiscal deficit, leading to high inflation, increases borrowing costs for private businesses through high interest rates and a fall in the growth rate, leading to lower growth in tax collections, which makes the deficit worse. The only remedy is reducing government expenditure but cutting social schemes would be electoral suicide. So taxes are increased to unbearable levels, further hitting the middle class and depressing demand. Suddenly the Congress has woken up to the fact that crushing the middle class is catastrophic for industries such as cars, refrigerators and internal tourism. Now our most revered Finance Minister has asked the Reserve Bank to lend money to banks at low rates of interest so that they can be passed on as customer loans. This is after the RBI instructed banks to stop all zero interest loans to retail customers. " For a long time we have harboured the myth that banks are meant to provide money to rich people and to corporates. Nowhere in the world, other than India, do corporates come to banks for working capital," said our Finance Minister. Er, quite. The reason that rich people prefer to borrow from banks, especially public sector ones, is that they can divert the money for private consumption or to other projects and they are sure that if they are unable to repay the loans they will be " restructured " and eventually written off. They can get away with the loot because they are either related to, pally with or have paid politicians to put pressure on bank managers. Sadly, economic decisions made in panic seldom work and trying to increase consumption with sky high taxes and inflation is doomed to failure. Trouble is that when such a huge country starts to hurtle downwards short term measures do not work. Perhaps lighning needs to strike our politicians.

Which politician is worth voting for?

Delhi is known for its pea-soup fogs but this year this year they threaten to blot out the sun completely. The reason? Elections in 5 states in November and December, followed by general elections by May. As the drop in temperature coincides with copious amounts of hot air from our fibbing politicians we can expect reason, morality or patriotism to be blotted out by generous distribution of Below-Poverty-Line cards, regularisation of illegal colonies, wads of cash doled out through Direct Money Transfer based on Aadhar cards, grains at Rs 2 a kg and Aadhar cards for illegal Bangladeshis so that they can access all the above mentioned benefits paid for by us. Taxpayer money is being wasted on hasty, superficial repairs of roads with as little tar as possible because tar comes from coal and coal has to be imported, because mines were given away as presents to family and friends. Problem is that this year the monsoon is refusing to go and a few showers will loosen the pebbles, leaving us with bigger potholes than before. It is necessary to bribe voters or else no one, except Bangladeshis, will turn up to vote which will be terribly embarrassing for politicians always boasting about India being the largest democracy when everyone knows that we are a violent police state controlled by family controlled political gangs. Out of a total of 4807 MPs and MLAs 1460, which is 30%, have criminal cases registered against them. In fact 688 MPs and MLAs declared serious cases against themselves in their election affidavits. Among others some are also criminals but have not yet been caught or are so vile that the police dare not charge them while the rest are accessories because they tolerate the criminals knowingly. Naturally politicians do not want the people to know so they try to censor the internet. Mr Rahul Gandhi recently came out strongly in favor of keeping criminals out of parliament. There is a long list of changes he could initiate to ensure true democracy in India. But none can be more important than freedom of speech. If we are charged with sedition every time we complain about corruption the villains will continue to go unpunished. If he is a patriot he must ensure the safety of the nation by stopping the free flow of Bangladeshis. Politicians should be worth voting for. Why else should we bother.

You need to be clever to copy.

East Asian countries such as Japan, China, Taiwan and South Korea became wealthy by imitation of western products. They reverse engineered machines, including cars, and then produced them more cheaply, making use of cheap labor. Apparently 60% of our population is under the age of 30 years which should make India an ideal country to become a manufacturing powerhouse. But that has not happened. Anything we buy, except pharmaceuticals, is either made in China or, if it is made in India, it is by a foreign company. Our most popular cars are made by Suzuki of Japan, smart phones by Apple of the US, refrigerators by LG or Samsung of South Korea and we Google if we want to know anything. This is because our labor laws are so restrictive that mechanics at a motorbike manufacturer earn in excess of Rs 100,000 per month while people with university degrees at private banks get Rs 20,000. Since most of the black money is in properties the price of land is exorbitant, making any project unviable. The recent Land Acquisition Act will make it almost impossible to set up factories or open new mines. If we do not get enough coal we will not generate enough electricity, if we cannot mine for iron or bauxite we will not have the raw materials for manufacture and if we cannot build highways or high speed rail links we will not be able to transport goods and people cheaply. Finally, our taxes are so high that most of our industrialists are looking to manufacture abroad rather than at home. To encourage manufacturing inside India our government decided to copy China and set up special economic zones which would be given tax holidays on importing machinery and export end products. Sadly, it all went pear shaped. Tax relief on importing machinery for the zones became useless as India signed free-trade agreements with Japan, South Korea, Sri Lanka, and Asean countries. A similar FTA with the EU is under discussion. Tax relief on exports is unacceptable under WTO rules. Companies in the zones cannot sell in the domestic market because they would have a tax advantage. " Such a situation does not arise in other countries since their differential tariff rates are much lower than India," said Arpita Mukherjee, Professor at Indian Council for Research on International Economic Relations. Excessive taxes to cover rampant corruption lead to stupid policies. Students copy in exams to cheat. Our government cannot even do that.

We need real freedom.

At last Mr Lalu Prasad Yadav has been found guilty of embezzlement of public money in the Rs 9.5 billion fodder scam over a period of years while he was Chief Minister of Bihar. The guilty verdict is being hailed as a victory of the law in India. But is it? Firstly, it has taken 17 years for the verdict to be pronounced, during which time Mr Prasad has been a Member of Parliament and a Railway Minister. He was even invited to lecture at Harvard. Americans who sat through his lecture must be wondering how a criminal was allowed to swank around on taxpayer money. Secondly, this is only the preliminary judgement. Mr Prasad is sure to appeal to the High Court and our judges, oozing the milk of human kindness, will allow him out on bail. After the High Court the appeal will surely go to the Supreme Court. After all Rs 9.5 billion can pay for an awful lot of lawyers. How long all these appeals will take is anybody's guess. Till then Mr Prasad will no doubt be enjoying himself, much as Mr Sukhram, caught red handed with tens of millions stuffed into pillows and mattresses, has been doing for over 20 years. No wonder the Congress, with the help of Mr Prasad's party, has blocked the setup of an effective Lokpal and was about to pass an ordinance to override an order from the Supreme Court banning convicted MPs, like Mr Prasad, from continuing in office. The Congress is also planning an amendment to the Right To Information Act so as to override an order from the Central Information Commission bringing political parties under the act. Terrorist organisations will happily register themselves as political parties for automatic immunity from the RTI Act. However, politicians would not be able to get away with their crimes without an army of apologists in the press. An editorial in the Economic Times compares Mr Prasad to Bhagat Singh. It actually says that since our police and lower courts are inefficient so politicians should be allowed to continue in office. Why are they so poor? Because they are controlled by politicians. So instead of recommending independence of the police the editorial recommends immunity for politicians. Bhagat Singh was a freedom fighter against the British. Some people think that our politicians are a greater enemy than the British ever were. We desperately need freedom from them.

Are we a nation of liars?

In a report about India published in 2010 the Asian Development Bank said," The central budget in 2008-2009, announced in February 2008, seemed to continue the progress towards FRBM ( Fiscal Responsibility and Budget Management Act 2003 ) targets by showing a low fiscal deficit of 2.5% of GDP. However, the 2008-2009 budget quite clearly made inadequate allowances for rural schemes like the farm loan waiver and the expansion of social security schemes under the National Rural Employment Guarantee Act ( NREGA ), the Sixth Pay Commission award and subsidies for food, fertilizer and petroleum." " The huge increase in public expenditure in 2008-2009 of 31.2% that followed a 27.4% increase in 2007-2008 was driven by the electoral cycle with parliamentary elections scheduled within a year of the announcement of the budget," said the report. In short the Bank is saying that the Congress deliberately broke the FRBM Act to bribe the electorate to win the elections in 2009 and lied to the Indian public by predicting a deficit of 2.5% in the budget. This is what we have been writing repeatedly for the last 4 years. The FRBM Act became law in 2003, during the BJP government of Mr Vajpayee, so why has the BJP not objected to the chicanery of the Congress. Why did the BJP not start a public campaign against a criminal waste of public money? Sadly because vast numbers of Indian people are poor and unable to see beyond their noses in their struggle for survival. They happily see it as income distribution from the rich to them and do not understand that the Congress will wrench the money out of their grasp by increasing taxes on every goods and service, that the Congress will force the Reserve Bank to keep rates low despite double digit inflation to maintain a false growth to increase tax collections to finance the false handouts and that if the same money had been spent on infrastructure it would have created millions of jobs allowing them to earn money with dignity. Thus opposition pasties chickened out from telling the truth to the electorate because they wanted to win elections and because in states in their control they were guilty of the same crimes. Freeloading journalists muddied waters by arguing about economic theories.  Only the people remained ignorant of the truth.

Republicans or RepubliKlans.

So, the Republicans have closed down the government, as they have been threatening to do, by refusing to pass the budget unless the Affordable Healthcare Act,also known as Obamacare, which was supposed to come into effect from 1 October, was postponed for a year. Obama has secured his second term in office and is not allowed to stand any more. Lately his popularity rating has been dropping. First there was Syria where he appeared unsure of what to do. He had promised to use force against the Assad regime if it used chemical weapons but when it did Obama asked Congress to decide whether to attack. In the event a chance remark by the Secretary of State, John Kerry allowed the Russians to seize the initiative. Then President Dilma Roussef of Brazil cancelled her state visit to the US later this year because she was enraged by the National Security Agency spying on her country, including her own emails and the Brazilian energy company, Petrobras. In 2011 Obama had capitulated timidly to Republican refusal to raise the debt ceiling by agreeing to a sequester which cut $85 billion from the budget, especially from the military. This time he was not going to give in to their blackmail and become a lame duck, only one year into his second term. The Act was passed by Congress and supported by the Supreme Court. So the ethical way to overturn it would be to win the next election and then pass a law to abolish the Act. But the Republicans are not prepared to wait that long because they have seen a similar law, passed by a Republican Governor, Mitt Romney, becoming a huge success in Massachusetts. Once the Act becomes a success a future Republican administration would not be able to amend or abolish it so they linked the budget to the postponement of the Act by one year. For Obama this is his legacy and he seems prepared to dig in. Hence the stoppage. The last time this happened was in 1995-96 when Bill Clinton was president. This time it is much more poisonous. A large number of Republicans are sure of winning their seats because of gerrymandering but may lose their primaries if they go against the Tea Party faction. The Tea Party fanatics have never been able to accept a black man in the White House. They still seem to be fighting the civil war as they all come from the former Confederate states. As did the Ku Klux Klan.

Blind or stupid?

No one likes to pay tax. People see it as a form of official extortion, especially in India where we resent every paisa we give to the government because we are treated as garbage by criminal politicians and civil servants and have to pay huge bribes to avail of services, which should be routine. A total of 35 million people pay any income tax, of which just 42,800 show income above Rs 10 million. " In western countries ' I pay tax, I buy civilisation ' has worked. It won't work in India. Here nobody wants to part with the money that reaches one's pocket," said former CBDT Chairman, PK Misra. Shocking how little understanding these fellows have. Firstly,no one in the west likes to pay tax. The Tea Party caucus of the Republican Party in the US is prepared to shut down the government because they think they will have to pay more money for health insurance. World's second richest man, Warren Buffett pays less tax than his secretary. Why? Because rich people finance election expenses of politicians so that they will pass laws to lower taxes on the rich when elected. Apple, with a market capitalisation of over $400 billion, pays no tax anywhere in the world.
Secondly, our tax rates are too high. In Japan sales tax in just 5% and the government is thinking of raising it to 8%. The average price of petrol in the US yesterday was $3.425 per gallon, which is 3.8 liters. At today's exchange rate it works out at Rs 60 per liter whereas it is Rs 74 for ordinary petrol and Rs 83 for premium petrol in India. Taxes on fuel and airport services are so high that few people can afford to fly so airlines are making huge losses. Stamp duty on properties are between 6 and 12% adding hugely to cost and making it impossible to buy properties. Paying wasteful rent is one of the prime causes for financial stress and the real estate sector runs on black money. In the UK there is no stamp duty on houses costing up to 125,000 pounds which works out to Rs 12.5 million. Stamp duty on properties costing from 0.5 to 1 million pounds, which would be Rs 1 billion, is just 4%. If they want people to pay taxes rates should be lowered, it should be made easy, services must be automatic and, above all, we must be treated with respect. But these fellows are so used to their cars with flashing lights and taxpayer financed junkets that their brains have stopped functioning. The Indian government is the enemy of the people.