Foundation of the economy is hollow.

In an article in the Economic Times 2 IMF pundits predict that growth will be 4.7% in 2013-14 and 5.5% next year. After some politically correct preamble they write," But inflation remains high, growth has yet to decisively turn around, CAD continues to be financed by volatile external flows, and the quality of fiscal consolidation remains a concern. In addition, subdued economic growth has led to rising corporate and financial strains." And again," However, even in the presence of slowing growth, Indian inflation has remained persistent and high, eroding households' financial savings and undermining currency stability. We believe low and stable inflation is the best way for monetary policy to support robust inclusive growth." What they mean is that the key to economic growth is low inflation and interest rates must remain high for as long as it takes to control inflation. Lower growth reduces demand and so should brings down prices but this is not happening in India. Lower demand leads to lower profits for companies, who find it difficult to service their loans, causing rising bad loans for banks. Inflation has become intractable because our most revered Finance Minister would not allow the RBI to increase interest rates saying," If the government has to walk alone.... then we will." Like some corny Bollywood dialogue. Now that the IMF has supported what we have been writing for the last few years the FM is incensed. He defended his record in parliament, bragging about controlling the fiscal deficit but forgetting to mention that this is being done by robbing cash from Public Sector Units in the form of excessive dividend, bringing down their share prices, and postponing payment for subsidies that he introduced to the next government. " I appeal to all political parties to join me in the pledge that we shall not, we shall never, do anything that will affect stability of the foundations of the Indian economy," he said. Lofty rhetoric but can we believe him? Despite his boast that the fiscal deficit would be 4.6% of GDP it seems that the deficit has already crossed the initial target of 4.8% by January. And what is going to do now? The cabinet passed proposals to increase Dearness Allowance to 100% of basic salary and increased minimum pension to Rs 1000 per month. The Congress is piling on expenses so that the new government is inundated and cannot function. This is how they want to keep our foundations stable. Great patriots, aren't they?

Is Ukraine the new Libya?

Using a UN Security Council resolution allowing the use of force to protect civilians Britain and France, with the help of NATO and Qatar, bombed Gaddafi's forces, killing 30,000 civilians. Today Libya is ruled by armed gangs who owe allegiance only to their tribes and refuse any attempt at control by the government. Last year over 7,000 were killed in Iraq in sectarian violence although even now the killers, George Bush and his poodle, Tony Blair, argue that they were kind to the Iraqi people by getting rid of Saddam Hussein. Syria has been different. While Russia and China vetoed any suggestion of force to help the rebels, Iran, through the Hezbollah, has been actively helping Assad to gain an upper hand in the civil war. So on to Ukraine. In November 2004 Viktor Yanukovych beat Viktor Yushchenko in presidential elections but was thought to have used unfair means. This precipitated street protests in Kiev, financed and instigated by US and European agencies, called the Orange Revolution. Elections were held again, Yushchenko won and appointed Yuila Tymoshenko as his Prime Minister. In 2009 Russia turned off gas supplies to Ukraine in January, at the height of winter, in a dispute over unpaid bills. Since a fifth of Europe's gas went through Ukraine this cause shortage of heating gas in Europe as well. Under pressure Tymoshenko signed a gas deal with Moscow for which she was tried and sentenced to 7 years in prison in 2011 after Yanukovych came to power in elections held in 2010. Ukraine's economy is in dire condition and will need $35 billion over the next 2 years. Bonds worth $6.5 billion will need to be redeemed this year. Last November, in a major blunder, Yanukovych broke off talks with the EU and opted for a Russian aid package worth $15 billion. With the winter Olympics scheduled to be held at Sochi in Russia at the end of January he should have feigned illness. Western powers took advantage of Russia's handicap and instigated another revolution. Yanukovych fled to Russia. The eastern part of the country, especially Crimea, is Russian speaking and voted heavily for Yanukovych. Now armed men have taken over government buildings in Simferopol in Crimea. If the EU offers money to Ukraine then Greece and Spain will be incensed. If they do not the Russians will happily step in. For now Putin can afford to wait. He can always turn off the gas to the western part. Why do they keep doing it? Will the west never learn?

Are they all on happy pills?

A survey global CEOs by Pricewaterhouse Coopers has found that short term confidence is down but CEOs in India are remarkably confident of the future. Over the next 12 months 49% are very confident and 40% are somewhat confident, giving a total of 89% and over the next 3 years 70% are very confident and 27% are somewhat confident, giving a total of a mind blowing 97%. This sunny outlook for the future is despite realistic appreciation of the dangers to the economy. The major concerns are 1. exchange rate volatility - 84%, 2. inadequate basic infrastructure - 82%, 3. over-regulation - 82% and 4. availability of skills - 81%. Exchange rate of the rupee depends a lot on external factors, changes in regulation depends on what politicians gain from it, infrastructure takes years to build and skills can only be developed with good education over time. Retail sales during the December quarter saw the steepest decline compared to previous 23 quarters despite being the festival season. Aggregate net sales were down 9.4% to Rs 123.66 billion compared to the same period last year. Rural demand is down even though excellent monsoons meant bumper crops. That the growth of the economy was a mirage based on an exponential increase in property prices can be seen from the fact that employment grew just 2% between 2000 and 2012 but employment in the construction industry grew by 17%. In rural areas employment in construction grew by a whopping 300%, from 9.4 million in 2000 to 37.2 million in 2012. The combined shackles of very high inflation with falling growth has restricted middle class spending to such an extent that expensive restaurants are having to open cheaper outlets to get more customers. A lot of these restaurants have compounded their problems by shifting to shopping malls from high streets in the hope attracting well heeled customers willing to pay higher prices. In the process their rents and utility costs have soared forcing them to increase prices and hurt customers even more. Indian companies took on a lot of debt during the growth years which they are finding difficult to service. Why then are 97% of our industry captains so optimistic about the future? Are they banking on a Congress rout at the elections to get things going or are they simply on happy pills? Mystery.

Do they want all of us to be the Bridge Men of Heston.

If a shopkeeper told us to pay him a certain amount of money, which he would distribute to whoever he pleased, and in return he would give us a little something of whatever he pleased we would create a big fuss, tell others to avoid the shop and may even call the police. But what if we found that almost everyone timidly accepted the shopkeeper's terms and quietly paid up whatever he asked for without protest and that he controlled the police anyway we would look for way to migrate to an area which was more just. The government happens to be like that shopkeeper, charging us huge taxes, distributing the money to buy votes, giving us very little service in return and using its might to intimidate us. That is why anyone who can tries to migrate out of India, even if they are labelled the Bridge Men of Heston for sleeping under a flyover in London. Politicians justify high taxes on moral grounds, arguing that people should not grudge paying high taxes to help the poor because the money is used for subsidies such as MNREGA scheme and giving cheap food. But a Robin Hood government is lethal for the economy. High taxes increase prices of goods and services, kill demand, reduce investment, reduce employment, increase inflation, increase deficits and actually reduce tax collections as the economy stops growing. Car sales have been falling for 4 straight months because of the combined effects of inflation, high interest rates to control inflation and high taxes. In panic excise duty on cars have been reduced in the interim budget. Despite making huge losses airlines are having to cut fares because passenger numbers have been falling. Frankfurt Airport in Germany charges $36.70 as taxes, Vienna Airport in Austria charges $34.60, Toronto Airport charges $51.70 but Delhi charges $60.03 as taxes. Why would tourists want to come here? Now the Airport Economic Authority has asked Hyderabad Airport to stop Development charges on passengers. Presently Hyderabad Airport charges Rs 484 from domestic and Rs 1910 from foreign passengers. After Congress victories in 2004 and 2009 based on promises of free goodies every party has latched. Free electricity, water, laptops and bicycles are passe. One politician is promising one goat and one cow for everyone. At least there will be no shortage of dung.

An alphabet soup of gangs.

Politicians in India maybe totally shameless, dishonest, unpatriotic villains but as a source for entertainment they are unparalleled. There are 38 parties in the Lok Sabha and 12 of them have one seat each. Do they matter? Has anyone heard of the VCK or the MDMK, and KC (M) does not stand for Kisan Chakra (Medium). There is a Janata Party, a Janata Dal (S), a Janata Dal (U), (R) Janata Dal and a (B) Janata Dal. If this profusion of alphabets is not confusing enough we hear that 20 MLAs have left the RJD in Bihar but 6 of them later recanted. The JDU is being blamed for poaching them. Meanwhile Chirag, which means ' Flame ', son of Ram Vilas Paswan, Chief of LJP is displeased about seat sharing with the INC and RJD and hinted at supporting the BJP, which has been condemned as support for communal forces although persecuting the majority to show support for 'minorities' is not seen as communal. Mr Nitish Kumar of JDU needs all the help he can get. He was elected chief minister with the help of the BJP, which has 91 seats in the Bihar assembly, but his personal hatred for Mr Narendra Modi made him a sucker for the Congress which promised him special package for Bihar, encouraging him to break his alliance with the BJP, and then dumped him. Mr Kumar is completely at the mercy of the Congress and the RJD who will bring him down when it will suit them. Reduced to irrelevance he has been whining from the sidelines, even calling for a bandh in his state. For those of us who have been wondering why a man of the stature of Nandan Nilekani has been working to help the police state by making the bio-metric card, Aadhar a success we now know that the Congress corrupted him by making him its candidate for South Bangalore. No one is immune to the lure of power and pelf, not even a billionaire who has everything. As proved by our most revered Home Minister, SK Shinde who is incensed by opinion polls predicting a rout of the Congress. " We will crush such elements in the electronic media, which are indulging in false propaganda. I have the intelligence department under me, I know who is doing such things," he threatened. Mr Shinde used to be in the police and so must be an expert in the third degree. And he has the bio-metric details of Aadhar to find who he wants. The people will have to choose which gang they want to rule them. It is like being asked to choose your hangman.

Regime change is easy. What happens now?

Vladimir Putin can indulge in some quiet satisfaction that the winter Olympic games at Sochi have been a success that he said they would be. Russia topped the medals' table with 13 gold even though the loss to Finland in Ice Hockey hurt deeply. Islamist threats of attacks turned out be pure bluster and they were left praying for an earthquake. The infrastructure functioned efficiently although boorish Americans focused on how a US athlete had to break open a bathroom door which had jammed. If a foreigner had done the same in the US he would have been frogmarched in handcuffs by US police, would have been cavity searched and then made to pay a hefty bill for repairs. With all foreigners safely home by now Putin can turn his attention to Ukraine where protesters trained and financed by US and Europe have made President Viktor Yanukovych flee the capital, Kiev for an unknown refuge in the east of the country. The trouble started in November when Yanukovych refused to sign a trade deal with the EU in favor of Russia. Ukraine is in danger of defaulting on debts worth $13 billion which the EU was not willing to forgive. Russia offered a package worth $15 billion and can supply Ukraine with cheap gas. Yanukovych, who favors Russia, grabbed the deal. When the protests started he handled it badly. He should have shown xenophobic articles in British newspapers about migrants from Bulgaria and Romania, sent journalists to Greece to show the effects of austerity imposed by the EU and to Serbia to show how the western powers conspired to divide Yugoslavia into little bits. Instead, like all politicians, he chose confrontation. In 2004-05 he faced the Orange revolution with the election of Viktor Yushchenko as President and Yulia Tymoshenko as Prime Minister. Later the two fell out and Yushchenko testified at Tymoshenko's trial for a gas deal she signed with the Russians. Is the west ready to put cash on the table this time round? Already the US is back-pedalling. " The United States, together with Europe and others in the international community are ready to supplement an IMF program to cushion the impact of reforms on low-income Ukrainians," said Treasury Secretary, Jacob Lew. Sounds ominous, does it not? Ukrainians have to ask themselves," Will the opposition be better second time round and do they want to be like Greece?" Not easy.

A right to commit crime.

Chairperson and Managing Director of United Bank of India, Archana Bhargava has opted for early retirement, citing health reasons, after only 10 months in her post. She had made a lot of enemies at the bank for revealing that the bank was hiding Non Performing Assets, or bad loans, amounting to 10.8% of total loans. For years the bank has not been reporting small unpaid loans of less than Rs 1 million each which amounted to Rs 23 billion out of total NPAs of Rs 85.46 billion. If this was a private bank the shareholders would have demanded that the guilty be punished but this being a public sector bank her resignation was quickly accepted, apparently because she had made a lot of enemies at the bank. For sure. No criminal wants to be found out. We do not know how many local politicians and business people have defrauded the bank but there is no doubt that the government will quietly recapitalise the bank with taxpayer money. Seems that the entire establishment in India, including our judges, are sympathetic towards criminals and not the victims. About a week back the Supreme Court commuted the death sentence on 3 men convicted in the murder of former Prime Minister, Rajiv Gandhi. Apparently it was because the men had spent 11 years in prison waiting for a verdict on their mercy petition. " Exorbitant delay in disposal of mercy petitions renders the process of execution of death sentence arbitrary, whimsical and, therefore, unexecutable," said the judges. It is shameful that the Congress did not take a decision on the petitions in the last 10 years while it was in power because it needed the support of the DMK in parliament. It is shameful that the DMK played politics with murder because the accused are Tamils. While some may argue that Mr Gandhi would have known the risk and accepted them for the reward of being Prime Minister we cannot forget that 14 innocent people also died whose only crime was to have gone to listen to the speech. It is shameful that the judges have used 11 years of extra life for the culprits, at taxpayer expense, to pardon them. Our judges have no compassion for Jessica Lal or Mudhumita Shukla, both murdered brutally in their prime, but allow their killers out on parole on compassionate grounds. For the relatives of the dead it must be torture to see the killers enjoying early freedom. It has become a right to commit crimes and our justice system is a joke.

How bad is it really?

An angry article questioning the figures put out by the IMF in a pink paper today. Is it angry because the IMF says growth will be 4.6% as opposed to 4.9% predicted by the World Famous Economist or is it because the IMF recommends higher interest rates to control retail inflation while our most revered Finance Minister keeps banging on about lower rates to stimulate growth. It does not matter because the Congress is facing a wipe out in the coming elections and the next government will have to deal with the disaster it is leaving behind. With creative accounting and massaged figures we, the people have no idea as to the real state of the economy so we hunt for clues. After creating the huge fiscal deficit and soaring inflation with his handouts the Finance Minister has cut Rs 310 billion from the from social schemes such as healthcare, rural roads, education, rural housing, drinking water and sanitation. To do that in an election year is surely a sign of desperation that the fiscal deficit cannot be controlled even after spectrum for cell phones was auctioned for Rs 610 billion and will leave leading telecom companies with a total debt of Rs 920 billion because their licenses come up for renewal next year. This will force companies to raise rates hitting the poor who love their cell phones. To pay for the innumerable social schemes the Congress was looking to raise money from every source possible. One was to ask for an upfront payment from private companies who were given contracts to build roads. This was called a premium. After paying this extortion money, the obligatory bribes to politicians and civil servants and exorbitant costs to acquire land companies were charging very high rates of toll from users, leading to great anger. The first toll between Delhi and Gurgaon has now gone but people are asking for all toll plazas to be removed. Along with social schemes the Congress bribed vast numbers of useless civil servants with massive salary increases. They also enjoy a bonus called Dearness Allowance which is linked to inflation and has risen to 100% of basic salary. The Congress has decided to merge DA with basic salary which will double pensions and other allowances. By treating the poor as beggars the Congress has only increased poverty. A study suggests that poverty is 2.5 times what the government figures show. It is not just bad, it is shocking.

The view from the east is opposite to that of the west.

Italy is furious that the 2 marines who killed 2 Indian fishermen inside India's coastal waters in 2012 maybe charged with piracy. Even the European Union has warned India against the move. Italy has recalled its ambassador to India for ' consultations ' which is a diplomatic downgrade in relationships and India's ambassador in Rome was given an earful by the Foreign Ministry Secretary General, Michele Valensise. Italy claims immunity for the marines because, according to it, the incident happened in international waters. Does that mean that Italians can murder Indian citizens in international waters without any consequence? Only the US has the power to bestow immunity on its citizens after cold blooded murder as it did with Raymond Davies. Italians cannot understand why the case is dragging on when an Italian is President of the Congress and is running India. After all they released Amanda Knox on appeal and have sentenced her to 28.5 years in prison on re-appeal when they know she ain't ever coming back from the US of A.They are anxious because they know that the Congress is facing a rout in the coming elections and any other party maybe more robust in protecting Indian citizens. The Congress, on the other hand, is twisting and turning because they want to avoid a proper trial for the marines where they might be found guilty and sentenced to a long prison sentence and they cannot release the murderers either because that will be suicide at the elections. So they keep changing the charges, hoping the courts will rescue them by throwing the case out. The Italians should remember that hypocrites have no respect, that Berlusconi is going to get married again, Bettino Craxi died in Tunisia as a guest of Ben Ali, the mafia was born in Italy and ' fascismo ' is an Italian word. They should be evenhanded like the Americans who are probably more brutal with their own people inside the US. Police in Deming, New Mexico subjected an innocent man to rectal examinations and repeated enemas because they thought that he was clenching his buttocks. He is now suing the police. A 16 year old boy had his testicles ruptured by a female police officer in Philadelphia leaving him sterile forever. The boy has been charged with aggravated assault. They see us as third world, we see them as hostile baboons. A matter of points of view.

The hollow pillars of our economy.

Banks are the pillars of any economy. They provide a safe place to store our money on which they pay interest. They lend this money back to us to buy houses, cars and for other expenses, such as an illnesses. Industries take loans from banks to build factories to provide us with consumer goods, thus creating new employment, and builders build houses for us to live in, employing large numbers of laborers. The importance of banks to the economy was dramatically illustrated by the global crisis precipitated by the fall of Lehman Brothers, which was not even as large as HSBC or Morgan Stanley. The report of a net loss of Rs 12.38 billion by the United Bank of India, in the quarter ending on 31 December, has suddenly shone the spotlight on the precarious condition of the public sector banks in India. The Reserve Banks has banned UBI from lending any more until the mess is sorted out. Gross Non Performing Assets or NPAs, as bad loans are known, rose by 36% to Rs 2.43 trillion from Rs 1.79 trillion one year ago. Even private banks are beginning to show an increase in NPAs. Public sector banks are under the control of politicians who force them to lend money to cronies and for buying votes. Thus agriculture and small and medium enterprises account for Rs 20.58 billion of the bad loans at UBI, which makes them suspicious. UBI blames a software provided by Infosys, one of our successful software companies, for not being able to identify which loans were turning sour which is not good news for our IT sector. If the large numbers of small borrowers are the problem at UBI numbers are even more terrifying with large companies. 3700 companies have a total debt of Rs 24 trillion which is a quarter of our GDP and of this Rs 8 trillion are with companies whose interest payments are higher than their profits. This would not have happened had the RBI not surrendered to the bullying by the Congress and kept interest rates low while inflation was shooting up. A combination of high inflation and extortionate taxes has brought growth down to below 5% which is reducing profits of companies. Hotels bookings are down as foreign investors look elsewhere. Will anyone be held culpable for the loot. Not if we go by the example of Ramalinga Raju of Satyam who is enjoying lavish parties. This is how the parasites are hollowing out our economy. What is the cure?

Even the lackeys are not buying the bluff.

Normally after the annual budget speech industrialists, self-appointed pundits and talking heads on TV are effusive in their praise for the Finance Minister even if the budget is a poisonous mix of enormous rise in taxes to pay for soaring salaries of useless civil servants and a colossal waste of taxpayer money on handouts to bribe the ' vote bank '. Not this time. The final Vote on Account  by our most revered Finance Minister has been greeted with snorts of derision by the usual lackeys which shows that everyone has given up on the Congress coming back to power in the general elections in a couple of months time. Every figure cited by the FM has been questioned and the consensus is that he has deliberately messed up the economy for the next government without going so far as to invite a credit downgrade. For a start he has achieved his fiscal deficit target of 4.6% for the current financial year by deferring oil subsidies of Rs 350 billion to the next fiscal and forcing public sector banks and companies to pay vastly increased dividends to the tune of Rs 470 billion. 
When questioned about how he had forced public sector units to pay increased dividends he said," That is the owner's money and the owner is saying if you have no use for the money then please return a part of it to me because I have other legitimate uses for that money." Like what? Swanning off to Davos when India is counted in the Fragile Five. You are not the owner of these companies, we are. Tax revenues for the current fiscal was estimated at Rs 10.29 trillion but till December 2013 only Rs 6.34 trillion had been raised which means around 40% of the estimate has to be raised in the final 3 months of the financial year. Surely impossible. Yet the FM estimates that tax revenues for the next fiscal will rise by 19%, income from divesting shares in public sector companies will raise Rs 569 billion, when he has been able to raise only Rs 160 billion, and the GDP will grow by 6%. Clearly he is setting the bar very high hoping to blame the next finance minister if he fails to achieve these targets. He has delayed payment of Rs 139 billion to the IMF. In a cynical move he has reduced excise duty on cars by 4%, on SUVs by 6% and on capital goods, electrical products, TVs, fridges, washing machines, computers and cell phones by 2% hoping to entice some cheap votes. A thoroughly unprincipled man to the last. This time nobody is buying his bluff.

We must remember.

As the rhetoric for the coming general elections heats up and everything gets clouded by lies about the economy, religion, caste, regionalism, criminality and corruption we should pause to remember what the Congress led government is leaving for us after 10 years. The Congress constantly harps on ' inclusive growth ' by which it means that it managed to include the poor in the growth of the economy. But did it? The Congress is particularly proud of the MGNREGA scheme which pays the rural poor for 100 days every year for doing nothing. Further, to protect the poor against rising prices it is linked to inflation and keeps rising at the same rate. When you dish out handfuls of cash you instantly increase the spending power of the poor, boosting the rural economy. But by setting a lower level to rural wages costs of farming are increased leading to a double digit rise in food prices. Spending Rs 2.3 trillion on this unproductive handouts does not increase employment or tax collections and results in increased government borrowing leading to increase in the fiscal deficit, which is also inflationary. Real wages, adjusted for inflation, grew by 11% in 2011 and by 10% in 2012 but has fallen to 3% in 2013. This is reflected in earnings of consumer goods companies which show a marked slowdown in rural sales. Rs 2.3 trillion would have built 45,000 km of rural roads, at an assumed cost of Rs 50 million per km, which would have generated much higher incomes by connecting farmers to markets and reduced inflation. Threatened with a fall in credit rating to junk status the Congress attempted to reduce deficits by increasing taxes on everything, especially services. The result, as any schoolboy would have predicted, has been a contraction in the services sector such that there is great rejoicing because the PMI for services came in at 48.3 which is higher than the December figure of 46.7. We must remember that any figure below 50 is contraction. To compensate for the soaring costs of living people cut down on saving. Savings have fallen from 38.1% of GDP in 2008 to 30.1% of GDP in 2013. Even worse, to protect their money people have moved from financial instruments to gold and properties leading to a huge property price bubble. Our largest bank, SBI has seen a 34% fall in profits due to bad loans. The list is long but we must remember when we vote.

Self deception is natural.

Human beings have an inbuilt capacity for justifying even the most craven act. After all no one would like to think of himself as a thieving, lying, unscrupulous scoundrel. A survey published in the Hindustan Times is a vivid illustration. The survey asked business leaders in India their opinion about the ease of doing business in the country and the role of the government. When it comes to the government the survey seems to reflect common consent. Business leaders are of the opinion that the government is helpful to a small extent in consulting industry on major policy shifts, in incorporating preferences of industry in policies, in taking into account global trade and finance and transparency of decision making. However, the deception comes when asked about itself. A massive 92.3% think that Business Society is efficient as opposed to 41% of Political Executive and 59% of Bureaucracy. And 89.8% think that Business Society in honest as opposed to 30,8% of Political Executive and 66.7% of the Bureaucracy. Why are the answers suspect? In response to the question - " Does the government allow businessmen to break rules and get away with it?" 59% thought it was to a small extent and 33.3% thought that it was to a large extent, for a total of 92.3% who thought that they could break rules with impunity. That is precisely what corruption is. To the question - " Is obtaining a business license associated with corruption?" 46.2% said it was to a small extent and 53.8% said it was to a large extent, making a total of 100%. That means all businessmen are paying bribes to obtain licenses. Which means 100% of businessmen in India are corrupt. When you pay huge bribes to obtain a license there is little money left to obtain land and build factories. So we export iron ore or iron pellets but not high quality steel which would add value and increase earnings. A few years back there was a bitter battle between 2 brothers one of whom wanted charge $4.2 instead of $2.34 for gas from the KG Basin. The government fought for the increase and won. The moment the judgement was out the 2 brothers went to Tirupati to give thanks. Then gas supply fell off and the price has been increased to $8.4. Through political influence business fellows have borrowed huge amounts which they are refusing to pay. Banks are facing massive bad loans. That is why there is little business in India. After all, even Diwali lights are made in China.

Subdivided minorities do not understand each other.

Minorities rule in India and are protected by the authorities so that they are always the victors. But in the rest of the world minorities have subdivided into further minorities who detest each other so much that they would like to wipe each other out. We remember the contest between the Catholic IRA and the Protestant British armed forces where both sides surpassed each other in brutality until they reached a weary stalemate. Now there is a Real IRA which would like to resume hostilities. In Syria the Assad regime, backed by Shia Iran and Hezbollah, its Shia allies from Lebanon, are fighting rebels backed by Sunni Gulf states, such as Saudi Arabia and Qatar, and their allies the Islamic State of Iraq and Syria, the Jabhat al Nusra and the Al Qaeda. Trouble is that Saudi Arabia ruthlessly suppresses any hint of revolt inside its borders while supporting the Al Qaeda in other countries. To compound the confusion different groups have different agendas and are now killing each other to gain ascendancy.  At the insistence of western powers the UN sent a special envoy, Lakhdar Brahimi to bring love and harmony to Syria. Yesterday Mr Brahimi apologised to the people of Syria for having failed. You have to feel sorry for him. With so many minorities hating each other with fervent intensity what chance did he have? Predictably France and Britain have blamed Assad and are itching to join the fun as they did in Libya when they killed a minority of 30,000 Libyans to get rid of Gaddafi. The British Prime Minister, David Cameron is an upper class sissy, who desperately wants to be Margaret Thatcher and would like people to forget that it was his cuts in flood defenses that have exacerbated the current floods in England and Wales, while French President, Francois Hollande has 4 children with Segolene Royal, whom he never married, was elected kissing Valeire Trierweiler and was photographed visiting actress Julie Gayet, hiding under a helmet on the back of a motorbike. Also there are riots between minorities in the Central African Republic in which hundreds have died in revenge killings. Then there are even smaller minorities, such as the Al Shabab which bombed a shopping mall in Kenya. And the Lord's Resistance Army which is spreading the word in the forests of east Africa. So many minorities. No wonder they cannot understand each other.

Razzle-dazzle works because we are suckers.

The Congress must be cock-a-hoop for having raised Rs 610 billion from auction of spectrum for cell phones. Telecom companies were bidding for 900 MHz band for 2G services and for the 1800 MHz band for 4G services. Of the amounts bid by the companies 25% of the final bids for 900 MHz and 33% of final bids for 1800 MHz have to be paid upfront which means that the government will receive Rs 182.96 billion before 31 March. This will allow our most revered Finance Minister to fill a big hole in revenues and claim victory in his efforts to keep fiscal deficit to 4.8% of GDP. But why are there holes that need to be filled when our most revered Prime Minister, a World Class Economist, says that economy grew at its fastest pace under his tender ministrations? So where did all that money go? Apart from wasting massive amounts on social schemes to bribe voters the Congress is spending Rs 1.8 billion on advertising to present it as a good thing. First use our money to bribe voters and then use more of the same on bluff. You have to give it to them. A sample of their razzle-dazzle occupies half the back pages of newspapers today. Proud photos of the Congress President and the Prime Minister above an advertisement which confesses to providing Rs 1.95 trillion in bank credit to minorities with further dollops of Rs 31.25 billion for scholarships and Rs 60.20 billion for Multi-Sectoral Development Programme and several other such schemes. Presumably minorities are also able to benefit from the MNREGA, farmers' loan waiver, Backwards Region Grants, reserved seats in private schools under the Right To Education Act, dirt cheap grains for dozens of children under the Food Security Act and myriads of other sweeteners so this is just the jam on the cake. Is it any wonder that our banks are collapsing under the weight of bad loans? But surely it must be a good thing to sell scarce resources to the highest bidder and use the funds to help the poor? It would be if the money was used on productive investment, such as infrastructure which would increase wealth. After the 3G auction, which raised Rs 677 billion, Telecom Minister, Kapil Sibal admitted," There is no liquidity in the market for them to invest in the infrastructure." After all, where in the world does a government extract a ' premium ' from companies building roads? We are suckers to fall for it every time.

At last the Congress provides entertainment.

Great excitement in the Lok Sabha yesterday when the Congress went ahead and presented a bill which will divide Andhra Pradesh into Telengana and Seemandhra. The excitement was provided by Congress MPs who fought each other, prompting the Speaker to suspend 16, not all of them from the Congress. One Congress MP, L Rajagopal has been expelled from the party for using a pepper spray to add some zing to the protests, leading to jokes about ' pepperazzi ' on the internet. Some feel that cyanide spray would have been more effective in clearing sinuses. One fellow apparently drew a knife but we are not told its size or sharpness or whether it was made in China. Although they claim to be equal to men in everything women seem to be singularly lacking in the melee. They should not object if they are labeled the ' gentler sex ' as of today. But why were Congress fellows fighting each other a couple of months before elections? A Times Now-CVoter poll gives the Congress just 6 seats in Andhra in the coming elections whereas in 2009 it bagged the largest number, at 33 seats, from the state. By dividing the state the Congress hopes to get a large chunk of the 17 seats in Telengana at the cost of the remaining 25 in the Seemandhra region. Telengana was ruled by the Nizam of Hyderabad and so has a high concentration of ' minorities '. With every other pseudo-secular party competing for minority votes the Congress calculates that this move will help it to get a substantial chunk of such votes and, along with other Telengana supporters help it to win more than the 6 seats that opinion polls are projecting. To that extent it has nominated Mr Digvijay Singh to manage its campaign in Andhra. It all becomes clear when we remember that this is the man who blamed the death of Hemant Karkare, Chief of the Anti-Terror Squad in Mumbai who sacrificed his life fighting the Pakistani terrorists on 26 November 2008, on Hindu militants, which makes him guilty of treason. He also continues to claim that the Batla House encounter was faked despite a Delhi court convicting Shazad Ahmed of the Indian Mujahiddin for the incident. Knife, pepper spray, traitor, this is the stuff of Bollywood films. Who says the Congress is a party of boot-licking, criminal-hugging, miserable tyrants? It can be a joke as well. What fun!

The many shades of deficit.

Our most revered Finance Minister is travelling round the world reciting just one mantra - he is going to keep the fiscal deficit to 4.8% of GDP. As though that will solve all our problems and Foreign Investors will be rushing in with sacks full of dollars to invest in new businesses, such as multi brand retail. Turns out that deficits come in different guises. There is quiet pride that the increase in taxes on gold has slashed its sales and reduced the trade and current account deficits although the weak rupee may have helped by making gold too expensive to buy. Naturally smugglers are rejoicing and are finding ever ingenious ways to bring in the precious metal. Although precious dollars are still flowing out through illicit channels it is not counted in official accounts. So, that's alright then. Fiscal deficit arises from government borrowing to finance both developmental, which includes capital expenditure such as in infrastructure, and non-developmental expenditures. Revenue deficit is government borrowing to meet non-developmental expenditures, such as salaries, defence expenditure and subsidies, most of it non-productive. This the Congress is unwilling to reduce because how else is it going to buy votes for the coming general elections. Before the 2009 elections the Congress adopted the Sixth Pay Commission and increased salaries of useless civil servants by 25% and has been increasing the Dearness Allowance until it has become equal to basic pay, thus doubling their salaries. Subsidies make up 27% of non-plan expenditure of 2012-13 and the Congress has been adding to it frantically. The Congress has been hoarding food grains to make the Food Security Act a success by dishing out cheap grains just before elections. The poor would be so grateful and the release of large amounts of grains will being down prices, controlling food inflation and making everyone so happy that they will rush out to vote for the Congress. Naturally, not having proper storage 1,94,502 metric tonnes of grains have been wasted of which 84% was rice and 14% was wheat. The Congress has been forcing Public Sector companies to pay out excessive dividends. NMDC has paid out a record 850% as dividends. Now even the Reserve Bank is being asked to transfer surplus funds to help reduce the fiscal deficit. It is like trying to hide your nakedness with a handkerchief. Which part do you hide?

Why didn't they stop the plunder?

With growth rates falling, inflation soaring and the rupee teetering the economic papers are full of articles blaming the excessive spending of the Congress on useless social schemes for the mess. It is easy to be wise in hindsight but what is the point of having degrees in economics if they could not foresee the result when we could. Should they not have started a campaign to stop the Congress from bringing the country to its knees? As citizens surely it was their duty to prevent a plunder of the nation's finances instead of presenting us with postmortem reports on the carcass of the economy. One article gives us a detailed analysis of the problems. It says," Whether intended or not, the UPA government's policies amount to leaving a scorched earth for the new government." What we have said before. And again," Thanks to the UPA's fiscal policy and its inevitable monetization, the proportion of government securities that the central bank ( RBI ) is holding, exceeds the securities that the Federal Reserve is holding in the US as a percentage of GDP." " The three major charges against the UPA's fiscal spending of the last five years ( if not 10 years ) are that it has been largely unproductive, it has crowded out the private sector from the banking system forcing it to go for riskier foreign loans and it has reduced monetary policy effectiveness so thoroughly as to burden the aam aadmi ( common man ) with a relentless rise in his cost of living.....One could not have come up with a better policy concoction to eviscerate the economy." Why did he not anticipate this result when we have been saying the same since 2009. To pay for its extravagance the government has forced Public Sector Units or PSUs, which are companies controlled by it, to distribute excessive dividends. In the last 3 years PSUs have paid the government Rs 917.93 billion in dividends. Desperate for cash the government has been selling of shares in these companies cheaply. Cash stripping and forced sales have resulted in a fall in the value of PSU stocks. MMTC was selling at Rs 1030 per share in February 2011 but is now selling at Rs 48.15, a loss of 95%. Market capitalization of MMTC has dropped from Rs 1.03 trillion to a mere Rs 46.85 billion today. In total PSUs have lost a colossal Rs 6.83 trillion in market capital. If only the pundits had spoken out before and stopped the plunder.

Insult of our flag shows our poverty.

In a national insult the Indian contingent at the winter Olympics at Sochi in Russia had to parade without the Indian flag because our Olympic committees insist on electing criminal politicians as officials. A Supreme Court appointed panel has found Gurunath Meiyappan guilty of betting on cricket matches and passing on information about the team during IPL matches. " Roots of corruption and malpractices have crept in deep into the game of cricket, more particularly the IPL, and are seeping into the game at an alarming rate," the report said. But in a gesture of supreme contempt for fans and for any propriety and ignoring massive conflict of interest Meiyappan's father-in-law, N Srinivasan has got himself elected chief of BCCI which governs cricket in India. This will give him the right to represent India at the ICC. Why are sports bodies in such demand for the crooks? Because it gives them the opportunity to roam the world on our money and at the cost of our athletes. At the summer Olympics in Britain our wrestlers had no physiotherapist but there were 5 officials for a team of 3. Tiny Jamaica won 4 gold, 4 silver and 4 bronze for a total of 12 medals at the London Olympics alone while India with 1.2 billion has won a total of 20 medals in 21 Olympic Games. It is constantly amazing how these people are so completely without shame or self respect that they cheerfully bring dishonor to the country for some free trips and free food. Because these people have the mentality of beggars they have reduced the people to beggars by doling out freebies with taxpayer money which has brought down growth to less than 5%, increased inflation and seen a fall in consumer spending. Not sure of sales foreign companies are refusing to invest. The FAA in the US has downgraded India's aviation safety to grade II from grade I which will hit our airlines. In response our fellows are going to increase inspection of foreign aircraft which land in India. If they have so many technicians why did they not make a better job of checking our aircraft and if they knew that dodgy aircraft from other countries were landing here why did they not take any action before? A poor country is easily disrespected. Will the US or the EU try the same with China and why not? Because they make money in China. So China can kick back. It is so humiliating to be an Indian. All because of our politicians and civil servants.

No demographic dividend without jobs.

Seems that jobs have grown by just 2.2% between 2000 and 2012, as per the figures released by the National Sample Survey Organisation. While jobs in agriculture were stagnant, manufacturing jobs grew by just 4%. The great bulk of jobs created were in services but in the casual, lowest paid segments such as retail trade, construction and personal services, such as maids, gardeners and cooks. Thus jobs in construction jumped from 16 million in 200 to 50 million in 2012, at 17% per year. Under this government trillions have been looted in various scams, such as the 2G scam, the Commonwealth Games scam, the Tatra trucks scam, the Agusta helicopters scam and so on. Much of that black money would have been invested in properties leading to a boom in construction. Land prices have sky-rocketed in cities so the money found its way to rural areas. Vadichera is a village of 700 families in Andhra, 100 km from the nearest town, Warangal and 15 km from the Vijayawada-Hyderabad highway. Land was Rs 20,000 an acre 10 years ago, it was Rs 25,000 per acre in 2003, Rs 200,000 an acre in 2007, Rs 300,000 in 2010 and Rs 1.2 million by 2012. Construction in rural areas employed 9.4 million people in 2000 which jumped to 37.2 million in 2012, an increase of 300%. But even these low paying jobs could be under threat. Sales in fast foods have declined in the October-December quarter. Indians are unable to eat out as uncontrolled inflation and a massive rise in service taxes have reduced buying power of consumers. Service tax revenues for the government have increased by 300 times in just 2 decades from Rs 4.07 billion in 1994-95 to Rs 1.32 trillion in 2012-13. No wonder that services are contracting, the PMI for the sector in January came in at 48.3, slightly better than 46.7 in December. Any figure below 50 shows contraction. Why is the government sucking the life out of the economy with extortionate taxes. Scores of social schemes have been started to bribe the ' vote bank ', politicians have to go on ' study tours ' at exotic locales abroad and legions of useless civil servants given rises in salaries with no increase in productivity. Dearness allowance has been raised to 100% of salary thus doubling their pays. Scams and bribes do not generate jobs.

Are the pundits willfully blind?

With the advantage of hindsight people are suddenly waking up to the economic mess created by the present government, led by the Congress. The puzzle is where were these people when the Congress was wasting trillions of rupees on social schemes just to win elections. The government has raised Rs 2.3 trillion in 5 years from spectrum auctions and sale of shares in PSUs.  Last week it sold the cancelled 2G spectrum for Rs 500 billion. It has raised taxes, especially taxes on every kind of service, so severely that the sector has been shrinking. The Purchasing Managers' Index for services for January was 48.3 which is higher than the December figure of 46.7. Although anything below 50 denotes contraction this rise is seen as encouraging. Not worth boasting about in Davos is it? Now the Central Statistics Office has announced that the GDP will grow by 4.9% this fiscal. When our most revered Finance Minister and the World Famous Economist were predicting 5.5-6%. However, even this figure maybe suspect because the GDP growth for 2012-13 was revised downwards from 5% to 4.5%. The GDP in 2012-13 was Rs 54.8 trillion and not Rs 55.03 trillion as projected by the CSO in February 2013, thus providing a lower base to calculate this year's growth. How did the Congress manage to destroy the economy? The Congress has spent a total of Rs 2.3 trillion on the MNREGA scheme which pays the rural poor for 100 days of fictitious work every year. This has been whitewashed as a rural employment scheme but in reality is a blatant handout of cash. But surely the scheme has improved the quality of life for the poor and, by increasing their purchasing power, has increased consumer demand, thus helping manufacturing? Initially it did spur an increase in rural wages but by providing a base for wages it increased costs for farmers and resulted in double digit food inflation, harming the poor who spend a greater part of their earnings on food. Real wage growth, adjusted for inflation, has fallen from 11% in 2011 to 3% in 2013. Earnings of consumer goods companies show a marked slowdown in rural areas compared to previous years. Had this money been spent on infrastructure people would have had better access to markets, to education and healthcare. Question is when we have been writing since 2009 why did the pundits not see it? Or did they stay blind to support the Congress?

More states lead to more corruption.

The Congress is set on dividing Andhra into Telengana and Seemandhra. Some say that it is to reduce the power of the Reddys, who own most businesses in the state, and others say that it is to defang Jaganmohan Reddy who could grab a large chunk of parliamentary seats in April. Whatever the reason we can be sure that it is not in the interest of the people of Andhra. It is the old divide and rule that the Congress inherited from the British and has been using with great success since. Divide the country into states depending on language, divide the people according to religion by giving special privileges to ' minorities ' and divide Hindus by classifying different groups into Scheduled Caste or Other Backward Castes. Jains are to be classed as a ' minority ' group although they are mostly extremely rich and there has never been any quarrel between Hindus, Buddhists and Jains as these religions were born in India and were not imposed by murderous conquerors who converted locals by force. The other reason to create smaller states is to give second rung politicians a chance to get a share of power and the spoils that come with it. Thus when Uttarakhand was carved out of UP it got a separate assembly with 70 seats and Dehradun as its capital. Land prices immediately began to soar as opportunities for collecting sacks full of black money were gleefully exploited. When Maj General BC Khanduri became Chief Minister he started to crack down on corruption and on the land mafia. This created enormous opposition and even people of his own party, the BJP, went against him. The crooks poured vast amounts of money into general elections in 2009 and the BJP lost all 5 seats in the state to the Congress. In panic the BJP forced Gen Khanduri to step down but as corruption spiraled out of control people became increasingly angry and disenchanted with the BJP government. So Gen Khanduri was brought back in 2011 to clean up the mess but could not prevent losing state elections in 2012. Indeed his opponents within the BJP worked against him to ensure that he lost his seat. The best solution would be to get rid of state governments and municipalities elect small councils to govern each district in the country. That will give power to local communities to manage their own affairs at grassroots level without being imposed upon by distant tyrants.  

We desperately need proper economists.

The Finance Ministry is so keen for domestic investors to buy stocks of Indian companies that it has started a Rajiv Gandhi Equity Savings Scheme which will give tax relief on investment up to Rs 50,000, in shares. If numerous people invest small amounts in company stocks it will increase market capitalisation of the companies, allowing them to invest in new projects creating more jobs, there will be less money for buying gold, which will help the Current Account Deficit, and reduce the influence of Foreign Institutional Investors who can move their money to other markets causing our markets to tank. But people are not buying. Why? Because our markets are highly manipulated by large brokers, such as Ketan Parekh, because the government is not to be trusted and because the hot money brought in by the FIIs can flee at any time. As a relic of the socialist era we still have government companies which are known as PSUs. Some of them are very good and make excellent profits. To reduce the fiscal deficit to below 4.8% the Congress is desperate to raise funds by selling of some of its stake in these companies. In 2012, the government put 427 million shares of ONGC on the block but priced the issue so high that there were no takers. Eventually, the Life Insurance Corporation, another PSU, bought 377 million shares at a total cost of Rs 114.26 billion to save the Congress. This time round shares are being sold off at discount rates to entice buyers. Individual investors have lost Rs 500 billion because of the resultant fall in market prices. Last January Engineers India was selling at Rs 229.50 per share but now the same share can be had at Rs 140-150. Thus EIL has lost 40% of its market capital worth Rs 30 billion. " It is not good market economics to sell family silver at discounted prices, which is detrimental to investor interest. The government is discovering sale price of PSU companies at lower levels; we fear this will destroy the market capitalisation of state-run companies," said Deven Choksey, MD of KR Choksey. So on the one hand the Congress wants people to buy shares and on the other by destroying market value they are scaring off investors. Because they are desperate for money because they have wasted the country's finances. When we could see it why did our pundits miss it?

All of us cannot be politicians.

Politicians are a special breed. To be successful in politics you need to start early. Find a leader that you can latch onto. Serve the leader without questioning his crimes, including plunder, rape and murder, always taking care to have an alibi so that you can deny any knowledge later. At the appropriate time stab the leader in the back and take over his constituency, tell any lie to deceive the people and embrace the nastiest villains with unctuous smiles, always prepared to betray or be betrayed. Once in power loot the treasury, travel the world in first class comfort and start grooming your vile children to take over whichever party you belong to. If, due to serious bad luck, your crimes are exposed deny everything, allege conspiracy by your opponents and the police or darkly hint at black ops by an unnamed foreign power. Be totally shameless at all times. Keep repeating that you have dedicated your life to the service of the people and the huge bungalows, Z+ security and first class foreign travel are all a huge sacrifice even as patients die because they are stuck in traffic while your cavalcade with flashing lights takes precedence over all other citizens. All politicians are of the same ilk but Indian politicians are special in that they have absolutely no qualms about sacrificing the nation with its 1.25 billion people, to win elections. The Congress won elections in 2009 by embarking on a colossal spending spree to bribe voters. The MNREGA scheme has cost over Rs 2 trillion since 2006, the farmers' loan waiver cost over Rs 700 billion and the Sixth Pay Commission increased civil service salaries apparently by 21% and cost Rs 480 billion. However, these figures hide the facts that MNREGA is linked to inflation and has already more than trebled, farmers have taken new loans which they have no intention of repaying and civil servants are given a non-performance bonus, called Dearness Allowance which is equal to their basic salaries. Not only that. An officer earning Rs 10,000 per month will not dare to demand bribes exceeding Rs 1 million but if he is paid Rs 100,000 per month his Bribe Price will increase to Rs 100 million adding to corruption costs. The Congress is up to its old tricks again, announcing a Seventh Pay Commission, education schemes for Muslims worth Rs 160 billion and increase in subsidised domestic gas plus other schemes. Only the really lowdown can betray their country. Not easy.

Rich countries always control inflation.

Since 2009 we have been writing that inflation was the biggest danger to the economy and that the Reserve Bank was woefully slow to increase interest rates. In fact the blunder was committed in 2007 when inflation was just above 4%, oil was around $65 per barrel and the rupee was 39 to the dollar. That was when the RBI should have increased interest rates above the rate of inflation which would have brought inflation down to below 3% and encouraged savings by giving positive returns on bank deposits. That would have reduced the Current Account Deficit or CAD and increased genuine investment, as banks would be flush with funds to lend, while discouraging a debt boom which is causing Non Productive Assets of banks to rise to uncomfortable levels. The RBI should have bought dollars, building up reserves of over a $1 trillion, which would have protected the rupee today when the Federal Reserve is reducing its bond buying program. The lower value of the rupee would have made exports cheaper, earning more foreign currency, and imports more expensive, curtailing consumption, thus  reducing both inflation and CAD. Instead the RBI acted as an agent of the Congress using the strong rupee to control inflation by keeping imports, especially oil and gold, relatively cheaper. At last someone has had the courage to speak up. Maybe because he is a Managing Director ( Research ) at Morgan Stanley and could be living abroad. He has made the same point that the RBI was too slow in raising interest rates and has advised adoption of the Urjit Patel committee report which recommends controlling the Consumer Price Index which is around 10% rather than the Wholesale Price Index which is much lower at around 6%. The Congress would like interest rates to be brought down to make consumer loans cheaper, to encourage sales, and cheaper housing loans, to increase black money, and create a false feelgood factor before the coming elections. Inevitably a stooge writes that the Bank of England is concentrating on growth rather than on inflation. Absolute lie. The CPI in Britain is at 2%, food inflation at 1.5% and shop prices have actually fallen by 2.7% in January creating deflation fears. It maybe amazing for us that there are people still willing to lie for the Congress when it has betrayed the country so spectacularly. It is people like this that has made India weak.

India could be conquered easily.

In an incomprehensible attack Nido Taniam, a 19 year old student from Arunachal Pradesh was killed by some men last week. Apparently the teenager got into an argument when a shopkeeper in Lajpat Nagar made comments on his hair and appearance. The attack is incomprehensible because the shopkeeper had no business making any comments on Nido's appearance, should have apologised when Nido objected and then, what is absolutely impossible to forgive, should not have instigated an attack of such severity that the boy ended up with severe injuries to his brain, lugs and internal organs. Then couple of days ago 2 women from Manipur were beaten up at Kotla Mubarakpur. People from Bengal, Assam, Manipur, Nagaland, Tripura and Mizoram are Indian citizens with as much right to travel, work or study in any part of India. The press claims that the locals call them ' chinkis ' which is derogatory for Chinese. But it is not that these people are mistaken for Chinese and so ill treated because China is seen as an enemy of India. After all the same thugs have no qualm buying goods made in China. In December 2011 a young woman from Uttarakhand was gang raped and almost disemboweled in a bus in Delhi. She died a few days later. And she looked no different from Delhi people. In the beginning politicians took no notice of her but when thousands started to protest her corpse was sent for a round trip to Singapore, in a waste of public money, to fool the people. This time, with elections round the corner politicians, in an act of utmost hypocrisy and cynicism, have joined protests. Is it something in the air and water of Delhi that makes people behave like mad dogs or are all Indians such vicious savages? Is it because our politicians are constantly dividing people based on region, religion and caste to get elected? The irony is that China claims Arunachal Pradesh as part of itself. Do these morons want to drive the people of Arunachal into China? Meanwhile 3 policemen have been suspended because 7 buffaloes, belonging to Azam Khan of Samajwadi Party in UP, went missing. The police went into emergency mode and the buffaloes have been found within 24 hours. When buffaloes are more important than citizens is it any wonder that our diplomat was sexually assaulted in the US on false charges?
 

You cannot control fire with petrol.

Seems that Indians are unable to save as much as before as they are having to pay ever increasing costs to maintain their standard of living. The reasons are purely due to actions by our government. School fees have risen by a mind-numbing 433% between 2004 and 2013. Why? Because the Congress has increased salaries of teachers in government schools, who are not properly trained and do not come to work half the days, by over 80%. To get their votes. Naturally salaries of teachers in private schools have risen, although by not as much. Then the Congress passed the Right to Education Bill which forces private schools to reserve 25% of seats for students from poor families for which the government pays token amounts to each school. To raise money for the handouts taxes have been increased by equivalent amounts, raising costs still further and forcing consumers to reduce consumption. The other way the government has been financing its wasteful spending is by forcing public sector companies to increase dividend payouts instead of spending on new projects which will increase employment. The MNREGA scheme which hands out packets of cash to the rural poor, for doing nothing, is linked to inflation. It started by paying out Rs 69 per day for 100 days in a year but last year Haryana was paying Rs 214 per day and is probably paying even more this year. Since this puts an ever rising lower level on wages for rural labor farmers have been increasing prices for their produce to make profits. The Congress has introduced a Right to Food Act which seeks to provide rice at Rs 3 a kilo and wheat at Rs 2 a kilo to 800 million poor people. To do this the government offers a Minimum Support Price to farmers for producing cereals. This underpins the market price at a higher level and encourages farmers to demand even higher prices at the next harvest. High cereal prices lead to higher prices for milk, eggs and meat as the price of fodder rises in conjunction. Couple of months back sugar mills in UP were refusing to buy cane at the price set by the government because the international price of sugar was so low that they would make losses. Farmers are encouraged to divert land to the production of cereals so costs of vegetables soar. The government then hoards cereals to distribute it just before elections, leading to rotting of vast quantities. When inflation is stoked by the government it cannot be controlled.