Saturday, November 29, 2014

Please don't snatch away our heroes.

Men love sports. Even those of us who are not equipped physically to be great at sports love to watch top players battling each other for victory. Whether various games were invented as surrogate for war we do not know but the passion of supporters who are prepared to travel hundreds to miles to support their team is obvious. Even an indoor game, which is played sitting down, like chess, is pure warfare. There is a king, a queen, 2 knights, 2 castles, or rooks, and 2 bishops. You win by capturing the king, as in a real battle. In contact sports, such as boxing, rugby, ice hockey and American football there is real danger of serious injury, even death, and we can only imagine the enormous courage it must take to participate in these sports. Although not really a contact sport batting against fast bowlers in cricket can be dangerous as the death of Phil Hughes of Australia has proved. To stand tall against a hard ball coming at you at over 140 km per hour and then to twist around to hook it for runs needs fast reflexes, keen eyesight and nerves of steel. There was a time when Indian batsmen were so scared to face bowlers like Hall and Griffiths that 2 wicketkeepers, Kunderan and Engineer, were picked to open the innings for India. That is why Sunil Gavaskar who opened against fast bowlers in a floppy hat was a great batsman. Raman Lamba died when a pull shot hit him on the forehead and 2 days back an Israeli umpire died when hit by a ball on his jaw. These are freak accidents which cannot be prevented. Phil Hughes was hit on his neck while trying to pull a bouncer. The death of a young man is always sad but to postpone the first test match at Brisbane because of his death is an insult to his memory and to the pleasure he gave to thousands of people by his fearless batting. His death seems to have released a whole bunch of wimps who would like to ban bouncers or encase batsmen in body armour for protection. Why not play with rubber balls and bowl under arm? In western countries parents are stopping children from playing outdoors for fear of injuries or sexual predators. Stuck indoors children play violent video games, watch pornography online or fall prey to online pedophiles. Today, politicians are passing laws restricting individual freedoms in the name of security, political correctness or the environment. They are monitoring our phone calls, cctv cameras monitor us wherever we are or whatever we are doing and advances in biometrics are stripping us naked in public. Sport is the only arena left where we are still free, where we worship our heroes unashamedly and where we rejoice their success or mourn their failure with them. Even this last freedom they want to snatch away from us. 

Friday, November 28, 2014

Robin Hood policies do not work.

According to IMD, a management institute in Switzerland, India has slipped from 29th in 2005 to 48th position in 2014 in the ability to develop, attract and retain talent. Women's participation in the labor force fell from 31.65% in 2005 to 25.30% 2014 as opposed to 46.16% in Switzerland and 37.03% in Malaysia. We are told that this is because women are choosing to study longer. Which means that men are earning so much that families can live comfortably on one income, but this is belied by the large numbers of children who are working as household servants or in hazardous industries, or begging on the streets. Maybe poor women are choosing to stay at home to have more children to avail of the various handouts started by the Congress, to buy votes. Apparently, a big reason for career women to drop out of work was to look after elderly parents, therefore we need to have a system of pensions and free healthcare for the elderly so that women are free to work. Subsidies in India are ' targeted ' at the poor which only encourages them to have more children, thus increasing the numbers of the poor. In Bangalore parents sold 3 of their daughters to two men who abused the girls. The girls managed to escape once but were sold again to the same two men by their parents. This unrestrained increase in the number of humans is resulting in shrinking habitats for wild animals so that India has the largest numbers of threatened species in the world. First we have to create talent and to do that we need quality education. An assessment of 300,000 students across 29 states has found that only 38% of women and 34% of men were employable, an average of 37%. This is apparently an improvement from last year when only 34% were employable. Three cheers all round? Students in parts of India consider cheating to be their birthright. Children of the rich are able to buy degrees from private colleges while children of politicians swank around with degrees from third-rate foreign universities, on taxpayer money. How can children compete when teachers do not teach? India has the highest number of public holidays in a year. Add 52 Sundays and 52 Saturdays and summer and winter vacations, meaning children are being taught around 5 months out of 12, every year. Our top students cannot wait to escape to foreign countries. That is because the quality of education is much higher in western universities, the quality of life is vastly superior and there is a safety net for everyone. Robbing from the middle class to pay the poor may win votes but results in greater poverty all round.

Thursday, November 27, 2014

Create more wealth inside India.

An article by a leading industrialist of India gives a clarion call to transform India into a manufacturing hub by listing all the actions that have to be taken by the government. Manufacturing constitutes only 15% of our GDP as against 34% for China, 31% for Korea and 22% for Germany. Apparently according to the World Bank India is 142nd out of 189 countries in the " Ease of doing business ", 179th in the " Ease of starting a Business " and 186th in " Access to electricity ". The article demands less regulations, better infrastructure and better training of young people. Blah, blah. We know all that. What is missing is what industrialists should do to improve manufacturing in India. India has 100 dollar billionaires, 1 billion being 100 crores. They are citizens of this nation and have earned their wealth from here so surely they have some responsibility towards their motherland? After all even with all the hurdles India boasts the largest oil refinery in the world at Jamnagar and Hindalco is the largest aluminium rolling factory in the world. Our pharma companies are very adept at reverse engineering expensive drugs which are still under patent protection but choose to import from China 80% of active ingredients of medicines sold here. The sad truth is that industrialists have happily grown wealthy through a system of crony capitalism in which they were active partners for 67 years. They paid election expenses of political parties so that whoever won the status quo would be maintained. Mobile phone numbers were made portable in 2011 but we are still paying roaming charges. Why? Our car manufacturers have refused to install minimum ' safety features ' because that will increase prices and may reduce sales. Companies hide key information from investors, which maybe one reason why retail investors avoid investing in shares. Companies have taken huge amounts of loans from public sector banks with the deliberate intention of defaulting on them. Here is what the Governor of the Reserve Bank had to say recently," In India, too many large borrowers insist on their divine right to stay in control despite their unwillingness to put in new money. The firm and its many workers, as well as past bank loans, are hostages in this game of chicken - the promoter threatens to run the enterprise into the ground unless the government, banks and regulators make concessions necessary to keep it alive. And, if the enterprise regains health the promoter retains all the upside, forgetting the help he received from the government or the banks; after all, banks should be happy they got some of the money back." Pretty devastating, what? Wealth gives enormous power. Grow rich with us and not on us.

Wednesday, November 26, 2014

Breathing increases global warming.

Seems that the air in Delhi is so polluted that it is impacting the health of citizens. No argument about that, it is the suggested remedy that is debatable. There are many reasons including still air, winter mist and fog, which traps particles, and the burning of leaves which fall from trees in the autumn. No one is prepared to take on the sweepers from burning waste. One major reason is the burning of straw by farmers in surrounding states after collecting harvest. Will state governments stop farmers from burning straw and will farmers listen if requested? No. One solution would be to invent new technology to help farmers get rid of straw without burning. Perhaps buying up all the straw to produce bio-fuels maybe an alternative. Another solution constantly touted is stopping people from buying cars. To force people to use public transport the government has increased parking charges by up to 10 times. One doctor has filed an Public Interest Litigation to restrict people from owning cars because vehicular pollution damages unborn babies. Why do people try to reduce our freedoms to lead our lives as we want when the government is constantly passing laws hostile to citizens. Politicians are elected to represent us so why should they not be role models? Why not a PIL to restrain politicians from using cars, to force security personnel into one car and to restrict the numbers of air travel allowed? The US has 809 motor vehicles per 1000 people while India has a measly 41 motor vehicles per 1000 people, according to official figures. There 3 countries with more vehicles than the US but none of them is trying to stop people from owning cars. How is it that babies are not affected in the US but they are affected here? Why is it alright for a maid to come by car in the US but we are to be stopped from owning cars? A major reason why people, especially women, travel by cars despite traffic jams, absence of parking spaces and a hostile police is because of safety. Crime rates jumped 100% this year and the death of a young woman from gang rape in a Delhi bus is still fresh in our memories. There is never a single policeman on Delhi roads although there are innumerable police barricades creating jams, for unknown reasons. Taxes on cars are so high the a Vice President of Honda complained that cigarettes are cheaper. He need not fret any longer. Taxes on cigarettes have been increased but bidis, smoked by the poor, will still be cheap. Maybe we should all smoke bidis as we have our pockets picked in crowded buses. CO2 is a major cause of global warming and humans produce CO2 while breathing so why not a tax on breathing. Kill 2 birds with one tax.

Tuesday, November 25, 2014

Crooks and cuckoos, we have them all.

Scarcely 24 hours after we wrote about the bad law to force motorists to get pollution certificates for their cars every 3 months, by denying them petrol, came the report that a staff at a petrol pump in UP was shot in the leg when he refused petrol to motorbike riders for not wearing helmets. Right next to that was a report that pollution checking centers were using pirated software and the certificates issued by them were worthless. Apparently there are not enough inspectors to check vehicular pollution so the government is passing it on to petrol pumps. It would be so much better if, instead of forcing checks every 3 months from petrol pumps, the law allows checks at the time of servicing. Modern cars need servicing every 10,000 km, so someone driving 100 km a day will need to service his car every 3.5 months and those who drive little have to get their cars serviced once a year anyway.  Also a major cause of pollution is adulteration of fuel with cheaper alternatives. Since fuel is totally under its control it is the government's duty to ensure purity. It must take away the price difference between petrol and diesel by adjusting taxes, so that both cost the same as in other countries, and add a harmless color to kerosene to make it stand out. Sadly, our politicians see themselves as our masters and not as servants. The Health Minister of Chhattisgarh has admitted that zinc phosphide, a rat poison, contamination in antibiotics resulted in the death of 13 women who underwent tubectomy. Not just that, capsules contained just 200 mg of Ciprofloxacin instead of 500 mg. Not just shady companies, even major pharma companies are selling substandard medicines. Crimes need to be investigated. But by whom? The Director of the CBI, our ace investigative agency, has been told to stand down from the 2G scam investigation by the Supreme Court for trying to protect some of the accused. As is usual, he has refused to resign and will retire in December with full pension, just as BB Mohanty did. No sharam, no izzat. We elect politicians to pass laws to serve us and to keep officials under control. Can they? A Trinamul Congress leader has alleged that the bomb blasts in Burdwan was a conspiracy between BJP and the CPM. Er, so 9/11 was a conspiracy by the CIA and flight MH 370 was plucked out of the air by aliens from another galaxy. With crooks everywhere we need our judges to punish them with long jail terms. Right? Apparently, 300 lower court judges are being probed for irregularities in buying computers and laptops. Crooks and cuckoos, no wonder we are the most optimistic nation on earth.

Monday, November 24, 2014

A law for logic?

The Second Amendment of the US constitution has become sacrosanct so that any politician may get away with breaking a commandment but dare not try to amend this amendment, even though children are being killed regularly. Clearly written laws, which are imposed impartially, provide the necessary framework for society to function, without which you have anarchy and chaos, as has happened in Libya where the parliament has taken refuge in a Greek ferry, for safety. Dowry, where a woman's family pays a man to marry her, is unacceptable. In the past, when property and wealth passed only to sons, it probably made sense to present daughters with gold and money at the time of marriage but it makes no sense today when girls, and even illegitimate children, have equal inheritance rights. But the practice continues because parents think that it is worth spending a fortune to buy superior grooms for their daughters. Trouble is, that men who are prepared to be bought, demand even more after marriage, perhaps in the mistaken belief that it increases their worth, and torture their wives to get more from their parents, often resulting in the death of the women. To stop the practice of dowry and ostensibly to protect women the government enacted Section 498A of the Indian Penal Code which makes it a criminal offence to treat a woman cruelly. Has it stopped the practice of dowry? No. Very few of these cases can be proved in court and women have used the law to take revenge on their husbands, or in laws, if the marriage failed due to other reasons. Does it mean that really vulnerable women should not be protected by the state? Again, no. In every case of dowry killing that is reported we find that the woman had informed her own parents of being tortured and her fears of being killed but her parents did not rescue her or inform the police because they spent so much money on her marriage. It is a form of honor killing and the woman's family are accessory to her death and should be prosecuted. Only then will this heinous practice stop. Seems that the government is deliberating a law that will punish people for employing children. Apparently middle class people are employing children as servants thereby depriving them of education and scarring them psychologically for life. When politicians and journalists drive around in our cities do they have their eyes closed? Whose fault is it that little children are begging at every corner, dodging in and out of traffic and being sold to child traffickers? India is probably the largest baby factory in India where foreigners, maybe even pedophiles, can get surrogate mothers to deliver babies for sale. People should not be allowed to produce children for profit. Any law for that?

Sunday, November 23, 2014

The new British.

To force Indians to buy their textiles the brutal British cut off the thumbs of weavers in Bengal whose muslin was so fine that an entire yarn could be pulled through a man's ring. Today, if you drive from Manchester to Stockport you will see the ruins of those mills with broken window panes, plaster falling off the walls and weeds growing in the gardens. We have got rid of the British but our politicians are using the same rotten system to beat us into submission. A half page advertisement in Saturday's newspapers warns us that any car bought before 2010 must undergo pollution check every 3 months and display the disc, failing which they will not be allowed to buy petrol and be fined Rs 2000 every time the car is stopped by the police. How can any car become polluting within 3 months unless it is used commercially? Trucks and buses are not mentioned and government vehicles are probably exempt too. This is another dastardly effort to extort money from the middle class. Not just money but we will have to wait hours in queues to get our cars checked, thus wasting our lives in front of petrol pumps. Or, maybe this is to force us to buy new cars because sales have been poor even during the festival season. And what happens if a car fails and the owner, say a pensioner, does not have the money to buy a new car? To pay for its social handouts to buy votes the Congress increased taxes on everything, raising prices and bringing the economy to its knees. This government promised to be different but since it has come excise duty on drinks has jumped and circle rates on real estate have been hiked by up to 20%, raising prices to prohibitive levels. Ordinary people cannot even dream of buying any property and are forced to pay high rents which keeps them poor forever. Why is it so difficult to understand that high taxes inhibit growth by reducing demand and frighten investment away from India. Ask Marten Pieters, CEO of Vodafone India. Politicians are crowing about a G20 deal on sharing of bank information which will apparently help India to bring back black money. You maybe able to stop money being stashed abroad but you cannot stop any country from keeping taxes low to attract investment, as many countries are doing. High taxes not only drive away new investments but are killing our domestic industries. Low cost airlines in India charge more than double the rate in Europe. Politicians are no fools. So they must have reasons. They have an insatiable appetite for money to give themselves luxurious lifestyles. The Brits cut thumbs while our lot suck our blood. No different really.

Bank leaks have to be plugged.

Public sector banks are busy restructuring debt to hide the amounts of bad loans. They have extended the period for repayment, converted loan into equity or given new loans to cover the old ones. However, about 20% of restructured loans turn bad as companies cannot or do not repay them. Even some home loans are beginning to turn sick which is unusual in India because a large part of the price of any residential property is paid in cash, or black money, so the owner will cut every expense but continue to pay monthly EMIs to prevent foreclosure. The weak economy has reduced profits and high interest rates increase cost of loans leading to financial distress for companies. But a big reason is that loans are issued by bank officials in return for expensive gifts or on instructions from politicians. Regulators have turned a blind eye to this cozy relationship which has resulted in rising bad loans for public sector banks. Many used loans to invest in the real estate sector where rapidly rising prices meant that profits could be multiplied in the shortest possible time. Land was acquired through political influence and apartments were sold at inflated costs. Taxpayers and investors lost out. Alarmed at the rising levels of bad loans the government and the Reserve Bank have been exerting pressure on banks to clear up their books. Banks, in turn, are turning the screws on companies which are finding it difficult raise funds. In desperation some are resorting to raising money from abroad but without adequate hedging against currency fluctuation, expecting the Reserve Bank to keep the exchange rate steady at current rates. According to one study one in four of the top 500 companies could come close to defaulting on their debt in the next 5 months. A lot depends on what the Federal Reserve does next year, which depends on the direction of the US economy. In the US profits are beginning to rise, jobs are being created again and the stock market is booming. On the other hand 10-year bond yields continue to be low, showing that the market expects inflation to remain soft for a long time to come. Since inflation is linked to increasing demand, which is created by rising wages in a growing economy the markets seem to suggest soft growth in the near future. We will know in the coming months. If interest rates start to rise in the US money may flow out of India leading to a fall in the rupee exchange rate which will raise inflation by raising the cost of imports, especially oil. Some expect the economy to grow strongly and are calling for interest rates to be cut by 100 basis points to stimulate growth but there maybe pitfalls ahead. There should be a law on how much a company may borrow.

Saturday, November 22, 2014

A hopeless city without any joy.

When Kim Jong Il of North Korea died in 2011 news channels showed pictures of grown men and women sobbing in offices, as they walked on roads or travelled in trains. It was a shocking display of brain washing of a people so that they were reduced to terrified, soulless puppets. It was comical, tragic and inexplicable. Surely, we Indians are not like that? While we have been conquered and butchered by brutal foreigners there has always been dissent and rebellion. Or, maybe we are not so different after all. When Ms Jayalalithaa was arrested in September 10 people died of heart attacks and 6 committed suicide. However, to get some idea of why all the people in North Korea have been reduced to complete submission you have to visit Kolkata. People here seem defeated. They live in tiny flats, some as small as 500 sq feet in area, in dirty buildings, which have not been painted in years, down lanes so narrow that a small car and a bicycle cannot pass each other. These are doctors, accountants, engineers and surveyors who have worked all their lives. The whole city has a feeling of decay. It is proud to be called the ' City of Joy ', from a book by a white man, which describes the city as a slum. Thirty years of glorification of poverty by communist governments has destroyed its spirit. Bengalis who rejected poverty have left, those left behind do not seem to have any ambition to better themselves. Years of strikes and union thuggery drove away all manufacturing from the state. Groups of young men sit around gossiping, ready to be hired by any political party to create mayhem. The present government of Mamata Bannerjee came to power by preventing Tata from setting up the Nano car plant at Singur. Naturally, no company wants to go anywhere near Bengal. To increase its membership the party has allowed Bangladeshis to flood in unchecked, who have set up bomb manufacturing units all over the state. To win elections the party has been using the old tactics used by the CPM to stay in power for 30 years, which is by frightening people from voting. To do that you need an army of goons, and goons need to be paid, so money has been raised through massive scams, which are gradually being exposed. Roads have been improved and flyovers built. Traffic police are everywhere and road rules are strictly enforced so there is no jam. Because police are around till after midnight the city is much safer than Delhi. But the overall impression is of crowds of sad looking people with black feet and arthritis shuffling painfully into oblivion. Terribly sad.

Thursday, November 13, 2014

Logical solutions, not emotion, are necessary.

To our shame news channels all over the world are reporting on the death of 15 women who underwent a routine sterilisation procedure, tubectomy, at a camp organised by the state government of Chhattisgarh. Trouble is that reports are mostly emotional with stupid comparison to Nazi eugenics programs. The reason why sterilisation is offered to poor people is because they have many children while the middle and rich classes have very few. Children of the poor are poorly nourished, cannot afford routine immunisation, are sent out to work by their parents because they are unable to feed them and remain illiterate, continuing poverty from one generation to the next. Repeat pregnancies, poor nutrition and unending housework ruins the health of the mothers. Contraception is vital if poverty is to be removed and the health of women and children are to be protected. Condoms maybe supplied free but women cannot force their husbands to use them. Oral contraceptives are expensive and have many side effects and intrauterine devices may cause infection due to poor hygiene. Tubectomy is a minor procedure, is permanent, not dependent on the whims of men and has no long term side effects. As is usual the doctor has been arrested although he claims to have carried out thousands of such procedures without any mishap and has blamed substandard drugs provided by the government. Also, as usual, a judicial probe has been ordered by the Chief Minister, which will take forever and the report may never be published, and after a while things will continue as before. When police raided premises of the pharma companies they found one of them was operating from a residential area with just 2 employees and one company tried to destroy evidence by burning all their stocks. How do these companies get their licenses? By bribing politicians, of course. India has hundreds of such companies making substandard drugs, which they sell by offering large margins to chemists. There are more than 350 brands of amoxycillin alone. If doctors started prescribing generics, as they are being urged to do, chemists will choose those brands on which they get maximum profits, in other words junk formulations. Trained doctors with recognised degrees are required to undergo Continuous Medical Education but no funding will be provided and drug companies have been banned from sponsoring. Yet untrained fellows can do whatever. So say our hon'ble judges. They claim to have suffered because of unnecessary tests. Really? What will be the punishment if a diagnosis was missed because tests were not done? Have we all gone bonkers? Going to Kolkata. This blog will return on 22 November if we survive Bangladeshi bombers supported by Trinamul. 

Depends on who you ask.

Retail inflation has dropped to 5.52% in October compared to 6.46% in September and Industrial Production has increased by 2.5% in September but manufacturing growth is still sluggish. Right on cue our most esteemed Finance Minister has called for cuts in interest rates. " I think interest rates now need to be moderated. That is one important factor. Inflation has been helped by both moderation of food prices in India and also global oil price. And I do hope the RBI bears this in mind," he said. He is not alone. Group Chairman of the Mahindra group, Anand Mahindra also called for a rate reduction. The Mahindra group sells SUVs, like the Scorpio, and is heavily into tractors, most of which are bought with bank loans. Car sales declined by 2.55% in October, despite the festivals when sales usually spike, although sales have increased by 3.03% since April. Indeed, there are many reasons to support a cut in interest rate. Global food prices are the lowest in 4 years, the price of crude oil has fallen by over $20 a barrel, growth in China is softening and commodity prices are down. We may expect retail inflation to fall further, so there is a strong argument in favor of lower rates. But economic growth is not solely dependent on interest rate. We have the highest tax rates in the world which increase prices and reduce spending. To reduce taxes the government has to reduce its expenditure, which it is unable to do. Lower commodity prices are helping to reduce subsidies but why are electricity rates increasing when fuel prices are going down? The thinking is that lower interest rate will stimulate growth, which will increase tax collection, which will reduce fiscal deficit, which will reduce inflation and stimulate growth further. It is most interesting that construction companies, whose earnings are dependent on mortgages, are not joining in the chorus for lower rates. That is because circle rates have been increased so high that the real estate sector is in danger of seizing up. Some say that there is no real evidence that low rates stimulate growth. With zero percent interest rates the US and UK are showing signs of growth but Japan and Europe are stagnating. Figures show that Britain is a more prosperous country than Germany but there are those who see scary figures hiding behind the rosy outlook. Instead of arguing about high or low interest rates the RBI could go for neutral real interest rate, which would be neither tight nor loose. A Goldilocks rate, as it were. According to the IMF, that should be 150 basis points higher than retail inflation rate. Which would be around 7.5%. In this high decibel argument who should we believe, the politicians or the Governor of the Reserve Bank, Raghuram Rajan? Poor us.

Wednesday, November 12, 2014

We were right all along.

For years we have been writing that taxes in India are the highest in the world but this was based on personal experience because there were no figures combining all the taxes levied on goods and services. Now there is. The government is keen to set up a uniform tax rate across India, called the Goods and Services Tax, which will combine all the taxes to one transparent rate, thus avoiding a cascading effect of different rates in different states. This will help business and bring in foreign investment, which the country sorely needs. A committee was set up to recommend one rate which will be acceptable to all the states and came up with an eye watering rate of 27%. Apparently this will be revenue-neutral, meaning that this is what consumers in India are having to pay at this moment. The committee arrived at this extortionate rate by calculating taxes collected in 2011-12 and says that a final figure will be calculated after last year's collections are taken into account. Even this is not enough for state governments which want to tax petroleum products separately. Which country in the world punishes its citizens with such exorbitant taxes? GST in Singapore is just 7% and see how rich it is. Indirect tax rate in Sweden and Denmark is 25% while top rate of income tax is 60%. Indeed, but both countries provide social security to all citizens. Regardless of class and social standing. Sweden provides for education, healthcare, maternity benefits, pensions and disability. For the poor there are supplementary benefits provided by municipalities. In India municipal corporations are all corrupt. There are thousands of ' ghost employees ', that are employees who do not exist but someone collects their salaries. To construct a house you will have to pay bribe to register your land, for your plans to be passed and to get a completion certificate. Roads are repaired superficially, so that huge potholes appear after one shower, and the money is divided between the contractor and officials. In Denmark healthcare is free for everyone and pensions are available to everyone " regardless of class and social standing ".  In India benefits are ' targeted ' which means that only the poor can avail of benefits. In parts of Andhra 95% of people applied for benefits with Below-the-poverty-line cards. If benefits are available to everyone the middle class will be assrured that there is a safety net then they will spend more, take higher mortgage and stop buying gold. That will stimulate very high growth. Tax at 27% adds to inflation and destroys demand. Then there are surreptitious taxes, such as the Right to Education, which is a tax on the middle class. We were so right.

Monday, November 10, 2014

How to pay for 66 ministers?

In 2011, Rod Blagojevich, Governor of the state of Illinois in the US was sentenced to 14 years in prison on 18 counts of corruption, including trying to sell Obama's seat in the Senate, which fell vacant when he was elected President, for campaign contribution or personal gain. Apparently the state governor can nominate a person to a seat, that falls vacant due to unforeseen circumstances, until a bye-election can be held. Sadly, in India being corrupt is no bar to getting elected or becoming a minister. Becoming a member of parliament is so lucrative that it is worth an ' investment ' of Rs 1 billion. Imagine the returns on becoming a minister, especially someone who controls resources, such as mines, or public sector companies, such as railways or Air India. The previous Minister of Civil Aviation, Praful Patel must love his daughter so much that she was allowed to divert an Air India flight for a cricket game in 2010. Also in 2010 Air India used a bigger aircraft on a flight to Maldives to accommodate the in laws of Patel's daughter in first class. 47 seats in economy class remained empty on the outward journey and 52 seats were empty on the return flight. Patel is presently in the Rajya Sabha, a safe haven for anyone who does not want to face voters. Having promised minimum government with maximum governance the present Prime Minister has expanded his cabinet to 66 ministers. The United States, a $16 trillion economy has only 23 members in the cabinet while India, at less than $2 trillion needs 66. Why? How is it any different to the 73 member cabinet during the Congress regime which used posts as bribes to other parties to hang on to power for 10 debilitating years? Seems that the present Prime Minister is using cabinet posts to please different castes and interest groups with an eye to coming elections in important states. It is important to win state elections because Rajya Sabha members are elected by state assemblies and Modi needs a majority in the upper house to pass important legislation, especially regarding economic reforms. Opportunists who have fled other parties have been rewarded. All these ministers will need vast sums of money to do their work. Large bungalows, Z plus security, a posse of cars, various staff to carry their heavy workloads, study tours abroad and so on. Perhaps to pay for all that the government has decided to increase excise duties on petroleum products. On the one hand reducing the prices of petrol and diesel will bring down inflation so that politicians can pressure the Reserve Bank to reduce interest rates, while on the other hand it makes sense to increase taxes on these products because their prices have been factored in and if international prices rise suddenly taxes can be reduced to ease the burden. Also the extra cash will be very welcome indeed.

Sunday, November 09, 2014

Catch 22 of official secrets.

On 6 November, one officer of the Indian Navy died and 4 are still missing, despite a wide search. They did not die trying to earn honor by fighting for India against enemy attack but drowned when their ship, a torpedo recovery vessel, sank off the coast of Vishakhapatnam when water flooded into the engine room and a steering compartment, when one seal gave way. The list of accidents involving our naval vessels make sick reading. Torpedoes exploding, ships running aground, fires breaking out, collisions with other vessels and water flooding in, a shocking list of incompetence and poor maintenance. The loss of aircraft by our air force is even more disastrous, 872 MIGs lost, at a cost of hundreds of billions of dollars, with an unacceptable loss of 200 pilots. The terrorists who attacked Mumbai in 2008 came from Pakistan by ship, hijacked a trawler and then landed on the beach using rubber dinghies. If Pakistanis can walk in unhindered imagine what China could do. Our ships will probably run into each other or explode while our planes will disintegrate killing our hapless sailors and pilots while enemy soldiers stroll in, stopping to have a meal at one of the restaurants on the way. Pakistan continues to add to its arsenal of nuclear weapons while China has just unveiled its first aircraft carrier. We pay Rs 4.8 billion for refit of our submarine after an explosion, only for it to explode again killing more people. The reason is rampant corruption in defense procurement. And the cause of corruption is the Officials Secrets Act. Who was responsible for this wonderful piece of legislation? The British, brutal occupiers of India. Ministers refuse to modify this act because there has not been any ' noticeable ' misuse of the act. How can something be ' noticeable ' if it is kept out of notice by making it a secret? There must be a Catch 22 somewhere. Since all our defense equipment is imported it is not really a secret. But keeping it secret makes it easy to take huge bribes while bringing in third rate, out of date weapons. On the other hand the fear of getting caught slows decision making so that our soldiers are denied essential, life saving equipment. In 2012 General VK Singh had to write to then Prime Minster to complain about lack of critical equipment. In March General Bikram Singh said that the army lacks adequate ammunition. Seems that our politicians and civil servants still fear an army coup so maybe that is why they deliberately keep it weak. Because they know that a sizeable number of citizens want the army to take over and hang these corrupt fellows. Or maybe they are taking orders from some foreign power. We do not know. Because it is a secret.

Saturday, November 08, 2014

US foreign policy guided by emotion? Inexplicable.

A much reduced Obama is visiting Asia, hoping to counter the rising threat of China. He will find a completely different Asia compared to his last visit. India and Indonesia have elected new leaders, Thailand is under military rule while the middle east is in flames. Foreign policy is the President's preserve. In this he is advised by the State Department, which has divided the world into various regions, to analyse events and devise policy to the benefit of the US. Which is how it should be. Therefore, you would expect that the assistant secretaries in charge of each department would be entirely logical in their recommendations and not motivated by emotion, personal dislikes or religious dogma. We have seen how a senior officer in the US embassy in Delhi engineered the sexual assault on Devyani Khobragade by New York Police baboons. But this attempt to humiliate India was nothing compared to the hostile campaign mounted against India by Assistant Secretary of State for South Asia, Robin Raphel in the 1990s. She equated India and Pakistan in terrorist activities against each other. " You have been asking us to for many years to declare Pakistan as a state-sponsor of terrorism. Yes, we will do so. But we will simultaneously act against India too if it did not stop meddling in Pakistan," she is reported to have said. After leaving the State Department she became a lobbyist for Pakistan saying that " there is less than perfect understanding of Pakistan here," and her job would be to make sure that " all relevant parties have the facts." In blatant interference with Indian sovereignty she created the Hurriyat in Kashmir and was in constant touch with separatists. She even acted as an agent of Pakistan by trying to force an Indian delegation to accept unofficial papers from Pakistan. " My friends over in Pakistan want you to go through this paper. It is not an official document, but....," she said. Why? Why is the US totally blind in its support of Pakistan? Why does it hate India, when you would expect strong friendship because India is a democracy, has no intention of attacking anyone and potentially a huge market, compared to the a poor, failed state like Pakistan, which is surviving on handouts? Especially when the ISI organised the 9/11 attacks and was supplying arms to the Taliban to kill US and Nato forces in Afghanistan. But an even bigger mystery is why India does not declare Pakistan a state-sponsor of terrorism, cut off all relations, build a fence along the border, lay land mines so that not even a rat can get across and shoot at anything that moves. Why did we go to Sharm al-Sheikh on bended knees just 6 months after the attacks in Mumbai? Have our Prime Ministers been taking orders from Washington? Terrifying thought.

Friday, November 07, 2014

India may do great by accident.

In a surprise move the central bank in Brazil increased interest rates to 11.25% while Russia raised rates by a hefty 150 basis points to 9.5% despite weak growth in Brazil and recession in Russia. In India calls to reduce the repo rate are becoming more strident as inflation rates fell in October, mainly due to a high base effect. However, real policy rates are still too low and there is no evidence that low interest rates act as an incentive to investment. Even though the Reserve Bank has not formally reduced interest rates banks are reducing deposit rates paid on savings because they are flush with funds and credit uptake is weak. If returns become negative once again people will resort to buying gold as they did in the past few years. Banks have too much liquidity because the RBI has been buying dollars to build up reserves in case foreign investors suddenly take their money out, following the conclusion of bond buying by the US Federal Reserve. Banks are reluctant to lend because they are sitting on vast amounts of bad loans as companies are unable to service their debt because of falling profit margins. What everyone is forgetting to mention is that most of these fellows borrowed money thinking that they would not have to repay their loans and a lot of them have invested in real estate, hoping to make a quick buck. In an effort to control black money and increase tax collections politicians have increased circle rates so high that it is now more economic to buy real estate in the US than in India. While politicians and business fellows have been beating their breasts at the high interest rate in India Republican politicians in the US have been demanding that the Fed raises rates. So angry are the Republicans at the extremely loose monetary policy that some are demanding that the Congress should oversee the Fed. Politicians in India are also demanding that politicians should set the inflation target for the RBI to follow. Should they really do that? Inflation in India is so high because of criminal fiscal profligacy by the Congress led government which wasted trillions of rupees in handouts to bribe the ' vote bank ' and then raised taxes to astronomical levels to balance the budget. At the moment politicians are hiding their crimes behind the fig leaf of the RBI but if they set inflation targets they will have no excuse for their failures. Politicians refuse to learn from the mistake of 1937 when premature tightening, just when the US was recovering form the Great Depression, led to another recession. With the global economy in doldrums each central bank is trying to defend its own economy while politicians look to their own interests. If there is global deflation our inflation may actually save us. It is called ' Ram bharose ', or ' Ram protects '.

Thursday, November 06, 2014

Uniform taxation impossible without spending control.

An article by Wolfgang Schauble, Germany's Minister for Finance, argues that taxation is now a global issue. " There is an increasing focus on intangible assets and mobile investment income that can easily be ' optimized ' from a tax point of view and transferred abroad," he writes. Developed countries with low birth rates suffer from a double whammy of increasing social spending on pensions and healthcare for an increasingly aging population along with a shrinking pool of young people who pay income tax and spend a lot on lifestyle, on which the government can collect indirect taxes. " ....the issue of fair taxation is becoming more and more pressing, because the number of taxpayers who make an adequate contribution to financing public goods and services is decreasing," he says. Economists refuse to acknowledge that wealth cannot be acquired without exploitation and western countries grew rich on slavery, colonialism and predatory taxation, through which they procured cheap commodities from poor countries and sold them very expensive goods manufactured from the same commodities. Developing countries are cursed with high birth rates among the poor, the very people who cannot afford to provide good nutrition, education or healthcare to their children, resulting in an exploding underclass forever dependent on handouts, to survive. 122 countries have agreed a Common Reporting Standard under which tax authorities will automatically share information with each other. Schauble suggests a uniform tax policy throughout the world. " A beggar-thy-neighbour taxation policy, by which one country pursues tax policies at the expense of others, is just as dangerous as beggar-thy-neighbour monetary policies based on competitive currency devaluation," he writes. Easily said but not so easy to implement. India has the highest rates of taxes in the world. While we pay tax on any income above Rs 250,000 in Germany there is no tax on income below 8354 Euros, Rs 634,000. All airlines in India will go bankrupt unless taxes are reduced from insane levels. Taxes on real estate in south Delhi have been increased so that buyers will have to pay taxes on assumed rates, higher than the market rates. In New Friends Colony and Defence Colony circle rates are double the market rates. The poor do not pay direct taxes while the rich avoid them by getting compensated by alternative means, such as stock options. Indirect taxes add to inflation and reduce demand, as Japan found out when it raised sales tax to 8%. In India indirect taxes are in excess of 20%. Also, in India taxpayer money is used by politicians for personal enjoyment. We must have strict control on spending if we are to have uniform taxation. That these criminal beggars will never allow.

A large nail for a gasbag.

The midterm elections in the US, held 2 days back, have given Republicans total control of the Congress by giving control of the Senate as well as increased seats in the House. Republicans have a lock on the House by gerrymandering in the states they control, thus ensuring victory for anyone the party puts up as candidate. Since every state, regardless of size, gets to elect 2 senators the population cannot be divided in such a manner as to ensure victory for any party. Hence, to gain control of the Senate by a turnover of 7 seats is a big victory for the Republicans. However, this time 21 Democrats were up for reelection as opposed to 15 Republicans which means that the Democrats were risking more upsets while in 2016, 24 Republicans seats will be up for contest as opposed to 10 Democrats which will give the Democrats a chance to overturn the loss. The right wing Supreme Court helped Republicans to disenfranchise many black and poor voters by demanding strict identity checks for voters and young people, who tend to vote Democrat, did not turn out. Since Obama was elected the Republicans have refused to cooperate with him on anything, resulting in total gridlock. They even shut down the government last year. In the party system of government, as in India, the prime minister is thrown out if his party loses but in the US the president is elected independently of the Congress. The Republicans opposed everything that Obama did, even at the expense of making the economy worse, but were successful in making him responsible for paralysis of the government. Some think that polarisation will get even worse now and no work will be done. Others are hoping that there will be more cooperation between the parties because with total control of the Congress the Republicans will be blamed for any gridlock. They can ill afford to do that because 2016 will coincide with presidential elections which encourages young, Hispanic and black voters to turn out in much larger numbers and they tend to vote for Democrats. As for Obama, he will not be standing again so what is he going to do? He is so unpopular that most candidates of his own party asked him to stay away. He has nothing to lose personally but what he does in the next 2 years could affect the chances of the next Democratic candidate for president. Obama won by blaming George W Bush for everything that was wrong with the economy. Is he going to leave the same legacy for his successor? He is making excuses for the drubbing but he is definitely to blame. We will be happy to see the back of this anti-Indian gasbag who supplies weapons to Pakistan and bends over to China.

Tuesday, November 04, 2014

Why is the west fighting wrong wars?

The fascist Neo-Nazi government in Ukraine is threatening to send more troops to the east of the country in a bid to suppress the rebel region by brute force. President Poroshenko claims that the east is a part of the country, in which case the people of the east are as much citizens of the nation as he is. Why then is he prepared to wage war on civilians as he has been doing, with hundreds of casualties? Parliamentary elections have elected a completely pro-western government in Ukraine because pro-Russian provinces were not allowed to vote so the government does not represent the whole country and is a sham. The rebels held their own separate elections and have sworn in their own president. Western countries have refused to recognise these elections and the western propaganda machine has been vilifying Russian President, Vladimir Putin for supporting the rebels. Now Putin is surely a dictator, who has suppressed any dissent by brute force, but he did not start the fun in Ukraine. The US, led by Barack Obama, the biggest serial killer, who has been using drones to slaughter hundreds of innocent civilians, did, when they organised an armed rebellion last November against a democratically elected president, Victor Yanukovych, who was forced to flee into Russia to save his own life. Why is Putin so popular in Russia while he is such a reviled figure in the west? Because the president who preceded him, Boris Yeltsin was a drunken buffoon who brought shame on the country. It is a mystery as to why there is such a visceral hatred against Russia in the west. Couple of weeks back Sweden was made to look stupid when it found nothing after mounting the largest search operation in its history when it announced that it was hunting a Russian submarine in its waters. David Cameron, of Britain, had the impertinence to threaten war against Russia. While the west is unnecessarily picking a fight with Russia their own citizens are flocking to join the Islamic State in Syria and Iraq. The ISIS killed 322 members of the Albu Nimr tribe in Anbar province recently. The chief of the tribe said that the government of Iraq did not supply arms or provide air cover for them. Maybe the Shia government in Baghdad did not find any reason to interfere when Sunnis were killing Sunnis. Just as Erdogan of Turkey was happy to let the ISIS slaughter the Kurds in Kobane because he does not want an independent Kurdistan. However, the biggest mystery is the unconditional support for Pakistan, which is the center for all terrorism in the world and whose intelligence agency, the ISI masterminded 9/11. Fighting wrong wars will only lead to massive destruction.

Monday, November 03, 2014

The money trail.

Our Prime Minister has promised to get back every paisa of black money stashed abroad. Hear, hear to that. But, er, the vast bulk of black money is here in India. So where is the treasure? If X marks the spot, surely politicians and civil servants know where it is. Apparently, Rs 100 million were stolen from the Congress in Maharashtra, just before assembly elections, which meant that only 137, out of 288, candidates received adequate support from the party. Poor fellows. You would expect a massive howl of outrage from the Congress with all the police brass running around like blood hounds, as they did in UP when a politician's buffaloes were stolen. But,in a baffling mystery, there was complete silence. In fact, Congress fellows denied any money was stolen. Generous lot, what? Or maybe they did not want to reveal where the money came from. For politicians and civil servants official salaries are mere pocket money, the real fun comes from 2 sources. One is cash in black bin liners, for looking the other way, which is invested in real estate, which explains why property prices in India are almost the same as in the US. Then, there are nice little junkets paid for by the taxpayer. Sometimes civil servants win the competition to go on such ' study tours ' to very expensive locales. Even when the economy was diving, with inflation out of control, exports were falling, the trade deficit was high and the fiscal deficit was barely contained by massaging figures fellows were attending the World Economic Forum at Davos in Switzerland, at $200,000 per head. The hapless taxpayer has to foot the bills through extortionate taxes. Parking charges in Delhi have been increased by nearly 5 times. It is not clear why we should pay for parking on broken, dirty plots, full of garbage and mud. The excuse trotted out is that it is to force people to use public transport to reduce congestion and pollution. Who would want to use the wretched public transport in Delhi? These fellows and the rich do not have to pay for parking because they have chauffeurs who drop the sahibs close to where they want to go and then drive to a side lane to wait. When sahib has finished he phones the driver to come and collect him. So the middle class are the asses. As usual. Now toll will be collected electronically on highways. This being India what happens if the ' system ' malfunctions and collects much more than you should pay? How do you get a refund? Why do we have to pay when taxes on cars, fuel and road tax are astronomical? We even pay a road cess on every tax we pay. Fuel prices for airlines have not been reduced as much as they should have been. Another tax. That is why people hide their incomes. Wouldn't you?

Sunday, November 02, 2014

Literacy is not enough, quality education is a must.

A sob story in a newspaper highlights what is wrong with thinking in India. Apparently large numbers of young people are having to work as laborers, despite being literate. Young people comprise one third of the population of the country and 90% are literate but " staggeringly high numbers " are working as laborers in agriculture and 20% are jobless. Over 90% of adolescents and 86% of youths are literate, so the article concludes with great indignation that they are being forced work out of poverty and are being denied higher education. The conclusion is completely wrong. It is not clear what being literate means. Ability to read and sign one's name would be considered literate but does not qualify a person for any job. Mr Akhilesh Yadav won assembly elections in UP promising laptops for every student but they are being sold off for half the price. Not much point dishing out expensive laptops when there is no electricity and when many have only the rudiments of primary schooling. Why is it wrong to work as labor, as this article seems to imply? One professor laments the refusal of Indians to work in factories, preferring desk jobs instead. Since he is a professor at MIT in the US it is easy for him to talk. Studies in the US show that those with college degrees earn nearly double of those with only high school diploma. In 2012, 4 years after the sub-prime crisis, the highest paid jobs in the US were those of financial managers. Michael Larsen, who manages the wealth of Bill Gates took home over $3 million in cash and stock options in 2012. No shop floor job after vocational training is going to pay anything remotely close to that kind of salary. It is not surprising that students in India would also want to join this elite club and live in comfort. Nothing wrong with that. What is bad is the abject poverty of a majority of farmers and farm laborers compared to the wealth of farmers in western countries, whose earnings are much higher than average wages. The reason is that farms in the west are much larger and are able to use high yielding seeds, proper fertilisers and the latest farm machinery. In India large numbers of children mean that land is divided into ever smaller portions, which are farmed repeatedly, exhausting the nutrition of the soil. High inflation has seen the costs of basic necessities becoming unaffordable so children are sent out to work to supplement family income. The quality of education is so poor that 47% of engineering graduates are found to be unemployable. What hope is there for the barely literate?

Perhaps it is safer to trust no one.

A woman in Mumbai who has named her step-father instead of her biological father in her passport application has been asked whether she was conceived by rape. A passport is an identity document, especially for travel to a foreign country. Every passport contains particulars of the holder, such as name, date of birth, place of birth, photograph and finger prints printed on the first 2 pages while the last page has the names of the father, mother, spouse, in case of married people, and address. Millions of people do not own any property, so have no fixed address, and many communities have no fixed surname which passes down from one generation to the next. India does not allow dual citizenship so a passport is also a certificate of citizenship which means it is important to know whether the father was a foreign national or not. This should be made absolutely clear, instead of asking if the mother was raped. Although numbers are still small, some women in India, especially educated ones, are choosing  to conceive either by artificial insemination or by physical relations with a man, without the restrictions of marriage. Since a child has no say in its own conception children of such single mothers should not be discriminated against. An official at the Ministry of External Affairs said that a birth certificate and an affidavit from the mother stating that she was single when she gave birth to the applicant would suffice. What if the biological father was a foreign national, especially of a hostile country? After all motherhood is a certainty, because lots of people are witnesses, but fatherhood is always a little doubtful. If a woman has the right to give birth without getting married and to have an abortion up to 20 weeks of pregnancy it means that the law is recognising a woman's right to her own reproductive system. In which case prostitution should also be made legal as suggested by the Chairperson of the National Commission for Women and demanded by those practising the trade. We may think that it is terrible for a woman to have to sell her body to survive but for those already in the trade a legal acceptance as a legitimate business would stop harassment by the police and allow them to access bank loans and other facilities. The ladies would be able to get rid of pimps, who abuse them, and organise themselves so that trafficking of women is stopped. The problem is that our journalists tend to twist facts, perhaps deliberately. Apparently the police in Kerala will not allow adults to kiss in public. We are supposed to be outraged. But surely in these days of ' love jihad ' it is better not to risk a riot if the kissers happen to be of different communities. Sadly, these days there are so many crooks that it is hard to trust anyone.

Saturday, November 01, 2014

Leadership cannot be inherited. Very few have it.

The Congress is a party of no principles. Its sole purpose for existence is to somehow grab power, either through blatant bribery of the electorate, by distributing handouts of taxpayer money, or by forming a coalition with other parties and allowing them to loot the nation. This absence of principle or ideology has enabled the party to rule India for some 56 out of 67 years since independence, by being able to agree with every group of people, every demand or every opinion, however diverse. Since power was the only objective every Congress member worked only for his own interest, to accumulate as much wealth as possible and to pass on the mantle of entitlement to son or daughter in continuation of a new kind of feudal system. One would expect each satrap to try to dominate others in a bid to achieve the supreme position of prime minister but that would probably result in a quick disintegration of the party. Apart from brief periods when Lal Bahadur Shastri and Narasimha Rao were chiefs of the party the Nehru-Gandhi Family has been the center of power as the fiercely ambitious satraps realised that wealth came from being in power and power came from total prostration to the Family. The drubbing in the general election in May followed by near wipeouts in the recent assembly elections in Haryana and Maharashtra have suddenly made the Family seem irrelevant and increased the clamor for more involvement by the Family. Some want Priyanka Gandhi Vadra to take an active role in politics while others want Rahul Gandhi to lead the party out of the morass that it is in. But how? Running a country surrounded by hostile neighbors, with a population of 1.2 billion people and with 37 parties in the Lok Sabha is not the same as becoming king, as Prince William may become one day. Since we do not know him personally we have to assume that Rahul Gandhi is a nice chap with a dimple in his smile but what does he know of the everyday lives of the people? Does he have the work experience to manage a government? Claiming a legacy of sacrifice is troublesome. Indira Gandhi and Rajiv Gandhi did not chose to sacrifice their lives for the nation, they were assassinated as a result of their policies - Operation Bluestar and Operation Pawan. What will be remembered as their legacies? The massacre of 1984, the Union Carbide tragedy or the Bofors cover up? Whoever is to lead the Congress must have a clear vision for the future with credible policies to achieve that vision. Promising more handouts while waiting for the BJP to falter will not work. The revolving door to power may have stopped.