If thugs beat up crooks does it help?

Having been thrashed in the general elections last year the Congress is determined not to let the present government function, by disrupting both houses of parliament so that no bill can get passed. The Congress is terrified that the amendments sought by the BJP will result in a boost to manufacturing, millions of new jobs, a growth in the economy and a feel-good effect on the people, which would result in another loss in the elections of 2019. Loss of power means a loss of opportunities to make billions of rupees so the government must not be allowed to work at any cost. Trouble is that the BJP adopted the same nasty tactics while in opposition and cannot take a moral high ground. Arun Jaitely, present Finance Minister and a very high-priced lawyer, said in 2012," If parliamentary accountability is subverted and a debate is intended to be used merely to put a lid on parliamentary accountability, then it is legitimate tactic for the opposition to expose the government through parliamentary instruments available at its command." Which means that if the government consists of crooks then it is alright for the opposition to behave as thugs. Does he advocate that citizens should also take the law into their own hands? Never mind that it costs the nation millions of rupees on each of them, surely they have some duty towards the nation and the idiots who stood in queues to elect them. But the BJP can still beat the Congress. The most important is the Goods and Services Tax bill which they should concentrate on. If necessary call a joint sitting of parliament and make it law so that it can be introduced from next year. Once taxes become homogeneous companies will stop looking for ways to minimise tax bills and business will boom. The amendments to the Labor Law and the Land Acquisition Act maybe left to the states. States can amend laws to suit their industries, as Rajasthan has shown. Rivalry between states may translate to a race for growth, to earn bragging rights, as the intense hostility between Chandrababu Naidu in Andhra and Chandrashekhar Rao in neighboring Telengana is set to prove. Instead the government seems to be confused on what to do. The price of diesel has been reduced by more than that of petrol so that there is a Rs 20 difference in prices. With international crude prices at very low levels this is a golden opportunity to equalise the prices of the two, as in the US and in Europe. A low price encourages people to buy diesel cars which are much more polluting. By increasing the price of diesel the government will earn billions to spend on infrastructure and reduce ill health by cutting pollution. Keeping diesel cheap to engineer a low retail inflation to pressure the RBI to cut interest rate is perverse and will backfire. Do not keep Air India viable by drip infusion. Put in a large sum, restructure it and privatise it. Right actions will have a multiplier effect. Just needs logical thinking.

Terrorists and traitors must be eliminated.

A fierce debate has broken out on whether Yakub Memon should have been hanged. Some make the case for hanging saying that keeping a man locked up for life is equally brutal. He was responsible for the death of 257 innocent people, who did not deserve to die either, and by showing contempt for human life he showed that he did not value his own life. Punishment must fit the crime and if the judicial system is seen as weak then people will extract revenge. People demand retribution for odious crimes and it is better for the state to punish the guilty than a rapist being lynched to death for raping a 7 year old girl. Keeping Maulana Masood Azhar and Sheikh Omar was directly responsible for the hijack of flight IC 814 to Kandahar in 1999 and an abject surrender by the Indian state. That made terrorists bolder resulting in the Mumbai attack in 2008, killing another 164 people. A new law will punish hijacking a plane with the death penalty. That will make any sense if the government of the day has the courage to stand firm against demands made by hijackers and not to surrender cravenly, as it did in the case of IC 814. Trouble is that India is a nation of traitors and opposition politicians are trying to ingratiate themselves with the ' minority vote bank ' by criticising the hanging. Seems that Dawood Ibrahim wanted to return to India but politicians did not take his offer because he knew too much. Dawood's aide, Chota Shakeel has threatened of consequences. A criminal scum dares to threaten India. After all, the British ruled India not by bringing battalions of soldiers from Britain but by paying locals to build an army with which to beat Indian rulers. Some have used maths to prove that capital punishment does not reduce crime, by quoting studies done in the US. Absolutely true. Someone in a rage loses all control while criminals, such as drug gangs, will target informers or the police. Terrorists, on the other hand deliberately target innocent people to destabilise the nation. The response has to be ferocious and disproportionate. Does that work? Absolutely, as Israel has shown repeatedly. Following the Munich massacre of Israeli athletes by the Black September group Israel launched Operation Wrath of God to kill every Palestinian involved. In 1976 an Air France plane from Tel Aviv was hijacked by Palestinians and flown to Entebbe airport in Uganda where the then President Idi Amin's soldiers held them hostage. Israeli forces rescued the hostages with the loss of one soldier and 3 civilians. Amin is said to have hidden inside a closet. Israel has a Hannibal Protocol which says that a hostage situation must be prevented even if it kills the hostage. Eight million Israelis survive surrounded by 400 million Arabs. Strength lives on, cowards perish and traitors must be hanged.

Bombing the periphery is no solution. Bomb the source.

The US has issued a travel advisory to its citizens against travel to India for fear of being attacked by Lashkar-e-Taiba, on behalf of the ISIS. Really? Where is the LeT based? In Pakistan. This just a couple of days after the terrorist attack on Gurdaspur killed 6 people. It was only due to pure luck that a slaughter of women and children was avoided. Where did these scum originate from? From Pakistan. Afghan government sources are claiming that the Taliban leader, Mullah Omar died 2 years ago of tuberculosis in a hospital in Karachi. Where is Karachi? In Pakistan. Osama bin Laden was killed in Abbottabad. Less than a mile away from the Pakistan Military Academy. In Pakistan. It is ludicrous to say that bin Laden organised the 9/11 attacks while hiding in a cave in Tora Bora in Afghanistan although he may have financed it. Only one intelligence agency had the motive to mount those attacks, and it has to be the ISI. The mystery is why the US continues to support Pakistan with money and arms and applies pressure on India not to retaliate, no matter how many Indians are killed by terrorists. The US poured vast sums of money into the ISI to get the Soviet Union out of Afghanistan. It succeeded. The Soviet Union has disappeared but, for all its bluster, the US was made to flee from Afghanistan with its tail between its legs, by the Taliban, with US weapons, supplied by the ISI. Pakistan has embraced China a far deadlier alternative. Some in the US recognise that the mess in Libya is purely due to the illegal killing of Gaddafi just as the mess in Iraq is due to the illegal killing of Saddam Hussein. The gunman who killed tourists on a beach in Tunisia was trained in Libya. Large numbers of economic refugees are flooding into Europe through Lybia, provoking a fear of infiltration by ISIS fighters. Global economic growth is going to be erratic so ethnic disturbances precipitated by unemployment and poverty are a real possibility. Terrorists affiliated to the ISIS killed scores of people on the Sinai in Egypt. When Erdogan's party lost its majority in parliament in elections in June there was great rejoicing that he would not be able to increase his powers. Kurds won seats in Turkey's parliament for the first time, raising hopes for peace between Turkey and the Kurds. No longer. The US has reached an agreement with Turkey to use its airbase to bomb ISIS in Syria and to create a buffer zone along the Syrian border. Turkey promptly used this opportunity to bomb Kurds in northern Iraq. Obama supported Turkey's bombing of Kurds, showing that he is completely confused about friend and foe. Killing ISIS will not solve the problem. Others will take their place. As long as Pakistan exists.

Merit should not be a dirty word.

According to Credit Suisse India had 51 dollar billionaires in 2014 compared with 50 in 2011. However, according to the Forbes list India has 90 billionaires in 2015, which puts us in fifth spot, while the Chinese put us third with 97 this year. According to Credit Suisse even though the number of billionaires maybe up the number of millionaires fell by 20,000 from 2011 to 2014 and there was similar drop in all categories. The reason was double digit inflation, a huge rise in taxes, a fall in the rupee and a dramatic fall in growth. Even worse, 61,000 millionaires have shifted overseas to avoid high taxes and for better services. But India is a millionaire nation in one respect. UNICEF estimates that more than 1 million children die of malnutrition every year. On the other hand, with $100 million each, 928 households possess 20% of all the wealth of the nation. The inequality is staggering. However, this figure may drop if real estate prices collapse, as is being predicted. All this is conjecture because most of the wealth of rich Indians is in real estate and, since at least half the price of any property, is paid in cash, or black money, it is impossible to know exactly how many rich people there are. If property prices fall to realistic levels the number of High Networth Individuals will decline sharply but it will be good for the nation as the black money will disappear. Lower real estate costs will enable more people to buy their own properties, save money on rent, which is non-productive expense, and will increase the number of middle class. While the number of middle class rose from 7% in 2001 to 13% in 2011 globally, the number in India rose from 1% to a mere 3%. Around 76.9% of Indians are confined in the low income group and are in risk of poverty should they encounter a heavy drain on their finances in the form of serious illness or injury. Why is it that Indians are the highest earning ethnic community in the US, earning more than the Chinese, while in terms of nations China's economy is 5 times that of ours? The reason is our bureaucracy which is an inheritance from the British Indian Civil Service and still functions as a colonial straitjacket. They come out with arbitrary tax demands, ignore court orders with impunity and seem to have politicians under their control. They infest every aspect of our lives, from sports to education, growing rich while standards deteriorate. They want to take away the independence of the Reserve Bank and set up a committee of pen pushers to decide monetary policy. No wonder Raghuram Rajan mourned that India has lost a generation of economists. Can you have wealth with a bunch of useless people deciding policy?

We voted BJP but do not take us for granted.

A Special Investigation Team, appointed by the Supreme Court, suggested that the Securities and Exchange Board of India should identify everyone who is investing in our stock markets through Participatory Notes. The Sensex fell by 551 points on this news and because of the fall in the Chinese stock market. The problem with P-notes, as they are called, is that funds buying stocks through this route are not obliged to reveal who their individual investors are. There are criminal gangs which will take foreign currency from Indians working abroad and pay a higher exchange rate in rupees to recipients in India. This is called the hawala system. It benefits users in that they get more money and beneficiaries do not have to pay any tax. Criminals use the dollars to buy goods, say gold, to smuggle into India. Criminals and those with black money can send money abroad through reverse hawala and invest anonymously into our stock market through P-notes, through tax havens abroad. Seeing the fall ministers rushed out to calm the markets by saying that they will not take any hasty actions. Why? Because foreign funds have invested Rs 2.7 trillion, out of a total of around Rs 24 trillion, through this route and if this is withdrawn the market and the rupee may fall. Surely, if the government wants to rule out money laundering and black money it should stand firm against foreign blackmail, but previously too the government panicked when foreign investors objected about Minimum Alternative Tax on investments. One answer is to exempt present investors in P-notes from exposure while making it mandatory for every future investor to be verified. Rules must be simply stated and clear. Isn't it strange that when the present and the 2 previous finance ministers are lawyers our laws have more loopholes than a sieve? This government argued in front of the Supreme Court that Indians do not have a right to privacy. The government also wants India to be a cashless society, apparently to get rid of black money. But using cards means that we lose the anonymity of cash transactions, which is dangerous. Every politician wants to have absolute power so they can remain in power forever. Privacy is the only defense we citizens have against repression. Kidnappers are already demanding payment in bitcoins. The government intends to amend the Whistleblower Act to make it mandatory for the name whistleblower to be disclosed. We have seen what happens to whistleblowers in the Vyapam scam. So no privacy for citizens or whistleblowers but money launderers can rest easy. The government wants to curtail powers of the Governor of the RBI by setting up a committee of civil servants, read boot-lickers, to set monetary policy. We voted for the BJP, but they should not take us for granted. We will not tolerate repression. A warning.

Will Hillary have to pay for Obama's foreign policy blunders?

So President Obama has left Kenya, the land of his father, after a tumultuous welcome by locals, who probably see him as one of their own, someone who has succeeded in becoming the most powerful man in the world while they struggle with life in a developing country. Being an extremely versatile gasbag he lectured them on women's rights, on corruption and to reject ethnic divisions. Born of a white mother and brought up by white grandparents in the balmy climes of Hawaii does he really understand what life is like in Africa? Does he understand what life is like for blacks in the US of A, 96% of whom voted for him in 2008 and 93% in 2012? Blacks certainly do not think that he has done anything for them. Even Donald Trump has recognised that Obama is no different. For us on the outside, who believed he would be different to the usual gung-ho presidents who talk about ' evil empires ' he has been a complete disappointment. He has turned out to be the most bloodthirsty US president in history killing over 900 civilians and at least 200 children in indiscriminate drone strikes. As he plays big daddy to his daughters does Obama ever think of the little children that he has slaughtered the same morning or a pregnant woman's belly sliced open by a shrapnel and her unborn child lying dead in the dirt. Strange that in a country so opposed to abortions, killing of children and unborn babies does not cause any unease. He was behind an armed coup in Ukraine, deposing an elected president and the formation of a fascist right wing government, resulting in a division of the country into a western Ukrainian speaking region and an eastern Russian speaking one. In an unnecessary provocation to Russia US and UK forces are holding joint exercises there. Nobody talks about hundreds of Libyans dying everyday because Gaddafi was killed in illegitimate bombing by misusing a UN resolution allowing protection of civilians, just as Saddam Hussein was killed by George Bush by blatantly lying to the UN. Obama and Bush: twin brothers. The US has become self sufficient in oil and gas from fracking and is even thinking of exporting natural gas. No longer dependent on oil from the Gulf Arab states the US has reached a nuclear deal with Iran which will allow Iran to sell its oil, further depressing oil prices. Good for us, but the US shale oil industry will lose out. Completely clueless about how to tackle the ISIS, Turkey has been begged to join in the fight. Turkey has taken the opportunity to bomb Kurdish PKK bases in northern Iraq, violating a 2 year truce. So now the ISIS is fighting Bashar al Assad, who is supported by Iran, Turkey wants Assad to go but is bombing ISIS, Kurds are fighting ISIS in Syria but Turkey is bombing the Kurds, while simultaneously bombing ISIS. Obama authorised bombing of Kurds but Americans are fighting with them. Wonderful. It is possible that Hillary Clinton will end up paying for this fellow's criminal folly? She is permanently tainted by working as his Secretary of State. Why did she do that?

A sweet spot, bitter round the edges.

Is India in a sweet spot, economically speaking? Figures seem to indicate that the economy is slowly getting off the floor, where the Congress had left it. In 2013 the rupee fell to 69 to the dollar when Federal Reserve Chairman, Ben Bernanke hinted at tapering the bond buying program, which came to be know as ' taper tantrum '. But now with the quantitative easing program having stopped and the Fed expected to raise interest rate by 25 basis points in September, the rupee is quite comfortable. Too comfortable, according to some. The Euro has declined by 21.30% against the dollar, the pound sterling by 6.01%, the Indonesian rupiah by 9.26%, the Brazilian real by 26.09% and even the mighty Swiss franc has fallen by 7.44% against the dollar but the rupee has barely budged with a fall of just 3.03%. The rupee fell sharply in previous dollar rallies in 1980-85, 1995-2001 and in 2008-09. This time the Reserve Bank has built up its foreign currency reserves to $353 billion, to smooth over undue volatility. This puts us in ninth spot behind the likes of China, Brazil and Russia. But is it enough? We are tempted to think that the more foreign exchange we have the better for us. But, as with everything in life, it is not that simple. The RBI has to buy dollars from the market which releases large amounts of rupees. This depresses the value of the rupee and causes inflation by increasing liquidity. The RBI has been mopping up excess money supply through open market operations. All very complicated. Some have calculated that $420 billion of reserves would provide adequate cover for any eventuality. This is comprised of $200 billion to pay for 5 months of imports, $112 billion to cover unhedged corporate debts, $85 billion to repay short term external debt and about $23 billion to cover outflow of foreign portfolio investment. Total $420 billion. Capital expenditure is increasing, which means new investment, and the government is spending more on infrastructure projects which have a wealth multiplier effect in the long term. The government is seriously clamping down on black money which will reduce inflation and increase tax collections. But in the short term it may result in a crash in real estate prices and result in a fall in consumer spending. Hindustan Unilever's earnings failed to meet market expectations and a fall in rural income means that earnings growth of companies producing consumer goods will be weak. Then there are both internal and external enemies. The opposition will not allow any bill to pass on frivolous grounds and the International Labour Organization has criticised the changes in labor laws, which are essential if manufacturing is to thrive in India. Only manufacturing can create millions of jobs for the poor. The monsoon has been very good so far, despite predictions of El Nino. Signs of spring but dark clouds just beyond the horizon. We live in hope.

Should the rupee fly high, or slightly lower?

Like our flag the rupee is a symbol of our nation of India. We are proud to see our flag flying high, at the top of the mast, so should the rupee be flying high as well? Unfortunately, the answer is not so simple. A strong rupee brings down the cost of imports, such as oil, resulting in lower prices and increased buying power for the people. On the other hand a strong rupee could make gold seem cheaper, as it is priced in dollars, reduces foreign earnings of companies, because of reduced exchange rates, and hurts exports by making them more expensive. Exports are down because of the weakness of the global economy. By encouraging imports while reducing exports a strong rupee will increase our Current Account Deficit, which is money flowing out of the country. One way would be to increase taxes on imports to make them so expensive that people are forced to buy Indian products. India is one of 23 countries founding members of GATT, which later became the WTO. Yet other members of the WTO are complaining about the high rates of taxes on imports. Our companies put pressure on politicians to keep taxes high so that they can sell shoddy products to citizens at inflated prices, without being restrained by competition. Although companies are reporting lower earnings growth, net profits have grown at almost double the rate of sales growth. A case of price gouging? The other way would be to make the rupee weaker by bringing down interest rate, currently at 7.25%. A substantial cut in the interest rate will bring down the cost of borrowing, thereby making it easier for companies to borrow money to fund new investments, allow banks to reduce bad loans, by reducing interest burden on business, and bring down the rupee, by reducing influx of foreign money, coming to take advantage of higher interest on deposits. The US has got out of recession by weakening the dollar through quantitative easing. Europe and Japan have followed suit. Trouble is, a weak rupee instantly pushes up import costs, and since we always import more than we export, it results in inflation. Rise in prices means that rupee buys less and less, which results in further weakening of the rupee. China has built up foreign currency reserves of around $4 trillion by buying dollars from the market to keep the renminbi weak but it has still appreciated against the dollar while the rupee has fallen. Because of uncontrolled inflation in India. The rupee is falling against the dollar but all other currencies, including the Euro, have fallen much faster. So, should the RBI weaken the rupee to stimulate exports, praying that oil continues to remain cheap, or should it allow the rupee to appreciate to encourage consumer demand which may increase growth? Should the rupee fly high or lower down? Difficult question.

Should we trust our money to foreigners and shady operators?

Seems that Indians are putting more money into shares, through equity mutual funds, than on physical assets, such as real estate and gold. Gold prices are dropping so people maybe waiting for it to reach some kind of bottom before investing in gold again. Property prices are also dropping because the government is cracking down hard on black money. This is good because investment in gold is completely non-productive while the boom in property prices, while encouraging a frenzy of construction activity, was more like a ponzy scheme which made it impossible for ordinary people to buy their own properties and increased poverty by wasting money on rent. So is it going to be beneficial for people to invest in equity mutual funds? We are constantly being advised to invest in shares through mutual funds by investing some money every month, the so called Systematic Investment Plan, which apparently smooths the risks of stock market volatility. But is it as safe as it is made out to be or are these people conning us because they work in mutual funds or brokerages? Mutual fund managers are only interested in launching new schemes, so that they have similar products under different names, confusing the public. Not understanding the trade jargon people hand over their money, expecting guaranteed returns. The reason for launching new products is that funds take hefty cuts right at the beginning, reducing the amount invested but increasing bonuses of managers. Equity analysts are accused of bias if they write negative opinions. Ketan Parekh, who was banned from trading in stocks because of illegal activities, is still playing the markets through off shore channels. So, if people are being forced to invest in stocks because they have no other avenue then it is dangerous. We have seen the recent crash in the Chinese stock market. The Chinese economy is 5 times the size of India's, China has $4 trillion in reserves, and the Communist Party is absolute. China rescued its market by forcing brokers to buy stocks, by banning large stakeholders from selling stocks, by forcing banks to lend money to retail investors to buy stocks, which is known as margin trading, and by banning Initial Public Offerings so that people did not sell old stocks to buy new ones. While the Chinese stock market is not a very large part of the economy the Indian market is largely controlled by foreign investors who can terrify the government from changing tax laws or forcing transparency in Participatory Notes, a route for black money and terror funding. Foreign investors are already hedging against large falls in Indian share prices when the Federal Reserve raises interest rate in September. Just over 1 month away. Poor Indians. They will get burned again.

We can get off the bottom but can we reach the top?

Indian politicians keep repeating that 8-10% growth of the economy is possible. Are they bluffing or is slow growth the new normal for the whole world? In the 19th and 20th centuries Europe and the US grew very fast, followed by East Asia. Growth of these countries was much faster than the rest of the world, in contradiction to basic economics which apparently predicts that living standards should converge. Europe became rich by looting commodities from colonies on every continent, which they used to feed their factories to sell back finished goods to the colonies at inflated prices. The US is blessed with vast resources, such as vast land area for agriculture, coal, oil, gold and other minerals, which together with free labor, called slaves, supplied by the Europeans, made it the wealthiest country in the world. Thus, Europe and the US became wealthy through exploitation which is not possible in today's word. East Asian countries, such as Japan, South Korea, Taiwan and China grew by manufacturing copycat products at much cheaper prices, which kept prices low in the west and created a boom in commodity prices, helping countries such as Brazil, Russia and Australia. But growth in these countries has slowed down as commodities and labor became more expensive, so what happens now? According to the ' dual-sector ' model of economics no country can grow rich by moving farmers from agriculture to services. That is because it is relatively easy to imitate in manufacturing but you need education, training and different business models for services. Also prices of goods are falling. " Although the total amount of physical stuff that humans make keeps expanding, the percent of our economic activity that we put into making goods keeps going down." India is faced with a similar dilemma. The answer is to provide education and increase training in skills. But will it work? Probably at a basic level. Learning to be a mason, a plumber, an electrician or to work on a factory floor will pull millions out of poverty, like it did in China, but it will not take us to the next level. One renowned economist writes that education does not decrease inequality because the top 1% creams off most of the wealth created while another writes that education created much more wealth in the sixties than it is doing now. As technology progresses a lot of economic activity cannot be measured because a lot of services provided online is free. There can be no wealth if no money is being created. In addition, a lot of work presently done by humans will be taken over by robots. The answer probably is a drastic reduction in the number of people so that fewer humans will work as supervisors as robots work on farms, in mines and on factory floors with free energy from renewable sources. All other ways to increase growth will fail. According to experts.

May not be maths, but is very logical.

Human beings can understand logic, have knowledge of past events and can imagine outcomes of their actions, based on such knowledge and personal experience. Why then do people hold extreme opinions and refuse to change them when presented with facts to the contrary? Discourse on social media has become more polarised, and hostile to those with other views. This can apparently be explained by using Bayes' Theorem which shows how the same set of probabilities maybe be used to arrive at completely opposite conclusions. Since the vast majority of us know only basic maths do people use maths instinctively or are human beings stubborn because emotions make them illogical. People use many methods to arrive at conclusions which may seem unreasonable to others but is not without logic. We see women being treated as sex slaves by ISIS in Syria and Iraq. Huge numbers of sexually repressed young men are joining ISIS for sex and to have control over women. ISIS pamphlets justify rape of women and girls, saying that it is permissible to rape kufr women and children who will not convert because rape is a form of conversion. When you read harrowing stories of such women it is easy to believe in ' Love Jihad ' in India regardless of how much liberals rant against it. Tolerance of people with different beliefs creates harmony, encourages cooperation and is healthy for society but if it is seen to be enforced then opinions become entrenched. Thus strident secularism is seen as hostile to religious belief and results in fundamentalism. Politicians and civil servants love secrecy, which gives them power over the masses. There is widespread belief that Netaji Subhash Chandra Bose did not die in an air crash in 1945. Even if he did not he must have died of old age by now. Still the government refuses to release old files regarding his death because it may harm ties with other nations. Even if agents of some other nation murdered Netaji all the people involved are likely to have died so it is very unlikely to have any impact on international relations today. Absence of honesty leads to suspicion and anger so some members of Netaji's family believe that the Congress is behind the lies about is death. Similarly, the post mortem report on former Prime Minister, Lal Bahadur Shastri has been kept secret. Surely his sons have every right to know how their father died? It is not surprising for people to become infuriated and form their own opinions. A common tactic, adopted by pompous egoists, is to deride others as fools with conspiracy theories, which is insulting and only serves to entrench opinions. Was Nehru's grandfather a Muslim? Did Feroze Khan become a Gandhi to marry Nehru's daughter, Indira? If so, secularists should be proud of that. Why do they hide it? Maths cannot work with secrets.

Property prices are a barometer of honesty in governance.

Business papers in India publish various articles about the real estate and stock market bubbles in China but there is hardly a peep about the massive property price bubble in India. Since this government came into office last year it has been trying to tackle the problem of black money. A law to punish money stashed abroad was passed in May and the government is working on another law to punish black money in India. Many trillions of rupees of black money were generated from a plethora of scams between 2004 and 2014, during the Congress rule. The present government has stopped big corruption although petty corruption is still as rampant as before because state governments and municipalities are just as rotten. The Congress increased spending on social schemes by 5.4 times, that is from Rs 474 billion to Rs 2.54 trillion while total government expenditure increased by 3.15 times. Most of this money was stolen. The Deputy Chairman of the Planning Commission said in October 2009,"....a plan panel study on PDS (Public Distribution System) found that only 16 paise out of a rupee was reaching the targeted poor." Where did all this black money go? Into real estate where at least half the price of a property is paid in cash. A report by FICCI said," The real estate sector in India constitutes for about 11% of the GDP of Indian Economy, as these transactions involve high transaction value. In the year 2012-13, Real Estate sector has been considered the highest parking space for black money." To reduce theft the present government is paying subsidies directly into bank accounts of recipients and to facilitate that 169 million zero-balance bank accounts have been opened. A report by Mukherjee and Shekhar of Ambit said,"....at least 10% of the overall subsidies have already been moved to the DBT (Direct Benefit Transfer). As a result, the ability of the politician-builder to pilfer subsidies to fund real estate construction has been checked." Just a measly 10% and the result has been a pile up of unsold properties in Delhi and surrounding areas. At least 170,000 units remain unsold and another 90,000 units are delayed. To check illicit transactions the Supreme Court banned sale of properties on General Power of Attorney so people in Rohini, a suburb of Delhi, are building mud huts on land to convert them from leasehold to freehold, with suitable bribes to all concerned, so that they can sell them. State politicians, always greedy for more money to bribe voters with, have increased circle rates on which taxes are calculated. The Delhi government is thinking of taxing rents, based on circle rates, which will increase rents further and cause immense misery. Politicians commit crimes and we pay. A nice deal, what?

History should be fact. Why the debate?

Eminent historian Ramachandra Guha has written an angry article about recent appointments of Sudershan Rao as head of Indian Council of Historical Research (ICHR), Gajendra Chauhan as head of Film and Television Institute of India (FTII) and Baldev Sharma as head of the National Book Trust. " To head bodies like the ICHR, ICSSR, FTII or NBT, one requires (a) to have the respect of one's professional peers; (b) to be a competent fair-minded administrator," he writes. Sudershan Rao has been a professor of history at Kakatiya University in Andhra for 40 years. That he is a member of the RSS, which is seen as a Hindu organisation, is irrelevant. Gajendra Chauhan is not a film star, having acted in B grade movies. So did Ronald Reagan, who was a very successful President of the US and is revered by the Republicans. Our previous Prime Minister has a DPhil in Economics from Oxford and is highly respected by his peers, but that did not stop him from making a dog's breakfast of the economy. The more basic question is," What are these institutes for?" There is no need for a government body to research into history or social science. This should be done in university departments, published in peer reviewed journals and debated at conferences. If these are ceremonial posts, to be given as rewards to party faithfuls, then why the objections? The FTII is a training institute with a distinguished faculty who will continue to teach but what is the objection to Chauhan being the head? Jose Mourinho never played in a first division team but he is one of the most successful managers in football today. We hope that Mr Guha's anger is not because he is an anti-Hindu Congress supporter. There are those who say that books on Indian history are full of mistakes. The south of the country has been neglected and the Aryan invasion never happened. Is it true that women were liberated in ancient India or is that a Hindu plot to subvert history? Churchill caused the deaths of 3 million in Bengal in 1943 by stealing our grains for British troops which makes him a mass murderer just like Hitler was but whereas the Germans have repented and paid for Hitler's crimes the British have not done anything. In fact, Churchill is celebrated in Britain. Does Mr Guha lecture about British crimes on his tours? As for changing history to suit political needs the Congress is a master at it. Mr Narasimha Rao, a much better economist than Mr Manmohan Singh, has been conveniently forgotten. As for Subhash Chandra Bose will we ever know how he was betrayed by Jawahar Lal Nehru? History has already happened so there should be no debate about it. Unless historians are prejudiced because of self interest.

God is a placebo for the weak, the strong have the force.

As Hindus, talking about religion in India is dangerous. We are instantly labeled as anti secularism, mocked as ' saffron chaddis ' and abuse as ' Hindu Nationalists ', like some Genghis Khan army marauding over all so called ' minorities '. Today, Sir Mark Tully has written how aggressive secularism maybe giving rise to fundamentalism. Tully is an Englishman, who studied at Cambridge, so no Indian would dare to argue with what he says. He trained as a priest and has written on Jesus. He mourns the fact that churches in Britain are empty and there may not be any Christian births in Britain by 2067. This is not intended to be a racist statement, meaning whites will disappear from Britain. What he probably means is that Christians will have become atheists. " It's not as though this secularisation is a sort of placebo that keeps people happy by supplying their material needs. It creates hostility to religion," he writes. In India, it is even worse. We have competitive secularism, characterised by virulent attacks on Hindus, apparently to protect ' minorities '. Religion is not supposed to supply material needs, it is meant to be spiritual. A true believer is meant to renounce all material desires as monks do in Christianity and Sanyasis do in Hinduism. But Tully is right. Humans feel a need for religion when they are poor and powerless. In Britain and in Europe a strong social security net and available healthcare rids everyone of the anxiety of starvation and disease, so there is less need for a god. In the US social security is not so generous and the poor could not afford healthcare because of the costs, until Obamacare came along. It is probably not surprising that Republicans, who are strong believers in religion, want to repeal Obamacare while the conservative press in Britain has mounted a vicious campaign against lazy scroungers who depend on state handouts from birth to death. But Tully should not worry. The global economy is not going to recover. Western nations had grown rich by exploitation of natural resources from Asia, Africa and South America, because of their military superiority. That cannot happen any longer. The earth's resources being finite any robust economic growth will lead to an explosion in prices of commodities, leading to inflation and bringing growth to a halt. But commodities will still be essential. You cannot do without iron, copper, aluminium or plastic. To increase profits costs must be reduced. One way is to generate cheap energy from the sun and wind and the other way is to get rid of humans, by using robots. As the numbers of the poor increase they will turn to religion for comfort and brotherhood. The rich and the powerful will feel god-like. As an Indian politician remarked," Who has seen the next life? Enjoy this one." 

Despite Donald Trump we pray that Republicans win next year.

One woman died and a BSF soldier was injured recently in Pakistani shelling across the border in Jammu. Nothing new. Pakistan has been shelling India off and on for decades. As usual Pakistanis blamed India for starting the exchange of fire. Pakistan has been suffering from long blackouts, leading to 1000 deaths, during the recent heat wave. With no electricity water could not be pumped into homes, which maybe to blame for some of the deaths due to dehydration. Who did they blame for the heat wave? India, of course. More specifically, hot air from power plants in Rajasthan. It must be maddening to see air conditioners running in India while sitting in the pitch dark. Imagine the amount of hot air coming out of air conditioners. No wonder the mad dogs went madder and started firing. The Prime Minister will visit Israel within the next one year. He should ask Israel to help in building a secure fence along our border with Pakistan. Terror attacks by Palestinians have been cut by 99% since Israel built a fence separating its territory from theirs. Now Israel has decided to build a fence along its border with Jordan to keep out ISIS. Hungary has started to build a fence along its border with Serbia to keep out illegal migrants. The US has built 670 miles of fencing along its border with Mexico and Republicans aspiring to win the presidential election next year are asking for the entire border to be fenced. But the mother of all fences is the Demilitarized Zone that has kept the peace between North and South Korea for over 50 years. South Korea has deployed automated guns capable of firing .50 calibre bullets which can stop a truck. The guns scan the horizon 24 hours a day and start firing if anything comes within range. At the moment they are controlled by humans but could become fully automatic. We should build a fence along the entire border with Pakistan, cut off all contact with that nation of maniacs and deploy these guns at regular intervals. No need to fight or argue at the United Nations, just ignore them. Even mad dogs cannot use nuclear weapons for being ignored. We lose nothing but gain hugely. Trade with Pakistan is not even 1% of our total trade while we lose vast amounts of money on soldiers protecting the border against terrorists crossing over, in lives lost and in time spent by the government in regular rubbish talks which lead nowhere. If the mad dogs are ignored they will fight and kill each other, an outcome to be fervently wished for. We do not understand why the US continues to protect Pakistan so that the serial killer, Obama rushed over here to lecture Mr Modi in January while the US is building super-nukes which are 3 times as powerful as the Hiroshima bomb. Obama finishes next year, good riddance. Let us hope a Republican wins next year.

Wild animals may hold the answer.

A report on child malnutrition makes dismal reading. Although rates of severe malnutrition have fallen large numbers of children are underweight which means that they are still not getting sufficient nutrition. To grow into a functioning adult a child needs to grow her bones, her muscles and her brain. Just calories are not enough. She needs protein, vitamins, minerals and a certain amount of fat for all round growth. Protein foods, especially of animal origin, are expensive and rural people get most of their proteins from dals, or pulses. The government pays a minimum support price, which is higher than the market price, for 24 agricultural products: 7 types of cereals, 5 types of pulses, 8 types of oilseeds, copra, jute, raw cotton and virginia flu cured tobacco. Why does the government pay for tobacco while enforcing large warnings on packets, movies and television programs? Because it can tax cigarettes, to improve health. Let people die of lung cancer as long as we collect our filthy blood money while protecting our ' vote bank ' farmers. Production of pulses has fallen, resulting in rising prices. The government should take advantage of the fall in the price of sugar to encourage cultivation of pulses. Perhaps all our experts who get paid for writing long reports should look at wild animals. There are 3 things that wild animals never put in their mouths. They do not smoke, they have no access to sugar and they never drink the milk of another species. In fact, once an animal is weaned by its mother it never drinks milk in its entire life. In India, 31% of people are vegetarians who supplement their diets by eating milk products. So, milk cannot be touched but the government can, and should, discourage the cultivation of tobacco and sugarcane and encourage the cultivation of pulses and vegetables. Why are children so malnourished despite trillions being spent on social schemes, like the NREGA? Maybe because there are too many of them. The population of India has grown to 1.27 billion, 17.5% of global population. The US is 4 times the size of India with one-fourth of the population. Vast numbers of people means vast numbers of slums, less land for agriculture, cutting down of forests, leading to soil erosion, and more diseases. The enormous density of population maybe gaged by the fact that lightning, which strikes a tiny area, kills over 2,000 people in India every year. The report shows a clear correlation of malnutrition with open defecation and poor social status of women. The only way is to link all social schemes to those who do not produce children, pay villagers from NREGA to build bathrooms adjoining their homes and give midday meals to women along with school children. Not to men. If malnutrition is a disease it will not improve by treating its symptoms. We must treat the cause.

Surely Iran has enough uranium for a bomb?

So the Iran nuclear deal is done with lots of hugs and smiles. The biggest grin was on the face of the Iranian Foreign Minister, Mohammad Javed Zarif, showing that he had got most of what he wanted. The US says that the deal will prevent Iran from building a nuclear bomb in the next 10 years by reducing the number of centrifuges from 19,000 to 5,000, by reducing the stockpile of low enriched uranium from 10,000kg to 300kg, the original core of the Arak heavy water reactor, producing weapons grade plutonium, will be removed and redesigned, intrusive IAEA inspections to detect any cheating, sanctions will ' snap back ' if there is any cheating and not producing any fissil material for 15 years. Western powers feel that Iran is so desperate to get rid of crippling sanctions that they will be glad to stick to the deal. Certainly, the spontaneous outburst of celebrations by the public shows how they are suffering. But the Iranian regime is not a democracy and Ayatollah Khamenei calls himself the ' Supreme Leader ', like Kim Jong Un of North Korea. Apparently, Iran started its nuclear program in 1984, running almost parallel with that of Pakistan's, which is not surprising since AQ Khan was behind both. What is to prevent Iran from continuing to enrich uranium in its military bases? Iran has agreed to " managed access " to its military sites on request which maybe stretched out to 25 days, enough time to clean out any proof. What if Iran already has enough Highly Enriched Uranium? The Hiroshima bomb contained 64kg of HEU but it could be reduced to 15kg. Iran already has missiles that can reach Saudi Arabia and Israel so both these countries have expressed doubts about the deal. Benjamin Netanyahu has denounced the deal as a " historic mistake " and said that Israel is not bound by the deal. The Arabs fear that lifting of sanctions will bring billions of dollars from oil exports which Iran will use to support its proxies in the middle east: Assad's army in Syria, the Hezbollah in Lebanon and the Houthis in Yemen, right on the southern border of Saudi Arabia. It is stunning to learn that Saudi Arabia, once an implacable enemy, is financially supporting Israel. We wonder if the US really understands the hatred that drives the people of the middle east. The hatred between Sunni Arabs and Shia Persians is so fierce that Saudi is willing to ally with Jewish Israel against Iran. Apparently Obama threatened to shoot down any Israeli plane trying to bomb Iran's nuclear sites last year. Obama is desperately in need of a legacy, having reduced US power to the point where it is now a spectator of world events. There is talk of a Nobel Peace Prize for Kerry and Zarif. Obama got his in 2009. Will the prizes be taken back if a nuclear war breaks out in the middle east? 

If you tax peanuts what will monkeys eat?

Retail inflation has risen to 5.4% in June compared to 5.1% in May, including food prices which rose by 2.88%, while Wholesale Prices fell by 2.4% in June. These are prices compared to prices last year. If WPI is falling why is the consumer paying more year on year. Is it because of rising taxes? Wholesale prices are mainly due to commodities, such as oil, which supply raw materials for factories, so if the input price has fallen then the price paid by the consumer has risen by 2.4 + 5.4, that is 7.8%. With interest rate at 7.25% this gives us a negative real interest rate of -0.3%. The progress of monsoon is uncertain because of an expected El Nino this year so food prices could rise further. Consumer confidence is already weak so rising prices may cut spending even more. If consumers cut spending it reduces demand, which means that sales will be weak. Companies will not invest in new plants or hire more workers unless they are sure of their profit growth. Politicians keep on increasing taxes in the belief that India has vast numbers of middle class people who aspire to a high standard of living, in imitation of the west, so they will continue to spend no matter what the price. A case of monkey see, monkey do, as it were. But in reality there are not as many monkeys as they think. Extreme poverty has declined from 35.4% in 2001 to 19.8% in 2011 but the main rise has been in the low income group, from $2 to $10 per day, which has gone up from 62.9% in 2001 to 76.9% in 2011. Upper middle class, $20-$50 per day, has gone up from 0.3% to 0.6% and high income group is 0.1%. About 3.3% of people earn more than $10 per day, which is around 35 million, double the entire population of Netherlands. The vast majority, a whopping 96.7%, earns less than $10, that is Rs 650 per day, or around Rs 20,000 per month. Which is peanuts. Living in any city, paying rent, school fees, transport and utility charges will cost more than this for a family of four. These people are also vulnerable as any big expenditure, such as a serious illness, will push them into poverty. This may explain why consumer confidence is dipping while indirect tax collections, based on consumption, jumped by 37.5% in April. Politicians keep on increasing taxes so that they can spend on social schemes to buy votes and the more the poor the more votes pennies can buy. And of course they need money to pay themselves, travel in first class comfort and for free medical care for entire families, including grand children. Meanwhile high taxes are pushing out the rich who are relocating to other countries so at some point only the poor will be left. Who will pay taxes then?

Why beat up the police? They are part of the system.

According to experts the reason for the debacle in Greece is because it lacks institutions of governance. Politicians are immune from prosecution even after leaving parliament. Shipping tycoons refuse to pay taxes. There is no proper land registry, the civil service is bloated and people have to pay bribes for essential services. Sounds familiar? Exactly what we face in India everyday. The difference is that Greece got rid of military rule only in 1974 but India has been independent since 1947 and in India people are so fed up that they are beginning to retaliate with violence. Which is extremely dangerous. Yesterday a mob beat up 2 traffic policemen for fining a man on a motorbike who jumped a red light. Traffic police are deliberately run over by car drivers, resulting in death. There are many reasons for this anger. Motorbike drivers have been led to believe that they cannot be punished because in any accident with a car the car driver is invariably blamed even though motorbikes are at fault over 90% of the time. Delhi traffic is chaotic because no one knows traffic rules, having obtained driving license by bribery. Driving licenses are issued by Regional Transport Offices, run by Delhi Police, but overrun with touts who can get you anything you want. But the main reason for the anger is that the police is seen as a collection agency for the government and against the people. There are known spots where traffic jams occur everyday, either because of proximity to markets or because the road has been dug up by Delhi Metro. Not one policeman is ever seen at these spots to ensure smooth flow of traffic. During recent rains traffic signals stopped working, roads became water logged and big potholes appeared. But not one policeman. Imagine being stuck in traffic for an hour and then just as you are finally able to get away a policeman jumps out in front of your car to force you to stop so that he can issue a speeding fine because you have been picked up by a hidden radar. The rage against the police is a manifestation of rage against the government. Politicians are despised, civil servants are seen as corrupt and the police are seen as stooges. Politicians control the police so that they can be threatened into silence. Police beat up a journalist and burnt him fatally for daring to criticise a minister. After flash floods in 2013 in Uttarakhand killed thousands civil servants wasted Rs 1 billion on fancy cars, hotels and food for themselves. IAS officers are running away from Delhi in droves because the Prime Minister insists on hard work and has clamped down on corruption. Why work if you cannot fill your pockets? In 68 years we have not been able to develop institutions of governance. Uniforms make the police visible and make them targets. Poor fellows.

Greece loses from peace, Iran gains from war.

European leaders have been talking all night about whether to extend further loans to Greece because they do not trust Greece to deliver on its promises. They want the Greek parliament to pass draconian laws on tax and pension reforms before they will start discussion on further loans. Former Greek Finance Minister, Yanis Varoufakis wrote that the German Finance Minister, Wolfgang Schauble had decided at the start to push Greece out of the Euro as a warning to France to remain within its budget. He points out that European governments loaned money to Greece to pay off their own banks, thereby transferring all the debt on to their taxpayers and now they are persecuting the Greeks on the excuse of protecting taxpayer money. While the Euro has been a disaster for Greece it has not helped the German people either. Savings rose in Germany while investment fell leading to rising current account surplus. Fall in investment meant that wages for the middle class remained suppressed while rising profits made the rich even richer. Greece joined the Euro by completely falsifying its finances. There are rumors about taking Goldman Sachs to court for helping the Greek government to cook its books in 2001. But isn't it extremely strange that no one is suggesting that Greek politicians who were responsible for lying about Greece's finances should be punished? After all, Christine Lagarde of the IMF, which is one of the troika, is a lawyer. The citizens of Greece are suffering the kind of agony that people suffer during war but it has been created by their own politicians and not by an external enemy. Should they not be punished for it? The lenders say that if they give in to Greece then other nations, such as Spain, Italy and Portugal, will also indulge in irresponsible behavior. Fair enough. But there was a way Germany could have mitigated the suffering of the Greek people while punishing its government. Germany could have lent money to Volkswagen, Siemens, Bayer and other companies to set up plants in Greece to provide jobs and get its economy growing again. Labor would have been cheap in Greece and it could have negotiated good deals for the companies. But that would have meant competition for its own workers, so better to label all Greeks as lazy bums and starve them. Cynical and cruel. Meanwhile, in Vienna the US and Europeans are close to negotiating a nuclear deal with Iran. Are they capitulating to Iranian demands so that Iran will increase its commitments against ISIS? The broad smile on the face of Iran's Finance Minister suggests he is extremely satisfied. Expect Saudi Arabia to buy nuclear weapons from Pakistan and a possible nuclear war in the middle east. Greece loses while Iran gains. Killing is more profitable than peace.

How to deal with cortical blindness and echolalia?

In cortical blindness a person can see perfectly normally but his brain is unable to process the information from his eyes and so he is unable make sense of what he is seeing. Echolalia is when a person repeats a set of words used by another. Our experts must be suffering from both conditions because they keep repeating the same words no matter what the economic data is. Indirect tax collections have grown by a whopping 37% in the April-June quarter, to Rs 1.54 trillion from Rs 1.12 trillion last year. A contented Chief Economic Officer said," Given that GDP growth is the tax base what it suggests is that underlying nominal GDP is growing at a healthy pace." Indeedy doody. How pray do you explain the fall in industrial production in May to 2.7%? April has been adjusted down from 4.1% to 3.4%. Production of consumer durables and non-durables have fallen. Could the fall in factory output and the jump in tax collection be linked? The tax collection has risen because of an increase in taxes on fuel, motor vehicles, consumer durables and services. Of these only the hike in tax on fuel is justified because, even with the rise in taxes, fuel prices have dropped from last year due to the fall in the international price of crude. But here too there is blindness because the government stubbornly refuses to adjust the taxes on petrol and diesel so that their prices are the same, as in other countries. People have to buy fuel and they need entertainment, such as restaurants and cinemas, so they cut consumption of consumables and postpone buying durable items. In the view of one expert we have to encourage savings by citizens so as to reduce our dependence on foreign capital. India's ' investment income ' has fallen to -1.3% of GDP, which means that it costs every Indian $2 per month to keep this foreign capital in India. We get $1.4 for every $100 we invest abroad while we pay $3.8 for every $100 invested here, whereas the US pays out $1.8 for inward investment but receives $3.3 from abroad. So what is the solution? Increase taxes so that people consume less and save more. But if taxes are increased it will add to inflation and people will be spending more on essentials, leaving less for saving. Another expert is of the opinion that for the economy to grow we need to create jobs by boosting our manufacturing sector. Our manufacturing sector was only 13.9% of GDP in 2010, compared to 29.5% in China, 24.8% in Indonesia, 24.5% in Malaysia and 33.6% in Thailand. What does he recommend? Reduce interest rate, bring down the rupee and investment finance. If the real interest rate falls people will stop saving, preferring to buy gold, while a fall in the rupee will increase prices by making imports, such as oil, more expensive. The RBI reduced interest rate by 75 basis points but consumer confidence remains weak. How can people have confidence in fellows who cannot see and keep echoing the same drivel?

Capitalist are bandits, socialists are slimy. What is the answer?

Capitalism is an economic system in which business is in private hands and the government acts as a regulator. In this system only those with brains, ideas and willingness to take risks become successful. A study has shown that the super rich are extremely intelligent and more likely to have attended elite schools. Rich people have created new businesses, providing employment to millions and pulling them out of poverty. Henry Ford's Model T revolutionised American society by reducing the cost of a car from $850 to $300. So, the wealthy are beneficial for society and have become rich by creating wealth for others. After all no one works without reward. But there is a dark side to them. The top 1% maybe even richer than we thought because they hide their wealth in tax havens. The richer they are the easier it is to hide their wealth. They are extremely intelligent and can afford an army of accountants and lawyers to find every loophole there is. This is supported by negative balance sheets of almost all countries. If money is going out of one country it must be going into another. But it vanishes. According to one estimate around $7.6 trillion are missing, which means $200 billion in lost taxes. Surely it is the duty of governments to stop tax evasion and punish the guilty? Not so easy. There is fierce competition between nations for investments, which means private capital. Why should any company base itself in India where corporate tax is at 35% when it is 12.5% in Ireland and 0% in the Cayman Islands. That is precisely what Vodafone did when it bought Hutchison Essar for $11 billion through a subsidiary registered in the Cayman Islands. The rich also influence what laws are passed by buying up politicians by financing their campaigns. There are lots of studies showing how the rich game the system and are bandits. Socialists aim for the moral high ground by preaching about inequality and are ardent supporters of financial help for the poor, by taxing the rich. After all, a person has become rich by benefiting from opportunities provided by the nation so it would be very mean if he refuses to share a little bit by paying higher taxes. Giving money to the poor increases their spending power and helps them to earn more by increasing their well being. But evidence point the other way. Every socialist country in the world is poor. The poor become dependent on handouts and see no reason to work. A social scheme maybe immensely successful initially but it makes poverty comfortable, causes inflation and reduces growth, as happened in Brazil. A much better way is to increase productivity which increases wealth and train workers to increase their worth. Crying for the poor buys votes for the socialists, giving them immense power, they control NGOs, where they use the money for personal gain, and can coerce the rich to obtain bribes. As has happened in India.

Circumstances change, voters always vote in self interest.

The BJP's astonishing victory in the Lok Sabha elections last year has been thoroughly dissected by all sorts of scholars since then. The consensus is that voter behavior in India is changing even if " contemporary voters demonstrated much greater continuity with the past." What are the changes in the voting behavior of Indians? " Indian voters, it was thought, typically prioritize other factors - patronage, populism or parochialism - when selecting their representatives. Yet evidence from state and national elections suggests macroeconomic realities are increasingly relevant." While respecting the greater knowledge of scholars we suggest that voter behavior has not changed at all. In fact, people vote in self interest all over the world, although how they calculate their self interest maybe extremely complicated, or even irrational. Thus, 93% of blacks voted for Obama in the 2012 elections even though he had made no effort to improve their lives in his first term. What it did was to increase bitterness among right wing whites a lot of whom think that he is the worst president since World War II. Indians may lack the standard of living or education of Americans but they vote according to how they perceive their self interest. " The old trope that Indian voters vote their caste than cast their vote is too simplistic. Even in states where caste conflict is known to be rife, voters often vote for candidates from castes and communities other than their own." It is not the fault of Indians. Politicians have sliced and diced the people according to religion and caste to get votes. The campaign by the Gujjars in Rajasthan to be designated as Scheduled Tribe is being blocked by another group which has monopoly of reserved jobs in the state. In a country where the population far outstrips resources voting for a candidate of the same caste maybe economically advantageous. The constant elevation of minorities by the Congress consolidated the Hindu vote while caste ceased to be such a problem because Mr Modi is from a backward caste and used to sell tea at railway stations. " Until the quality of the state improves or clean politicians can convincingly demonstrate that they can deliver, even well-informed voters might have good reasons to seek assistance of candidates who try to pass off their criminal records as signs of their competence." Exactly. With simmering discontent about social injustice people see corruption as just redressing the balance, as in the Vyapam scam. " Dynastic politics may not be popular, but dynastic politicians certainly are." True. One of Mr Modi's greatest asset is the lack of a parasitic family. Dynastic politicians win by diverting scarce resources to their constituencies to bribe voters so they win. Although it may look complicated it is very simple. People vote in self interest only.

Is India in danger of catching China disease?

It is hard to know what is happening in China as its government controls all information. Analysis by foreigners, based outside China, depends on their biases. China's stock market has plunged by around 30% since June although it is still higher year on year. About 45% of companies have suspended trading in their stocks so investors cannot get out. More than $3 trillion have been wiped off the market capitalization of companies. The government has stopped Initial Public Offerings and asked 21 brokerages to buy shares worth a total of $19.3 billion. Even after the fall companies are valued at an eye-watering 59 times their reported earnings. The meteoric rise of the stock market was due to the government encouraging citizens to buy shares so that retail investors comprise 80% of the market. Most of them were trading on money borrowed from banks, called margin trading, and as the value of their holdings have dropped it has triggered a forced sell off by the banks, to reduce their own risks. The market had gone up by 150% in the last year so a correction is good but it maybe dangerous for the Communist Party because it makes it look incompetent and tarnishes the gloss of omnipotence. The government does not want people demonstrating on the streets so it is doing everything to support the market just as Japan did 20 years ago. Some people see China's problems as bigger than that of Greece while others see a parallel with the US stock market just before the crash in 1929 which led to the Great Depression. While we would be ecstatic if China crashes, resulting in a civil war with division of the country and independence for Tibet, what about India. The Indian stock market has risen by 90% in the last one year but 70% of investment is by foreign investors. Less than 2.5% of Indians invest in the stock market probably because they need the regular income of term deposits in banks but mainly because they do not trust our markets or our companies. From 2008 till now value of shares of over 300 companies have fallen by over 90%. 80% of Indians believe that companies are corrupt. Earnings estimates of companies are falling although if the economy grows strongly, pulling poor people out of poverty, we could see a boom in earnings. Only 49% of companies fulfil proper disclosure practices. Because of low interest rates during the Congress Raj firms have borrowed vast sums of money which they are unable to repay because of lower profits. They have also borrowed from abroad without hedging against a fall in the rupee so if interest rate rises in the US many firms may have to default. They have only one solution which is for the RBI to lower interest rate in India but if wholesale prices have fallen by 2.5%, reducing input costs, and the retail prices have gone up by 5.1% then can we conclude that consumer prices have actually increased by 7.6%? The property price bubble is another story. We could end up like China, only poorer.