Sunday, March 13, 2016

We have more to learn from Brazil than just football.

Thousands of people are protesting in Brazil against the government of President Dilma Rousseff who says that she is not going to resign because she has been democratically elected and blamed the opposition for creating a crisis. Sounds familiar? That is exactly what our politicians say when they are accused of hanky-panky. People are angry because the economy shrank by 3.8% last year and the currency has dropped by 55%. Brazil's economy relies largely on exports of minerals, controlled by the government, and agricultural products and the slump in commodity prices has resulted in huge deficits. People are enraged at allegations of $2 billion scam at the oil company, Petrobras. Something like our 2G and Coalgate scams. While the economy was booming the previous president, Lula da Silva started a direct benefit transfer scheme, called Bolsa Familia, in which the government paid a subsidy of 70 Reals for every child to the mother, provided the child attended school and health checks regularly. It was hailed for lifting 11 million families out of poverty and Lula is revered by the poor. We have the MGNREGA, Food Security Act and the Right to Education Act to subsidise the poor. Now the government has decided to provide free cooking gas to 50 million poor women. Prosecutors even picked up Lula and his wife for questioning. Such an act will be impossible in India where politicians can travel to the US for secret medical check ups in private planes, with lots of boxes, without any customs search. As the recent games with Vijay Mallya has shown. Mallya was Member of the Rajya Sabha and as an MP got himself a diplomatic passport. Clearly Rs 90 billion can buy an awful lot of support. To get their money back banks applied to the Supreme Court to impound his passport on 8 March but Mallya had left India on 2 March, no doubt assisted by his well-wishers. Now the Attorney General wants Mallya to come back to India to surrender his passport. Naturally, Mallya has declined the invitation. You cannot take Rs 90 billion from banks by being stupid. He said that he does not feel safe in India and, although he feels sick to be in hiding, one day he will return to clear his name. Retail inflation rate in Brazil was 10.36% in February despite the interest rate being held at 14.25% for 5 months straight. The Governor of the Reserve Bank, Rajan has cited Brazil as an example of what can happen if you try to grow the economy too fast. However, politicians have elections to win and in a poor country like India handouts are the easiest way to win. Politicians get power and pelf and the hapless taxpayer foots the bill. In other countries people are protesting against corruption, here they are protesting to bring corruption back. The irony is that most people here have heard of Brazil, but only for its football.

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