Can we bank on our banks.

Speaking at Bancon, the annual bankers' conference in Mumbai, RBI Executive Director, B Mahapatra said," Till March 2011, things were manageable. We had around Rs 1.1 lakh crore ( trillion ) in recast loans, but now if you see, things are quite out of control. It has gone up to Rs 2.7 lakh crore. This is only CDR ( Corporate Debt Restructuring ) and if you put both ( CDR and bilateral restructuring cases between banks and companies ) together, maybe it might exceed Rs 3.25 lakh crore." This is scary stuff. Banks, especially those controlled by the government, are sitting on a mountain of bad loans and restructuring is one way of not showing the loans as losses on their books. Banks have had to increase provisions for these loans in case they do go bad, which has seen a fall in profits of public sector banks. Central Bank reported a loss of Rs 15.09 billion in the September quarter followed by Untied Bank of India with a loss of Rs 4.89 billion. Net profit of Corporation Bank has dropped by 96% from Rs 4.06 billion to just Rs 155 million while that of State Bank of Mysore dropped by 79.3% from Rs 1.45 billion to Rs 300 million. A lot of these loans maybe wilful fraud with the connivance of bank officers who are bribed to disburse large loans for commercial projects and the money is then diverted for personal use or for other dubious projects. The casual manner in which banks lend money was beautifully illustrated recently in Noida where a builder sold apartments to multiple buyers by arranging bank loans for them. The banks are now forcing these people to continue to repay their loans for properties they do not possess. A Deputy Governor of the RBI, KC Chakrabarty said that banks had written off Rs 1 trillion of bad loans in the last 13 years. He exposed a subterfuge called a " technical write-off " wherein a bank takes a hit on its profits by writing off a loan but continues efforts to recover it in courts or other forums. " We must move away from restructuring, there should not be any category called restructuring. The moment it is restructured, it should be declared as NPA, there should not be any technical write off..." he said. Public sector banks are owned by the government which means that they are controlled by politicians and run by civil servants. A bigger bunch of villains you will not see.

Cannot be rich without exploitation.

Writing in the New York Times, Nobel Prize winning economist, Paul Krugman says that the US economy will remain depressed for a long time to come. He quotes Larry Summers,former Treasury Secretary under Bill Clinton, who thinks that the US will be in " secular stagnation ", which is a persistently depressed state where full employment can only be produced by creating bubbles, which will be temporary. Krugman says that the US economy was growing in the 60s and 70s because the population was growing due to the baby boomer generation but now the population is stagnant. Another cause is the trade deficit which has been growing since the 80s. He has been a vocal supporter of the Fed Chairman Ben Bernanke's attempts to stimulate growth by keeping short term interest rate at 0% and injecting $85 billion dollars every month by buying treasuries and mortgage related securities. Some economists would go further. They recommend negative interest rates where people will be charged for keeping money in banks or holding on to cash. This will result in the dollar to fall in value and, while this may reduce the trade deficit by making exports cheaper and imports more expensive, it will surely result in tit-for-tat devaluation of currencies across the world and the end of the dollar as a reserve currency as central banks dump US treasuries. The Republicans have a simple solution to improve the economy. Cut taxes for the rich and make up the shortfall in revenues by cutting food stamps for the desperately poor. If the rich have more money, they say, they will invest in new businesses which will create jobs which, in turn, will draw people out of poverty into gainful employment. But will it? A rich man may choose to spend the extra money in buying a luxury yacht made in Germany, a painting by a dead artist or a factory in China. How will that create employment in the US? Major US companies prefer to hold money abroad rather than paying tax in the US. That is why the middle class is shrinking as good jobs disappear, to be replaced by jobs paying less than menial wages as bosses take home millions in bonuses. The real reason is that rich countries became rich by exploiting poor countries by buying up raw materials cheaply and selling manufactured goods at exorbitant rates. Now that poorer countries are refusing to be exploited the rich Americans are exploiting the poor ones. That is the dirty secret.

Good bye to Tendulkar.

The superlatives poured in. Slimy politicians were seen in the stands on the second day of the test match on Saturday when he came into bat at 38 not out overnight. Everyone wanted to be there when he scored his last century, but it was not to be. On 74 he tried to steer a slow off break from Narsingh Deonarine and was caught off the outside edge by Darren Sammy standing at first slip. As he walked off Sunil Gavaskar, sitting in the commentator's box, was effusive," Sachin Ramesh Tendulkar, thank you, thank you, thank you." Figures and trivia will keep statisticians earning their pocket money for sometime to come. Age 40 years, played 200 test matches, hit 51 centuries, scored a total of 15,921 at an average of 53.79 and even took 46 wickets at an average of 54.17. He hit 69 sixes and 2058 fours and ran 7275 runs for a total of 1,46,351 kms. He played on 59 different grounds and batted for 688 hours and 21 minutes. We may say that Tendulkar was one of the greatest batsmen of all time but would it have been possible if Sunil Gavaskar had not shown the way? In the fifties and sixties we had no one we could depend on to open the innings against the likes of Hall, Gilchrist, Trueman, Tyson and Davidson. In his very first series in the West Indies Gavaskar scored a total of 774 runs at an average of 154.80 and India won the series 1-0, the first ever series win on foreign soil. But his greatest innings was probably at the Oval in London in 1979 when India was set 438 to win in the last innings of the match. He scored 221, as masterful a display of patience, concentration and strokes as you will see in a lifetime. If the English captain, Mike Brearley had not deliberately wasted time by changing the field after every ball we could have won. For the first time India had an opener we could depend on. There were no helmets in those days so he batted against the most fearsome fast bowlers in the world in a floppy panama hat with the ball whizzing around his neck and head. Tendulkar brought us pleasure but it was Gavaskar who gave courage to Indian cricket. Another great champion is also on the verge of bowing out as Vishwanathan Anand is 2 games down with 6 games left to survive the challenge of Magnus Carlsen. Great people bow out but filthy politicians go on for ever. The tragedy of India.

We will not be fooled forever.

Our most revered Finance Minister has been shooting off his mouth again. On 15 November, at Bancon 2013, which is a banking conference in Mumbai, he said," Monetary policy has no impact on food prices.
The only way we can contain food inflation is to augment supplies, but supplies are not entirely elastic." What is that supposed to mean? If a bumper kharif crop after the best monsoon for over 20 years is not enough to increase supplies what will? Obviously he is never going to admit the truth which is that the government is entirely responsible for the rise in prices of food. The Minimum Support Price paid to farmers for grains sets a high base price irrespective of supplies and MNREGA has caused rural wage inflation which feeds into prices of produce. High grain prices increase the cost of feeding animals which means the prices of milk, eggs and chicken keep rising. To win in 2009 the Congress forgave all loans to farmers. Faced with high NPAs in state controlled banks it cannot repeat the same bribe this time so maybe this is another way of providing a bonus to farmers. Our Agriculture Minister, who is a friend of the Congress, has said that rising prices are good for farmers.  " Supplies won't increase dramatically in a short period of time. For supplies to rise we need great investment, great production, better distribution and better logistics. So, we have a challenge," the FM said. Which begs the question: What the hell were you and your cronies in government doing for the last 10 years? The government has stockpiled over 75 million tonnes of grains when the mandate is for 28 million tonnes. Thus the government is guilty of hoarding grains, causing prices to rise. This is a criminal offence. Why was salt selling at Rs 150 per kg in the eastern states just a couple of days ago? The lies do not end there. Heads of Central Public Sector Enterprises were summoned to the Finance Ministry den at North Block in Delhi and ordered to pay higher dividends so that the fiscal deficit does not shoot up. Oil companies ONGC and Indian oil and the gas provider GAIL were there as they are sitting on large cash piles. We were told that these companies were making huge losses because of subsidies so fuel prices were raised, feeding into electricity bills and airlines losses. Lies cannot fool us all the time.

India is surviving on black money.

We have been banging on about the excessive levels of taxation in India extracted by force by a vigilante tax department supported by a hostile government, keen to extend its survival by bribing voters with taxpayer money. This has naturally resulted in a jump in litigation as hapless citizens look to courts for protection, as explained by one Guatam Nayak in an article. Tax fellows have been set a target of growing collections by 20% which is impossible when the economy is growing by 5%. The threat of cessation of investments by foreign companies led to the dilution of the General Anti Avoidance Rules, which sought to collect taxes on transactions going back to 1965. But citizens do not have the option of saving money in a less parasitic environment. Encouraged by politicians tax fellows seek to ensnare people by dubious interpretation of tax laws and since 50% of the demand has to be deposited before appeal is heard an honest taxpayer ends up being unlawfully victimised. The system is based on extraction of money by force and is known as Tax Deduction at Source. Thus, banks are required to deduct 10% tax at the time of paying interest on deposits even if the total tax paid by an individual far exceeds her annual tax liability. The person then has to file returns to claim a refund which may take over a year. It is an adversarial system practised with a ferocity that would have made the British proud. If direct taxes are severe indirect taxes are much worse because they are levied in stages which keeps them hidden. A person travelling from Delhi to Toronto has to pay a total of $183.03 in taxes. Austria charges $34.60 in security and service taxes at Vienna airport, Germany charges $36.70 at Frankfurt and Canada charges $51.70 on security, sales tax and improvement fee at Toronto. Delhi is the highest at $60.03 under Passenger Service Charge, Passenger Service Fee and India Development Fee. Taxes on domestic flights are equally onerous but are hidden under incomprehensible codes. This is why an American is able to fly 1.8 times every year while an Indian is able to fly on average once in every 10 years. Since people are unable to fly our airlines rack up huge losses. Not content with destroying the economy our most revered Finance Minister has warned suspected service tax evaders of severe reprisals. That is why no one knows how much black money is floating around.

The grassy knoll definitely exists.

In an article titled " The love for conspiracy theories " one Sandipan Deb ridicules the tendency for human beings to look for conspiracies where none exist. He lists the AIDS epidemic, the shooting of President Kennedy, the death of Subhash Chandra Bose and 9/11 attacks where people have not believed the official explanations and concocted wild theories to explain the events. The official explanation for AIDS is that it emerged in Africa when the Simian Immunodeficiency Virus mutated to infect humans who handled blood of monkeys while eating them as bushmeat. But why now and why in Africa? SIV must have existed for centuries but has not infected humans thus far and Chinese are known to eat raw monkey brain without getting infected. The index case was a homosexual man in California. As for Kennedy, Marina Oswald, the wife of Lee Harvey, has broken her silence to claim that her husband was innocent of the crime. People who claimed that Princess Diana was murdered were ridiculed until recently when a man referred to as Soldier N has claimed that the SAS in Britain arranged the accident by blinding the driver of the car, Henri Paul by shining a laser in his eyes. The soldier's wife, Mrs N has been warned by the SAS that she could be killed. Knowing how snobbish the British aristocracy is, is it at all conceivable that they would have been pleased with the mother of the future king married to a Muslim Egyptian? Can anyone imagine Diana attending Prince Williams marriage and coronation in a burqa? The death of Syama Prasad Mukherjee, the founder of the Bharatiya Jana Sangh, in custody is suspicious enough but the sudden death of Lal Bahadur Shastri on the night he signed the Tashkent agreement, reversing all the gains that the Indian armed forces had made against Pakistan, is surely too much of a coincidence. Was there an autopsy? If not, why not? It is true that people, not just in India, but in every country in the world have developed an almost total distrust in politicians and it maybe satisfying to claim inside knowledge of an event but the recent disclosure of how the NSA in the US and the GCHQ in Britain have been bugging countries and world leaders leads to a feeling of us against them. We are told that if we have nothing to hide then why worry so we can ask if they do not intend anything nasty why spy on us. Whether Mr Deb likes it or not the " grassy knoll " does exist.

The last straw.

Everybody knows that the economy is on life support, with the S&P threatening a credit downgrade to junk status but India seems to avoid a crisis like that in Iceland, Greece or Ireland whose economies went into severe recession when their banks nearly collapsed under bad loans. The state run banks in India are sagging under Non Performing Assets, as bad loans are called, but they are trusted by the people who know that the government will never allow these banks to fail by recapitalising them with borrowed money. The RBI raises money for government spending by selling bonds. Banks are required to invest 23% of their funds in these bonds which is known as the Statutory Liquidity Ratio. Since the credit rating is suspect, yields on these bonds have risen to 9%. In Europe countries had to be rescued when yields on their bonds rose to 7% but our government borrows money invested in term deposits by citizens in banks controlled by itself. However, this profligacy has consequences. Easy borrowing leads to wasteful expenditure, raises borrowing costs for everyone else, such as businesses, and leads to high fiscal deficit. To adjust for its high borrowing the government allows inflation to rise, which reduces its debt in real terms, but causes enormous suffering for the people which the politicians seek to mitigate through various subsidies in an attempt to get votes, thus making the deficit worse. Any government gets its revenues through taxes but in India only 35 million out of a total of 1,200 million people pay income tax, of which about 89% are in the lowest tax bracket. Agricultural income is completely tax free, which is why a large proportion of politicians list their professions as farmers. To augment its revenues the government has levied a cascade of indirect taxes on every product and service, thereby adding to inflation and reducing consumer demand. When taxes are extortionate people will find ways of avoiding taxes which leads to accumulation of black money. Some of the highest taxes are on properties so it is not surprising that more than half the price of any property is paid in cash, which is the reason why property prices do not fall as in other countries. So far India has averted a crisis like that in Argentina and East Asia but it is a matter of time. Maybe the tapering of QE3 in the US will be the straw that breaks the camels back. We have been lucky so far but will that last?  

We Indians hate the T word.

A sudden deluge of good news on the economy. Helped by a weak rupee exports jumped 13.5% in October while imports, which have become more expensive, dropped by 14.5%. Consequently, the trade deficit fell to $10.55 billion compared to $20.20 billion in the same month last year. " We are confident of meeting the official export target of $325 billion ( for the fiscal year ), and if the trend continues we may even hope for a higher number," said Commerce Secretary, SR Rao. We will not spoil the momentary glow by remembering that China exports the same amount every month. The trade deficit was $90.68 billion in the first 7 months of this financial year which is $22 billion less than $112 billion last year. Our most revered Finance Minister proudly proclaimed that the Current Account Deficit will be $60 billion, which is less than the estimated $70 billion and much less than last year's $88.2 billion, quite forgetting that he is solely responsible for the dire state of the economy in the first place. Increased taxes have effectively reduced gold imports by 80%, from $6.85 billion last year to $1.37 billion this October. Total gold and silver imports are down by 12.8%, from $28.10 billion to $24.50 billion. Industrial production has grown by 2% in September compared to 0.6% in August and exports of agricultural produce, textiles, leather , handicraft and engineering have all increased. Why then has the stock market index, the Sensex dropped by 1000 points in the last few days while the rupee is down from around 61 to the dollar to 63.72 this morning, despite RBI support. That is because the Consumer Price Inflation was 10.09% in October, up from 9.84% in September while food prices increased by 12.56% in October compared to 11.44% in September. The consequences of wild inflation are 1. people will curtail non-essential spending on travel, eating out and buying cars 2. the rupee will fall in value as it buys less, which, in turn, will increase prices further and 3. the RBI will keep interest rates high which increases the borrowing costs of government and industries, hitting growth. But the proverbial bull in the china shop are figures from the US. In October 204,000 jobs were created in the US while the economy grew faster than forecast at 2.8% in the third quarter. This may signal the end of the bond buying program or the dreaded " tapering ". We are so terrified of the T word.

A highway of corruption.

The Indian government cheats the people in numerous inventive ways. There is the alphabet soup of scams - 2G, Coalgate, CWG, Adarsh, mining and many that have not been discovered as yet. One of the biggest scams is to call a narrow, broken and dangerous track a " National Highway ", give it a number and charge toll on it. Not just once but every 30 or so kilometers. Some stretches on these roads have been widened and resurfaced but alternate with long segments of broken surface or where work is still going on. Most of these so called highways have just 4 lanes, have very poor signs and not one has facilities for emergencies such as break downs or accidents. Truck drivers blatantly drive the wrong way to save on diesel, villagers drive tractors overladen with produce, blocking both lanes, and cows meander across at will. Our ministers who frequently travel abroad on fictitious business on taxpayer money are either blind or choose not to see that ordinary roads in other countries are better than our National Highways. Why? Because road building is financed by the most corrupt method, called PPP or Public Private Partnership which is a partnership between politicians, civil servants and private companies to loot the public. The government asks for tenders to improve a particular stretch of road. Companies favored by the scoundrels are awarded contracts by quoting ridiculously low rates. Once contracts have been signed these companies then ask for the price to be revised upwards and start charging high rates of toll even as the work is going on, causing huge traffic jams. Once the scams became public private fellows have virtually stopped applying for projects. In 2012-13 the ministry could award just 1322 kms of road building projects as opposed to a target of 9500 kms. This year's target has been lowered from 7500 kms at the start of the year to a pathetic 2128 kms. To protect their hides the crooks blame each other resulting in Rs 170 billion worth of litigation. To resolve the mess the Congress is setting up a regulator. Will it help us, the citizens? No. The ministry will just ignore any advise from the regulator that does not facilitate bribes. Where the government is a thief then private fellows will join the party. The toll operator in Gurgaon is apparently cheating the government by under-reporting the numbers of cars passing through. If one thief cheats another does it balance the budget?

Why do we Indians suffer from inferiority complex.

We Indians are known for our lack of humor but what is worse is that we have no pride in ourselves. We do not know if it is because we despise our politicians, because we are ashamed of how filthy our country is, because our education system does not stimulate our minds or because we hate ourselves for resorting to corruption in our struggle to survive against a hostile state. Our space research organisation, ISRO is attempting to send a probe, called Mangalyaan to Mars at a cost of Rs 4.5 billion. The carping against it has been as vicious as it has been ignorant. There are those who say that such a lot of money would be better spent on giving stuff to the poor. Is it such a lot of money anyway? The distance of Mars from earth  varies from 401 million km to a mere 54 million km, the average being 225 million km. In September, 2014 when it is supposed to reach Mars it will probably have traveled around 92 million km. If we consider that Jet Airways lost Rs 9.99 billion in the 3 months to 30th September flying on earth which has a diameter of just 12,742 km then the cost of the project seems almost negligible. Then there are those who say that we are wasting time and money on duplicating what others have already done. By that logic all of education is a colossal waste of time and money. How many generations of children have learnt the same tables in maths, the same alphabets and the same nursery rhymes? First, the US may share its data or photos sent back by the Curiosity Rover but is unlikely to share the technical details of the mission which must have cost billions of dollars. They will see if the knowledge can be used by their defence industries or can be commercially exploited. After all, the " terminator technology " employed in genetically modified foods was invented by the US defence department and passed on to Monsanto. Former ISRO Chief and Planning Commission member, K Kasturirangan said," We cannot overlook this aspect in a modern competitive world where everybody is zealously guarding his or her own capabilities and trying to create either a commercial advantage out of that or be militarily stronger by having that kind of extra capability." If this mission is a success we could perhaps earn vast sums by teaching others how to get to Mars so cheaply. Think of how many poor could be helped with that kind of money? 

Creative accounting will not protect against junk status.

Prof Nouriel Roubini is known as " Dr Doom " for his prediction of the collapse of the housing bubble in the US, also known as the sub-prime crisis, and the deep recession it would cause. He says that the loose monetary policies adopted by central banks to resume growth and reduce unemployment are already forming bubbles in various countries. Stock markets have recovered more than 100% since the lows of 2009 and high-yield junk bonds are back. Real estate prices are rising in Switzerland, Sweden and Canada as well as in China, Hong Kong and Brazil. This is because excess money supply is forcing funds to invest in risky stock markets of emerging economies to increase returns while zero interest rates are tempting people to buy ever more expensive properties, expecting prices to rise even higher . In India the Sensex scaled record highs of 21,321 before profit taking brought it down to 20,666 and property prices have risen 1000% since 2002. Low interest rates and black money is preventing a correction in property prices which is resulting in double digit retail inflation. Leading into next year's general elections the government is locked into a high spending mode but is committed to cutting the fiscal deficit at the same time. The only option was to increase revenues which led to savage rise in taxes on every kind of goods and services. The double whammy of taxes and inflation led to a fall in consumption leading to a fall in revenue growth. Government expenditure in the first half of the current financial year was Rs 8.09 trillion against a full-year target of Rs 16.65 trillion but revenue receipts have been only Rs 3.89 trillion compared to a target of Rs 10.56 trillion. To stimulate growth the government needs to invest in useful spending, such as infrastructure, but is committed to totally useless social spending to bribe the " vote bank ". The Food Security Bill has increased subsidy by 10% while the fertiliser ministry has asked for an increase of 50% in subsidy. To keep the fiscal deficit within control the government will " rollover " $15 billion deficit to next year's budget. " Whatever we need to do, we will do. But the fiscal deficit target will be met," said one Finance Ministry official. India's accounting method " never gives you the real picture of your finances," said Devendra Kumar Pant, Chief Economist at India Ratings and Research. Creative accounting, isn't that what Ramalinga Raju is accused of?

The CBI itself is illegal, say judges.

In April of this year Mr Ranjit Sinha, Director of the Central Bureau of Investigation admitted in the Supreme Court that it is merely an arm of the government. He was being coy. What he meant was that the CBI is an arm of the government because it is the extortion arm of the Congress which happens to control the present government. This gives the Congress so much power that even when the BJP was in power for 6 years it did not dare to resolve the Bofors case even though there is clear proof that Quattrocchi had taken bribes. Nor did the BJP dare to get justice for the victims of Mr Sajjan Kumar who is alleged to have incited a mob to kill Sikhs after the shooting of Indira Gandhi in 1984. Seems that its uselessness has caught up with the CBI. Couple of days back a 2 judge bench of the Guwahati High Court opined that the CBI is not a police force in legal terms and does not have the power to either investigate or arrest suspects. The CBI was born on 1 April, 1963 by the Ministry of Home Affairs under the Delhi Special Police Establishment Act 1946. The court also said that the DSPE Act applied only to Union Territories, such as Chandigarh and Pudicherry and presumably also to Delhi. This means that all the crooks implicated in the numerous scams under the aegis of the Congress, such as the 2G scam, the Coalgate scam, which were being investigated by the CBI, are claiming immunity with joyous smiles. " This apart, it is the state legislature, which is entitled to constitute a ' police force ' for the purpose of conducting ' investigation ' into crime," the judges said. What the judges probably mean is that forces such as the Central Reserve Police, Border Security Force or the Indo Tibetan Border Police are actually paramilitary forces under the central government but any police force charged with investigating crime and arresting citizens is to be constituted by the respective state government. There is thus no concept of a Federal Bureau of Investigation as in the United States. If the CBI was constituted under the DSPE Act then its role should be limited to Delhi and in areas under the jurisdiction of the central government. No doubt this judgement will be challenged in the Supreme Court by the Congress, especially since its power to harass opponents will be severely weakened without the CBI. Down boy.

How do you shut up foreigners?

We know that the Congress would like to ban free speech and thinks that any Indian indulging in free speech is guilty of sedition but how can you ban these pesky foreigners, especially when you are begging for their precious dollars to rescue an economy that is near bankruptcy because of your treacherous policies. The credit rating agency, S&P has maintained India's rating at BBB-/A3 for now but thinks that there is chance of a downgrade to junk status after the general elections in May. Clearly S&P does not want to be seen as interfering with elections by downgrading our credit rating now but has issued a clear warning," We have noted a marked slowdown in India's real growth. This complicates the government's debt dynamics and ability to implement reform." What it means is that with growth slowing down tax collections will not be able to meet the social schemes Congress started to bribe voters and hence a future government will not have the money to lower taxes to stimulate demand or spend on improving our stone-age infrastructure without which we will remain poor. " The next government, regardless of composition, will face several challenges," says the S&P report. This means that the next government will not be able to reduce the fiscal deficit or inflation, which will cause the rupee to fall and lead to a credit downgrade. The Congress has not reacted to the S&P report nor to Jim Rogers, Chairman of Roger Holdings when he said in an interview," I am not very optimistic about India. It is a wonderful country but has not been managed very well for decades." However, the Congress has reacted ferociously to a report from Goldman Sachs which mentions the word the Congress is fiercely allergic to. The word is " Modi ". In a report titled " Modi-fying our view: raise India to Marketweight " Goldman Sachs says that since BJP is seen as market friendly and Modi is predicted to become the next Prime Minister it is raising India's stock market to buy. Our most revered Commerce and Industry Minister, Anand Sharma said," I think banks such as Goldman Sachs should stay focused only on doing what they claim to specialise in." Er, but that is exactly what Goldman Sachs is doing. It is advising its investors. If only the Congress could accuse the bank of sedition and lock it up. Dang.

Self interest only serves a few people.

To win elections in 2009 the Congress resorted to bribing its " vote bank " through various cunning schemes, dressed up as economic stimulus to mitigate the negative effects of the sub-prime crisis on the economy. Sadly, bribery is a crime whether practised by an individual or by the government. Thus the Sixth Pay Commission, which increased salaries of useless civil servants by 80%, was supposed to increase sales of companies by increasing demand. However, it also increased the bribe price of these fellows and helped to increase fiscal deficit to 4.8%. The MNREGA scheme was supposed to increase rural purchasing power but resulted in a rural wage inflation leading to food inflation at 18%, causing even more hardship for the poor, and the waiver of loans to farmers has caused bank NPAs to rise. For the elections in 2014 the Congress is banking on the Food Security Bill which will provide rice at Rs 3 a kg and wheat at Rs 2 a kg to 75% of rural and 50% of urban population. The hype is that by spending less on food the poor will have more money to spend on other essentials thus helping the poor will lead to increased growth of the economy. To make this a success the government has built up stocks of food grains more than double of what is required. India does not have enough capacity to store so much grain so, a lot of it is lying out in the open, being eaten by vermin or rotting in the rain. Since the government pays a Minimum Support Price, which his higher than the market price, farmers will naturally divert land to growing grains rather than vegetables which have very short shelf lives. As everyone knows the price of vegetables has risen to unaffordable levels. Not just that it seems that such massive subsidies on food may fall foul of the WTO. The Doha round of trade talks have been stalled since 2001, mainly because rich countries are asking poorer countries to open their markets while providing hundreds of billions of dollars worth of subsidies to their farmers. India was one of a group of countries standing up to bullying by the rich countries but by passing the Food Security Bill India will now be in a defensive position. Western countries could challenge the law at the WTO and obtain permission to levy extra taxes on our exports. Imagine what that would do to our meager exports. 

Can we tax corruption?

Seems that Mexico is about to levy a tax of 1 peso, which is equivalent to 8 US cents or about Rs 5, on every liter of sugary soft drinks. This is apparently because the government is concerned at increasing obesity, not to mention the $1 billion that the tax will raise. Since 2006 when Felipe Calderon became president taxes have gone up while politicians have made vast amounts of money through crony capitalism. In India the Congress grabbed power in 2004 by promising a bunch of handouts and freebies to millions of people and have levied punishing taxes to pay for these. Also telecom licenses, coal mines and contracts for building roads were given to friends at highly profitable rates. Rumors are that Rs 250 billion were enjoyed from the Commonwealth Games. Naturally the fiscal deficit went up to 4.8%, bringing with it a threat of credit downgrade. Clean drinking water is not easily available in Mexico, forcing people to drink either bottled water or soft drinks. In India the government owned Indian Railways hands out bottles of water to every passenger on every Rajdhani and Shatabdi train as soon as the train begins its journey. These bottles are labelled Neer which is the word for water in Sanskrit. As the author suggests in the article both countries could benefit enormously from a tax on corruption. In India the HSBC Services sector PMI was 47.1 in October from 44.6 in September. Anything below 50 denotes contraction so, although the figure was better than last month the sector must still be shedding jobs. " While activity readings maybe stabilising, a notable recovery is not on the cards for a while," said Leif Eskesen, Chief Economist for India survey sponsor HSBC. " Despite the weak growth backdrop, the RBI has to keep its inflation guards up to address the lingering inflation pressures," he said. Many experts are of the opinion that emerging markets have reached the limits of productivity gains through industrialisation and future growth rates will be around 3.5%. This would be extremely bad news for us because the economy will not generate enough jobs for the rising population although the IMF is more optimistic and sees growth at 6.7% in 2018. The solutions are simple. Control inflation tightly, reduce taxes and engineer a fall in the population. Only a person of principle and personal integrity will be able to rescue the country. Is there such a person in India? 

Who stands to gain?

The Intelligence Bureau has warned that the ISI of Pakistan may use remnants of Khalistani terrorists hiding in Pakistan to assassinate Mr Narendra Modi. The Khalistani movement intended to create an independent Sikh state in Punjab and resorted to violence resulting in the assassination of the Prime Minister,Mrs Indira Gandhi. However, it was the blowing up of Air India flight 182, from Montreal to Delhi, over Ireland killing 329 people by the Babbar Khalsa International which resulted in the defeat of the movement as western countries clamped down on its financing. Starved of funding and defeated by the police in Punjab surviving members of BKI are still hiding in Pakistan as servants of the ISI. So who would want to see Mr Modi dead? Pakistan would seem to be an obvious candidate because he has promised a more muscular foreign policy. Modi was apparently responsible for the deaths of a few hundred Muslims in riots in Gujarat in 2002. However, it is not the Muslims of Gujarat who have made that an issue but the so called secular parties, especially the Congress which has used the CBI to file innumerable false cases against Modi and his ministers. This utterly cynical ploy to win " minority " votes has convinced the Indian Mujahideen that Modi should be killed. Thus the bombs in Patna 10 days ago. But if truth be told, some in the BJP would also be very glad if Modi is killed because the resultant sympathy wave will ensure a big victory in next year's general elections and smooth slide into the Prime Minister's kursi. With tears of hypocrisy, of course. The US would be very pleased if Modi is removed. In typical boorish behavior the US has refused Modi a visa to visit the US, which has a very large Gujarati community, but not to anyone of the Congress although the Congress President had to make a quick getaway from a hospital in the US after being served with a summons by a Sikh group. The US wants India to quietly accept every barbarism from Pakistan without retaliating. Mr Vajpayee did nothing after the attacks on our Parliament in 2001 and the present government went on " bended knees " to ask for peace after the Mumbai attacks in 2008. If Modi has no money stashed abroad and no children studying in the US he makes for an awkward customer. So many reasons to want Mr Modi dead.

Diwali greetings to all.

Diwali greetings to all. We hope and pray that peace and prosperity will finally come to India after 400 years of Mogul barbarism, 200 years of British brutality and 66 years of the most corrupt feudal exploitation of the people by political gangs led by mafia style families. Of course, any change has to come through the ballot box. Delhi, Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram will hold assembly elections in stages till mid December, followed by the general elections in May 2014. The BJP was hoping to capture Delhi and Rajasthan from the Congress while keeping the other 2 in its control. While Rajasthan could indeed fall to the BJP in Delhi the outcome has been made very interesting by the new Aam Aadmi Party. Born just 11 months back AAP, as it is known, seems to have tapped into a deep well of anger at massive corruption, rising prices and a clueless police force unable to stop horrendous crimes against women. If elected the AAP promises an end to corruption, complete transparency in its functioning and an end to pretentious security, such as gun toting bodyguards and cars with flashing lights. In such a short period of time it has gained enormous support, especially among the poor, the traditional ' vote bank ' of the Congress. In an in-your-face insult to old parties the AAP has chosen a broom as its election symbol, promising to sweep away all the garbage. Every auto rickshaw in Delhi displayed the broom with the slogan " Now the broom will go to work " but the Congress government forced them to stop. Now the Congress has written to the Election Commission asking it to ban all opinion polls. Its legal department Secretary, KC Mittal thinks that such surveys " lack credibility " and can be " manipulated and manoeuvred " by " vested interests ". Being of the Congress Mr Mittal is naturally unaware of something as basic as Freedom of Speech. He also seems to be unaware of the Congress using the CBI to harass opponents with false charges while deliberately fluffing cases against supporters and friendly newspapers publishing blatant lies disguised as news. Probably only two politicians in India have not accumulated any personal wealth and they are Ms Mamata Banerjee and Mr Narendra Modi. They are considered dangerous and are hated by the Congress. It is going to be extremely interesting. Let us hope India can smile again.

Who says India is not a funny country.

One week back 7 bombs exploded in Patna, just before Mr Narendra Modi addressed a rally, killing 6 people. The first bomb went off accidentally in a toilet at Patna Railway Station, injuring one of the terrorists, Mohd Tarique Ansari. His mate, Mohd Imtiaz Ansari panicked and tried to flush the rest of the bombs down the toilet but failed. " Clutching a bag, he was opening and closing the door of the toilet. I called the cops and they found bombs in the bag," said a porter. Anyone would expect Bihar Police to have gone into an extreme state of alert and round up the remaining terrorists. Not quite. The First Incident Report filed by the Station House Officer of the Government Railway Police, Ram Pukar Singh reads," I asked Imtiaz to furnish legal documents for carrying bombs, which he could not. When quizzed Imtiaz admitted that after the blast, he had tried to flush the bombs down the toilet." Question: Does the Bihar government issue permits to carry bombs? Not just that, the FIR does not even mention how many bombs Imtiaz was carrying which might make it difficult to prove his guilt in court. But there is a bigger joke. One Mehre Alam was in the custody of the top anti-terror outfit in India, the National Investigation Agency but escaped and, to make it funnier, he warned Hyder Ali, a senior member of the Indian Mujahideen, who had planned the bombings with the ' operations head ', Tehseen Akhtar. These 2 had been involved in other blasts and set up a Ranchi cell where 8 men have been trained in making bombs. However, the biggest joke is that our most revered Prime Minister and the President of the Congress, Ms Sonia Gandhi warned against communal forces in a reference to the BJP and the RSS, that is against Hindus. Since independence the Congress has grabbed power by dividing the country by language, caste, religion and selective laws. In September the Reserve Bank wrote to the 5 Devaswom boards in Kerala, which manage all the Hindu temples in the state, asking them to reveal their stock of gold. In 2011 a Supreme Court committee forced open 5 vaults in the sacred Padmanabhaswamy Temple and found treasures worth Rs 1 trillion. Only vault B remains untouched. Sacrilege, abuse, lies and attacks. Does the Congress want to wipe us out?

Wealth can only come from a love of the country.

The bottom experts are singing hosannas because their eyes have seen the bottom of the economy. This years monsoon has been abundant, although typhoon Phailin damaged rice crops in Odisha and Andhra, so a bumper harvest is expected. The Congress is beginning to release the humongous stockpile of grains it had built up in anticipation of the Food Security Bill so there is expectation of food prices coming down, although how it will reduce the price of vegetables is not explained. The Current Account Deficit is expected to fall to $60 billion through a combination of increased exports, due to the weak rupee, and decreased imports, especially of gold. The Congress is desperate for the rupee to become stronger before elections next year, which will reduce our export advantage, and smugglers must be busy even now building routes to smuggle gold into India. The government has cleared 99 projects worth Rs 3 trillion without explaining where the money is going to come from. Clearing projects is of  no use unless they are implemented and it may take years to get all the clearances. Also if the totally corrupt Private Public Partnership route is followed it will merely result in prices so high as to be unaffordable for the people while resulting in windfall gains for cronies. Foreign Direct Investment was $13 billion till August but Foreign Institutional Investors poured $16 billion into our stock market. So foreigners prefer to invest in stocks so that they can make a quick exit but do not want to be tied down for the long term. The Sensex has reached a record 21,196 this morning but is nervously waiting to find out when the Fed will start to wind down its bond buying program. Inflation remains uncontrolled and the RBI increased the Repo rate by 25 basis points 3 days back. The HSBC manufacturing PMI for October was 49.6, which is the third straight month of contraction. The real danger is that the Fiscal Deficit is threatening to explode. As a result of extortionate taxes, which reduces demand by increasing prices, revenue collection is 36.9% of budgeted amount compared to 37.5% last year. The government has already borrowed Rs 4.12 trillion out of a target of Rs 5.42 trillion for the whole year while deficit has increased to 76% in the first half of the financial year compared to 65.6% a year ago. Adversarial economics only causes poverty. Surely the World Famous Economist should know that.

Bomb blasts of secularism.

Last Sunday, just before a BJP rally in Patna, addressed by Mr Narendra Modi, there were 7 low intensity bomb blasts, killing 6 people and injuring hundreds. Attacks were carried out by the Indian Mujahiddin whose operatives were carrying 18 bombs, of which 5 failed to explode. One terrorist arrested by the police, Imtiaz Ansari, is believed to have said," Our objective was to trigger fear so that many women and kids get killed in the stampede." Had there been a stampede with hundreds, or even thousands, of casualties there would have been reprisals against the perpetrators with widespread riots. Fortunately Mr Modi and the BJP decided to go ahead with the rally and such is Mr Modi's charisma that the crowd stayed good humored throughout. At the end of the speech Mr Modi was heard exhorting the crowd to stay calm and go home peacefully, which they did. Following the blasts the shameless have resorted to the usual excuses and blame game. Our most revered Home Minister, Mr Shinde, who proudly claimed to have restored power faster than the US after the blackout over the entire north and east of India last year, was said to be enjoying a Bollywood music launch for a film. The Chief Minister of Bihar refused to provide a bullet proof SUV to Mr Modi because he wanted 2 of them for his visit to Nalanda. Why one man needs 2 SUVs for a visit inside his own state is a mystery. In a statement the Gujarat Police have accused Bihar Police of a casual attitude towards security for the rally. In a statement they said that " rehearsals before the event was not carried out ". " It was after great persuasion that Bihar Police officers agreed to join the Advance Security Liaiason..." and " However Bihar police officers, for reasons best known to them, had refused to sign the ASL report and had not taken note of relevant issues mentioned therein." We do not think that the Bihar Police were told to neglect security at the rally but it is surely the case that they were influenced by the constant anti-Hindu rhetoric of the so called secular parties. These pseudo-secular parties, led by the Congress, are constantly reminding us of Babri Masjid and the Gujarat riots and deliberately instigating Muslims to attack Hindus and our shrines. While they went on " bended knees " to beg for peace with Pakistan after the Mumbai attacks of 2008. Why do Hindus have to die for secularism? Strange!