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!

Why worry when we have full employment.

The RBI expects the economy to grow by 4.8% in this financial year which is down from its previous forecast of 5.7%. Some foreign experts reckon that growth will be below 4% but the government is still very optimistic, insisting that it will be 5.5%. They never explain what these growth figures mean. Have they taken account of inflation? This growth could be based on higher corporate earnings which have been caused solely by rising prices and not by higher sales. In which case the economy is shrinking and we are in a recession. On the other hand according to the National Sample Survey Organisation urban unemployment in India is lower than that in the US of A. In 2009-10 unemployment among women was 5.6% while it was just 3.4% in men. In other countries an unemployment rate of around 4% is considered full employment because there will always be some people in between jobs. While unemployment in Patna was 13% among men and 24% among women, unemployment among men had fallen to 1% in Bhopal and 1.4% in Howrah. These are very strange figures indeed because manufacturing industries lost 5 million jobs between 2004 and 2010.  Even stranger is the fact that companies are unable to find suitable candidates to recruit. The reason is that our education system churns out tens of millions of poorly educated graduates who are unemployable. The artificial scarcity of trained labor results in very high wages which means that our industries cannot compete globally and our exports amounted to a paltry $300 billion in the whole of 2012-13, an amount that China exports every month. Naturally our trade deficit was a massive $190 billion last year. However, since the Congress thinks that our economy is booming it is piling on tax after tax on the people. The Department of Telecom has decided that telecom companies have to pay a separate license fee of 8% of revenues for cell phone towers, never mind that they have paid billions of rupees for licensing spectrum. Since CEOs of theses companies cannot go around with a dish clamped to their heads saying, " Beep, beep " it is assumed that towers are part of the business, just as offices are. And tolls on " expressways " will increase. These would be considered normal roads in civilised countries. Predatory taxes will kill off growth. We can only hope that they kill off the Congress as well. Forever.

The RBI shows some purpose.

Seems that everyone has accepted that inflation is the biggest enemy of growth. While a few months back politicians, civil servants and business fellows were howling for lower interest rates, claiming falsely that it will increase investment thereby leading to growth through higher job creation, yesterday there was not one peep as the RBI raised the cost of borrowing by 25 basis points. The previous Governor of the RBI, Subbarao succumbed to intense pressure form the Finance Minister who said," I have tried to argue that while I acknowledge that the central bank mandate is price stability, price stability must be seen as a larger mandate of growth and employment." Not true. We have consistently argued that policy and spending is decided by the government without consulting the RBI. Therefore, it must be the function of the RBI to act as a protector of the rupee by regulating government spending and keeping a lid on both the fiscal and the current account deficits. Since the government is the largest borrower a high cost of borrowing would force politicians to limit wasteful spending by making it expensive to borrow. During World War I ( 1914-1918 ) the Kaiser and the German Parliament decided to finance the war entirely by borrowing. The German Mark fell from 4.2 to 8.91 to the dollar. The Congress has financed a string of social schemes, costing trillions of rupees, through borrowing. The rupee has dropped from 39 in 2007 to 62 to the dollar today. Germany came out of the war with its economy and industries largely intact but was undone by the " London Ultimatum " which forced Germany to pay 132 billion gold Marks as war reparations. In the first half of 1921 a Mark was 60 to the dollar but fell to one third of one cent, leading to hyperinflation. Germany has never forgotten the trauma of those years and that is why it is insisting on austerity for Greece. India faces a flight of tens of billions of dollars when the Federal Reserve starts to taper its bond buying program, as it must, which will lead to further fall in the value of the rupee. It is imperative to control inflation now to prevent it becoming completely out of control. Our so called experts are craven stooges who blame the weather, oil prices, Europe but never the true culprits. The new Governor seems to have brought some spine and purpose to the RBI.

Bad laws lead to fat lawyers but no business.

Seems that companies in India have spent around $1 billion on legal fees in 2012. The Tata group has around 400 lawyers and the $27 billion Essar group has a legal team for each of its 8 businesses. The reason is that there are too many laws in India, laws are designed to be oppressive so as to extract massive bribes and our courts are almost somnolent so that cases drag on for years. On the one hand it allows convicted criminals, such as the former telecom minister,Sukhram, to evade justice for decades while on the other it denies justified recompense to an injured party. Thus, the Australian mining company, White Industries, fed up with the dilatory tactics of the government owned, Coal India, obtained a judgement from an international arbitration tribunal in Singapore overriding both Delhi and Calcutta High Courts. Russian telecom company, Sistema has already sent a notice to the government threatening arbitration proceedings unless it is compensated following cancellation of all 2G licenses by the Supreme Court. In 2007 Vodafone bought a 67% stake in Hutchison Essar for $11 billion through an entity based in Cayman Islands. As per Indian law Vodafone should have withheld $2.5 billion in tax from the seller Hutchison Whampoa of Hong Kong so the government rightly demanded compensation from Vodafone. Either the law is vague or the government lawyers are totally incompetent because the Supreme Court found in favor of Vodafone. Instead of making the law clear and fair the government decided to introduce a law called General Anti Avoidance Rules under which tax fellows can impose taxes retroactively, going back to 1960. Foreign companies set up a huge outcry saying that they would stop investing in India. At about this time the economy went into a tailspin which spooked the Congress so now the law has been delayed till 2016. The mobile maker, Nokia is fighting a tax demand of Rs 20 billion on royalties it receives on software while Vodafone and Shell are contesting taxes on transfer pricing. Even Indian companies such as Reliance have threatened to go for arbitration on the pricing of gas from the Krishna Godavari fields. Bad social schemes need bad taxes which need bad laws which cannot be enforced by bad lawyers. Is it any wonder that we remain poor?

The majority die in the name of democracy.

In the general elections of 2009 the average turnout across the country was 59.7%, of which the Congress received 28.55%. So, in effect the Congress received votes from just 17% of the total electorate. However, our first-past-the-post system meant that the Congress increased the number of its seats in the Lok Sabha to 206 which made it the largest single party and allowed it to cobble together a coalition by creating over 70 ministries, a straightforward bribery to politicians just as it had bribed the electorate with disastrous social schemes. That is how democracy works, which basically means rule by the majority. Sadly, when it comes to the people the Congress chooses to persecute majority Hindus in favor of minorities in the name of Secularism, which is as false as it is cynical. In some parts of the country minorities form up to 20% of the population so politicians of other parties also tend to pander to them to get votes. These politicians divide Hindus by appealing to members of their own castes and this, added to minority votes, sees them through to victory. One such is Mr Nitish Kumar, Chief Minister of Bihar. He came to power with the support of the BJP and together they formed a coalition government but since Mr Narendra Modi was elected the Prime Ministerial candidate by the BJP he has broken with the BJP and is now governing with the support of the Congress and RJD of Mr Lalu Prasad Yadav. His excuse is that Mr Modi did not protect Muslims during the riots in Gujarat in 2002 and is therefore Hindu nationalist. It is true that around 1500 Muslims did die in 2002 but everyone chooses to forget that over 500 Hindus were also killed. This is nothing compared to the killings of over 8000 Sikhs after Indira Gandhi's assassination in 1984, orchestrated by the Congress.
The numbers of Muslims in Bihar are far larger than the numbers of Sikhs so Mr Nitish Kumar has clearly calculated that pandering to Muslims would outweigh any grievance that Sikhs may feel. That is mind numbingly cynical. Yesterday Mr Modi addressed a crowd in Patna in Bihar. There were 6 explosions resulting in the deaths of 6 people with over 100 injured. Mr Nitish Kumar had refused personal security for Mr Modi but is now crying " conspiracy ". And it is all in the name of democracy.

High taxes are an extortion.

From Chyavanprash to bricks and cement. Seems that the Burmans, promoters of the $1 billion dollar company, Dabur, have surrendered to the lure of the windfall profits of the property market. As the Tatas, Godrej, Mahindras, Wadias and every other business group have done before them. The risks are minimum. Borrow a few billion from banks and buy land. Banks are always happy to lend against immovable collateral. Quickly put up a sample apartment and start advertising. High Networth Individuals, as the wealthy are called, deposit booking amounts for apartments. Start building with the money collected and keep asking for further installments as the work progresses. At no time does the builder incur any risk. Sure, bribes have to be paid to officials and politicians for innumerable permits required by law but these are built into the price. These poor fellows are then left with mountains of cash which cannot be deposited in their bank accounts or invested in mutual funds and constitute a security risk. They buy properties from the original investors at a premium, paid in cash. It is a real win-win situation. The builders make huge profits, banks get their money with interest, the HNIs make a quick buck and fellows with black money sleep in peace in the knowledge that their money is safely invested in properties. Thus, the rich and the crooked have an interest in ensuring that property prices keep on rising. However, to earn their fortune politicians have to win elections and the easiest way to do that is to bribe the electorate. For that they need to collect taxes. Vast amounts. With prices of properties in tens of millions it is naturally a juicy target. The central government has imposed a 1% tax, which must be collected and deposited by the buyer or his property will not be registered. Now UP is to levy VAT on buildings under construction. Property prices have risen so high that 99% of people cannot afford them. People are thus forced to live in rented apartments which is one of the main reasons for poverty as rent money is a total waste. A kind of mutual fund, called Real Estate Investment Trusts, could allow ordinary people to invest in the real estate market and profit from the boom. Effective tax on such funds will be a bloodsucking 43.6%. This will only push up prices even higher. Until one day they crash. Lots of people will be wiped out.

India has become a pathetic nation.

How do we understand what is going on in India? Our stock market index, the Sensex is on fire. It closed on 20,683 yesterday, within sniffing distance of its highest close of 21,004 on 5 November, 2010. The highest intraday high was 21,228. Experts are divided on how high it will reach, from 22,000-26,000. Foreign investors have put in $2.09 billion into Indian stocks between 2 and 27 September and taken out $965 million from the debt market, despite rising yields. In 2013 they have invested a total of $13.7 in our stock market while taking out $5.7 billion from our debt market. Why are they running away from debt? Is it because they do not trust our government's ability to to repay the loans? Figures are certainly bad. The September wholesale inflation rose to 6.46% from 6.1% in August while retail inflation rose to 9.84% in September from 9.52% in August. Food inflation rose to a blistering 18.4% from 18.18% in August. Industrial production rose by a paltry 0.6% in August while the HSBC Services PMI dropped to 44.6 in September from 47.6 in August. Anything below 50 denotes contraction. So, services, which comprise over 60% of the economy, is contracting and cutting jobs. This is partly due to inflation which is reducing demand and partly to the introduction of new taxes on every service. Instead of reducing and rationalising taxes the central and state governments are devising new taxes to levy on people. The European Commission published a list of 20 top destinations for direct investment in the world and India does not feature on the list.
Since the EU had direct investments of 5.6 trillion Euros in the rest of the world this is a great loss for us, especially because our infrastructure alone needs investment of $1 trillion. German newspaper Frankfurter Allgemeine recently wrote," Stealing in government has never been this brazen....Crime rates are up and security of life....is at its lowest ebb. India must then be more than qualified to be called a failed state." A failed state, thanks to Congress. One of our top newspaper crows how the US has snubbed Prime Minister of Pakistan, Nawaz Sharif while choosing to forget that the Obama administration has quietly resumed $1.6 billion of aid to Pakistan. Begging for approval. How pathetic is that?

The reaction hits the people.

Newton's third law states that every action has an equal and opposite reaction. When you float on water the downward pressure of your weight is matched by the upward resistance of water. In economics it is different. The reaction usually surfaces after sometime, may be surprising in its manifestation and need the courage of patriotism to control. Instead of recognising the growth in the economy between 2004 and 2009 as due to very loose monetary policy in the west, resulting in a flow of cheap money, and taking steps to prevent excessive corporate debt the Congress chose to take credit for the growth. It allowed its coalition partners in government a free hand resulting in massive scams. To win elections in 2009 it resorted to a huge increase in spending which increased fiscal deficit and resulted in double digit inflation. To plug the big hole in its finances the Congress resorted to an extortionate increase in taxes, leading to further increase in inflation and a drop in demand. When people stop spending corporate profits fall. Kingfisher Airlines has already gone out of business and now Jet Airways has declared a loss of Rs 9.995 billion in the June to September quarter. When companies make less money they maybe unable to repay loans they have taken from banks, which means banks see a rise in bad loans. Non Performing Assets are set to rise from 3.4% to 4.4% by 31 March next year but we do not know how many loans have been quietly restructured by giving fresh loans so that they do not reflect on banks' balance sheets. Some experts believe that NPAs could be more than 10% of total loans. Our most revered Finance Minister has urged state-run banks to " closely monitor 30 largest defaulters ". On the other hand the government is giving Rs 140 billion to PSU banks to lend at lower rates to people to buy cars and other goodies to boost consumption and tax collection. With elections due in 2014 the Congress thought it could repeat the bribery of 2009 and passed the Food Security Bill which seeks to distribute rice at Rs 3 a kg and wheat at Rs 2 a kg. The Minimum Support Price it pays is higher than market prices which probably led to diversion of land to growing cereals. Which has resulted in a surge in the prices of vegetables with onions selling at Rs 80 a kg. Trouble is politicians act but we suffer the reaction.

We must have confused our enemies.

It was an Ahhh moment for Britain yesterday as Prince George, the 3 month old son of Prince William and Kate Middleton, was exhibited to the paparazzi for his christening ceremony. Dressed in, what looked like, a white frock he exhibited the typical British bull dog spirit as kept a stiff upper lip throughout and seemed to resemble a miniature Winston Churchill. Without saying a word his haughty disdain for the cooing assemblage seemed to suggest," We are not amused." Back in India it was a case of same to same. Our most revered Prime Minister is on another foreign visit, this time to Russia and China. He has really creamed his tenure in the kursi by travelling abroad more than 70 times since 2004, at a cost of Rs 6.40 billion, more than any other Prime Minister in our history. He has traveled abroad 37 times in his second term and, in a show of contempt for our elected representatives, a total of 15 times when the parliament was in session. It maybe argued that since he is more ceremonial than executive, allowed to warm his chair as long as he obeys orders, it does not matter where he goes. However, after Sharm al-Sheikh it is terrifying for Indian citizens what he is signing away wherever he goes, especially with our most dangerous enemy, China. What the boss does crooked civil servants are sure to follow. Three unnamed senior officials in the Home Ministry have taken off for a foreign jaunt to Cairo, Istanbul and Dubai. Two pilots and 3 engineers were supposed to fly an Embraer jet back from Lisbon in Portugal to India. How it reached there we do not know but the trip was to be for 9 days which was to include training. The 3 Home Ministry fellows offloaded the 3 engineers, extended the trip to 14 days and added Cairo, Istanbul and Dubai to the itinerary. Wonder if they have taken their wives with them or are travelling solo to study the anatomical expertise of belly dancers and other artistic delights. Would they be returning with the usual gold biscuits, bottles of Scotch and toys for grandchildren or will they be filling their suitcases with various types of onions? Wish we knew. While our fellows are on their junket abroad a Pakistani fellow continues to earn money in India even though his visa expired last week. Are we surviving because our enemies are as confused as we are?

Foreign Direct Investment is the key.

Scared by the precipitous fall in the value of the rupee when Fed Chairman, Ben Bernanke hinted at tapering the bond buying program in the US the government, along with the RBI, has initiated a number of steps to build up foreign exchange reserves and shore up the rupee. Levels for Foreign Direct Investment have been increased in various sectors. Up to 100% in telecom and single brand retail, 51% in multi brand retail, 49% in insurance and defense. Instead of buying from the market oil companies have been allowed to buy dollars from the RBI, reducing pressure on the rupee. To attract money from overseas Indians the RBI has reduced financing rates of banks. $9.6 billion of NRI deposits have already come in. Hit by the fall in the rupee and high inflation imports have fallen by 18.1% while exports have risen by 11.2%, bringing the trade deficit to just $6.8 billion in August. There are plans to allow rupee trading inside India. At present Foreign Investors are not allowed to hedge their rupee exposure in over-the counter or exchange trading markets in India. They must go through Category 1 banks which is expensive. So a Non-Deliverable Forwards market has developed in other countries over which the RBI has no control. It is hoped that allowing rupee trading inside the country will be controlled, thus preventing wild fluctuations in the value of the rupee, and deepen the credit default swaps market. But will it not make it even more dangerous? It was the collapse of the credit default swaps that led to the sub-prime crisis in the US and what is to prevent foreign investors from playing games both inside and outside the country. The daily foreign exchange market runs at over $4 trillion so the entire foreign exchange reserves of India amount to loose change. Most of these measures are short term to attract hot money and could reverse in an instant. The only real remedy is to increase Foreign Direct Investment. FDI did increase by 6% between January and June to $10.87 billion but this is nothing. Our infrastructure alone needs $1 trillion. Trouble is that our politicians are good at passing laws but self interest prevents implementation. Walmart has already left, along with Posco and Arcelor Mittal, and now the mining giant, BHP Billiton has surrendered 10 oil and gas fields because of failure to get clearance. The money is out there. But can we get it?

The people must remain ignorant.

Common Cause, a NGO has filed a Public Interest Litigation in front of the Supreme Court challenging the ban on news broadcasts by private FM channels. Only the government owned channel Prasar Bharati has the license. Bangladesh, Nepal and Sri Lanka do not restrict private channels from broadcasting news and current affairs. " India is perhaps the only democratic country in the world where the dissemination of news and current affairs programmes on the radio remains a monopoly of the government-owned broadcaster," argued advocate Prashant Bhushan. Wrong. India is definitely not a democracy. It is a police state run by political gangs, controlled by mafia families, for their own benefit. Criminals and cockroaches love the dark which conceals their repulsive presence. Not just radio. Our government tries its best to censor the internet. According to Google India is second only to the US to ask for information on accounts of users and for removal of any criticism of the government. In the recent stampede on a bridge leading to a temple at Datia in Madhya Pradesh police threw dead and living people into the swollen river. Eye witnesses insist that not only were the police were robbing dead bodies and then throwing them into the river to decrease mortality rates but they threw living people, including children, into the river. The Information and Broadcasting Ministry is right in claiming," What is material is the way of presentation. The same event can be sensationalized or put in a sober manner taking care of the sentiments and sensitivities involved." Absolutely. If a private channel were to broadcast the truth with eye witness accounts people would be outraged and may resort to rioting. With the government controlling news everything can be sterilised until it appears in newspapers and since vast numbers of people cannot read the event can be suppressed. See what trouble Edward Snowden has caused, and is still causing, the US government. The Brazilian President, Dilma Rousseff has cancelled a state visit to the US to show her anger at the National Security Agency spying on Brazilians and yesterday the American ambassador to France was called for a dressing down. What did our government do? Our most revered Foreign Minister actually defended the US spying on Indians. Let other countries spy on our citizens. As long as the people stay ignorant the politicians are safe.

The waiting debt trap.

Every so often Financial Services Secretary, Rajiv Takru starts spewing fire and sulphur against bad loans, called Non Performing Assets, incurred by banks.  The reason for his ire is that banks have referred 549 cases of defaults of loans to the Corporate Debt Restructuring Cell with a total value of Rs 3.38 trillion till 30 June of this year which is 49% higher than Rs 2.27 trillion last year. " Every bank in any particular lending consortium will have to file an FIR ( first information report ) against a borrower who is found to be a wilful defaulter," he said. He is right to be worried. Loans through Kisan Credit Cards are over Rs 2 trillion and total loans to the agricultural sector is more than Rs 5 trillion. Before the 2009 elections the Congress bribed farmers by waiving repayment of all loans, costing banks Rs 750 billion. Farmers are no doubt waiting to be forgiven again before 2014 elections. In a really weird case of reverse bribery infrastructure companies actually paid a " premium " to the government to build roads, airports and power plants. The companies were expected to recover costs from the people through higher toll charges on roads, extremely high airport charges and constantly rising electricity prices. The Congress thought that, like the compulsory reservation of 25% of seats in private schools for poor children, it would gain credit for getting poor children into private schools and collect huge amounts of money upfront to spend on wasteful social schemes to bribe the " vote bank " while blaming companies for the increasing prices. In a case of breathtaking dishonesty the Congress took the money and then failed to provide land for building roads, environmental clearance or captive coal mines to provide power. The companies took loans believing that the government would honor its side of the bargain and are now landed with massive debt. In a report Credit Suisse says that 10 large business groups which are Adani, Essar, GMR, GVK, Jaypee, JSW, Lanco, Reliance Group, Vedanta and Videocon have a combined gross debt of Rs 63.10 trillion. They were also encouraged to borrow abroad to take advantage of historic low interest rates which has jumped in value because of the falling rupee. These companies are now having to sell assets to decrease their debt load. But will it be enough to reduce the NPAs?
 

Will someone explain what is going on.

We maybe citizens of India, we maybe educated with post graduate degrees and we may have traveled to other countries but it is astonishing how little we know about our own country of India. And we cannot be informed if we are ignorant. In 2005 a government company, Neyveli Lignite was allotted a Talabira II coalfield in Odisha by a screening committee, headed by the then Coal Secretary, PC Parakh. The committee said that Hindalco, a company owned by Mr Kumar Mangalam Birla, had been provided adequate coal stocks from Mahanadi Coalfields ltd but had failed to utilize the offer. They said that Hindalco and Neyveli could jointly develop Talabira II and III to produce an extra 30 million tonnes of coal. However, the Odisha government wrote to the Prime Minister's Office recommending that Talabira II should be given to Hindalco which the PMO accepted, overruling the committee's recommendation. Now the CBI has filed FIRs against Mr PC Parakh and Mr Birla. Why? In India politicians have the power to use all natural assets and taxpayer money as they please without giving any explanation or having to account for their actions. Out of 160 captive blocks allocated between 2004 and 2009 only 2 have started production so that India is now having to import coal despite having reserves of more than 270 billion tonnes. The CBI should have asked the Prime Minister and the Chief Minister of Odisha as to why Talabira II was allocated to Mr Birla. If Mr Birla had written a letter requesting for the coalfield then surely that is not a crime. The Prime Minister has defended the allocation. To prove how politicians think they are feudal lords with the power to do what they please our most revered Finance Minister said that Public Sector companies must invest Rs 1.4 trillion in new projects or they will be forced to pay very high dividends. " Dividend payments by PSUs will not be less than last year's. In no case we will accept dividend less than last year's," he said. Last year PSUs paid Rs 554.43 billion in dividends, this year the government is expecting Rs 738.66 billion. Companies are not investing in new projects because demand has collapsed due to scorching inflation. So, either these companies have to waste money on projects for which there is no demand or hand everything over to the Congress which they will use to bribe the electorate for the coming elections. Wish we were clever enough to understand what is going on.

We are all bottom experts now.

The great sage of India, Mr Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission is the latest expert to expound on the bottom. " I think the economy has bottomed out and will now move up, though one has to be cautious on the pace of recovery," he said in a recent interview. When asked about the IMF projection of growth at 4.3%, it has since been reduced to 3.75%, he said," The IMF forecast is based largely on recent performance. They are not factoring in the possibility that the positive features I have listed may have a significant effect in the next six months." What he actually means is that the IMF has been consistently wrong in the past and his wild guesses could actually come true because no one really has a clue. Surely, if any of them had a clue they would not be swanking about in the millionaire Swiss resort of Davos while we, with no knowledge in economics, could see the economy teetering on the edge. In its forecast the Planning Commission predicted an average growth rate of 8% between 2012 and 2017. The IMF was totally wrong about the Argentinian and Russian debt crises. They started to grow only after defaulting on their debt and stimulating their economies. The IMF said that austerity will make the Greek economy contract by 5.5% between 2009 and 2012. In fact, it contracted by 17% which has devastated the country. The IMF forecast that the British economy would be plunged into recession by the policy of austerity being pursued by the Tory government. It has just revised its growth forecast of the British economy from 0.9% to 1.4%. The present Governor of the Reserve Bank, Raghuram Rajan was the Chief Economist at the IMF from 2003 to 2007.  Thing is that it is very difficult to make macroeconomic forecasts because of so many variables. From the weather to earthquakes to internal politics to external economic shocks it is almost impossible to calculate the combined effect of all of them. However, while the others are unpredictable politicians should always behave in the national interest. " The food inflation is because of high inflation in cereals, and a short term spike in onion prices. The government is working on ways to offload substantial volumes of stocks of food-grains,..." said Mr Ahluwalia. In short the Congress has generated food inflation and will bring it down before next year's elections to gain credit. Is that the bottom he means.

Three cheers for India.

Three cheers for us. The first is for the highest level of malnutrition in the world despite the fact that India exports food grains. Globally under-nutrition falls by half the rate of GDP growth but in India an average GDP growth of 4.2% between 1990 and 2005 has resulted in malnutrition falling by only 0.65%. Experts are unable to explain this enigma. The reason is that successive governments have concentrated on increasing production of grains, such as wheat and rice, by a device called the Minimum Support Price which pays farmers more than the market price encouraging them to produce even more. Since we do not have adequate storage space vast quantities are left to rot in the open or be eaten by vermin. As a result grains become more expensive, land is diverted from producing fruits and vegetables to producing grains, which is why vegetables have become so expensive fueling food inflation, and the government incurs a huge expense, raising the fiscal deficit. Food inflation rose to 18.4% in September from 18.18% in August. Many experts recommend genetically modified foods. Which is nonsense. Adding genes to plants to produce bacterial proteins which are toxic to insects, such as BT Brinjal, could have unknown harmful effects if taken long term. Also foreign companies would come to control India's food production which would be dangerous for our security. The second cheer is for being the country with the highest number of slaves in the world. There are an estimated 29.8 million slaves in 162 countries in the world of which India has 14 million. China is a distant second with 2.9 million, Pakistan has 2.1 million and Nigeria is fourth with 701,000. Bonded labor, child labor, children sold by parents to gangs who chop off limbs to turn them into beggars and women trafficking for prostitution, we are first in every form of inhuman monstrosity that one can think of. But why do we get such headlines? This brings us to the third cheer which is that condom use has dropped by 40% in 5 years. Population has grown by 1.43% from 2005 to 2010 and is set to surpass that of China by 2025. China has prevented 400 million births since 1979 with its one child policy which is one of the reasons for its phenomenal growth. To reduce malnutrition, slavery or crime we must reduce poverty and to reduce poverty we must reduce the numbers of the poor. But then there will be no " vote bank " to bribe.

The bottom is yet to be reached.

Has the bottom been reached? Those who look at uncontrolled inflation, uncontrolled spending, which will increase fiscal deficit, and the way that the rupee is being shored up with increased borrowing are fearful of what will happen if the US starts to withdraw its stimulus rapidly or growth in the world economy falters. The Congress is still trying to push its delusion of growth at all costs, arguing that the IMF forecast of 4.25% growth, despite robust farm production due to fantastic monsoon rains, in this financial year is wrong and growth will be between 5-5.5%. " I know that the World Economic Outlook report does not share my optimism, but I may tell you that we do not share their pessimism," said our most revered Finance Minister. Pity politicians cannot be punished for economic treason. So what should we believe? The HSBC Services Purchasing Managers Index is down to a dismal 44.6 in September from 47.6 in August, the lowest in 4 years. Any figure below 50 denotes contraction. That is no surprise because retail inflation rose by 9.84% in September as compared to 9.52% in august while wholesale prices rose by a 7 month high 6.46% in September compared to 6.1% in August. When people are being hammered by rising prices and taxes they are likely to cut expenses in eating out and travelling. If services, which constitute 60% of the economy, start cutting jobs then demand is likely to fall further. Surely manufacturing is growing because Indian products have become cheaper due to the fall in the value of the rupee? The index measuring both manufacturing and services has gone down to 46.1% in September from 47.6% in August and 48.4% in July. Both sectors are shedding jobs. After expanding by 2.7% in August industrial production grew by a microscopic 0.6% in August. The solution surely is to let the rupee fall to its true value, reduce taxes to stimulate demand and push exports by spending on roads, ports and electricity. The good monsoons will hopefully bring down food prices and limit the rise in inflation. But the Congress cannot do that. It has earmarked massive spending in social schemes to bribe its vote bank to try to win the coming elections. This will raise fiscal deficit and invite a credit rating downgrade. And so the bottom keeps dropping.

Inequality is part of rapid growth.

According to Credit Suisse global wealth has increased by 112% since the year 2000 to $241 trillion. Wealth of Indians has increased by 300%, from $1.2 trillion to $3.6 trillion. The report predicts that global wealth will grow by 40% to $334 trillion by 2018. Just 32 million dollar millionaires own 41% of all assets while 68.7% of people control just 3% of the wealth with assets less than $10,000 each. In India 2.8 million are high net-worth individuals while 90% are below the $10,000 mark. In India the bottom 70% of the population hold 20% of private wealth while in China it is 29%, in the US it is a paltry 7%, in Germany 13% and in Norway the bottom 70% hold 12% of private wealth. It is difficult to know how they have calculated the wealth of Indians. Anyone with income over Rs 180,000 per year should be paying income tax but only 35 million people declare income above that level. At today's rates shopkeepers, artisans, such as plumbers, electricians and masons, maid servants and even beggars earn more than the taxable threshold because it is set so low. However, nobody does. All income from farming is exempt from tax and 50% of the price of any property must be paid in cash or black money. Politicians, business fellows and civil servants cannot declare their main sources of income, which are illegal, so the parallel economy is probably greater than the GDP. The failure of communism and socialism has proved that any economy can grow only through exploitation. Colonialism was pure exploitation of resources of other countries. The attacks on Iraq and Libya were to gain control of their oil reserves. However, western countries are restricted by a vociferous section of their people who object to exploiting the poor. China has no such reservations. Its Communist Party practices a most aggressive form of capitalism where it grabs land and resources from its own people while gifting billions of dollars to dictators to exploit resources of African countries. The stalemate over raising the debt ceiling in the US is being financed by the billionaire Koch brothers while Richard Branson has sold his house in Britain to his children so as not to pay any taxes in his homeland. Only growth with low inflation, low corruption,low birth rate and rigidly controlled election financing can eliminate poverty. Or else inequality will continue to grow.

They have been turned into monsters.

In 1991, 22 years ago, the body of a 4 year old girl was found beside a Manhattan highway in New York. The body was naked and bound and weighed just 20 pounds which was half the weight of an average 4 year old. There was no name and no child was reported missing. They named her Baby Hope. The police were very upset for the little girl and arranged a funeral for her, attended by hundreds of mourners. " This case really touched us, because she was just an innocent child, we all have kids or know them," said retired Detective, Jerry Giorgio. " I know it haunted me." For 22 years New York police kept her memory alive by visiting her grave. On the 22nd anniversary they again put up posters and announced a reward of $12,000 for information leading to the identity of this little girl. Finally, they received a tip off which led them to identify the mother of the child and match her DNA. Conrado Juarez, 52, a distant cousin of the father, was arrested for the murder of the little girl 3 days ago. He has confessed to raping her, suffocating her to death and then leaving her beside the highway in a cooler under cans of soda with the help of his sister, who has since died. Last week Assistant Chief of Police, Joseph Reznick went to her grave, as he has done many times before, and replaced a placard on the headstone which said, " The identity of this little girl is unknown " with another placard which read " Angelica Castillo ". This story is at once heart rending and heart warming, showing that New York police are human underneath all the guns they carry. Surely our police are just as caring? Two days back there was a stampede at a bridge leading to a temple at Datia in Madhya Pradesh, over 110 people died. Nothing new in that. Such tragedies happen regularly in India and the huge population means that hundreds die. What can the police do? Turns out that instead of helping people the police were throwing the dead and injured off the bridge to reduce the body count. Teenager Ashish, 15, told the police that his 5 year old brother, Golu was dead. The police told him," Now your brother is dead, why should you live on?" and threw him off the bridge. He was found unconscious with one leg broken. If Rathore and BB Mohanty were police chiefs we can imagine what officers under them will be like. Politicians control the police to cover up their own crimes thereby turning them into monsters. What hope for our children?

Public sector banks need protection.

There was a time not so long ago when you would expect to spend half a day to withdraw a few thousand rupees from an Indian bank. At that time a couple of thousand rupees were enough to meet the expenses of a family of 4 for one month. Then came reforms and inflation and banks improved their services so that you could be in and out in a few minutes, which is good because now you need a thousand rupees a day to survive. Large numbers of private sector and foreign banks have opened branches in all cities, offering a range of services in beautiful air conditioned comfort, very attractive to younger people. Older people still prefer public sector banks because they are considered safe, have much lower charges and and have the comfort of a passbook which can be updated at one's own convenience. To reduce costs private sector and foreign banks prefer to send monthly statements through couriers, which go back if no one is at home to receive them, and then charge large amounts for a replacement copy. In 2008 public sector banks received a large inflow of funds from both people and businesses because the government will never allow a public sector bank to fail. Of course, government control means that two penny politicians can and do force public sector banks to lend to high risk businesses owned by family and friends or to produce a spurt in spending to produce a false growth in the economy to win elections. That is what happened in 2008-2009 when the Congress forgave all loans to farmers at a cost of Rs 750 billion, kept interest rate very low to encourage borrowing and borrowed vast amounts to increase salaries of useless civil servants by 80%. They won the elections but have left public sector banks with huge Non Performing Assets as companies find it difficult to service their loans in a slowing economy and falling demand due to high inflation. Last year Rs 750 billion worth of loans were officially restructured under the Corporate Debt Restructuring scheme. In an effort to control bad loans banks have now been instructed to get tough with borrowers. Business owners will be asked to furnish personal guarantees as collateral if they ask for their debt to be restructured. Banks will also be watched to prevent them rolling over bad loans on the sly. The economy is so unforgiving.

Wealth is an illusion.

Seems that wealth in India has increased by 300% from $1.2 trillion to $3.6 trillion in the 13 years since the year 2000. This wealth is not for the people however. More than 90% survive on less than $10,000 a year while 2.8 million are High Networth Individuals. This does not tally with the the figures put out by our tax fellows. They say that only about 35 million people declare taxable income of which 28.84 million, or 89%, declare income under Rs 500,000 per year. Only 406,000 declare income above Rs 2 million per year which, with very high prices and retail inflation at 9.5%, is considered middle class. The discrepancy is explained by the fact that in India all farm incomes are free of income tax and there are extremely wealthy people who call themselves farmers so as to pay no tax. Also 86% of the wealth in India is held in properties and only 15% in financial assets. In China 45% of wealth is held in financial assets and 54% in non financial assets. Property prices in India have increased by 1000% since the year 2000 making anyone who owns any property into a multi millionaire. Owning a property worth tens of millions of rupees does not translate into higher tax collections. At least 50% of the price of any property is paid in cash or black money to evade the stupidly high rates of taxes and millions of people own ancestral properties, which may have increased in value, but do not add to disposable incomes. There are not many avenues for financial investments in India. Term deposits in banks are a losing proposition. The rate of interest is less than the rate of retail inflation so your money is losing in value and the interest is clubbed with your income so you may end up paying 30% tax on it. Our stock market is highly manipulated. Foreign investors hold a large proportion of shares in our companies which makes our market dependent on what is happening in the US and hence highly unpredictable. Having no other avenue of investment Indians put their faith in gold despite increasing taxes. That is why businesses borrow money from banks to finance new projects. High interest rate to control inflation means that companies are finding it difficult to service their debt and banks are fearful of bad loans. 10 companies have gross debt at Rs 63.10 trillion which is 60% of GDP. Wealth is not some esoteric calculation by clever economists. It should be owned by the people.

Spending first leads to poor economics.

Our most revered Finance Minister said that the government will be recapitalising banks with Rs 140 billion so that they can lend at lower rates to those who want to buy vehicles or consumer durables, such as TVs refrigerators. Government spending is made up of what it raises from taxes and borrowing the rest from banks. The amount it borrows is called the Fiscal Deficit and is added to its total debt burden. It makes little sense, therefore, to borrow money from banks to give it back to them to lend to people at lower rates. This is just another form of subsidy. The same man said recently that subsidies on food and fuel must be reduced to balance books. So the Congress wants to reduce subsidies on some goods while raising them on others. Another desperate attempt to somehow boost demand to create a few more jobs before elections next year.Trouble is that food subsidies cannot be reduced because the Food Security Bill promises wheat at Rs 2 per kilo and rice at Rs 3 per kilo to 700 million people and only state owned companies are allowed to sell fuel and we are told that they are being forced to keep prices low to help consumers, thus running up huge losses. Truth is that the government collects vast amounts of taxes on crude and then claims it is subsidising end products and having to bail out the losses of these companies. The attempt is always to grab as much money from us right at the beginning so that they can bribe the " vote bank " with wasteful social schemes which increase inflation and harm the poor. Anyone buying a property costing more than Rs 5 million, which is virtually every property in cities, is forced to deduct 1% as tax and deposit it at the relevant office. Knowing how government offices function it means wasting days standing in queues and having to pay bribes to submit the tax. If we are being forced to act as agents of the government surely we should be given the same perks as the crooked civil servants, such as free healthcare and pensions. Banks deduct 10% from the interest they pay on term deposits. You then have to file tax returns to claim a refund at the end of the tax year. Which means having to pay an accountant and paying service tax on that. Thus we vote for and pay for a feudal government which exploits us 24/7. Is it any wonder criminals are attracted to politics?

From BRICS to BIITS with the Congress.

So much for " big bang reforms " of the Congress led government which was greeted as some sort of economic bonanza by the freeloading press last year. With much fanfare the government announced increase in the prices of petrol, diesel and electricity, 100% foreign ownership of single-brand retail, 51% foreign ownership of multi-brand retail and 49% foreign ownership of domestic airlines. At that time we predicted that apart from a rise in inflation, which would further depress growth rate by killing demand, there was nothing to get excited about. Sadly, we have been proved right one year on. The Swedish furniture maker Ikea not set up a store because its desire to sell coffee in its stores would make it multi-brand. 48% of IndiGo, India's only profit making domestic airline is already foreign owned. Jet and Etihad are still talking. Multinationals such as Walmart and Tesco have refused to open any store here because of abysmal infrastructure, open hostility from states controlled by other political gangs and the requirement to source 30% of products locally. Lately Walmart has broken off its partnership with Bharti in the cash-and-carry business which sold in bulk to shopkeepers. The result is that growth rate has fallen from 7.4% in 2011 to 4.3% in 2013. Current Account Deficit can only be curbed by reducing imports of essential goods. Imports of project goods are down 38% compared to last year while imports of machinery are down 12.4%.
Exports have risen on the back of a weak rupee but that could be undone by the Congress trying its utmost to make the rupee stronger by increasing the flow of foreign currencies in stocks and bonds. This could result in a collapse of the rupee if the Federal Reserve decides to taper its stimulus and foreign investors decide to exit suddenly. The Congress is only looking to produce a mirage of stability until the general elections of 2014 and does not care what happens after that. It is calculating that if it somehow manages to win another 5 year term it will have time to reverse some of the damage while blaming foreign countries for the disaster, as it has been doing till now. Meanwhile, BRICS is said to be dead and India is now a part of BIITS which are countries with low growth, high inflation and high CAD. Thanks to the Congress and the World Famous Economist.

Criminals thrive in secrecy.

Andrew Parker, Chief of British spy agency, MI5 thinks that the Guardian Newspaper has done a great disservice to the country by exposing how GCHQ in Britain has been recording all phone and internet traffic from all over the world. In his opinion this is absolutely essential to protect Britain from terrorist attacks. Of course, he would say so because secrecy gives him enormous powers to do as he likes without having to account for his actions. Apparently Prime Minister, David Cameron sent thugs to destroy hard drives from Guardian computers to keep the British public from knowing what their government is up to. There are doubts about whether scientist Dr David Kelly was murdered and the British spooks covered it up. Mr Parker claims that there are hundreds of Islamic fanatics living in Britain who want to target the country and some of those fighting in Syria could return with extensive knowledge of firearms and explosives. The British government actually allowed 2 chemicals, used in the production of Sarin, to be exported to Syria. Even now the British are supplying weapons to Syrian rebels who could turn against them in future, just as the Taliban turned against the west after receiving arms from them. Scotland Yard is now investigating whether Princess Diana was killed by an elite unit of the SAS as claimed by one Soldier N. Apparently Princess Diana's driver was " lamped " by " dazzler lasers " which blinded him causing him to crash against a pillar. People like Mr Parker would definitely not want all this information to be in the public domain because not only will it cause widespread revulsion but he could feel the snap of handcuffs on his wrist. While newspapers in the west are ready to expose official misconduct here in India newspapers openly act as agents of the Congress. In a disgusting and offensive article Rahul Kansal, Executive President, Bennet, Coleman & co ltd, publishers of the Times of India, compares Mr Narendra Modi to Nazis, Khmer Rouge, North Korean regime and all the murderous scum of the world. Not a word about how the Congress has betrayed this country time and again and continues to do so till today. Secrecy covers up crimes against the citizens. 

How to fool foreigners?

Our most revered Finance Minister is fond of lecturing us on what needs to be done but never spells out how he is going to do it. " On the government side, sooner ( rather ) than later we will have to address the issue of higher subsidies than budgeted, on both fuel and food," he said, as he jetted off to the US in one of the luxury planes bought with taxpayer money. But how? The Food Security Bill was passed during the monsoon session of parliament and he did nothing, knowing full well that once a subsidy is started it is virtually impossible to stop it. With the population still growing more food, not less, will be required. Since the NREGA handout is linked to inflation, and inflation continues to grow at 10%, budgetary support will only continue to balloon. As for fuel, no one knows the amount of subsidy because the taxes on petroleum products are so varied and confusing that we do not have any idea as to what the right price of sale should be. The price is calculated as 80% Trade Parity Pricing and 20% Export Parity Pricing. Then customs duty, import charges and imaginary costs such as Trade Premium and Ocean Freight Charges are added on. All this is probably done to deceive the people because we cannot understand such gibberish. It is stupid to collect huge taxes up front and then claim that oil companies are losing money and need government support. It would be much better to simplify and reduce taxes on oil and allow a level playing field for private companies which would stop cartelisation by state owned companies and bring down prices through competition, as has happened in telecom. On the one hand, subsidies cause distortion in trade, angering other countries, while on the other, high taxes hinder free trade agreements. Thus, talks with the EU on a FTA are held up because of high taxes on alcoholic drinks and cars while food security subsidies could fall foul of WTO rules. The new Chief of WTO, Roberto Azevedo said," They ( India ) would soon be breaching their, what we call AMS ( Aggregate Measurement of Support ) commitments in the WTO. So, they are asking for some kind of actions in Geneva that could allow those programmes to continue to work." In short," Be prepared for trade sanctions." But before that Treasury Secretary, Jacob Lew lies in wait. And Americans are not known to be diplomatic. You can fool the people but foreigners are tough nuts.

Lightning strikes are a sign of things to come.

Although they look fearsome lightning strikes are usually far away from populated areas and very limited in range. That is why fatalities are rare. But not in India. Our population density is so great that 32 people, including 9 children, were killed over the weekend in Bihar and Jharkhand. Of course, when people breed like rabbits poverty keeps on rising which is good news for our politicians who can easily buy votes by bribing them with a plethora of social schemes. Unfortunately, social schemes have to be paid for by increased government borrowing which increases fiscal deficit, leading to high inflation, increases borrowing costs for private businesses through high interest rates and a fall in the growth rate, leading to lower growth in tax collections, which makes the deficit worse. The only remedy is reducing government expenditure but cutting social schemes would be electoral suicide. So taxes are increased to unbearable levels, further hitting the middle class and depressing demand. Suddenly the Congress has woken up to the fact that crushing the middle class is catastrophic for industries such as cars, refrigerators and internal tourism. Now our most revered Finance Minister has asked the Reserve Bank to lend money to banks at low rates of interest so that they can be passed on as customer loans. This is after the RBI instructed banks to stop all zero interest loans to retail customers. " For a long time we have harboured the myth that banks are meant to provide money to rich people and to corporates. Nowhere in the world, other than India, do corporates come to banks for working capital," said our Finance Minister. Er, quite. The reason that rich people prefer to borrow from banks, especially public sector ones, is that they can divert the money for private consumption or to other projects and they are sure that if they are unable to repay the loans they will be " restructured " and eventually written off. They can get away with the loot because they are either related to, pally with or have paid politicians to put pressure on bank managers. Sadly, economic decisions made in panic seldom work and trying to increase consumption with sky high taxes and inflation is doomed to failure. Trouble is that when such a huge country starts to hurtle downwards short term measures do not work. Perhaps lighning needs to strike our politicians.

Which politician is worth voting for?

Delhi is known for its pea-soup fogs but this year this year they threaten to blot out the sun completely. The reason? Elections in 5 states in November and December, followed by general elections by May. As the drop in temperature coincides with copious amounts of hot air from our fibbing politicians we can expect reason, morality or patriotism to be blotted out by generous distribution of Below-Poverty-Line cards, regularisation of illegal colonies, wads of cash doled out through Direct Money Transfer based on Aadhar cards, grains at Rs 2 a kg and Aadhar cards for illegal Bangladeshis so that they can access all the above mentioned benefits paid for by us. Taxpayer money is being wasted on hasty, superficial repairs of roads with as little tar as possible because tar comes from coal and coal has to be imported, because mines were given away as presents to family and friends. Problem is that this year the monsoon is refusing to go and a few showers will loosen the pebbles, leaving us with bigger potholes than before. It is necessary to bribe voters or else no one, except Bangladeshis, will turn up to vote which will be terribly embarrassing for politicians always boasting about India being the largest democracy when everyone knows that we are a violent police state controlled by family controlled political gangs. Out of a total of 4807 MPs and MLAs 1460, which is 30%, have criminal cases registered against them. In fact 688 MPs and MLAs declared serious cases against themselves in their election affidavits. Among others some are also criminals but have not yet been caught or are so vile that the police dare not charge them while the rest are accessories because they tolerate the criminals knowingly. Naturally politicians do not want the people to know so they try to censor the internet. Mr Rahul Gandhi recently came out strongly in favor of keeping criminals out of parliament. There is a long list of changes he could initiate to ensure true democracy in India. But none can be more important than freedom of speech. If we are charged with sedition every time we complain about corruption the villains will continue to go unpunished. If he is a patriot he must ensure the safety of the nation by stopping the free flow of Bangladeshis. Politicians should be worth voting for. Why else should we bother.