Crooks feel so comfortable in India.

A report by Global Financial Integrity, based in Washington in the US, ranks India 5th largest exporter of illicit money. Between 2002 and 2011 around $5.9 trillion were transferred out of developing countries. In 2011 alone $946.7 billion, generated by crime, corruption and tax evasion, drained out of poor countries. India's share in this was $84.93 billion in 2011 and a total of $343.04 billion between 2004 and 2011. GFI President, Raymond Baker says," Anonymous shell companies, tax haven secrecy and trade- based money laundering techniques drained nearly a trillion dollars from the world's poorest in 2011, at a time when rich and poor nations alike are struggling to spur economic growth." Where is all that money going to? The UK has 7 tax shelters and the US has 9. In the US, Alaska, Delaware, Florida, Nevada, Texas, Wyoming and Washington have incorporation laws similar to tax havens. This might explain why Indian politicians keep running to the US on flimsiest of excuses. No wonder India is ranked 94th on Global Corruption Perception Index by Transparency International. These figures are not surprising when we consider that most of our civil servants and politicians are criminals. Within the last 5 years we have been regaled with so many scams that it is impossible to remember the list. Trillions of rupees looted by the scum have to be stored somewhere. Those who have the means keep the money abroad in numbered accounts while the rest invest in properties, thus creating the mother of price bubbles. This relationship is wonderfully illustrated by the adventures of Mr Ashok Khemka who alleged shady land dealings by Mr Robert Vadra, son in law of Mrs Sonia Gandhi. Mr Khemka is an officer in Haryana which has a Congress government and the Congress will do anything to protect The Family. Thus Mr Khemka has been charged with misconduct by the Haryana government while civil servants, who were found to be complicit in shady deals by the High Court, have not been charged. Even more incredible, there are intelligent and educated people who actually advocate not punishing civil servants for the crimes they commit. Apparently this frightens them so much that they stop working. Make it a law that if a file is not cleared by one month they lose one month's salary and see how they jump. Should we be making excuses for criminals to make them feel safe?

Individuals with moral courage are game changers.

Speaking at ET Awards 2013 our most revered Finance Minister said," Reforms require game changers. Game Changers are not individual men or individual women. Game changers are ideas. Game changers are institutions." Oh dear. Is he saying that Gandhi was not a game changer? Ideas do not grow on trees but come from individuals who are original thinkers and are not afraid of criticism. It is the Congress party which has destroyed the economy by playing the same old game of bribing the " vote bank " with taxpayer money and destroying institutions such as the CBI by using it to harass opponents while deliberately messing up cases against friends. Game changers are not always for the good however, as was exemplified at Nelson Mandela's funeral. There was Robert Mugabe who has murdered thousands to stay in power, destroyed the Zimbabwean economy and is determined to hang on to power even at the age of 89 years. There was Tony Blair skulking in the background. A war criminal who was a shameless poodle to George Bush and who apparently had " multiple encounters " with Wendi Deng precipitating her divorce from Rupert Murdoch. The present President of South Africa, Jacob Zuma is definitely not a game changer. Accused of corruption and rape, married 6 times with 20 children, some of whom are from affairs with other women, and spending $20 million of public money to extend his private residence to house his enormous family. We know and loath his type in India. He was booed every time his picture appeared on screens. Obama and David Cameron are no game changers either. They could not resist squashing Denmark's Prime Minister Helle Thorning-Schmidt, who seems quite a babe, to take a selfie. Cheap thrills. Mandela was definitely a game changer. Imprisoned for 27 years on Robben Island by the apartheid regime he brought about a peaceful transition to black rule without bloodshed. In the movie about him he is played by Morgan Freeman. When told to change the symbol of white supremacy, the Springboks rugby team he says," That is selfish. It does not serve the nation." About whites he says," We have to surprise them with restraint and generosity." It took great courage to tell the truth to people who had been brutally suppressed for a century. Sadly, our lot are puny crooks and liars.

Socialism is dead. Let us bury it forever.

Seems that our socialist friends in Venezuela are using blackmail on ONGC Videsh ( OVL ). Apparently the government has been taking money from its oil company, Petroleos de Venezuela SA to fund social schemes, leaving it short of cash. Now PdVSA is withholding $421 million in dividend payments to OVL to force it to pay for the entire investment in the 2 oil projects although it holds 40% share in one and just 11% in the other. Before we start getting angry about Venezuelan perfidy we should remember that this is exactly what our government has been doing. In mid-October our most revered Finance Minister called heads of all Central Public Sector Enterprises, including ONGC, and demanded higher dividends to reduce the exploding budget deficit, purely due to social schemes. He is demanding Rs 730 billion in dividends this year compared to Rs 550 billion last year. When Hugo Chavez became president in 1999 he used the country's oil wealth to start social schemes. This allowed him to win 3 elections but inflation soared and the Bolivar dropped in value. On 1 January, 2008 the Bolivar Fuerte, or strong Bolivar, was introduced in exchange for 1000 old Bolivars. At introduction it was 2.15 to the dollar. As inflation soared it dropped to 4.30 and then on 13 February, 2013 it was adjusted to 6.30 to the dollar. Chavez died on 5 March 2013 and was succeeded by Nicolas Maduro who does not have the same charisma as Chavez did and so has continued with social schemes. Inflation has soared to 54% and Caracas has become the murder capital of the world. It was President Lula who started Bolsa Familia where families were paid directly provided they kept their children in schools and took them for health check ups. The Congress thought it was good a wheeze to win elections and started the Direct Benefit Transfer Scheme but without any conditions. A jubilant Congress fellow even called it a " game changer ". However, inflation, especially in food, was going out of control. So the Congress brought in a Food Security Bill which promised cheap food to around 800 million people. Sadly, this broke WTO rules on subsidies so our Commerce Minister went to the negotiations in Bali determined to wreck the entire trade deal if we were not allowed to break the rules. Naturally we infuriated everyone. Socialism perpetuates poverty. It must be made a criminal offense to use it to win elections.

Most of our growth came from scams.

A couple of days back the World Business Report on the BBC showed a group of young women eating sushi at a " kitty party " inside a luxury mall. There is so much money in India now that the top designer labels are opening outlets in cities, confident of handsome profits. And yet we are told that only 35 million people pay any income tax and the Congress has been spending trillions of rupees in the name of " inclusive growth ". Bank loans to farmers were forgiven, the MNREGA scheme pays the rural poor for 100 days a year for fictitious work, farmers are paid a Minimum Support Price for grains which is higher than the market price, tribals will be paid a MSP for forest produce, The Food Security Bill promises to provide wheat at Rs 2 per kg and rice at Rs 3 a kg to around 800 million poor people, a Backwards Regions Grant, Below Poverty Line cards which are better than winning a lottery and an endless list of handouts. If we are such a poor country who buys handbags for Rs 2 million each and shoes for Rs 1 million each? How did they make so much money? We have people like the late Ponty Chadha who could get monopoly license to sell liquor as well as permission to provide midday meals in schools in UP because of his proximity to politicians. There are the Reddy brothers who were making trillions from illegal mines in Karnataka and 2 former Chief Ministers were named in the Goa mining scam. A report by the Comptroller and Auditor General estimates that Rs 1.86 trillion were lost in the Coalgate scam in which mines were distributed to family and friends.  Then there were the 2G scam, the Commonwealth Games scam, the Tetra trucks scam, the Scorpene submarines scam, the Augusta-Westland helicopters scam, the Railway Board scam and other scams yet to be reported. Billionaires in India refuse to repay loans taken from banks. They use their connections to politicians to get bank officers to restructure loans by issuing new ones. Banks are sitting on trillions of rupees of Non Performing Assets. A report by Credit Suisse says that 10 large infrastructure companies have combined bank debt of Rs 63.1 trillion, which is half of the GDP of India. That is why land prices are zooming up, inflation is uncontrolled and luxury retailers are coming here. The vaunted growth is built on stolen wealth which is why it is not generating taxes. BBC should not be surprised.

It can only be good to light fireworks underneath the criminals.

Yesterday, Sunday was a tumultuous day as votes cast in the recent elections in 4 states were counted. From early trends it was clear that the BJP was going to win big in Madhya Pradesh and Rajasthan while it was nail biting stuff in Delhi and Chhattisgarh. For a while it seemed that the BJP, under Chief Minister Raman Singh, would lose Chhattisgarh because of the sympathy vote in the Bastar region where 30 Congress leaders, including Mahendra Karma, the architect of Salwa Judum, were killed in May. Eventually Raman Singh won a comfortable majority with 49 seats out of a total of 90. While it was a straight fight between the Congress and the BJP in 3 states, Delhi had a new party called the Aam Aadmi Party or AAP, which had chosen a broom as its election symbol, in a deliberate provocation to the other parties. The AAP promised a transparent government free of corruption, a Jan Lokpal Bill to tackle corruption in government and no deal with any other party as they are all corrupt. It is no wonder that traditional parties hate the AAP but the people loved it and it won 28 seats out of a total of 70 in Delhi. Not just that, the AAP chief, Arvind Kejriwal humiliated 3 time Delhi Chief Minister, Sheila Dixit of the Congress by over 25,000 votes. Pundits are claiming that this is the end of winning elections by dishing out freebies to the poor on taxpayer money but sadly, that is not the case. Raman Singh is known as " chawal wale baba " in Chhattisgarh because he was giving rice, gram and salt to the poor almost free. Shivraj Singh Chouhan won in MP by giving money to girls, distributing free bicycles to children, subsidised food grains and 24 hour electricity to rural families. Ashok Gehlot lost in Rajasthan despite giving wheat at Rs 2 a kg, pensions and free medicines in government hospitals. The AAP was promising to reduce electricity bills by half, free water and other handouts for the poor without stating how they were going to pay for them. The danger is that the Congress will see this as a victory of handouts and pile on social schemes to win the general elections next year or leave behind a bankrupt economy if it loses. We wait to see what effect the AAP has on criminal states like UP, Bihar and Maharashtra. At the very least it has put some fear in the criminals who were so comfortable till now.

There is a pot of gold at the end of a well lighted road.

Manufacturing is usually labor intensive and for a poor country like India with hundreds of millions of young people providing cheap labor we should be having a thriving manufacturing sector, like China has. In an effort to stay in power the Communist Party in China built up gigantic modern infrastructure and actively helped companies to set up factories to provide employment to its people and supply cheap products all over the world, helping to keep down inflation, which encouraged central banks to keep interest rates low which, in turn, encouraged people in rich countries to go on a borrowing binge to buy Chinese made products, making China the second richest country in the world. India, on the other hand, has a so called democracy which means elections every 5 years. Unfortunately for us our politicians, being largely of the criminal class, took the easy option of wasting taxpayer money on social schemes to bribe the poor instead of improving education, building wide roads, ensuring constant electricity, universal healthcare and measures to reduce population. The consequence is that vast numbers of Indians have remained poor, dependent on handouts to survive, which is what politicians want. More than 3 million jobs were added in the organised sector between 2004 and 2010 but a survey by the National Sample Survey Organisation showed that there was a loss of 3 million jobs in the total manufacturing sector. Which means that the unorganised sector, which employs many more people, lost 6 million jobs. The unorganised sector produced 12.6 million new jobs between 1993 and 2004 but only 1 million new jobs between 2004 and 2012. It was partly due to the strong rupee which hampered export related industries such as textiles, garments, leather and gem cutting. Exports have rebounded since the rupee depreciated against the dollar but the Congress is trying desperately to strengthen the rupee, probably to control inflation. The infrastructure sector is in absolute shambles because projects were given to cronies who wanted to make windfall profits but have been halted by the CAG. A report by Credit Suisse says that 10 large infrastructure companies have a combined debt of Rs 63.1 trillion. Will we always remain poor for the sake of winning elections?

Every bad action has a much worse reaction.

Isaac Newton's third Law of Motion states that every action has an equal and opposite reaction. That is true in the pure world of physics but in the messy world of human beings an action maybe completely ignored and forgotten or result in exaggerated response. Thus, every bad action results in much worse reaction, because of the multiplier effect of millions of emotional human beings. The BJP government between 1998 and 2004 had lowered taxes, reformed telecom, bringing about a mobile revolution, reduced deficits, reduced subsidies in fuel and generated a Current Account surplus. In its overwhelming greed for power the Congress promised freebies to the poor who are happy to get mouldy bread today than jam tomorrow, not realising the diabolical ploy in the Politics of Perpetual Poverty. Thus trillions of rupees were wasted on a massive lie called " inclusive growth " instead of on productive infrastructure which would have allowed the poor to move out of poverty by starting small businesses, better education and improved health. This massive spending resulted in huge deficits, high inflation, an explosion in property prices, leading to accumulation of black money, and a fall in the value of the rupee. The government is now stuck. To reduce deficit it has to cut expenditure, but this will reduce growth. To reduce inflation interest rates need to go up but that will increase borrowing costs for industry and cause many companies to go bankrupt as they are sitting on massive loans which they need to restructure. To reduce CAD exports need to be encouraged by a weak rupee but that will increase prices of imports, especially oil, and add to inflation. To survive in next year's elections more humongous bribes need to be paid but that only adds to the fiscal deficit and inflation. The Congress thought that at least one painless method of reducing CAD would be to reduce the import of gold. After all purchase of gold by the people is completely unproductive and just locks up finance. So they increased taxes on gold from 2% to 10%. Gold imports fell but sadly so did precious dollars from the export of jewelry by 54% to $4 billion because of shortage of gold. Gold demand in Thailand has doubled as smugglers use drug routes to fill the demand in gold. Bad faith results in bad action. The reaction is terrible for India.

India needs patriots, not excuses.

At a keynote address at ET Now conclave in New Delhi on 29 November our most revered Finance Minister said," I don't produce growth. I don't produce growth, I don't deliver growth. No government delivers growth - government delivers the conditions for growth." Politicians, especially Indian ones, are known never to take responsibility for their actions. Last week the Prime Minister of Latvia, Valdis Dombrovskis resigned after a rood collapse at a supermarket killed 54 people. He came to power in 2009 and is credited with rescuing the economy from collapse. A government or finance minister may not be able to produce growth but they sure can destroy it as ours has done by indiscriminately wasting money to buy votes to win elections. The FM compares his record with that of the previous BJP government, boasting about the growth rate between 2006 and 2008, completely forgetting to mention that this growth purely due to the reforms instituted by the BJP, a flood of cheap money from abroad, subsidies on fuel and record borrowing by business companies because of abnormally low interest rates. He brags that the best GDP growth rate of 9.6% was in 2006-07, the lowest fiscal deficit of 2.5% in 2007-08 and the largest rise in foreign exchange reserves by $92 billion in 2007-08. True, but oil was at 64 dollars per barrel and the rupee was allowed to rise to 39.33 to the dollar. The foreign exchange rise was due to borrowing by businesses and hot money looking for higher returns from the stock market. Inflation was 4.74% only because the strength of the rupee kept inflation low by keeping imports, especially of oil, cheap. That was the time when the Reserve Bank should have increased interest rates to bring inflation down to below 3%, controlled excessive borrowing and bought large amounts of dollars to bring the rupee down to between 45-50 to the dollar which would have increased exports, reduced the CAD and built up a comfortable cushion so that we would not have to worry about the Federal Reserve tapering its bond buying program. We had a Current Account surplus from 2002 for 4 years. Even now, more wasteful social schemes are being invented to try and win elections next year. The FM says that the best is yet to come. Yes, when the Congress is wiped out.

Will we survive by ourselves?

The Doha round of trade talks at the WTO, which have been going on for over a decade, is going nowhere in Bali in Indonesia as India refuses to discuss its Food Security Bill. " For India, food security is non-negotiable," said our most revered Commerce Minister, Anand Sharma. " Public procurement at administered prices is often the only method of supporting farmers and building stocks for food security in developing countries. Need of public stockholding of food grains to ensure food security must be respected," he thundered. Sadly, we cannot believe his pious words because we are not convinced that the bill was passed to help poor people. We are of the opinion that the bill is an extremely cynical ploy by the Congress to win next year's general elections and will do genuine harm to the economy and to the poor. By paying a Minimum Support Price for food grains the cost of food goes up. A higher price encourages farmers to divert farmland to grain production creating shortage of fruits and vegetables as shown by the recent food inflation. Hoarding of grains by the government causes artificial shortage and, since India lacks adequate storage capacity, vast amounts of food are wasted. India is not the only country which pays subsidies to its farmers. The US pays billions of dollars of subsidies to farmers, some of whom are billionaires while the butter mountains and wine lakes of the European Union are legendary. Under WTO rules no country is allowed to pay subsidy of more than 10% of output and the fear is what the Congress will give away on other aspects of trade to protect the Food Security Bill. Memories of Sharm-al-Sheikh linger. Our talks with Asean for a Free Trade Agreement have fallen through recently. A trade agreement between India and the European Union is going nowhere after years of negotiations. The EU wants a reduction in duties on cars and wine, which means alcoholic drinks, which India is not prepared to concede because the government needs punishing taxes to pay for wasteful social programs. Meanwhile Europe and the US are pushing ahead with negotiations to conclude a transatlantic trade deal that would create the biggest trade block ever. The WTO will become redundant and they will dictate trade terms to others. We are not in Asean, Apec, Nafta and will not be in TTIP. On our own we will be crushed by the others. All to win lousy elections.

Does democracy end with elections?

In India if you see newspapers showing pictures of 3 or 4 pretty girls cheerfully giving the finger it means they have just voted in some elections. They are showing the indelible ink mark on their left index fingers which is applied to prevent bogus voting. Today is Delhi's turn to elect a new state government and voter turnout seems to be higher than in other years. Educated people are usually reluctant to vote because they see it as a waste of time. Political parties are legalised gangs, full of criminals guilty of the most heinous crimes, usually controlled by families and buying votes from legions of poor people with promises of free handouts at taxpayers' expense, never mind the cost to the economy. All these freebies have to be paid for so taxes are among the highest in the world making everything so expensive that the vast majority of people cannot afford them. Thus poverty is the excuse for keeping people poor so that they will be so grateful for the few cheap rubbish thrown at them that they will vote for whoever promises the most. So the election commission has incorporated a NOTA or " None Of The Above " button on the voting machines which is meaningless because even if a majority of people reject all candidates they will not be disqualified but the person with just one vote will win if the others get no votes. The gang which wins forms the government which means they can do whatever they like without having to account for their actions. They can order 12 luxury helicopters from Augusta-Westland at a cost of Rs 30 billion for their comfort, travel abroad with families and friends at will, make vast amounts of black money from dishing out coal mines, sign away our security at Sharm-al-Sheikh and destroy the economy with useless social schemes to keep a foreign woman in power. And then tell fancy stories to lull us into stupor. Our most revered Finance Minister writes how he is fighting to save the economy from collapsing since he returned to the ministry, completely forgetting to mention that he is the man responsible for all the social schemes responsible for the uncontrolled inflation and fiscal deficit. He talks about how glorious everything was in 2007 without talking about how he has destroyed the economy and how India is still 94th on the Corruption Perception Index with a score of 36 out of 100. Democracy has become the last refuge for the villains.

There can be no growth without education.

We can rejoice. The great sage of India, Montek Singh Ahluwalia has seen bottom. He now expects great growth in the economy. But he does not say how. A report by PeopleStrong, a human resource company, says that jobs will increase by a mere 1.4% next year. The good news is that the skills of the those joining the labor force have improved, the bad news is that only 34% of them are employable. A previous study found that only one in four was employable. India turns out more than 4 million graduates every year of which more than one million are from professional colleges and 600,000 are engineering graduates. That is not surprising when this government has criminally ruined education by banning examinations in schools and guaranteeing promotion to a higher class for all students. This was done because the Congress levied a new tax on the middle class when it passed a Right to Education Bill which forces private schools to reserve 25% of seats for poor children. Most of these children would have illiterate parents who would not be able to help them with their studies at home and would fare badly in examinations. So no exams. What this has done is to give a permanent holiday to teachers because now they have no need to teach anything because no one can judge what the children know. Programme for International Students Assessment tests 15 year old children in reading, maths and science. In 2009 India came 73rd out of 74 countries, just above Kyrgyzstan but below Trindad and Tobago with a population of just 135, 000, less than that of a small town in India. So the Congress did not allow any child to appear in the test in 2012 and has said that India will not participate in 2015 either. Not only that the Congress has cut the education budget by Rs 40 billion to reduce fiscal deficit which has ballooned because of the wasteful social programs. After all children do not vote, do they? On the other hand a report by Credit Suisse says the 3,600 top companies in India have a debt of $400 billion and have difficulty in paying back because of the fall in the value of the rupee. 80% of loans are in companies which have not paid any interest in 4 quarters in the last 2 years and 26% in companies that have not paid interest in 8 consecutive quarters. Robbing our children to fill their own pockets. Wonderful.

Will we get a proper government this time round?

Chhattisgarh, Madhya Pradesh and Rajasthan have had their say. In a couple of days it will be Delhi's turn as we vote to elect the next state government. In the other 3 states it was a straight fight between the Congress and the BJP but in Delhi the Aam Aadmi Party or AAP is the joker in the pack. People are sick of constantly rising prices of utilities, horrific crimes, especially against women, and a brutal police force more interested in protecting criminal politicians than serving the people. Crime is born from corruption. Delhi has the misfortune of being the only city in India with both a state government and the central government. The state government was involved in the Commonwealth Games scam which brought us shame across the world. Roads were repaired a couple of months ago in anticipation of the elections but potholes have returned. During this one month electricity demand is at its lowest because air conditioners and fans have been switched off and it is not cold enough for heaters. Still we suffer periodic blackouts. We only get to know of very few of the numerous scams. One was the theft of Rs 200 million from the money for building night shelters for the homeless. The Delhi Anti Corruption Branch tried to suppress the crime but it was exposed by the Vigilance Commission. From 2G to Coal mine allocation to Tetra trucks to Augusta-Westland helicopters the political gangs constituting the central government have been very busy collecting trillions of rupees. Some of that money will probably be invested in winning parliamentary elections in May next year so that they can continue to collect more moolah while thwarting investigations by the CBI. Already one party has been distributing bottles of alcohol in poorer parts of Delhi while another one has been distributing 10 kg sacks of flour for women and alcohol for men. Many hundreds of billions of rupees will be spent till May next year. Whether this will provide a stimulus to the economy or merely increase inflation only time will tell. There is a chance of a hung assembly in Delhi. The AAP is saying that it will refuse to form a coalition with either the Congress and the BJP as they are equally corrupt. That will mean President's rule with reelections in 6 months. The Congress will try everything to prevent elections in Delhi coinciding with the national ones because of the Modi factor. Will they support an AAP government just to keep the BJP out? We can only hope that these elections will be more than an entertaining circus.

The emperor has no clothes.

The bottom watchers are back in business. The economy is said to have grown by 4.8% in the second quarter of the current financial year, after growing by 4.4% in the first quarter, the lowest in 4 years. So, the economy must have bottomed out. Agriculture grew by 4.6% due to fantastic monsoons and manufacturing grew by 3.2%. However, growth in manufacturing has been -0.1% between April and September. Unnamed sources were unimpressed. " How is revival possible when the jobs-creating sector is flat," said one. " The agriculture growth achieved in the first half of 2013-14 is just about long term average. It is hard to be excited about data released today." Our most revered Finance Minister is having none of this. " I am absolutely confident that we can overcome this period of stress and return to high growth path. In 2014-15, our growth will be close to 6%. In 2015-16, it will be close to 7% and a year after we will be back to high growth rate of 8%," he said. The Congress has increased taxes to unbearable levels and invented new ones but very cleverly it has not levied a tax on hot air. Being a lawyer by trade he is extremely slick with words. What does " close to " mean? Is 5 close to 6, or 4 or 2? He is setting a high bar for the next government while leaving it with a huge fiscal deficit by rolling over $15 billion of expenditure to the next financial year.
Cunning or what? Trouble is when you spend on unproductive social schemes while cutting expenditure on vital infrastructure inflation rises, tax receipts fall due to falling domestic consumption and growth dives. Increasing taxes only reduces demand further. The result is runaway fiscal deficit. The government has achieved 84.4% of its target deficit for this fiscal between April and October, that is in just 7 months. Tax receipts were just Rs 3.6 trillion while total expenditure was Rs 9.2 trillion and deficit Rs 4.57 trillion. But there is also the Current Account Deficit. By reducing gold imports through high taxes and increased exports due to the weak rupee CAD is expected to fall to below 4% this year. When premium petrol was first introduced it was Rs 3 more expensive than ordinary petrol but huge taxes increased the difference to Rs 10 so motorists stopped using it. The government has realised that premium petrol increases mileage and cuts consumption of oil so now they are thinking of reducing excise duty by Rs 5. The Congress has destroyed the economy and is frantically looking for excuses. Sadly there are none.

Will the rupee be sacrificed to save banks?

The Reserve Bank has published its concerns over the amount and quality of bank lending. In a report it says," In the past, growth in sensitive sectors - viz real estate, capital markets and commodities - generally followed a pattern similar to the growth in overall credit. However, in 2012-13, growth in credit to sensitive sectors almost doubled primarily on account of credit to real estate. This expansion needs to be seen in light of rise in housing prices in all Tier I and Several Tier II cities in 2012-13." Real estate, the share market and commodities are called sensitive because prices in these sectors are very volatile and the RBI is especially concerned about the enormous bubble in property prices. 15.9% of bank credit is in properties. The quality of loans is also deteriorating as shown by a 37% rise in Corporate Debt Restructuring. Public sector banks will need an additional capital of Rs 4.15 trillion of which Rs 1.5 trillion will be in equity capital and the rest will be in debt capital. The government has already infused Rs 477 billion and promised an additional Rs 140 billion. When the government is borrowing trillions from banks where will it find the money to fund the banks? Borrow with one hand while lending with the other, joke or mystery? Even greater worry is because banks are using short term deposits to lend long term. Since all government figures are suspect we probably do not know the real extent of the stink. The Congress forgave all bank loans to farmers in 2008 to win elections in 2009. Farmers have spent Rs 2 trillion on the Kisan Credit Card which they have no intention of repaying. In an article in the Hindustan Times, Samar Halarnkar writes about how, in 2002, a bunch of journalists had looked into how billionaires refused to repay billions of rupees to banks. He cites the example of Pramod Mittal, younger brother of steel billionaire, Lakshmi Mittal, who refused to repay Rs 60 billion he owed to banks. In 2011 Pramod Mittal arranged a lavish wedding for his daughter in a palace in Istanbul in Turkey. In 2002 unpaid loans amounted to Rs 1.1 trillion which is Rs 3 trillion in today's money, enough to build an expressway in every state and a school in every village. While banks send thugs to snatch a car if we miss a couple of EMIs they are happily writing of billions from the robber barons. No doubt politicians and civil servants get their shares. Banks cannot collapse because the government will print money to capitalise them. But the rupee will.

Whoever wins the elections, we the people lose.

The Congress is infuriated with Hong Kong based securities house, CLSA Asia-Pacific Markets for predicting a victory for the BJP with Narendra Modi as their Prime Ministerial candidate. They say that the BJP will win a total of 202 seats in all of India and have given a breakdown of how many seats the BJP will win in each state. Should the BJP win that many seats other political gangs, which are abusing the BJP as a Hindu party so as to get " minority " votes, will come wagging their tails to be included in government. We know that contrary to what they swear on their mothers politicians in India are not in it to serve their country but to multiply their wealth several fold. The Congress is especially desperate because a defeat not only means the end of trillion rupee scams but they seem to be genuinely afraid of Modi. He is unmarried, has no children and is not known to possess accounts in foreign banks. What if he decides to go after their crimes? Despite their control of the CBI and other agencies how do they control him? So they have decided to use any amount of taxpayer money to bribe voters, never mind if the fiscal deficit balloons to 6,7 or even 10% of the GDP. They are devising new social schemes everyday. Not content with a recommendation of increasing NREGA handouts in line with the rural CPI they have asked the committee to increase it even further. Apparent cost Rs 330 billion. Trouble is that people get used to bribes and demand even more. So now they are planning to waste Rs 750 billion on assisting business start-ups in rural areas. Sugar mills in UP will be provided with interest free bank loans so that they pay farmers a price higher than the market rate. Road construction companies will have their contracts restructured so that they have to pay less premium, although why anyone should pay a premium for constructing roads is not explained.  However, what the Congress absolutely cannot afford is a ratings downgrade before the elections because of a rising deficit. But what spending to cut without losing votes? They have decided to cut education spending. Probably because children do not vote. This when our manufacturers are unable to find trained manpower to run their machines. The country is slowly going bankrupt. Whoever wins, we lose.

God did not make us poor, taxes do.

The OECD, a group of developed countries, predicts that India will grow at a mere 3.4% this fiscal which is even lower than that of the IMF which sees growth at 3.7%. The report mentions many reasons, including high fiscal deficit, high corporate debt levels and very high inflation. Uncontrolled inflation over the last several years has reduced the purchasing power of the middle class. The Wholesale Price Index rose 7% in October from 6.46% in September while the Consumer Price Index was 10.09% in October from 9.84% in September. When prices of essential commodities rise to untenable levels people cut down on discretionary spending which reduces profits of companies who cut down on new investments, leading to lower employment opportunities. A study by the industry body, Assocham shows that there has been " de-growth " in the capital goods sector and contraction in several other sectors of the economy. Secretary General, DS Rawat said," It would take quite a while before fresh investment can be expected, as even if a positive territory is found, it has to first absorb the surplus capacity with the industry before a demand-driven in investment is expected." The Congress says that inflation is because supplies have been unable to keep up with demand which has shot up because people have become so rich due to its policies. Er, no. Inflation has exploded because of useless social spending by the Congress, purely to win elections, which has resulted in massive fiscal deficits. The Congress thinks that the NREGA scheme was a great help in winning elections in 2009 so it has decided to increase it even further this time round. A committee under Pronab Sen, Chairman of the National Statistical Commission suggested the rural CPI should be taken to calculate any increase in the handouts but has been told to increase it even further. The Congress has set aside Rs 330 billion for the scheme. To prevent a credit downgrade to junk status before the elections the Congress has increased taxes to punitive levels. A World Bank and PWC report says that total corporate tax rate in India is 62.8% and taxes have to be paid under 33 headings. The report puts India at 158th position on taxes. High taxes make everything expensive and unaffordable. That is why India is poor. And will stay poor.

Proud of being third class.

On the face of it no one else could have killed 14 year old schoolgirl, Aarushi Talwar on the night of 15 May, 2008, except her parents. There were 4 people inside the house and according to the testimony of the maid, Bharti Mandal the outer grill door made of iron was locked from inside and Nupur Talwar, the mother said that Hemraj, the servant had locked it from outside when he had gone to fetch milk. That was a lie because Hemraj was lying dead on the terrace and the door to the terrace was locked from inside. The door to Aarushi's room was equipped with a click-lock which could not be opened from outside without a key and her father, Rajesh had the key with him. Aarushi's body had been washed and the murder weapon, a golf club was hidden in the attic. The Talwars refused to unlock the door to the terrace, thus concealing Hemraj's body. Curiously Noida Police did not demand the key or break the lock. The police in Noida did not secure the crime scene, did not make proper notes of the evidence and allowed media people to walk all over the house, thus destroying evidence. The Talwars are both dentists, wealthy and apparently well connected so they have tried every which way to derail the investigation and the trial. And they nearly succeeded. In 2011 the CBI applied to close the case but the Special Judicial Magistrate, Priti Singh turned down their application, forcing them to prosecute the Talwars resulting in conviction. The Talwars have been insisting that they were innocent and that Aarushi and Hemraj had been killed by an outsider without explaining why an outsider would want to kill a 14 year old girl and a servant and how the person gained access to Aarushi's room without breaking the door. Nothing was taken so robbery could not have been a motive. This case has aroused fierce debate because the victim is seen to be an innocent child, because the police did everything to vitiate the case and because the parents came across as cold and calculating. Anyone whose only child has been brutally murdered would be distraught with grief but the Talwars showed no emotion. On the other side people say that they have been set up because the judge refused to accept closure. Will the conviction stand. Highly unlikely. In India well connected people are seldom punished. The sad thing is that the Noida Police is boasting about its work. So proud to be third rate.

Our government is permanently on bended knees.

Today is the fifth anniversary of the Mumbai attacks, also known as 26/11. Since then it has been clearly proven that the attacks were carried out by Pakistani terrorists, trained and abetted by the Pakistani intelligence agency, the ISI. The US had its 9/11 in 2001. Every year since then the names of the victims are read aloud at the site. The US attacked Al Qaeda in Afghanistan forcing Bin Laden to flee from his hideout in the caves at Tora Bora but there was to be no escape. On 2 May, 2011 US Navy Seals attacked his house in the garrison town of Abbottabad in Pakistan, killed him and dumped his body into the sea. Since 2005 the US has been assassinating those it sees as its enemies, hiding in Pakistan, by firing missiles from drones. The latest was the chief of the Tehrik-i-Taliban, Hekimullah Mehsud who was taken out on the first of this month.
Contrast the furious US response to the killing of its citizens to the loving embrace of Pakistan by this Congress led government. Hardly had the funeral pyres cooled down than our most revered Prime Minister was signing an agreement with Pakistan on 16 July, 2009 confessing to Indian involvement in the separatist movement in Baluchistan. Pakistani Foreign Minister, Shah Mahmood Qureshi, would not have been surprised because he had expected India to negotiate for peace on " bended knees ". Seems that the government has decided to wipe this atrocity from our memory because there is not one word on the attack in today's Times of India, the newspaper which led a campaign of subjugation called " Aman ki Asha " or " desire for peace ". We run a Samjhauta ( which means " understanding " ) Express between Delhi and Lahore allowing Pakistanis free access to our country. Pakistani singers and actors earn vast sums working in Bollywood films although our films are restricted in Pakistan. Musharraf was treated as a VIP when he visited India last year with his wife. He is a war criminal responsible for the unprovoked attack on Kargil, accused of treason in his own country. Is it any wonder that Pakistani Prime Minister, Nawaz Sharif wants visa free travel between India and Pakistan? A nation of 1.2 billion people allowing a country of mad dogs to keep killing our citizens. Why?

Are we going to become a country of homeless people?

Housing prices increased in 12 cities in the second quarter of this financial year. Kolkata rose by the highest margin of 5.3%. Although prices in Delhi declined by 4.5% in this quarter they have risen by 6.7% year on year. If property prices in cities have touched zenith people with money, especially black, will look elsewhere
to invest and they are now buying up rural land. Guarav Jain, a real estate consultant says that the average buyer of rural land " is someone who is over 40, kids educated, has a house and is wondering what to do with surplus cash." In Vadicherla village in Andhra price of land was Rs 20,000 an acre 10 years ago. In 2003 it was Rs 25,000 an acre, by 2006-07 it had risen to Rs 200,000 an acre, to Rs 300,000 in 2010 and to Rs 1.2 million in 2012. The curious thing is that Vadicherla is a village of some 700 families, around 100 km from the nearest town, Warangal and 15 km from the Vijayawada-Hyderabad highway. The price of land in Ramavarapadu, a village near Vijayawada, shot up from Rs 700,000 an acre to Rs 70 million and in Mardi, which is 15 km from Solapur in Maharashtra the price has jumped from Rs 20,000 to Rs 1 million an acre in 10 years. Such prices are bound to make fundamental changes to villages in India. Farming is hard and dependent on fickle weather changes, so farmers are tempted to sell out by these mouthwatering prices and work as day laborers instead. The disappearance of agricultural land will lead to decreasing produce which, with an ever increasing population, can only mean disaster in the near future. When children of farmers see some of their friends driving around in cars they put pressure on their own parents to sell out and enjoy a life of luxury. This is fine while the money lasts but once it finishes they will find no work unless they are educated and will take to crime. This has already happened in Delhi. Shortage of land and surplus funds, along with the NREGA, has led to severe inflation which has led to a 40% drop in savings among urban middle class. " Poor households are unable to maintain the consumption at current prices while middle income families find their purchasing power erode fast, thus having far less surplus money," said DS Rawat, General Secretary of Assocham. Soon we will not be able to afford food or shelter. 

Is it real or just smoke?

At a press conference this morning US Secretary of State, John Kerry announced an agreement with Iran at Geneva. Under this Iran has agreed to halt all uranium enrichment beyond 5%, give up its stockpile of uranium enriched to 20% and stop further work on the nuclear reactor at Arak which would have given it an alternative fuel, plutonium for nuclear weapons. Iran also agreed to " intrusive monitoring " by the IAEA of its nuclear facilities and may repair existing centrifuges but not install new ones. Iran will be allowed to sell 1 million barrels of oil per day but will receive only $4.2 billion every month from sales, the rest of $15 billion will go into international restricted accounts. The language was surprisingly harsh. " If Iran fails to meet its commitments we will revoke the relief." " Sanctions affecting crude oil sales will continue to impose pressure on Iran's government." The agreement is for 6 months and it is on Iran to prove that it is complying with its promises, if not sanctions will be reimposed. " The concessions Iran has committed to make as part of this first step will also provide us with increased transparency and intrusive monitoring of its nuclear program." So, is this the most humiliating defeat for Iran since Darius III was defeated by Alexander in the Battle of Issus in 333 BC. Iranian Foreign Minister, Mohammad Javad Zarif appeared surprisingly cheerful given what Kerry had just told everyone. It maybe because Iran got the most important concession of all. Although there is no specific mention of it Iran has achieved what it has been demanding all along and that is the right to enrich uranium for peaceful purposes, even if it is only up to 5%. Having achieved what it set out to do Iran can afford to cooperate with every demand that the western countries make and gradually get the sanctions lifted, knowing that once they are completely gone it will be very difficult to impose them again. Iran has the infrastructure and the knowledge and can afford to wait for a year or two to get nuclear weapons, which is what it wants. So Kerry's posturings were to reassure Israel and Saudi Arabia, which has threatened to obtain nuclear weapons from Pakistan, and Republicans back home. Israel has already called the agreement an early Christmas present for Iran. So, is all this merely smoke or will it really stop Iran?

Is it worth sacrificing the country?

The government has announced that due to prolific monsoon rains this year the area being planted for wheat has more than doubled to 1.519 million hectares compared to 646 thousand hectares last year and so we may expect a record crop of 94.88 million tonnes early next year. Sugar cane is being planted on 81,000 hectares compared to 45,000 hectares last year. But is this a good thing? We do not possess enough storage space for so much wheat so a lot will lie out in the open to be eaten by vermin or just rot away. Exporting wheat could bring in desperately needed foreign exchange but we are not told whether it will be profitable after the government has bought wheat from farmers at the Minimum Support Price and added the cost of transport. Sugar mills in UP, the second largest producer of sugar in India, are refusing to begin crushing sugar cane because they cannot afford to buy cane at the present rates. Last year the UP government forced them to buy cane at Rs 280 per quintal but, due to depressed price of sugar, millers made a loss of Rs 16.5 billion. Millers say that they cannot pay more than Rs 225 per quintal because they still owe Rs 24 billion to farmers while farmers are demanding Rs 350 per quintal because of increased input costs. Political parties being gangs of thugs the first response of any government is with threats of violence, which is what UP has done. If much higher areas of land are given over to wheat and sugar cane because farmers are being guaranteed higher prices then there will be less land for planting vegetables, which maybe why food inflation is at over 16%. Food inflation is out of control because wages of casual labor in rural areas have shot up because the MNREGA scheme has set a floor rate for wages by paying Rs 215 per day for 100 days a year, for doing nothing. But surely it must be a good thing for such poor people to have more money? Not if they have to pay even more for milk, vegetables and eggs and not if the fiscal deficit is in danger of causing a credit rating downgrade to junk status. To fudge the books the Congress has decided to rollover $15 billion of expenses to next year's budget to meet its target of 4.8% of GDP. Each political gang is doing whatever it thinks will win it a few more seats at next year's elections. But is it worth sacrificing the country for it?

The most entertaining elections ever.

For educated middle class Indians elections are boring. The same ugly corrupt faces competing to promise free handouts to the poor at taxpayer expense and then trying to buy votes by distributing cash, saris or pouches of alcohol. All parties are more or less same, you just try to choose the one you think is the least villainous of the lot. If you vote at all. This time it is different. Two mavericks, who are probably the only 2 politicians in India without billions in black money, are creating all sorts of problems for the other gangs. One is Mamata Banerjee in Bengal. When she withdrew support from the government last year the Congress thought that she will self destruct in her state because of her eccentric and authoritarian behavior but she won a resounding victory in the gram panchayat elections in July, trouncing the Congress and the CPM. It appears that she has been cleaning up the rotten administration in the state, totally corrupted by the 30 year rule of the CPM, so that the cost of business is one of the lowest in Bengal today. It maybe the reason why David Cameron chose to visit Bengal his way to Sri Lanka a week ago. The other is Narendra Modi of Gujarat who is the Prime Ministerial candidate for the BJP and is promising clean government which is anathema for civil servants and other politicians. How are they supposed to make tons of black money so that their families are secure for generations if this fellow carries out his threat of reducing corruption? Is the man completely loopy? The excitement is drawing in foreigners. When Goldman Sachs raised India to marketweight in expectation of Modi's victory the Congress went ballistic. Our most revered Commerce Minister, Anand Sharma called it " most inappropriate and objectionable ", to which Jim Rogers, Chairman of Roger Holding said," What Indian politicians are saying if you criticize is that you can't comment if you are an outsider. That is one of the problems for India, and this is why India has been a disaster for so long." " The best-run Indian state has not done as well as the worst-run Chinese state since 1980," he said. " So, I am saying, throw all the existing politicians out and find a new set from wherever or however and start again." Howls of anguish, blatant lies and foul abuse: this has to be most exciting elections ever.

And they'll come tumbling down.

Between 1981 and 1989, 7 buildings were constructed at Campa Cola Society in Worli, Mumbai. Builders were given permission to construct 5 floors but, as is usual in Mumbai where the construction industry is controlled by the building mafia, extra floors were constructed and sold off to unsuspecting buyers. One building has 20 floors and another has 17. During the 80s it would have taken years to construct that many floors so it is inconceivable that local politicians, state government and municipal officials were unaware of what was going on. Clearly massive bribes must have changed hands. In 2002 the Brihanmumbai Municipal Corporation suddenly woke up to the illegal constructions and in 2005 concluded that all flats above the fifth floor were illegal. Demolition notices were issued against 83 flats. People living in these flats must have been devastated and, quite naturally, filed cases for relief. A highly corrupt country like India generates vast amounts of black money. The government reckons it is 10% of GDP but like all government figures it is highly suspect. It could well be anywhere between equal to the GDP or double of it. It is dangerous to keep mountains of cash at home so this money is invested in properties. Properties in Mumbai are more expensive than in Manhattan so it is not a joke to be told that your flat will be demolished. None of these people could possibly buy an apartment in Mumbai at present rates and will become homeless. Now the Supreme Court has ruled that 103 flats will be demolished and has asked all residents to vacate by 31 May 2014. The reason why criminals flourish in India is because justice is selective. The Court did not order the builders and municipal officers to be arrested and made to pay these residents to buy new flats so the villains get to enjoy their loot while innocents suffer. And what about Delhi where the Supreme Court is situated? A visit to Vasant Kunj, Lajpat Nagar or Kishangarh will reveal that owners of buildings have added illegal floors without permission and without strengthening the foundations of the buildings. Earthquakes are rare in Mumbai but very common in Delhi. On 12 November 4 quakes struck Delhi after midnight when most people would have been in bed. Will the Court order demolitions in Delhi or wait for nature to do it?

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?