The three little piggies.

Politicians and their pet pundits constantly advise Indians to invest in the stock market. After years of bitter resistance from unions the government has allowed the Employees Provident Fund to invest in stocks. Rising markets, fall in the price of gold and constant repetition enticed individuals to buy into the stock market fiction and invest in equity mutual funds. Indians trust physical assets, such as gold and real estate, over equity because they see stocks as speculation at best and gambling at worst, but the stock market gives very good returns over the longer term. Some say that markets give the best returns. What experts do not understand is that people do not trust the government or the regulators who, they think, are in collusion with business people to con us. That feeling of mistrust will have been exacerbated by the falls in stock prices in the last few days, though the Sensex has ended positive today. The rupee has fallen to Rs 66 to the dollar. We are told that we can dismiss these falls as temporary because our economy is in a ' sweet spot '. Inflation and the current account deficit are low because of very low commodity prices, especially oil. Our interest rate is relatively high, which gives the Reserve Bank huge latitude for softer monetary policy to stimulate demand. Foreign exchange reserves at over $350 billion are sufficient to reduce volatility of the rupee, the RBI said. Banks maybe sitting on bad loans of Rs 3-6 trillion, which means that banks are reluctant to lend, and the total debt of Indian companies are an eye-watering Rs 32 trillion which means huge interest payments. A lot depends on what the Federal Reserve does in the US. The opposition will not allow the government to pass any reform bills because they sense that without reforms the economy will not be able to withstand the global crisis and if growth stays weak they will have a much better chance of coming to power in 2019. The rupee and shares have fallen but real estate is still going strong, prompting RBI Governor to say that prices must fall. Bank lending to real estate is rising but fewer properties are being sold because prices are too high, the government has clamped down on black money and states have increased registration charges to very high levels. Builders have put all their hopes on a substantial cut in interest rate but a low interest rate may cause the rupee to fall further. That will result in higher import costs and a rise in prices. Like the 3 little piggies the Congress built our economy on sand. Only one weapon will work and the government must use every trick to pass the Goods and Services Tax bill. Or else, bye bye.

Our dirty little secret.

Socialists like to help poor people but they do not like to count the number of the poor, so when a socialist newspaper publishes an article about numbers then things must be getting very serious indeed. Apparently, everyday 68,922 people celebrate their 25th birthday in India, which means that 2.1 million turn 25 years old every month, of whom 1.48 million are in rural areas while 0.62 million are in urban areas. By 2025 there will be 690 million under the age of 25, out of a total population of 1.43 billion. Scary. Malthus predicted that if population growth went unchecked then it will outstrip food production resulting in famine, which is nature's way of restoring balance. There are those who refute this view by saying that human beings will find ways of increasing food production as needed. Scientists tell us that genetically modified, or GM, food is the panacea for food scarcity. Is it? 60 million acres of US farmland have been taken over by ' superweeds ' resistant to Monsanto's weedkiller. GM seeds are expensive so farmers take loans to buy seeds and fertilisers. If a crop is destroyed by the weather the farmer has no money to buy more seeds. Alternatively, if there is a bumper harvest prices drop so much that the farmer is unable to pay his creditors. In either case suicide is the way out. Even if GM technology is able to deliver large amounts of cheap food even that has to be paid for and for that people need to have jobs. How is India going to produce 600 million jobs? We are told that if the economy can be made to grow at 8-10% then millions of jobs will be produced, which will increase spending, resulting in increased investments, which will create more jobs in a perpetual cycle of wealth creation. Will it? Turns out that the much touted high growth, during the first term of the Congress from 2004 to 2010, actually lost 5 million jobs. What will the young do if there are no jobs? One solution is to migrate illegally to other countries. But it is not easy to find jobs without skills so they end up sleeping rough. Or there could be riots, as occurred in Egypt, which also has a demographic bulge, where young people wanted jobs so that they could get married. And therein lies the problem. More people having families means even higher numbers of young people looking for jobs, in a never ending cycle. Would education provide a stimulus for job creation by providing a highly trained workforce that companies would exploit? Half of all university graduates in the UK are in menial jobs which require no degrees. Scholars write scholarly papers about the different growth rates of states in India. One such study suggests that sub-nationalism in Kerala was responsible for its higher development over UP. Maybe, but 3 million are working abroad which is supporting its economy. Perhaps Kerala' superior development is because its fertility is half that of UP. Trouble is, poor people mean more social schemes and more NGOs. Our politicians love that.

Do sovereign nations have sovereignty?

Have independent countries lost their sovereignty to international finance? The humiliating deal signed by Greece is an obvious example where the creditors can overrule the Greek parliament and will dictate government policies. Would it not be better for Greece to leave the Euro, bring back the drachma and default on all its debt, so that it can start with a clean slate? Not so easy. That is what Argentina did in 2001 and has been cut off from all international loans since. It reached a deal with 99% of its creditors where loans would be restructured but a two-penny judge in the US has scuppered the deal and Argentina is stuck in a limbo. How much debt does the US have? The US has total debt in excess of $18 trillion whereas little Argentina has a debt of $115 billion. But the US can print as many dollars as it likes, secure in the knowledge that foreign governments and funds will still buy its treasuries, while a fascist judge has virtually taken over Argentina. Reserve Bank Governor, Raghuram Rajan wrote in 2003," Capital controls were meant primarily to prevent a 20-year-old investment banker from moving money across the world to the country providing the highest returns - what government bureaucrats derisively term speculative capital." But isn't that what he did when he first became governor? He increased interest offered to Non Resident Indians which was another way of increased overseas borrowing. But is any government or central bank really in control of its finances, except the US? The rapid growth in emerging markets was due to very low interest rate followed by quantitative easing in the US which led to a flood of dollars into emerging markets. Governments and businesses borrowed merrily but now the boom has turned to bust. Quantitative easing has ceased and interest rate may rise in the US. Markets and currencies are falling across the board. Since nations have no control over their finances emerging nations can never emerge from the shadows. India owes $8.8 billion to Iran. Why? Because the US decided to impose sanctions on Iran just as it has punished Cuba for over 70 years and has imposed sanctions on Russia. We had to buy expensive oil for decades because the US willed it. The US is involved in trade negotiations with 11 trans-pacific countries, called TPP, and with the European Union, called TTIP. One of the contentious demands by the US is Investor-State Dispute Settlement in which a company can sue a government in another court outside its boundary. Which brings us back to the fascist judge who screwed Argentina. The US continues to supply advanced weapons to Pakistan to kill Indians but our politicians and civil servants love going to the US for vacations. Sovereignty is a myth.

Should we be optimistic or alarmed?

The Dow Jones index plunged by 531 points yesterday, the biggest fall since 2011. Investors are worried about the Chinese economy, a steep fall in commodity prices, especially oil, and uncertainty about whether the Federal Reserve will raise interest rate in September. Markets hate uncertainty, hence the fall. We have the advantage of ignorance, unlike fund managers and brokers, who study markets 24/7. So, we predict that the Fed will raise interest rate by 25 basis points to keep right wing Republicans off its back, although the leading Republican candidate, Donald Trump is into real estate and may prefer rates to remain at 0.25% for as long as possible. However, the forward guidance by the Fed will promise no more rises till well into next year to calm stock and currency markets. Experts predict that commodity prices will remain suppressed for sometime to come. Rapid global economic growth, fueled by very low interest rates, and supply disruptions due to various wars following 9/11 resulted in a boom in commodity prices. These pressures have now largely receded and the Iran nuclear deal will allow Iran to increase its oil production. No one knows why OPEC is pumping oil while prices keep dropping. It maybe nothing to do with the US or Russia. Saudi Arabia is a bitter enemy of Iran and bringing down oil prices is one way of keeping economic pressure on Iran. What about China? A Chinese thinks that the devaluation of the yuan was a courageous move designed to align the currency with the market rate. China wants the yuan to become a part of the Special Drawing Rights of the IMF so the devaluation was a move in the right direction. Not so, say the critics. Growth in China was due to massive investments, fueled by debts, which are giving less returns so China has to shift its economy to consumption, which will take time. Meanwhile it tried to reduce debts of public sector units by encouraging people to invest in A shares with borrowed money. When that bubble popped the government panicked, just as it did when the yuan fell more than it bargained for. Growth in China is much less than 7%, fiscal deficit is 10% of GDP and debt is 300% of the GDP. Monetary policies cannot work any more so devaluing the currency is the only hope of stimulating economic growth by increasing exports. Slowing growth in China means less demand for commodities so prices are falling. We should be dancing in India. Low commodity prices reduce cost for our companies and bring down inflation. The Finance Minister never stops pushing the RBI to reduce interest rate. Already the Sensex and the rupee have fallen and reducing interest rate will cause the rupee to fall further. Foreign investors will flee and the Sensex and the rupee will collapse. The good thing is that China has a long way to fall whereas we are already near the bottom.

Can India become wealthy without a strong foundation?

The Prime Minister has announced a special package for Bihar, of Rs 1.25 trillion. Elections to the Bihar assembly must be completed before 29 November, so this is an obvious political move. Naturally, present Chief Minister of Bihar, Nitish Kumar poured scorn on the package, having been pleading for one for months. Maybe the reason for his anger is that all the money is tied to development projects, so he cannot use any of it as handouts to bribe specific sections of society, to win seats. Perhaps, if he had carried out his duties as chief minister with due diligence there would have been no need for special packages for Bihar. Nitish Kumar has a personal hatred for the Prime Minister, forgetting the old principle that there are no friends or enemies in politics, only strategic alliances. He has embraced his old foe Lalu Prasad Yadav, who is out on bail for the fodder scam. A clear case of cutting his nose to spite his face. Bihar desperately needs very good infrastructure because states with good infrastructure index are the ones with high per capita incomes. UP is an exception. It is fairly high on the infrastructure index but its per capita income is only Rs 20,939, compared to Tripura at Rs 41,994, Karnataka at Rs 46,285 and Andhra at Rs 48,614, states which are much lower on the infrastructure index. Bihar is one rank below Bengal in the infrastructure index but the per capita income in Bengal is 35,432, over 2.5 times that of Bihar at a paltry Rs 13,790. Perhaps, it is no coincidence that both Bihar and UP have the highest fertility rates with the lowest literacy rates. Both governments blame the central government for not giving them special packages consisting of vast amounts of money but never explain why they should get special treatment over other states, which have as much need. Both these states are extremely lawless which means giving them money is like pouring it down a drain, unless governance improves. There seems very little evidence of that in Bihar where rates of rapes and kidnappings have been rising. School education was destroyed by the Congress with the Right to Education Act which forces private schools to reserve 25% of seats for children from poor families. This was a mean tax on the middle class as fees tripled for their children. However, most of these children would fail exams as they would get little help at home, which would bring the Act into disrepute. To hide that the Congress abolished all exams, including Class X Boards. With no exams to show if the children were learning anything teachers stopped teaching, resulting in a fall in standards. Now states are asking the center to revoke the policy of no exams and bring back Class X Boards. Politics is only about winning election and service is just something to be taxes. What about politics for service?

Is it possible to work part time and survive?

Sarvshreshth Gupta, an employee at Goldman Sachs, was found dead in a car park in San Francisco in April, presumed to have committed suicide. ' Sarvshreshth ' means ' supreme ' and he appeared to be so. A student of Delhi Public School he studied at Pennsylvania University, which is Ivy league, and then at Wharton, one of the top business schools in the world. He could not take the pressure at Goldman Sachs where he had to work 100 hours a week. A week is only 168 hours in total. Perhaps, being a high achiever he could not bear the thought of giving up. Deaths of people working in banks is not unusual as pressures to improve profits are relentless. Such pressure to make profits forces youngsters to resort to illegal activities with profound effects on the world. The Libor scandal could have affected trillions of dollars of business and worsened the financial crisis of 2008. Fines of a few billion dollars are loose change for banks and will not alter habits because the rewards are many times more. How much more? A trader at the London branch of JP Morgan Chase, nicknamed the London Whale because of his huge trades, lost the bank $6.2 billion in 2012 but the bank made record profits of $21.3 billion the same year. US regulators have forced banks to employ compliance officers to oversee their work, which is naturally hated by bank bosses. Now the New York Times has published an article, detailing the extreme working conditions at the e commerce firm, Amazon. The company actually boasts of " unreasonably high standards " for its employees. Employees talk of grown men crying, pressure on fathers to spend less time with their families and workers are encouraged to criticise their colleagues. Employees returning from cancer treatment or a miscarriage were edged out and thousands of staff are sacked every year, in what is known as, " purposeful Darwinism ". But Amazon is not alone. Elon Musk of Tesla scolded an employee for missing a corporate event to witness the birth of his child and a former Apple employee in Australia wrote that when he missed a business trip when his pregnant wife fell down stairs it was marked as a " performance issue ".  Amazon CEO, Jeff Bezos wrote a memo to his employees saying," I don't recognize this Amazon, and I very much hope you don't either." He also said that it would be crazy to stay at such a company and," I know I would leave such a company." While 82% of employees approved of the CEO only 62% would recommend a friend for a job there. Former employees of Amazon are in great demand because they are used to hard work and Uber recruits them heavily. Tech giants and banks are not the only ones. The Japanese have a word, ' karoshi ' which means ' death from overwork '. Fortunately, our civil servants are not in danger. They get paid to relax.

It's all about love, finds CAG.

When the Delhi government asked the Comptroller and Auditor General of India, CAG, to audit the 3 private power distribution companies in the capital last year they did everything to prevent the audit, repeatedly appealing to courts, saying that the CAG has no authority to audit private companies. We wondered why? Why should a company refuse a free audit when large accounting firms charge in millions. We got the answer yesterday when the CAG reported that customers have been taken for a ride by all 3 companies to the tune of Rs 80 billion. How did they do it? They manipulated consumer figures, bought costly power, suppressed revenue and gave undue favors to group firms. They misrepresented facts to the regulator, miscalculated assets and inflated costs. They had long term purchase agreements with power plants, for which they charged consumers, without buying any power from those plants. They also purchased an excess of power so Delhi was the only power surplus state in north India. Why then do we suffer from long periods of power cuts? They charged customers for replacing faulty meters even though the manufacturer was supposed to pay for them. There was serious conflict of interest in dealing with companies of the same group. Although the Delhi government owns 49% of equity, having invested Rs 7.5 billion in the companies, government representatives rarely turned up at board meetings. As wonderful an example of crony capitalism as we are likely to see. Perhaps the CAG should have accessed bank accounts of some of the officials. Let us see what other delights the CAG has reported in recent months. Land acquired for Special Economic Zones were sold off or put to other uses by the companies. When the CAG started to investigate 47 files regarding SEZs went missing. No doubt innocently destroyed by government officials. Rs 9 billion of illegal toll collected by highway operators were not declared to the Highway Authority. Civil servants are cheating the taxpayer of billions of rupees by being paid for fictitious medical, travel and other expenses. Municipal corporations of Delhi were found to have financial irregularities worth Rs 2.5 billion. We pay enormous charges for poor services, broken roads and piles of stinking garbage. Business fellows, or so called promoters, are milking companies by taking massive salaries. When Lord Black tried the same trick in the US he went to prison for 3 years and was fined heavily. Poor shareholders may not even know whether the same fellows actually own any shares in the company or have borrowed money from banks by pledging them. Politicians, civil servants and politicians in tight embrace. We observe their romance.

We need astrology to predict technology.

One Vivek Wadhwa, based in the US, writes that Indian industries have to innovate or perish. He then goes on to to list how the world has been changed by innovations in technology that have already taken place and tries to predict those that are coming. The processing power of computers has been doubling every 18 months even as Moore's law predicted doubling of capacity every 2 years. Technology is disrupting old ways of doing business. Amazon has destroyed old bookshops, Apple music has made music available to everyone and smart phones with apps, such as Uber, have cut down the cost of taxis. With 3D printing technology and robots it is cheaper to manufacture in the US and India than in China. A device the size of a book, costing Rs 35,000, has been invented in Delhi. Apparently this can perform 33 medical tests. Cost of solar energy has dropped by 98% and by 2020 energy from renewable sources, along with improved storage, will result in an abundance of energy even in the poorest villages. With unlimited energy we will have unlimited water simply by boiling sea water and with unlimited water and electricity we will have vertical farms, which will be sealed and so will not need pesticides. Even meat will be manufactured by technology so no need to slaughter animals. There will be no need to breed animals for meat so less methane will be produced, which will help in reducing global warming. Sounds as if the world will become a virtual paradise where people will relax in air conditioned comfort with cheap electricity, eat very cheap food washed down with pure water. Will it? Maybe cheap but they will still need to be paid for. Earlier Mr Wadhwa predicted that masses of people will lose their jobs as traditional businesses disappear. Robots will take over manufacturing, self-driving buses will have no need for drivers and computers with voice recognition will take over secretarial work. Hackers can take over your smart phone, listen to your conversations and pinpoint your location. Ethical hackers have already demonstrated how easy it is to take over a car. Imagine you are a driving to work in your self-driven car when it is taken over by kidnappers who demand payment in untraceable bitcoins. Perhaps Mr Wadhwa should see pictures of Hiroshima and Nagasaki to understand what devastation can be wreaked by technology. The biggest danger is that, with all this cheap food and energy, there could be an explosion in the population of human beings which will be a disaster worse than any nuclear explosion. Forests will disappear, thousands of species will become extinct and wars will increase. The humongous profits of technology companies, like Apple depend on selling millions of products. Technology will make wars more lethal. No wonder astrology is big business.

What are we buying with our tax money?

Only around 36 million people, out of a total of 1270 million, in India pay income tax. That is a shocking statistic and is taken to indicate that there is large scale cheating by the people. The Chief Economic Adviser, Arvind Subramanian pointed out that the number of voters in India is 20 times larger than the total number of taxpayers. Politicians blame people for evading taxes and lazy journalists echo the same lies. So what is the truth? The rich can afford an army of accountants to advise them on how to reduce their tax bills. As they do all over the world. Who enacts tax laws with more loopholes than Swiss cheese? Politicians. But there maybe another reason why most Indians do not pay taxes, which is so shameful that politicians will never acknowledge it. Which is that the vast majority of Indians do not earn enough to pay taxes. The second reason why Indians get labeled as tax dodgers is because the taxable income is too low, whereas in the UK it is 4 times as much. At such low rates plumbers, electricians and taxi drivers should fall in the tax bracket. Politicians will not go after these people because they will be accused of being against the working class and lose votes. Reserve Bank Governor, Raghuram Rajan said," So the circle is complete. The poor and the underprivileged need the politician to help them get jobs and public services. The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get public resources and contracts cheaply. And the politician needs the votes of the poor and the underprivileged. Every constituency is tied to the other in a cycle of dependence, which ensures that the status quo prevails." Succinctly put, sir. So, politicians need the poor to bribe for votes so they keep them poor by their policies. The massive black money in India is not because we dodge taxes but because crony capitalism results in massive corruption. Social handouts requires vast amounts of money so the government taxes virtually all income at source. We file tax returns at the end of the financial year and receive refunds from the income tax department. This requires so much work that it takes many months to transfer refunds into our accounts. Imagine if, like in the US, half the people, that is 600 million, were paying tax. The entire civil service would have to be employed in paying back tax refunds. The pernicious TDS system forces people to work for the government by deducting tax from rent or from sale of property and deposit it with the government. There is no explanation as to why a person should be forced to work as a servant of the government without any salary or compensation of any sort, while civil servants get huge perks. While they get pensions and free healthcare for life we get nothing for paying tax. You pay to buy something. What are we buying with our tax money?

Two red rags to the bulls.

Politicians and business fellows are seeing red. The Wholesale Price Index was - 4.05% in July. Wholesale prices have been falling since January because of weak commodity prices globally. This time the Consumer Price Index has come down to 3.78% in July after a tiny uptick in June when it was 5.4%. RBI Governor, Raghuram Rajan wants to maintain a real interest rate of 150 to 200 basis which means he can cut repo rate a hefty 1.25%, from 7.25% at present down to 6%. In theory, that will bring down the cost of borrowing and allow industries to set up new projects, adding new jobs, increasing tax collection and boosting growth. The high interest rate has not subdued car sales which grew by a robust 17% in July. Total number of Indians holding credit cards is a minuscule 20 million who spent a total of Rs 171 billion last year. This means that people buy only cars and real estate with bank loans. If car sales are buoyant despite high rates why are our movers and shakers squealing for rate cuts. Because real estate is in the doldrums and massive amounts of black money is stashed in properties. If property prices crash, as they should, to reflect market reality, they will lose heavily. It takes a lot of effort to make black money, involving enormous risks of feeling the heavy hand of the law on your collar, so it will hurt to see it vanish. The government has enacted a stringent black money law which must be scaring the bejesus out of these fellows, hence the enormous rage against the government and the Prime Minister. That maybe why no bill was allowed to pass in the monsoon session of the parliament. It may not be a question of interest rate and price indices. The rupee has been under pressure ever since China devalued its own currency, the yuan. If the rupee is overvalued our exports will fall further. Our exports have fallen for 8 months in a row and cheaper Chinese exports may hurt our exports even more. There is concern that other countries may weaken their currencies to stay competitive. Many African countries use the yuan for business or hold yuan as foreign currency reserve. So, the RBI may have to cut repo rate to bring down the value of the rupee. But how will it control the fall? Once the Chinese devalued the yuan the markets took that as a sign that the currency would fall further and started selling out. The government has been supporting the yuan to control the fall. China cut its interest rate to a historic low of 4.85% to support its stock market. It can do that because its inflation rate is just 1.5%. Our retail inflation at 3.78% is higher and may rise if a weaker rupee increases cost of imports, especially oil. The strength of the dollar and the Chinese moves have made it unnecessary to increase interest rate in the US but the Federal Reserve may be forced to increase rate by 25 basis points under sustained Republican attacks. The WPI and the CPI are red rags to the bulls of interest rate. How will the RBI manage them?

On Independence Day we demand real freedom.

Today is Independence Day in India. It is a national holiday and has become a day for speeches by politicians, exhorting Indians to work for the nation, while doing everything to hold back any progress. We pay taxes but get nothing from the state, no healthcare, no pension, no old age care but we are asked to surrender our subsidised gas cylinders while our useless members of parliament who did less than one day's work in the entire monsoon session get over Rs 3.5 million per year. Including free fights, medical care, electricity and laundry charges. Yet these extremely pampered people want double of what they are getting. And they have no sharam or izzat. A man, who has never done a day's productive work in his life and yet lives a life of luxury that Warren Buffet would envy, will not allow any amendment in the Land Acquisition Act because his heart is bleeding for poor farmers. Our flag does not belong to us. It belongs to fellows who whizz around in cars with revolving red lights, who are guarded by heavily armed security, who are allowed to take a ' companion ' when travelling abroad on government business and whose families are not subject to customs search when returning from junkets, allowing them to smuggle in any amount of contraband. The US also has a long list of rules for respecting its flag but no one is arrested for wearing clothes made in the colors of the flag. No wonder Americans love their country and we have a whole bunch of traitors who speak against India in supporting others. Enough talk. Here is what we want. We want an end to secrecy. We want to know who signed away our sovereignty so that we keep genuflecting to Pakistan despite continual attacks on our nation. Why do we repeatedly return gains made by the sacrifice of our gallant soldiers for nothing in return? We want respect and an end to the concept of VIP and VVIP. We want term limits for politicians. Since every profession has a retirement age we demand  that politicians not be allowed to stand for election after 70 years of age. The Rajya Sabha must not be a dustbin for politicians who have lost elections to the Lok Sabha. Two thirds of the Rajya Sabha must be eminent citizens who have never been in politics or a civil servant. We want all education institutions and sport bodies to be free of politicians and civil servants. We want freedom of speech, we want privacy from the government and we demand that cases be concluded within 2 years and no special treatment of criminal politicians or their broods. We want all municipalities, which are cesspools of corruption, to be abolished and most services to be privatised. Only monopolies, such as water and electricity distribution, should be controlled. We want our country to be rich and powerful. We are tired of being ashamed of our governments. We want freedom from the tyranny of our politicians. We want REAL INDEPENDENCE. 

Cheap electricity will electrify the economy.

The state electricity board in Rajasthan has debts of over Rs 1 trillion. Why? This is where the truth is fudged. The glib answer is that it is because electricity is being subsidised and the price of electricity should be increased regularly. The truth is that the subsidies are given, not to everyone, but to certain sections of society to get votes. Since most people live in villages politicians have promised free electricity to farmers to win elections. Figures from Rajasthan bear this out. From 1947 to 2013 industrial use of electricity has fallen from 71% to 45% while the share of agriculture has risen from 3% to 18%. Politicians are also huge users of electricity and since they are immune from prosecution they do not pay their bills. Including the self-professed Honest Man. To ask the rest of the urban population to pay for all the stolen electricity would raise bills to astronomical levels and result in protests. Electricity should be cheap in India because we are sitting on 301 billion tonnes of coal but mines were handed over to friends and relatives, without mining experience, so that a majority of mines are inactive. We had to import 242 millions tonnes of coal in the last fiscal and, since coal is only used for producing electricity we are having to pay huge bills. No doubt politicians and their friends made money on imports. They never lose. But price of anything is linked to demand and demand for electricity has fallen, partly due to the weak economy and partly due to a relatively mild summer, when the heat has been suppressed by regular rain, so there is excess capacity. Yet distribution companies are clamoring for higher prices. The reason is that generating companies have been promised payment for ' capacity utilisation ' which means that even if a plant is running at 10% capacity it has to be paid for its full capacity. So, the company cuts down on its fuel cost but gets paid in full. Double profits and double pegs all round. Our bills have doubled but we are told that electricity is being subsidised and we are so pleased. How stupid can we be? However, there is no doubt that producing electricity from coal is bad for the environment. Burning coal produces smoke into the atmosphere and tragically in Punjab children near a power plant developed uranium toxicity from ash. If India is to progress we need to produce large amounts of cheap electricity for manufacturing and domestic use, while decreasing pollution. Sounds paradoxical but it maybe possible to produce vast amounts of electricity from renewable sources. Germany is already way ahead, Wall Street firms are beginning finance renewable projects and even Saudi Arabia is talking about exporting renewable electricity. We need new technology that will run air conditioners in homes on solar energy. That will instantly reduce consumption from fossil fuels. Do we have the brains?

They should vote for change. Will they?

Campaigning for the coming elections in Bihar the Prime Minister said that Bihar still remains a BIMARU state, while Rajasthan and Madhya Pradesh, with BJP governments, have progressed. To which an instant riposte by an anti-BJP newspaper shows that on certain parameters, such as infant mortality, malnutrition, open defecation, and maternal mortality all the 4 BIMARU states are neck and neck. Maybe, but Bihar and UP still have the highest fertility rates in India at 3.5 and 3.3 against an all India average of 2.4. The main reason why Bihar will lag behind all other states in development is that it is last in literacy in all of India at number 35, with UP at 29. High birth rate with poor literacy leads to crime which is a leading industry in Bihar. Growth in the economy has made a section of people very rich and liberalisation has resulted in the availability of a vast array of international brands, from smart phones to luxury cars, from designer clothes to expensive restaurants. The poor can see shopping malls full of tempting goods while the ubiquity of televisions gives them a glimpse into the lifestyle of the rich. Crime is the quickest way to achieve the same lifestyle so they can be easily recruited by whoever is ready to pay. The top criminals join political parties which protect them from the police. No wonder conviction rates for criminals is only 10% in Bihar while Kerala tops the table with 77%. The intimate connection of crime with politics is illustrated in Bengal where most of the crimes are committed by party goons. Police are not allowed to investigate these crimes. Last year West Bengal police refused to cooperate in the investigation of terrorists making bombs in the house of a politician. Large numbers of people from Bihar travel to other states looking for jobs which leads to resentment among the locals who accuse Biharis of taking their jobs and committing crimes. Attacks on Biharis have taken place in Maharashtra and earlier there were fights in parliament because of attacks on Biharis in Assam. We Indians have little choice in the politicians. It is often a question of who we despise the least. The choice is even more limited in Bihar and UP. To shirk their responsibility politicians demand special help from the center. It would be grossly unfair to other Indians to shovel our tax money to ever growing populations in these states. That is why the anger. While the rest of India is changing towards k type with fewer children Bihar and UP are still r type who breed a lot and care little for their children, depending on the state to keep them alive. As the site of the ancient civilisation of Pataliputra and the university of Nalanda Bihar deserves better. Whether they choose to change or stick with the same old rot is in their hands.

If one expert predicted it why the surprise?

Only 18 million Indians invest in shares. Shares are the cheapest way to raise money because investors get paid dividends only when the company makes profits whereas it has to pay interest on loans even when it is losing money. Thus we are being constantly enticed with tales of huge returns over the longer term. The Congress even started a Rajiv Gandhi Equity Savings Scheme to trap poorer segments of society into stocks, by labeling it ' savings ' and not a ' risky venture '. We are told to invest through mutual funds, supposedly run by experts, to reduce the element of risk but fund managers are more interested in increasing their own earnings rather than those of investors. Why discuss about shares? Because yesterday share markets across the world fell after the People's Bank of China devalued the yuan by 2%. Apparently this took markets by surprise. Guess what? The PBOC has devalued the yuan by another 1.6% this morning. But surely if these fund managers are such experts they should have seen this coming and factored it in much earlier. How is one to know what the PBOC is going to do, given that China is so secretive about its finances? One person predicted it way back in April. In his article, Anantha Nageswaran wrote that China's growth rate was not 7%, as officially published, but between 1.6% and 3%. Despite its brave talk about shifting the economy towards domestic consumption China was more dependent on exports because falling imports showed that domestic demand was weak. There was a huge bubble in the stock market, created by margin trading and China had been practicing quantitative easing by buying US bonds which released vast amounts of yuan into the market. The rich have been taking their money out of China and a currency depreciation will increase the outflow. How prescient! In May he wrote that China wanted to enter the Special Drawing Rights of the International Monetary Fund because that would make it a reserve currency. All central banks would buy yuan which would support its value. When this did not happen China resorted to more debt which has made bubbles in real estate and the stock market even worse. In July he wrote that despite its brutish behavior towards its neighbors China is deeply insecure. It tried to reduce debt by enticing people to buy shares and is now desperately trying to shore up the stock market. New graduates at a university were ordered to shout the slogan," Revive the A shares, benefit the people." How does the double devaluation affect India? The rupee will become stronger relative to the yuan, hurting exports. The RBI could cut the repo rate to weaken the rupee but that would make imports, especially oil, more expensive, adding to retail inflation. We hope that China collapses but are we prepared to meet the headwinds?

Is Reagan's voodoo economics the answer for India's problems?

A professor in Britain is cross with the Indian media for its sensational coverage of the government's intention of setting up a 7-member Monetary Policy Committee to decide interest rates in India. " Where is the deep discussion of whether inflation targeting makes sense for India? Or, if it does make sense, does a range of 2% to 6% make any sense?" he asks. There have been many articles in support of a MPC with former governors of the RBI weighing in with their views. Even the current governor has supported such a committee. The problem for everyone is the proposal that the MPC will have 7 members, 4 of which will be appointed by the government and the governor will lose his veto power, because no one trusts politicians or civil servants who are at the bottom of all that is rotten in India. The media was questioning as to whether the MPC would be independent. If it is going to be just another arm of the Finance Ministry why not save a lot of time and money by getting rid of the MPC, as well as the post of governor of the RBI, altogether and let a bunch of civil servants come out with a figure. After all, they control every other aspect of our lives, from sports to sex.  As for having an inflation target, what should the MPC focus on? Politicians are only motivated by hanging on to power and in their warped thinking economic growth at any cost leads to victory at elections. That is why the previous governor was pressured into keeping interest rate at 5% to 6% in 2009-2010 while inflation was raging at over 10%. " Developing countries and India are characterized by external supply-side constraints. If inflation rises above target because of a rise in drought-affected food prices, then raising interest rates will impact growth without impacting the source of inflation," writes the professor. The interest rate was raised to 8.5% in 2011 but was prematurely reduced to 7.25% in 2013. Inflation spiked again and it was raised to 8% in January, 2014 and, despite drought last year which caused high food prices, inflation has fallen to 5.4% and the RBI has cut rate to 7.25%. So high interest rate did work. In the opinion of the present governor interest rate should be 2% higher than the rate of inflation which will encourage savings and move people away from buying physical assets, such as gold. The real villain is irresponsible spending by politicians to win elections. Perhaps, instead of a MPC we should have a Fiscal Policy Committee, composed of independent economists, to control runaway spending by politicians and civil servants. Trouble is, economists are wrong too often. One economist thought that solar power will be too expensive at Rs 9 per unit. Companies are ready to sell solar power at Rs 5 per unit in Madhya Pradesh. Does it mean that India will benefit from Reagan's supply-side economics? Also known as ' voodoo economics '.

The merry go round of tax and corruption.

Delhi has been ranked at 379 among 476 municipal areas studied, in India. As the capital city Delhi hosts the central government. It also has a state government and 3 municipalities. The more the politicians the more the multiplication of corruption. The quickest way to clean Delhi is to get rid of the municipalities and let the state government be in charge of all services for which we pay such huge taxes. Some services, such as garbage collection, maintenance of traffic and street lights and repairing roads can be privatised. Contracts should be awarded by competitive bidding and fines for shoddy work will be written into contracts. Instead monopolies, such as power distribution and car parking have been handed over to private contractors, resulting in a huge rise in electricity bills and cars are double or triple parked, causing traffic jams. In the assembly elections in January the Aam Aadmi Party won 67 out of 70 seats. Local BJP workers must have worked against the party to stop the anti-corruption drive by the Prime Minister, just as they sabotaged Gen Khanduri in Uttarakhand. Apparently 400 buildings have been found unsafe in north Delhi, which is a joke because people have made structural changes in almost every house or apartment without permission and without safety advice from an engineer. Recently the High Court has allowed regulators to enforce hotels and restaurants to sell bottled water at the printed price. Higher charges were allowed by the Supreme Court but a new law in 2011 gives more power to the government. In India the Maximum Retail Price, or MRP, must be printed on every item sold to the public. No doubt, the intention of the law was to prevent overcharging by shopkeepers but, like every law in India, it just shifted the corruption elsewhere. The MRP printed on bottles of water, sold in restaurants, is more than double the MRP of identical bottles sold in corner shops. So, manufacturers and hoteliers are cooperating in ripping off customers. MRP misuse is even more rampant in hospitals where the MRP on medical devices is often double of what the hospital pays to buy it from the manufacturer. A fixed MRP helps the government to collect taxes on every product and this is the source of all corruption. Why is it fine to sell a bottle of beer at 3 times the price but not water? After all the cooling and service is the same. Because huge taxes on beer means that the government is a beneficiary in cheating the customer. Only 3% of people in India pay income tax while about half of all Americans pay income tax. Imagine if 600 million Indians, almost double the entire US population, paid income tax. The government would be inundated and all work would come to a standstill. So, we maybe helping the government by not paying taxes. Makes up for the cheating.

Hope the next US President is not an agent of Pakistan, as Obama is.

Which of the 17 hopefuls won the Republican Party debate last Thursday? The answer would depend on who you ask. Some thought that billionaire  Donald Trump was a clear winner because the people are angry with politicians and see Trump as an outsider who gives as good as he gets. Trump certainly thought so. When asked as to why he had contributed to Hillary Clinton's campaign in the past, even though she is a Democrat, his reply was that rich people contributed to all politicians in return for influence in policy making. That is devastating because it implies that politicians are bought by the wealthy. People loved it. Crony capitalism is shamelessly blatant in India, with industrialists being nominated to the Rajya Sabha where they can directly influence policy in their favor. Globally the middle class constitutes 13% of the population while it is a miserable 3% in India, the low income group making up a massive 76.9% of the population. These people have no time for issues but vote for handouts every time as we saw with the overwhelming victory of AAP in Delhi. Trump will probably not win the Republican Party nomination and Hillary Clinton may have to withdraw because she is tainted by the policies of Obama. If Trump is not the Republican Party candidate he may choose to run as independent, which may split the conservative vote and hand victory to the Democrat nominee, much as Ralph Nader split Democrat votes in 2000 to hand victory to George Bush. Does it matter to us who the Republican candidate is? Absolutely. The serial killer Obama has been our enemy. He has supplied sophisticated weapons to Pakistan to be used against India. When Mr Modi became Prime Minister last year he decided to be firm with Pakistan and reply bullet for bullet. Obama invited himself over to our Republic Day celebrations in January. How he threatened Modi we do not know but since his visit Pakistan has multiplied its attacks on us while our government has gone back to the failed old policy of ' constructive dialogue '. He has capitulated to Iran in the nuclear deal, accepting Iran as a nuclear power which will be allowed to construct nuclear weapons after 10 years. Even if the Congress refuses to ratify the deal sanctions will disappear so that Iran will be able to earn billions of dollars with which to support its proxies, Hezbollah and the Houthis, in the middle east. Chances are that Saudi Arabia will get its own weapons from Pakistan. Ironically AQ Khan of Pakistan helped to establish Iran's nuclear program. If there is a nuclear war in the middle east US bosom friend Pakistan will be responsible. Hopefully, the next US President will not be an agent of Pakistan.

Play dirty, but get the job done.

Governor of the Reserve Bank, Raghuram Rajan thinks that India has lost one generation of economists so that there is a lack of good economists to make policies. Does it mean that our top economists have migrated abroad, as Rajan himself did, or that all our economists are employed by the government or by companies so that their advice is biased? What is troubling for us ordinary folks is that although there are many good articles analysing economic figures a lot of them are contradictory so it is difficult to know whether we are going up or marking time on the same spot. Industrialist, Rahul Bajaj is disappointed that despite his emphatic election victory last year the Prime Minister has been timid. It is inexplicable why he is allowing the opposition to block all his bills in the Rajya Sabha, where he is in the minority. 67% of the Rajya Sabha MPs are wealthy, 17% have criminal charges against them and 100% would like to double the perks that they get, which makes them greedy beggars. He could have filed non-bailable charges against the criminal types and promised juicy contracts to others to get them to support his bills. The Congress dropped corruption cases against Mulayam Singh and Ms Mayawati and dished out coal mines to friends. You cannot fight according Queensberry Rules with opponents who fight dirty. So, can the economy really improve from here? Retail inflation is steady, the rupee is stable and there may be early signs of a pick up in demand. Increase in government spending on infrastructure could boost the economy. This may not create jobs as companies are sitting on excess capacity which will accommodate rising demand. Even if companies want to expand they will not get credit because banks are staring at losses of Rs 1 trillion from bad loans. The government has decided to spend Rs 700 billion over the next 4 years to recapitalise public sector banks. Will that be enough to get banks lending again as well as funds to spend on infrastructure is not known. Net sales have fallen for 3 quarters in a row which is not encouraging for recovery. This is supported by slowing industrial output in May due to weak manufacturing. Despite this indirect tax collections jumped by 37.5% in the first quarter, gleefully reported by the Chief Economic Adviser, as a sign of a pick up in economic growth. Maybe, taxes are the disease which is blighting our economy. High taxes and low interest rates create wealth for the rich and keep us poor. That is why it is essential to pass the Goods and Services Tax bill. Threats or promises, whatever it takes.

Only countries with snowfall are wealthy. Why?

After rapid growth in the early years of the century emerging markets have slowed down. The MSCI Emerging Markets Index nearly quadrupled between 2002 and 2010 but has fallen 10% since. Brazil and Russia are in recession while China is having to prop up its stock market. Ruchir Sharma, head of emerging markets at Morgan Stanley says," Very few emerging markets historically have ever been able to make to the developed countries. This is a return to normalcy." Why? Europe developed by looting colonies while the US had vast natural resources, which it developed with cheap slave labor. Japan, South Korea and China became rich by developing mass industrialisation, producing cheaper imitations of western products. However, what all rich countries have in common is that they are relatively colder and have snowfall in winter. Even in Europe the warmer countries in the south, Greece, Spain, Italy and Portugal are not as rich as the colder northern countries, such as Germany and Finland. That is not to say that all cold countries are rich. Argentina and Russia are extremely cold but not rich. So a combination of snow and exploitation is the secret of becoming wealthy as a nation. Emerging markets did so well in the early years because of low interest rates in the US. A lot of dollars were invested in emerging markets to earn higher returns. This pushed up local currencies, keeping inflation in check. The rupee rose to 39 to the dollar in 2007. Central banks bought dollars to keep local currencies from appreciating too much and also to build up reserves in case capital started flowing out. Firms went on a borrowing binge which they may find difficult to repay if the US interest rate rises, leading to a stronger dollar. After the crash of 2008 the US dropped interest rate to near zero and resorted to quantitative easing, which is another term for dollar devaluation. This distorted the world because dollar is a reserve currency and the US can print as many as it likes, knowing that central banks in other countries will be frantically buying dollars to prevent it from falling too far. Now that the US economy is growing and the Federal Reserve is poised to increase interest rate all other currencies are falling. This pushes up inflation and forces countries to increase interest rates, cutting growth. Seems that Austrian economists believe that central banks are responsible for bubbles, market crashes and recessions. They predicted inflation in the US and a return to the gold standard. Others may hoot in derision but maybe instead of inflation in the US it was manifest as disinflation elsewhere. Gold rose to near $1700 an ounce before retreating. The US has experienced 12 boom-bust cycles in 1940. Maybe, at each cycle rich countries will settle lower so that after decades they will also become middle income countries. Global warming will make snowfall less anyway.

If we are merely computer simulation why not write our own history?

People never learn from history. History is useful for making films glorifying certain characters, such as Spartacus, romanticising the fatal love affair of Anthony and Cleopatra or vilifying villains, like Adolf Hitler. The US has been losing every war since World War II but the urge to interfere is still irresistible. Confused about what to do in Syria, but unable to resist the temptation of doing something, Obama has trained a bunch of rebels to fight ISIS in Syria. The first 60 of such fighters were sent into Syria recently and were immediately attacked, not by Assad's army or by the ISIS, but by Jabhat al-Nusra, which is an affiliate of the Al Qaeda. Getting repeatedly humiliated is not easy to bear. So, even as Hiroshima remembers the horrific nuclear strike 70 years ago Obama has asked the Department of Energy to construct ' super-nukes ', 3 times as powerful as the Hiroshima bomb. Eminent historian Ramachandra Guha writes," History is a humanistic, not a technical, discipline. It aims at expanding human understanding, not at solving social (or national) problems." And, " A knowledge of history may thus make the aam aadmi more self-critical, less xenophobic. As for political (or business or sporting) leaders, a knowledge of history is - or should be - the best antidote to hubris." But understanding of past events depends on which side you are on. Thus, Genghis Khan is a hero to Mongolians but a barbarian to Europeans. The British celebrate Winston Churchill as a great leader but to us, Indians he was a villainous butcher, no different from Hitler, who killed 3 million in Bengal by stealing our grain to feed his troops. One author thinks that it is alright to remove names of invaders from our streets and to give them Indian names but to make ridiculous claims about our past glory is foolish. Perhaps so. But what is the harm of a lunatic fringe claiming all sorts of inventions thousands of years ago? Why does the media in India focus so much space ridiculing these people? There are many people who believe in UFOs and aliens visiting earth. So what? There are conventions where adults dress up as comic superheroes. Good luck to them. The overwhelming majority of people smile indulgently as we go about our daily life. We Hindus believe that the universe is ' Maya ', which ' means an illusion '. Now a scientist has postulated that quantum particles, dark matter and the enormous speed of galaxies can be explained by assuming that we are a computer simulation by an advanced civilisation. If we do not exist then it does not matter if Adam was playing with dinosaurs, 72 virgins are waiting for us or that our ancestors were whizzing around in ' Pushpak Raths '. After all, history is our story. 

' Get your retaliation in first ' will work in our politics.

The Reserve Bank has kept the interest rate and the Cash Reserve Ratio unchanged at 7.25% and 4% respectively. Soon after the announcement the Oriental Bank of Commerce cut deposit rates by 25 basis points but did not lower the lending rate. The RBI cut interest rate from 8% to 7.25% this year but banks have refused to pass on the lower rates to customers. To be fair to banks, they raise money from the public in the form of term deposits which lock in the interest they have to pay for months to years. So if a banks average cost of deposits is 8% it has to lend at a higher rate to be profitable. Borrowers get angry because banks raise lending rates as soon interest rate goes up but are tardy in bringing them down. The RBI has forced banks to move away from Benchmark Prime Lending Rates, which is set by banks, to the Base Rate set by the RBI. Banks have transferred home mortgages to their home finance companies which are not bound by RBI rules and continue to use the old BPLR rates, keeping mortgage rates high. Public sector banks are owned by the government, which means politicians, and run by civil servants, which means they are above the law. Shifting to Mumbai Interbank Offer Rate, MIBOR, would make mortgages much more volatile but over the long run borrowers would have to pay much lower rates. It takes 3-4 quarters for lower interest rate to make funds cheaper for banks, at which point banks may start lowering lending rates. The RBI has to wait to see the effect of its monetary easing and also whether the Federal Reserve raises US rates in its September meeting and what effect it has on the rupee. While yields on short term government securities have fallen sharply yields on long term G-secs are still high, at 7.8-7.9%. Yield is inversely proportional to price, so it means that demand for long term bonds is weak. It maybe because foreign investor limit of $30 billion per year is already exhausted or that the market is expecting inflation to rise in the medium term. Whether this means that the market is expecting the economy to grow strongly matters little because if inflation is built into the system any growth will be accompanied by inflation, which will result in monetary tightening and falling growth. There are some encouraging news for the economy. Commodity prices, especially that of oil, are soft, retail inflation at 5.4% is within the RBI target and the RBI has built up foreign currency reserve to cover 10 months of imports. On the other hand, consumer sentiment has fallen to a low level which would translate to lower demand. Rural demand is low, farmers are demanding loan waivers, which will result in increased bad loans in banks, and cement demand is low, showing weak infrastructure spending. If Congress is obstructing play their game. Start corruption cases against some and do not let them breathe until they support the Goods and Services Tax Bill. As they say in rugby," Get your retaliation in first."

Should scientists be allowed to invent whatever they can?

Indian journalists suffer from a delusion of knowing everything but does that mean people with differing opinions are to be treated with disdain? A journalist who has written a book seems to think so. He thinks that scientists are scared of Artificial Intelligence because they maybe stupid. " This fear inspired a letter last week, which was signed by hundreds of eminent people including the theoretical physicist Stephen Hawking, who says many things that would look foolish if you said the same, and the chief of SpaceX and Tesla Motors, the yet to be despised billionaire, Elon Musk." He does not explain why Stephen Hawking is a fool or why Elon Musk, who may revolutionise how we travel, is to be despised. A Swedish philosopher, Niklas Bostrom reasoned that an AI programmed to produce paper clips will go on producing paper clips, until all of earth's resources were used up, thereby ending civilisation. But then he turns his pop psychology on its head by writing that humans are frightened of AI because machines will become more intelligent than us. " The fear of the stupid machine is in reality a respectable front for the fear of the intelligent machine," he writes. Wow. But what if it is possible to invent such robots that are much more intelligent than us? Is it right to do something just because it is possible? Scientists must have been very excited to unleash the power of the atom over Hiroshima and Nagasaki, which has led to rogue states like Pakistan and North Korea to build there own, making the world much more dangerous.  It is one thing to be listening to the universe to solve the question of whether earth is the only spot where life exists but it is completely different to advertise our presence. If an advanced civilisation, capable of travelling in space, is able to lock on to our radio signals it may find us. What is the guarantee that it will be friendly? Science fiction writer, Isaac Asimov devised the 3 laws of robotics which would prevent robots from ever harming humans but a robot invented the zeroth law which was based on ' greater good ', an excuse used by politicians to pass restrictive laws. The biggest fear of AI is not that it will be stupid or intelligent but that they will be totally logical, while humans are illogical. A mother died saving her child in an escalator accident in China. That surely is totally illogical. A lot of effort has gone into educating this woman and she can easily produce another child but the child's future is uncertain, especially without a mother. That is the difference that makes robots so dangerous for us. A robot may produce good music but will it be able to appreciate music, or any other beautiful thing? Robots may turn out to be like the Vogons who obliterated earth to build a space highway. To understand the danger of AI we have to think illogically. Like humans.

If no one is responsible why work?

A reforms commission, FSLRC, headed by retired judge, BN Srikrishna submitted its report in 2013 which suggested that the monetary policy of the Reserve Bank should be decided by a Monetary Policy Committee, a majority of whom will be appointed by the RBI, with the Governor retaining his veto power. In December the government appointed a 3 member committee which changed the report to say that the MPC should have 7 members, 4 of which will be appointed by the government, and the Governor will lose his veto power. This resulted in an outcry. Now government officials are busy denying charges of trying to nobble the RBI. They say that these were in the FSLRC report to which Justice Srikrishna's emphatic response is," It is neither my view nor is it FSLRC's view. It reflects the government's view." A professor from Canada has written a vigorous defense of monetary policy being decided by a committee instead of by one man. He says that India should develop strong institutions which can function automatically without the need for a chief. Institutions based on strong rules which are transparent " which build in safeguards to keep venal individuals out, and which create and lock in self-reinforcing, incentive-compatible mechanisms that ensure that, by and large, everyone behaves as they should, delivering efficient and fair outcomes for all." He gives the example of Belgium which had no national government for almost one year but functioned well and institutions in the US continue to function despite political gridlock. We would argue the exact opposite. In India nothing gets done because files are transferred from one civil servant to another, unless a bribe is paid to expedite the process. It is a committee culture, to avoid any responsibility should anything go wrong, that raise costs and delay all projects. The metro rail in Delhi was built ahead of time because one man, E Shridharan took responsibility. Committees are responsible for the massive corruption in Indian government because it is impossible to pin culpability with everyone pointing the finger at another. If he is as honest as he claims to be why is Manmohan Singh trying to get out of answering questions in a court of law. It was the National Advisory Committee of Sonia Gandhi that was responsible for the collapse of our economy. Just like Belgium, Delhi was without a government for almost a year and functioned very well. Since the AAP government has come garbage is not collected, streets are full of potholes, power cuts are frequent and auto rickshaws break the law at will. Perhaps it is because of faith in institutions that the sub-prime crisis took place. Banks have been fined huge amounts but no one has gone to jail. Instead bank chiefs are still taking huge bonuses. As any physician will tell you, medicine by committee usually kills the patient. 

Good may be difficult but bad must go.

Getting rid of bad does not mean that good will follow, writes a professor. We have a natural indignation against injustice and unfairness. Not just humans, even monkeys have a sense of fairness and will reject unequal reward. But we get so engrossed in fighting injustice that we are unable to give sufficient attention to what to replace it with. " It is easier to mobilize against injustice than for justice," writes the professor. " We are more enthusiastic to fight the bad - say, hunger and poverty - than to fight for, say, the kind of growth and development that makes food and sustainable livelihoods plentiful." It is possible that what is injustice to some people is highly moral duty to others. A report in Britain says that rich parents create a ' glass floor ' underneath their children which means that mediocre children from middle class families have a 35% higher chance of becoming high earners than children from poorer families. " A society in which the success or failure of children with equal ability rests on the social and economic status of their parents is not a fair one," says the report. Predictably, this has drawn an angry response from others who see it as parental duty to help children to get on the career ladder. If you help your friend's child to write a proper resume, which helps her to get a coveted job, is it wrong? Middle class children get help with their homework and are taken on educational trips by parents. Such inequality is stark in India. Most middle class people have attained their status through education or some particular talent they possess while vast numbers of poor people are illiterate. Which means that children with educated parents get an automatic advantage from birth simply because their parents talk to them so that by the time children start attending school middle class children are already ahead in IQ tests. In the US poor parents are being taught how to talk to their children. Thus families make a lot of difference. So should middle class parents be forbidden from reading bedtime stories to their children? 2,400 year ago Plato recommended that children of the elite should be taken away and brought up by the state, to create equality, which Aristotle opposed. Unfortunately, there is no evidence that removing injustice and corruption leads to removal of poverty. " Teachers and nurses often do not show up for work, but that does not mean that performance would improve much if they did. Policemen may stop asking for bribes, but that won't make them better at catching criminals and preventing crime," writes the professor. Perhaps. The trouble is that the fight against poverty is led by hypocrites who do it for personal gain. But, as long as bad persists good cannot enter, so bad must go first.