The greasy pole of the global value chain.

An angry article compares liberalisation in international trade to a Ponzi scheme, perpetrated by the West, especially the European Union. According to the EU Trade Commissioner, Cecilia Malmstrom," The fundamental role of EU trade policy must be to create economic opportunity for people, starting with people in Europe." Nothing wrong in that. The European Union is a collection of 28 countries with free travel and free trade between member countries. Within this bloc the Eurozone consists of 19 countries which have a common currency, the Euro, with the European Central Bank setting a common monetary policy, but leaving each member to set its own fiscal policy. No wonder the EU economy is under severe stress. Some think that another crisis is almost inevitable while others point to the 0.6% growth in the first quarter of this year, which would translate to an annual growth rate of 2.2%, as a sign of the economy beginning to recover. Trouble is that unemployment rate is still above 10%, banks are still reluctant to lend despite a negative interest rate and prices fell 0.2% in April, which shows the weakness in consumer demand. Latest figures show a fall in manufacturing, as the boost from the collapse in commodity prices begins to wear off, giving rise to fears of deflation. Germany, as the largest economy in the Eurozone, is blamed for not spending enough, which is shown in its high savings rate and a current account surplus of over 30 billion Euros. No surprise that the EU wants trade deals to be beneficial to itself. The EU wants Global Value Chains to provide " energy, raw materials, or intermediate goods or services ", which is taken to mean that developing countries should provide basic commodities and parts while the EU will manufacture high value end products. To that end the EU wants that " trade must also be about values and principles as much it is about economic principles ". In other words the EU wants to use its 'values' on human rights, labour and environment to gain an upper hand in trade. Countries, which depend on exporting commodities are suffering because of the fall in prices. Whether they are borrowing from future generations is something they have to work out. Saudi Arabia is increasing oil production despite weak prices. We do not know whether it wants to cripple US shale oil production, hit Iran's earnings from oil or to sell off as much as it can before renewable energy makes oil redundant. European countries have been used to looting raw materials from their erstwhile colonies and are unable to adjust to equality in trade. The US was founded on the blood of indigenous Indians and then grew rich on slavery. Now they want to use trade as a weapon. The only solution to grow wealthy through education, innovation and producing high value products. Create our own Ponzi scheme.

Even rich children are not getting educated. Why not?

A survey, conducted between January and July 2014, by the National Sample Survey Organisation highlights the wide gap in access to education between the rich and the poor. The survey shows a massive gap between the lowest and highest quintiles in terms of income, and between rural and urban populations. No surprise there. What is surprising are the figures for the richest fifth of the population. Taking only the urban people, 89% of the richest fifth attain primary education, 72% attain secondary education, 66% attain higher secondary education and a paltry 31% attain education above higher secondary. Primary means up to Class VIII, secondary is up to Class X, higher secondary is up to Class XII and college thereafter. The question is: Why are so few of richer children getting educated, why not 100%? It is not as if we have hundreds of Bill Gates and Mark Zuckerberg, dropping out of college to launch companies spanning the entire globe. Why are 69% of children in the economic upper fifth of the population not going to college? It cannot be because of a lack of seats in colleges, because education is very big business and we see a new college opening almost everyday. The Governor of the Reserve Bank has warned students not to take education loans for useless degrees. So here is a terrifying thought: Only 31% of top 20% of the population are attending college and the vast majority of them are getting rubbish degrees. Which means that India is a nation of duffers. Only 7% of MBA graduates are fit for employment, the rest 93% earn less than Rs 10,000 a month, if they get any job at all. Americans are most unimpressed with the standard of our medical education. But private space industry in the US is opposed to Indian Space Research Organisation because it is able to put satellites into orbit at very cheap rates. So a tiny few are up there with the best. If our education system improves we will be unbeatable. Over 80% of engineering graduates know nothing. In fact, those who are learning skills earn much more than engineers and MBAs. What happens to these graduates? After spending hundreds of thousands getting a degree can they train as plumbers or electricians? It is not just a loss of face, their worth will drop precipitously in the marriage market, especially since gender selection has drastically reduced the number of eligible girls. The Vyapam scam in Madhya Pradesh in which the process of selecting all the candidates for medical and engineering colleges and for jobs in government was found to be controlled by criminals is an example of the rot in the system. The Bihar government found money to reward highly paid MLAs but had no money to pay school teachers. Shows what politicians think about education. If people remain stupid it is easy to lie to them. Win elections.

Why persist with policies that have failed for 68 years?

The International Monetary Fund estimates that India's Gini coefficient has gone up from 45 in 1990 to 51 in 2013. The higher the value the more the inequality in income among the rich and the poor. To treat any problem the cause must be understood. " There are several possible explanations for growing income inequality - from the nature of technological progress to the lack of opportunities due to the caste system, to ineffective government programmes and lack of infrastructure that connects people in the interiors to markets," says an article. So, what to do about it? Technology cannot be halted, its progress is relentless. It is in the nature of human beings to want to create something new. Already scientists are predicting that robots will take over half the jobs in the next 30 years. Which means that inequality will only grow. Japan is set to open the first farm run almost exclusively by robots. Only 140 million out of 300 million were able to find jobs in India between 1991 and 2013. If robots are set to take over most jobs the situation can only get worse. It has become fashionable to blame the caste system for inequality, thereby shifting the blame on Hindu religion. We can argue that, with 50% reservation in higher education and government jobs, low caste status is actually a boon. Reservation in Tamil Nadu is at 69%. Recently, Jats in Haryana were included in reservation and then Patels were given 10% in Gujarat. If caste is a cause of inequality why is there so much demand to be classed as low caste? Government programs to reduce inequality means handouts. Apparently, countries in South America have been very successful in reducing inequality through redistribution. The Bolsa Familia program in Brazil has been lauded by the World Bank for reducing poverty. Commodity prices fell, inflation went up and the economy has gone into a severe recession. Socialist policies of Hugo Chavez in Venezuela have resulted in such severe crisis that there is no electricity in a country with the largest oil reserves in the world. So what is the answer? Unfortunately, people talk about inequality when they should be talking about poverty. There will always be people with exceptional abilities, such as Thomas Edison and James Watt, and if they are suppressed we will go back to living in caves. Redistribution is ineffective because of the leakage in the system. Even if done honestly, which is impossible in India, a lot of money will always be wasted in paying salaries of civil servants entrusted with the program. Faced with low growth countries are contemplating 'helicopter money' in which money will be distributed to poor people so that increased spending results in higher growth. India has already been practising the concept through various programs like the MGNREGA. They have not worked. At the risk of boring repetition, reducing population is the only answer. Reduce poverty and inequality will follow. Logical.

Our justice system in big trouble because of an Italian court.

The Indian government seems to have been caught off guard by the verdict of an Italian court, which found that bribes had definitely been paid in the AgustaWestland helicopter deal. Giuseppe Orsi of AgustaWestland has been sentenced to 4.5 years and Bruno Spagnolini of Finmeccanica has been sentenced to 4 years in prison. " The destination - at least partial - of the illicit funding to the payment of the price of corruption of Marshal Tyagi for his intervention in favour of AgustaWestland for the VVIP helicopters is validly proven," the court observed. SP Tiyagi was chief of the Air Force at the time of the deal. The reason for the government's discomfiture is that the investigation was meandering along to a dead end, as is the routine in India, but now it is being forced to show that it is doing something. In India every effort is made to drag a case on for years, until witnesses have died or forgotten the details or have succumbed to threats and retracted their testimony, which is known as 'turning hostile'. As happened in the murder of Jessica Lall, where the main witness, Shayan Munshi turned hostile. He has been charged with perjury but even that case is dragging on. The case concerning the murder of thousands of Sikhs in 1984, following the shooting of Indira Gandhi, is still going on. Despite innumerable commissions identifying the guilty, and witnesses clearly identifying those who instigated the murders no conclusion is in sight. One of the accused, HKL Bhagat, has died already. In the BMW case where Sanjeev Nanda killed 6 people with his car and then went home and washed his car in an effort to destroy evidence, the witness Kukarni turned hostile. Two senior lawyers were caught on tape trying to bribe Kukarni to change his evidence. Nanda was sentenced to 2 years in prison but let off because of 'time served'. Ain't that grand? Film star, Salman Khan was accused of hunting blackbucks, which is an endangered species. The game went on for 17 years, he was sentenced to prison and has now been let off. The same Mr Khan was implicated in a hit and run incident in 2002 in which one person was killed. He has been let off by the High Court but the legal ping pong is still going on. In the case of Ms Jayalalithaa, Chief Minister of Tamil Nadu, the High Court did its own calculations and came to the conclusion that only 10% of her wealth was 'disproportionate assets', which means ill-gotten. Apparently, it is allowed to have 10% of your wealth from dubious sources. But, er, 10% of Rs 1 billion is Rs 100 million, which is a huge some of money. The whole system is designed to let off the guilty. Unless you annoy a judge. Then judgement is swift and severe. A fellow got drunk and lost a judge's coat. He lost his job instantly and has been jailed. An inadvertent mix up in names resulted in a fine of Rs 1 billion on Times Now, despite repeated public apologies. Loot, murder, treason, all are games. Only, do not annoy a judge. Yes M'lud.

Why can't every government department be like Isro?

It is not a surprise that India is poor, weak and disrespected by other nations, it is a wonder that we survive at all. The latest shouting match in parliament on bribery allegations in the purchase of helicopters is nothing new. Coal, telecom, Commonwealth Games. Adarsh, and now helicopters, at times it seems that every deal during the Congress rule from 2004-2014 was corrupt. Why is there so much crime in India? Because taxpayer money is seen as private property by politicians. In Tamil Nadu politicians are promising free cell phones, free electricity, and 50% subsidy on buying scooters. All politicians are billionaires so they will help the poor with their own money won't they, just like Bill Gates is giving away his fortune through his foundation? Not our lot. All promises are based on taxpayer money. One article laments the loss of life and public funds due to callous politicians in the month of April. People killed by a bridge collapsing in Kolkata, people burnt to death by fireworks in a temple in Kerala and vast amounts of food stocks disappearing in Punjab. How can Rs 45 billion worth of grains go missing from government godowns? Was the grain stolen or was the money borrowed from banks used for other purposes? How do politicians get away with this kind of loot? By using taxpayer money to promise free goodies and then claiming that victory at elections was absolution for their crimes. The Reserve Bank has asked banks to set aside 15% of their loans to Punjab, in case there is default. The total maybe anything up to Rs 200 billion. Where politicians lead activists are sure to follow. Every year 20,000 people die from rabies, from 30 million stray dogs roaming our streets. Activists, supported by western saboteurs, are adamantly against any form of culling. They want all dogs to be sterilised. Will they pay for the operations? Hell no. They want the taxpayer to pay. Even our judges are loose with taxpayer money. A court ordered the government of Kerala to pay Rs 40,000 to the family of a woman who died of rabies. Why is the taxpayer being penalised for the sin of activists? Mystery. Yet where genuine grievances are concerned you have to wait years, sometimes decades, to get any relief. People waste Rs 800 billion every year because of time wasted in futile visits to courtrooms across the country. When asked why he wanted a post at a public sector bank an honest candidate replied," Upar ki kamayee," which meant extra income or bribes. If public funds can be used for the benefit of politicians, civil servants and even dogs, why should he not get a share? Yet, a government organisation, Isro is putting foreign satellites in orbit at very low cost, purely through indigenous technology. If only the rest were like Isro the whole of India would be flying. If only.

Do we really need to behave like lemmings?

Economists are growing increasingly pessimistic about the prospects of growth for the global economy. Productivity is falling, inequality in income is growing and there is a fall in investment globally. " As income is redistributed from labour to capital, it flows from those who have a higher marginal propensity to spend to those who have a higher marginal propensity to save," writes Professor Roubini. Which means, people who earn less tend to spend a higher proportion of their income while rich people tend to save more. " Moreover, a protracted cyclical slump can lead to lower trend growth. Economists call this 'hysteresis': Long-term unemployment erodes workers' skills and human capital; and, because innovation is embedded in new capital goods, low investment leads to permanently lower productivity growth." Which means that new investment has a much higher component of automation, reducing the need for human labor. Some very rich people met in California this week to discuss how robots are taking over jobs. Bankers with PhDs and MBAs are being replaced by computers. As unemployment rises a large pool of educated workers competing for fewer jobs puts downward pressure on wages, which have remained stagnant for decades. The last 250 years has seen an enormous amount of growth compressed into a relatively short period of time so some adjustment is natural. However, if wages remain stagnant workers are reluctant to increase productivity and zero interest rates allow the wealthy to earn profits without creating jobs. This is shown by weakness of global manufacturing activity and where it is growing strongly, as in Italy and Germany, it is because of deep discounts. The Eurozone grew by 0.6% in the first 3 months of the year but inflation will remain at around 0.2%, reflecting a lack of demand, and rising debt remains a serious concern for Greece, Spain, Italy and even France. With no solution to the migration crisis some think that another Euro crisis is almost inevitable. Poverty is rising in Japan where unemployment is low, crime is low and irresponsible behavior, such as drug addiction and single parent families, is low. The most probable reasons are low productivity and competition from low wage countries. Central banks have resorted to zero interest rates, in some cases negative rates, and quantitative easing in the hope that cheap money will encourage spending and new investment. Wistful articles about looking for a new paradigm sound like desperation. The mortal drought in India and the wildfires in Canada are a warning that global warming is going to impact global growth adversely. This maybe what Thomas Malthus foresaw 250 years ago, only the details are different. We need to reduce human population drastically. Or perish, like lemmings.

Who is afraid of Donald Trump?

President Xi Jinping of China has denied that there is a " House of Cards power struggle inside his government. House of Cards is a television serial based on entirely fictitious characters. It is interesting that he is having to deny a power struggle in his government when Robert Mugabe, Pierre Nkurunziza and Kim Jong Un are not. However, he admitted that," There are careerists and conspirators existing in our party and undermining the party's governance." Since coming to power Xi has accumulated a plethora of titles so that he has been called a " chairman of everything ". He has been referred to as 'core leader' and recently was photographed in an army uniform while being named 'commander in chief'. A collection of his quotations are available in an app, much like Mao Zedong's 'Little Red Book'. Phrases like the 'Crucial Minority', which means the party elite, 'Toilet Revolution' and 'Feudal Residue' are some of the quotes. Perhaps, we can conclude that a serious power struggle is going on in China and Xi Jinping is not as secure as he makes out to be. One month ago the Chinese government mouthpiece Global Times saw Donald Trump as an example of everything that is wrong with democracy saying," Mussolini and Hitler came to power through elections, a heavy lesson for western democracy." But yesterday it reacted cautiously when Trump said that " we can't allow China to rape our country " by its trade policy, after his victory in the Indiana primary. Xi will be watching nervously to see if Trump wins in November and what policies he adopts to reduce the huge trade deficit with China. Another country watching Trump's rise nervously will be Pakistan. The US Congress has refused to fund the sale of F-16 jets to Pakistan prompting the Foreign Minister to say," If funding is arranged, Pakistan will get the F-16s, otherwise we will opt for jets from some other place." Empty threat from a bankrupt nation? Talking about Dr Shakeel Afridi, who is in prison for helping the Americans locate Osama bin Laden, Trump said, with a snap of his fingers," I think I would get him out in two minutes. I would tell them (Pakistan) let him out and I'm sure they would let him out." Reacting to the comment the Interior Minister snarled," Contrary to Mr Trump's misconception, Pakistan is not a colony of America," and advised him to " treat sovereign states with respect ". Pakistan may not be a colony of the US, like Britain is, but it is a beggar nation, surviving on handouts, a failed state and the world's biggest sponsor of terrorism. These 2 countries are inherently unstable and a little push may send them over the edge. They are also our biggest enemies. So, wish The Donald a big victory in November. 

When are eye-watering perks of no benefit?

We would never have known if it was not for anti-bribery laws in OECD countries. Massive bribes were paid in the AugustaWestland deal and the investigative agencies did nothing until now, when an Italian court has sentenced the former chief of the company, Giuseppe Orsi, to 4 years in prison. One of those involved, Christian Michel, has named Ms Sonia Gandhi as the prime mover behind the deal and his lawyer has agreed that he wrote the note naming her. Michel has offered to testify in India if he is not arrested but the government refuses to give him that guarantee. Why? To protect the Gandhis? The government should reach a plea bargain with Michel, offering him immunity, and get it approved  by the Supreme Court so that it cannot be challenged. Every effort should be made to get Michel to testify under oath in a court of law where he maybe cross examined so that the case is watertight. Is it any wonder that people are angry at the unending corruption that occurred during the 10 years of Congress rule? Two of the accused were apparently on the board of a real estate company, Emaar MGF, which is being linked to Mr Rahul Gandhi's aide, Kanishka Singh. Former Chief of the Indian Air Force, SP Tiyagi has admitted to meeting with company officials. Not only did corruption waste Indian taxpayer money on helicopters, which did not meet specifications, but it corrupted Air Force officers, thus making our nation insecure. If there is one man who was totally responsible for all the crime that went on from 2004-2014 it was Dr Manmohan Singh, who was Prime Minister during that period. He was never elected by the people but was appointed by Ms Gandhi and was a puppet in her hands. He knew everything that was going on but chose to do nothing, even appointing people with enormous conflict of interest to cabinet positions. It is an absolute lie to say that he did not benefit personally from all the corruption. Being Prime Minister for 10 years with everything paid for by the taxpayer is no benefit? Travelling the world with family is no benefit? Living free in a huge bungalow in Lutyens Delhi after retirement is no benefit? The house has 31 Air Conditioners, 15 desert coolers, 16 air purifiers and 14 heaters. If the man had any sharam or izzat he would have resigned very early but he chose to hang on for 2 full terms, for all the perks of the job, never mind that he was neck deep in stinking muck. Then there was the Adarsh scam in Mumbai where a defense land was illegally used for building a block of apartments which were sold to politicians, civil servants and armed forces officers. Giving flats to officers of the armed forces were clearly sweeteners to overcome any objections. Screaming matches in parliament is of no used. We want the guilty to hang. Unless they choose to run away. It is easy, ask Vijay Mallya.  

Surely Trump will be much better than Clinton for India?

A country consists of all kinds of people, rich and poor, healthy and ill, clever and not so clever, abled and disabled, natives and immigrants, all having different expectations from politicians they vote for. So, can you be all things to all the people?  In a country like India, with an overwhelming number of poor, it is easy to campaign on promises of handouts on taxpayer money or divide the people by promising reservations in government jobs but what can you do in a more balanced and wealthy country like the US? Hillary Clinton is campaigning on being all things to all people by promising " civil rights, voting rights, workers rights, women's rights, LGBT rights, and rights for people with disabilities ". That is what the Congress Party in India has tried to be for the past 68 years, resulting in massive corruption, weak security and increasing poverty. Donald Trump seems set to win the primary in Indiana today which will make him odds-on favorite to become the Republican candidate for president. It is accepted wisdom that Clinton will beat Trump easily in November's election, but will she? Trump is hated by some Republicans because he is not right wing enough, such that some have accused him of being a secret agent of the Democrats. " Maybe Donald negotiated a deal with his buddy Hillary Clinton," tweeted Jeb Bush in December. If that is so surely Trump has a greater chance of capturing the center and increasing his appeal to Democratic voters who do not like Clinton. Clinton's challenger, Bernie Sanders claims to be a socialist, which makes him very popular with young people. He knows that he will not succeed against Clinton but is determined to continue fighting till the Democratic convention to make his demands of greater taxes on the rich and more protection for domestic business part of the manifesto. Therein lies the problem for Clinton. Sanders is pulling her far to the left which may make it difficult for her to claim the center. " Her commanding rationale is what it's always been: 'It's my time and the country is ready for a female president, and it ought to be me'. And a combination of running for Bill Clinton and Barack Obama's third terms. That in itself gives you a messaging headache, because those were two different presidencies and two different Democratic parties...," said a Republican pollster. Clinton is disliked by 52% while Trump is disliked by over 60% of voters. What does it matter to us in India who among these two unpopular candidate wins? Bill Clinton imposed sanctions on India after nuclear tests in 1998 while Obama definitely had an understanding with Pakistan to supply sophisticated weapons to its army in return for the killing of Osama bin Laden. She was Secretary of State when Obama illegally bombed Libya, resulting in a failed state. With Clinton we will get a hostile president, at least Trump will be entertaining.

Can we grow amidst all this uncertainty?

Since the Great Recession, starting in 2008, economics has become the most important subject on earth. For us in India economic growth is absolutely essential to provide jobs with 68,992 turning 25 years old everyday, which is 2.1 million every month. A report says that only 7% of graduates of business schools are fit to be employed, because the quality of education is so poor. Banks, finance companies and maybe even the Life Insurance Corporation of India are sitting on huge bad loans. If the economy grows fast companies will make more profits, which will allow them to pay off the loans, and invest in new projects, creating more jobs. Banks will start lending again once they have cleared up their books. Trouble is that global trade is still weak which maybe why India's exports keep falling. But economics is not just about numbers and theories. It is also about perception. If people are optimistic about the future they will spend more, which will increase sales and lead to more jobs. If, on the other hand, people are gloomy about future growth they will spend less and save more. Which would not be such a bad thing except that in India people will probably buy more gold, to hedge against inflation and the fall in the value of the rupee against the dollar. Some think that the US economy is in an ideal state, what is known as a Goldilocks economy. Growth will be between 2-3%, unemployment will be down and inflation rate will be just right, allowing the Federal Reserve to increase rates gently. While others think that Obama has completely destroyed the economy. Apparently businesses are unable to pay their creditors, they are borrowing to pay employees and using credit cards to pay taxes. That sounds devastating. Politicians have elections to win so they will go with what the majority of people want, even if it will be harmful in the long run. In the US, Democrats and Republicans are almost equally balanced because most of the economy is in private hands and the government does not run any business. In India, the vast majority of people want handouts, which bankrupts the state, because revenue is chronically less than expenditure. Punjab, once the richest state in India, is having to borrow from the Reserve Bank's temporary borrowing facility to keep functioning. Scientists are now concentrating on behavioural economics to work out why humans behave the way they do. They are realising that textbook theories cannot explain real life situations. Thousands of years ago Paris made a series of wrong choices which resulted in the destruction of Troy and to his own death. Self interest and short term gains still tempt people and governments. Therefore, low growth is going to be the norm. We will just have to adjust.

Indians are really very honest about paying income tax.

Socialists in India always moan about how few people pay income tax. The implication is that there are masses of people hiding their income so as to avoid paying tax. Which is partly true. All income from farming is exempt from tax and there are millions of people, such as plumbers, masons and electricians, who earn more than the tax threshold of Rs 250,000 per year, but do not pay tax because they are paid in cash. Village life is uncertain as it is dependent on weather, so every year millions migrate to cities. About 4 million Indians have migrated abroad while around 315 million have migrated inside the country. While they earn more in cities the cost of living, including rent, is very high. So, why do they come? Because they can earn throughout the year, quality of life is much better and they can avail of better healthcare and education. In the US life in cities has been found to be safer, healthier and wealthier. But the real truth is that most Indians do not earn enough to pay direct taxes. When the poverty line is pegged at an earning level of Rs 32 per day in villages and Rs 47 per day in cities then it is easy to see why the majority of people are classed as above poverty line, but they still do not earn enough to pay taxes. As these pictures show there is poverty in the US as well but see the number of cars in the background. If 47% of Americans are too poor to pay federal income tax then surely twice the number of Indians do not earn enough to pay taxes. At least we have a threshold of Rs 250,000 a year, there is no threshold in the US and tax rates start from 0 earnings. So how is it possible for so many people to pay no tax? Because the government provides social security for everyone. It is in the interest of people to file tax returns honestly, which is used by the government to provide assistance to those in need. In India, 51 million people file tax returns, out of a population of 1,250 million, and only 13 million actually pay income tax. Despite the phenomenal rise in the number of services being taxed, the rise in the rates of taxes and services contributing 52% to the GDP, direct taxes paid by such a small number of people contribute 51% of total tax collection. Is it any wonder that people feel aggrieved at paying so much to the government, for which they get nothing in return. No income support, no education support, no healthcare and no pension. It maybe that high levels of service tax are encouraging more services to demand payment in cash. Which may account for the sudden rise in the amount of cash in circulation. Indian firms are looking at transferring to Ireland where corporate tax rates are very low. Seems that Indians are really very honest about paying income tax. Congratulations to them.

Speak in a hushed voice if you want to stay hidden.

Cockroaches love the dark, as do thieves. Surely our political masters are honorable people who welcome the sunlight of complete transparency? Apparently not. Yesterday, in the Rajya Sabha, the dumping ground of discarded politicians, extreme indignation was expressed against the Right to Information Act by members of all parties. Normally there is complete unanimity when they award themselves eye watering perks, which would make US Senators drool. " Anyone can pay Rs 10, some 'paanwadi' (betel leaf seller) or 'chaiwala' (tea vendor) can also ask who made a missile or anything about international affairs," said Mr Praful Patel, of the Nationalist Congress Party which was a partner in the last government which passed the act. Mr Patel has probably been nursing a resentment for a long time. It was under this act that an activist exposed the fact that Air India was ordered to fly a larger plane to Maldives so that his daughter could fly business class with her in laws. More than 50 seats went vacant on each leg of the journey. He was responsible for the merger of Air India with Indian Airlines which was a spectacular failure requiring Rs 300 billion to keep it afloat, and it is not going to make any profit this financial year, as the government had expected. The loss this year is over Rs 26 billion. The deal with a consortium, known as DIAL, to improve Delhi Airport has been criticised by the Comptroller and Auditor General for a loss of Rs 1.67 trillion to the government. That was when Mr Patel was Minister for Civil Aviation. Is it any wonder Mr Patel would love to remain in the shadows? In which case he should have spoken in measured terms. The arrogance in his speech is breathtaking. Those who sell paan and chai are Indian citizens who have every right to know how they are being shafted by their politicians. Is he saying that poor people are incapable of making informed decisions? In which case they should not be allowed ot vote. Is that what he is saying? Maybe he is because he was ignominiously booted out by the same paanwadis and chaiwalas in the last elections in 2014. That he is still leading a life of luxury on taxpayer money is a disgrace. His party was in power in Maharashtra when the massive irrigation scam took place. Rs 350 billion is said to have been pocketed. A contractor has revealed how 22% of the cost of any dam has to be paid in bribes. A drought is an act of nature and Maharashtra has suffered 2 years of severe drought. If the irrigation money had not been stolen maybe so many farmers would not have to commit suicide. We, the people, need more rights to information and withholding such information must be made punishable by heavy fines and prison terms. Squash the cockroaches.

The world is at the edge. Can we pull back?

A survey has found that a majority people in poor countries consider themselves to be 'global citizens' while most people in richer countries do not. Which is not surprising. After all, wouldn't 73% from Nigeria, 70% from Peru and 67% from India love to settle in the west with 24 hour electricity and water supplies, clean surroundings, unbroken roads, and strictly applied laws, where politicians cannot get away with plunder of the exchequer? And it is not surprising either that they do not want us. When people read of a couple with 9 children asking for free IVF treatment for having more babies they must be getting disgusted. What is surprising is that, with its economy in recession, with no prospect of improvement in the near future, a large majority of Russians do not see themselves as 'global citizens', which means they are proud to be Russian. Exactly opposite, 71% of Chinese consider themselves as global. Well-to-do Chinese women are travelling to the US to give birth so that their babies will get automatic US citizenship and will be able to sponsor their parents to the US when they grow up. We do not know whether the government is covertly encouraging these women. The sole purpose of Unit 61398 of the Peoples Liberation Army is to hack into US companies to steal industrial secrets and US citizens of Chinese origin regularly spy for the mainland. Germans are dubious about accepting more Syrian refugees and also about inter-racial marriage. So is Europe lurching to the far right? Right-wing parties are gaining strength right across Europe, 29% in Switzerland, 18% in Finland, 13% in Sweden, 21% in Austria and 14% in France. These numbers may seem small but could change fast. The Cosa Nostra has declared war on migrants in Sicily with the Mayor of Palermo saying," Palermo is a Middle Eastern town in Europe." Curiously, although the French people seem to be more tolerant of immigrants the government is very anti-Semitic. After the Charlie Hebdo attack an Israeli company offered a software capable of detecting terrorists from the mass of data received by intelligence agencies but the French government refused. The technology may have prevented the Paris attacks in November last year. In a brazen criminal act, reminiscent of the 'extraordinary renditions' by the US, following 9/11 attacks, China has abducted 45 Taiwanese citizens, accused of a telecom scam, from Kenya. Doubts are being raised about the shooting down of MH17, following which sanctions were imposed on Russia which crippled its economy. Russia is entitled to feel aggrieved. The Kurdish PKK has warned Turkey to expect a long fight for freedom. Who will the US support? NATO member Turkey, or the Kurds, the only forces fighting ISIS on the ground? Whether there will be an economic apocalypse remains to be seen, but the signs are ominous. We are at the edge. Will we tip over?

Why no wealth effect despite very high asset prices?

What creates a wealth effect? " The rule of thumb has been that for every $1 increase in household's equity wealth, spending increased 2 cents to 4 cents. For residential real estate, the increase is even greater: consumer spending increases 9 cents to 15 cents," says an article in Bloomberg. If that is so wealth effect in India should be huge because both stock and real estate prices have soared in recent years. Yet, the Governor of the Reserve Bank, Raghuram Rajan has cautioned against euphoria. According to World Bank figures he is right. Comparing China, Vietnam, Indonesia and Bangladesh with India, we are the lowest in cell phone subscriptions, last in cereal yield and lowest in fertilizer consumption, but the highest in cost to export. Port charges are very high, turnaround times at ports are very long and it costs a fortune to transport goods across the country because of delays at toll plazas and high toll charges. The IMF forecasts are also cautious. Growth will remain the same for the next 2 years, volume of exports will remain low and inflation will be stubborn at above 5%. The interesting bit of information is that gross national savings will fall to around 30%. It was above 35% in 2007. The Federal Reserve Bank of Dallas states that "higher incomes and household wealth boost spending. Higher, real (inflation adjusted) interest rates - reduce current spending". There must be great wealth effect in India because savings are dropping, which means that people are spending more. This would seem to be borne out by the high inflation rate. Less than 1.5% of Indians invest in stocks, compared to 10% in China and 18% in the US. Just 2% of household savings in India are in stocks, compared of a long term average of 45% in the US. The real estate sector has been stagnant for 2 years. Recently Mr Rajan advised real estate developers to reduce prices to attract buyers. But developers are unwilling to reduce prices despite sitting on large unsold inventory. Why so? " We need action on real side (as) also on transparency on land acquisition, on transparency on construction and on sales," said Mr Rajan. What he means is that they should eliminate black money on buying land and cheating investors by delaying handover of properties or taking money for not building any property at all. The RBI has lowered interest rate from 8% to 6.5% but that has not increased corporate borrowing. Instead personal loans and credit card use are going up, causing tension. Yet there are only 21.1 million credit cards in India in a population of 1,300 million. Credit card use is white money, so why the anxiety? Because they want the black money to come out from the shadows. Life is not easy, is it?

Working faithfully is not enough, seize the narrative.

Ideas are important in a democracy but telling a good story is more important, writes a professor. He gives the examples of Ronald Reagan, who promised to bring down taxes and to lower inflation by raising rates, of Bill Clinton, who coined the slogan," It's the economy, stupid " and of Barack Obama, who brought hope to African Americans that anyone could aspire to the highest office in the land. In 2012 a video of Republican candidate, Mitt Romney, saying that 47% of people pay no federal income tax was leaked to the media which was quickly seized on by the Democrats to portray him as a wealthy man out of touch with the electorate. Obama easily won re-election. Romney was right. 47% of people earn too little to pay tax. Today Donald Trump has won primaries in 5 states with near 60% of votes. He was able to see that Americans are unhappy with the economy, and worried about their future, and promise a prosperous future by bringing jobs back to the US. Mr Modi was elected Prime Minister in 2014 because of his promise of reducing corruption and increasing jobs but he is allowing the opposition to define the narrative at present. This is causing a lot of frustration for supporters of Modi. No one can understand why he has not worked vigorously to expose the crimes committed by the Congress and its allies during their 10 years in power. Thus Mr Rahul Gandhi, a man who has never worked in his life is able to brand the government as 'suit, boot ki sarkar'. He promised voters that he will deliver," Shirt ki sarkar, chappal ki sarkar, kurt-pajama ki sarkar." Of course, he will. And it will be a great improvement. For the last 68 years, of which the Congress has been in power for 55 years, it has delivered a langoti ki sarkar, so anything more will be welcomed joyfully. By passing the Land Acquisition Act the Congress has made it impossible for farmers to sell their land, so that they remain locked in a cycle of poor monsoon, failed harvest and borrowing from local moneylenders, which leads to either suicide or generations of bonded labor. " In the fever swamps of the far right, many people believe that the Nehru-Gandhis deliberately kept India backward in order to nurture a poor and ignorant vote bank," supporters hoot in derision. Are they wrong? Despite seeing the Soviet Union disintegrate and socialism failing miserably in Brazil and Venezuela, which has introduced a 2 day week, why do they still continue with their toxic policies? The Congress will not allow any bill to be passed by disrupting the Rajya Sabha. Mr Chidambaram is still defending his role in altering an affidavit on Ishrat Jahan, a terrorist. He sees nothing wrong in being guilty of treason. If he wants to improve India Mr Modi has to seize the narrative. Expose the crooks, the rogues and the traitors. 

When sugar is bitter, why blame cricket?

The Bombay High Court ruled that all IPL cricket matches, scheduled to be played after 30 April, must be moved out of Maharashtra even though BCCI, Board of Control for Cricket in India, promised to use only treated sewage to water the grounds. India is cursed with an abundance of activists who file Public Interest Litigation at the slightest pretext and judges are happy to pronounce judgement on matters outside their jurisdiction, while other cases with genuine grievances are kept hanging for decades. In response to another PIL, the Supreme Court is deciding on whether to publish the names of people who have defaulted on bank loans, against the objections of the RBI. The RBI is a regulator of banks and is independent of the government. Its board consists of economists entrusted with looking after the wealth of the nation so interfering with its decisions can have serious consequences. The decision to move IPL matches seems short sighted at best. The court has not banned washing of cars or watering of lawns, including their own. The biggest irony is that sugarcane, a very water intensive crop, is grown in the driest areas of Maharashtra. "....it needs just over 2000 liters of water to produce 1 kg of sugar, which means 2 million liters to produce 1 tonne. The estimated water usage of all the 20 IPL matches in Maharashtra is 6 million liters. That's three tonnes of sugar. Maharashtra produces in excess of 10 million tonnes of sugar per year," says an article. If the court really wants to remedy the sugar scarcity it would take up the irrigation scam of the previous government, in which an estimated Rs 350 billion were stolen, and punish the guilty expeditiously. Is it a big deal? Indeed. One of the driest places in India, Jaisalmer in Rajasthan, has grown Rs 3 billion worth of crops this year, thanks to an irrigation canal. The IPL is also serious business. It allows younger players, who are not picked to play for India, to show their quality, allows young players to earn a lot of money, provides an incentive to players to be fit and definitely improves standard of play. Politicians and civil servants have been against it from the beginning probably because the teams are owned privately and they are unable to cream the tournament for private gain. Faced with constant assaults the BCCI is thinking of moving the IPL abroad which will be an enormous loss in taxes. India is totally dependent on the southwesterly monsoon. After 2 failed monsoons the government must plan long term on storing water. Las Vegas, a city in the desert, uses 7.5 million gallons, that is around 29 million liters of water, everyday for its hotels and casinos. It gets just 4 inches of rain a year and has suffered from drought for 16 years. Still it manages. How? We need to learn. Socialists are always howling about redistribution to the poor. How will they get Mother Nature to redistribute water? If they really want to help the poor bring down the population. Then we will be able to watch the IPL on screens while splashing around in swimming pools. Else wait for Mother Nature to do it.

Is Xi Jinping the new Mao?

A complete disintegration of China would be great for India but, with a large number of nuclear weapons and missiles, it could cause enormous destruction, both within and outside the country. President Xi Jinping was born in 1953 and lived through the Great Famine that killed up to 45 million people. This was followed by Mao Zedong's Cultural Revolution in which elders and party leaders were humiliated and beaten by Red Guards. President Liu Shaoqi was beaten and imprisoned. He died in prison in 1969. Since he became president in 2013 Xi Jinping has been accumulating power by purging top officials on corruption charges. Recently he has been named a 'Core' leader, a title previously enjoyed only by Mao and Deng Xiaoping, who crushed the peaceful protests at Tiananmen Square in 1989. A few days back Xi was named Commander in Chief of the armed forces and was seen addressing officers at army headquarters in an army uniform. So, does Xi Jinping see himself as today's Mao Zedong? It is important because even though China was very weak under Mao it invaded Tibet in 1950 and is occupying large tracts of land after its invasion of India in 1962. Under Xi China claims the entire South China Sea as its territory and has built artificial islands on reefs. In January it landed civilian planes on one such reef and a military plane landed on the same reef this month. Its megalomania knows no bounds. China is planning to build 20 floating nuclear power plants on the South China Sea to supply power to the reefs and for exploration for minerals. Obviously, it feels that it has a right to do whatever it pleases and if neighboring countries are harmed then tough luck. So where is China's power coming from? From its economy. Decades of double digit growth has propelled China to become the second largest economy after the US which is why it is able to spend so much on its armed forces. Economic growth was built on exports which are falling because of the fall in global growth following the crisis in 2008. The economy is slowing down rapidly so the government will have to stimulate the economy. But how? China's debt is 248.7% of GDP. Following 2008 the private sector non-financial debt has risen by $6.5 billion per day. Property prices are increasing again, giving rise to the fear of a bubble. Chinese banks are sitting on huge non-performing assets and cannot raise money from the market because their shares are trading at below book value. Growth is being maintained by debt, driven by the real estate sector. Overcapacity and excessive debt are leading to deflation so some stimulus is needed by raising money through government bonds instead of through bank credits. We do not know whether Xi Jinping is like Mao Zedong or Kim Jong Un. The only hope for peace is if the economy collapses totally. We can only hope.

A humble salute to our lords and masters.

Seems that India's politicians are becoming more autocratic by the day, enforcing bizarre rules to make us more miserable than we already are. No wonder India is 118th on the World Happiness Index, below Somalia, China, Pakistan and Bangladesh. Having lost in the Supreme Court the Maharashtra government has passed stringent rules to prevent a return of girls dancing in bars. By banning alcohol, tips and suggestive postures Maharashtra is using force to stop the bars from reopening. The same government has no problem when Malaika Arora earns Rs 25 million dancing in hotels during New Year eve. Presumably they serve holy water in these hotels. Apparently women in India refuse to be goody two-shoes because they are showing interest in using sex toys. Shock and horror! How does Mr Fadnavis think that India has a population of 1.3 billion? If he really wants to help women he should make it easier for them to work instead of being mean and nasty to poor women. He should concentrate on tackling serious crimes, which will keep women safe anyway. In an effort to win power by any means Mr Nitish Kumar has banned all forms of alcohol in Bihar. If he has time perhaps he would read this short history of Al Capone who built his power on bootlegging during Prohibition in the US. This ban got him votes of women and will help 'gooda raj', who are his partners in government, in making a fortune from smuggling. A toast to 5 years in power. The central government is determined not to allow doctors to settle abroad after training but has no problem in allowing civil servants to make merry in foreign lands, sponsored by international agencies. What agencies are we talking about? The CIA, MI6 or even the ISI? The logic is that the government spends a lot of money in training doctors so they must work in India to pay back the debt. A huge lie. Because of reservations most doctors are having to pay huge capitation fees to qualify from private medical colleges. They have to work night and day, as interns and residents, for their training. Doctors will be punished if they accept any gift from pharma companies. Doctors will be struck off for 3 months for a gift of Rs 5,000 and for 6 months for a gift of Rs 10,000, which is good, but civil servants can accept a gift of Rs 25,000 from friends. Maybe because they are so pure anyway. Our medical education is very poor so even if a few return after training abroad they are passing on latest knowledge to our doctors. Finally, even after paying huge taxes and tolls we are restricted from driving in Delhi by a tyrant but our trillionaire MPs can whizz through toll plazas without paying a paisa. We are vassals, they are our masters.

Should children be used for political gain?

We have written many times about the pernicious Right to Education Act, which forces private, fee paying schools to reserve 25% of seats for poor students, which makes it an act of lottery, leaving 75% of poor students to the mercy of government schools and increasing fees for the middle class by over 300%. Middle class people are frustrated with the present government for not getting rid of the act, says an article. " By outlawing detention before eighth grade, the law effectively delinks advancement from educational achievement," says the article. Why did the Congress stop all exams up to Class X so that no student maybe failed? Because parents of poor students are very often illiterate so they would be at a great disadvantage. According to socialist thinking, inequality is most easily solved by bringing everybody down to the same level. It has the added advantage of getting votes. It has lowered standards so that " percentage of rural children in grade four capable of double-digit subtraction dropped from 58% to 40% ". " In effect, RTE has created the dreaded licence-permit raj in education," says the article." The National Schools Alliance estimates that more than 5,500 schools have been forced to close....At least another 15,000 have been threatened with closure. Some schools survive only by paying inspectors to look the other way..." The US government went the other way. A law, No Child Left Behind, enacted in 2002, mandates standardized tests for all schools in the country regularly and schools that did not show progress of children would be severely penalized, including firing of teachers and shutting down of schools. The act has led to stagnation, instead of improvement, and has resulted in "....widespread cheating, teaching-to-the-test, narrowing of the curriculum, heartless cases of neediest children being thrown out of schools and more ". A generation has been lost. Many states in India have asked the center to revoke the RTE Act and bring back exams for Class X students. Indian politicians enjoy their power to terrorise citizens so instead of repealing the punitive act they add more violence to it. The AAP government in Delhi asked private schools to list every piece of apparatus, such as microscope and petri dish, and little things, such as " fire extinguishers, TVs, photocopiers, typewriters, desks, dissection equipment, table tennis table and library books ". What about pencils, pens and erasers? Clearly, they want to create animosity between parents and teachers, let the children go to hell. The first act of the same government was to increase their own salaries by 400%. We got rid of brutal white skin tyranny to inherit a more brutal brown skin one. We must be so lucky.

Why are educated women so unhappy with their marriage?

More than 20,000 housewives in India committed suicide in 2014 compared to 5,650 by farmers, nearly 4 times as many, and yet this does not receive any coverage in the media, as do farmers. The surprise is that female activists, who get extremely agitated about access to Hindu temples or the building of dams for irrigation, show no interest in why their sisters are killing themselves. It has been left to foreigners to research the causes of housewife suicides in India. A study in The Lancet in 2012 found that in women older than 15 years of age the rate of suicides in India is 2.5 times that in high-income countries. In western societies "marriage confers protection from suicide to married women". So, why is marriage killing our young women? " We found that female literacy, the level of exposure to the media and smaller family size, were correlated with higher suicide rates," said one researcher. Counterintuitively, women in traditional large families, which probably means rural, have much lower suicide rates. A glib answer is to blame dowries, but dowries are more prevalent in traditional families. It cannot be strained relations with in laws because an educated, working woman is likely to "forge a strong alliance with her husband and persuade him to break off from his parents and set up a nuclear family on their own". Is it because of unfulfilled expectations? In villages most women would eat the same kind of food, wear the same kind of clothes and do a lot of physical work, looking after their families, looking after dairy cattle and helping out in the fields. In cities, standards of wealth, and hence standards of living, vary enormously. Expenses are much higher and jobs maybe very stressful. A 5 year study in the US showed that 82% of wealthy are happy while 98% of poor are unhappy, 87% of wealthy are happy in their marriage while 53% of poor are unhappy, 93% of wealthy liked their work while 85% of the poor did not and 0% wealthy were unhappy with their finances while 98% of the poor were. A civil servant writes that happiness is of 2 types, positive and negative. Positive happiness comes from acquisition and is therefore never satisfied while negative happiness comes from absence of unhappiness, which means an inner peace. Our negative happiness is spoiled by an oppressive state which imposes unjustified restrictions on our lives, like the odd-even rule of driving in Delhi. A book Sex and the Single Girl, published in 1962 promised women that they can 'have it all' but a woman writes that it has made women slaves to their work and to their bodies and provided free sex to men, without the commitment of marriage. Is the rising incidence of abortions in Indian cities a hint of why our young women are unable to bear it any more? We need to ask.