To the detractors of Kejriwal

I understand where you are coming from. If I may, I can categories your objections broadly as follows -

a) process and procedure for introducing the bill
b) about Kejriwal's grand ambitions, with an eye on Lok Sabha
c) about running away from the responsibility of governance

Here's my point of view -

a) Processes and Procedures - For last 67 years, we have seen how these processes and procedures have been used by the "System", the "Government Machinery", what ever you call it, to deny the country men what is duly their right. Right at the top of this Govt Machinery sits the elected bodies (loksabha, rajyasabha at national level and legislative assemblies at the state level), filled with politicians. So it is no surprise that they set the tone. You go to a police station to get a complaint registered or ask for verification for the passport, or go to local municipality to get your building plan sanctioned or get an electricity connection, procedures and processes are waved in your face. Ever thought why? Because, by making it complex it is easier to scare the people into giving the speed money to get things done. Processes and procedures are used to reward or thwart the efforts. I do not think Lokpal bill is a panacea, but I do believe it is one of the things that needs to be done besides so many others. I hope even the detractors agree with this fact, so why not let the processes and procedures take a back seat and let a good thing get passed.

b) Kejriwal's grand ambitions - First, let me say that it does not bother me. For me that is not even a question, as I look at what he is trying to do now or plan to do for the country and for the people. That is all that I am focused on. Having said that, let's assume that he indeed is ambitious. So, what is wrong with that? Are we all not ambitious? In fact I am happy that an honest, intelligent person, with integrity is ambitious and wants to do something at national level. Is that not good? Would you much rather have a criminal, dishonest person running the country?

c) Running away from the responsibility of governance - Mahabharat, Chanakya Niti, basic texts on governance, all of them cover this extensively. The basic principal is not only to have the good of people at heart, but the ability to deliver that as well. In the present setup, though the Kejriwal govt took the office, it was up against the challenge of entrenched opposition, that wanted status quo. The govt did what it could in last couple months, however, it was clear that the moment it goes after the big guns, or tries to implement the big ticket items on the agenda, hell will break loose. It did. The response of the government, in my opinion is a smart one, instead of becoming a lame duck government, not being able to deliver what is good and is promised, when it found itself stone walled, it quit. The calculation that would have gone into this action would be something like - re-elections are going to be called along with the Lok Sabha elections, the party will come back with majority and then carry on with its agenda of cleaning the system. Smart, isn't it. Also, at the same time, Kejriwal and the team can put their energy in planning for Lok Sabha elections, getting the right candidates etc. So, what is wrong? If a good thing can get bigger, all the more better.

Let there be Million Indias but No Hungry Child in One India

Huston we have a problem! However, this one is not for Huston to resolve.  It is a Himalayan problem, that we, the dweller in the shadows of Himalayas, have to comprehend, come to terms with and fix.

The problem is "Unity in Diversity". I expect a question, why is that a problem, is that not a virtue? Exactly, that is what we have been told and taught all thru' our school, and is now ingrained in our brains. We are a land of diverse cultures, multiple languages, different faiths, blah blah blah and yet we are united. Really? Common, really?

Even at the height of India's dominance of the world (at that time India controlled approximately 33% of World's GDP), India was not the geographical India as we know it today. India was multiple independently ruled states that stretched from Indian Ocean in the south, to Himalayas in the north, and from today's Afghanistan on the west, to today's Bangladesh on the east. That kind of independent states structure did two things to our region (if I were to call India as a region rather than a country)

a) it brought a lot of prosperity to individual states, within this region, and the region as a whole.

b) From time to time it allowed external forces to invade this region and loot the wealth, since individual states were not all very militarily strong, and sometimes played one against the other, ultimately leading to Britishers subjugating the entire region.

So, what is the take away from history?

a) By uniting we have solved the problem of security, we are a much more secure region, that can not be subjugated in bits ad pieces, as was possible earlier, when the region was divided

b) Uniting these diverse parts, means we are living a common minimum program. Which essentially means, we as a united nation, only do those things, run those programs, that are acceptable to all.  In a setup where there are diverse set of cultures and creeds and faiths and different development levels, you know what happens, there is very less that come out as common, and lot of good things of different geographical areas, cultures, faiths are left out, since they are not acceptable to others. So, what has it done to the region? Well, it has left us with sub optimal growth. It has wasted multiple generations in this region. It has spread poverty equally!

It wont be an exaggeration, if I were to say,  we are not united, we are bound together. We have tied our hands and feet to each other so that all of us can sink together!

What we must do. We must overhaul our federal structure. Make each state autonomous. In the new structure, center should have control over only three things - Defense, Foreign Relations and Monetary Policy for the region's currency, everything else should be run by the States. Each State must choose its Prime Minister, these Prime Ministers can then choose a President for the entire nation. With a center that is only responsible for Defence, Foreign Relations and Monetary Policy, the buck will securely be with the respective States so as far as development and growth is concerned. Let there be no ambiguity in who is responsible for children going to bed hungry.

A pile of rat shit!

53%  of India ‘s land is arable, as per 2011 world bank report.  In hectares, we have 2^nd largest land area, under cultivation, after US. That is huge. No wonder, this region nurtured an ancient civilization that found it perfect to settle and grow. It was a sought after land for many intruders, who wanted to conquer it and then settle down here to enjoy its riches. However, we in the present are wasting the natural bounty. Infact we have made this huge fertile land our bane.

India is the 2^nd largest producer of rice - 23% of entire worlds output; 2^nd largest producer of wheat - 18% of worlds production, 2^nd largest producer of fresh vegetables – 10% of world production.

What do we do with this bounty? We let it rot! Why, because we want the food to be available for our own countrymen. So, the government buys the food and stocks it. Does not matter if we do not have storage space, we just stock it in open. Does not matter if the food spoils, we still have a pile to look at from a distance and feel happy that we have a pile, even if it most of it has turned into rat shit!

In financial terms this is how it translates – Farmers spend money to grow the agriculture produce, farmers use fertilizers, subsidized by the government to the tune of INR65,000 cr. Farmers get free electricity, in most parts of the country, to pump ground water for irrigation, this translates to approx. INR30,000 to 35,000 Cr. Then there is subsidy on diesel, subsidy on seeds and other miscellaneous schemes that keep getting announced from time to time. Add to this the cost of the effort put in by 50% of our population, which is engaged in agriculture, approximately 600million people.  You are looking at a staggering bill! However, this is just the cost of production. 

Now, comes the procurement time. Government again spends money to buy the produce and stock it. Government has administrative machinery to organize buying and purchasing of the agriculture produce. Government machinery costs money.  For stocking, government creates storage spaces, though grossly inadequate and substandard, these storage spaces consume a lot of money to maintain (at least on paper). Government has many organizations to manage this infrastructure, and logistics of movement of farm produce from one region to another, like FCI. These organizations are overstaffed, inefficient and corrupt to the core, these eat more money.

Then what we do? We wait. We wait for the food pile to turn into a pile of rat shit, so that the cycle can start again!

Am I making case for no food buffer?  Absolutely not. We most definitely need some. But, typical of us, when we do, we overdo. There is a reasonable limit for actual food buffer and there is a way to manage that buffer. Beyond a certain level of actual food buffer, we need to create a financial buffer for food.  We can sell excess food in the world market, pocket that money, invest that money in safe securities, which will earn interest as well, and use it when we have to, during the rainy days, when our buffers run low or when the production in lower.

Indian Economic Revival - Another Chance Squandered?

Under the political stewardship of the father of India's economic reforms, it is surprising that this government has violated some of the very basic good economic governance principals.  Or is it that this government became so delusional about the amount of wealth or the consistency of maintaining the growth of the heady days of 2006 and 2007 that it took gamble with its finance, which are now coming back to haunt it. Or is it that the people who pushed for some of these economic programs (Sonia Gandhi and Coterie) came from non economic backgrounds and with no leadership vision to see what is right for the nation over next many decades vs. the here and now. Have we again squandered our chance of providing decent living to our people that is not based on grants, but rather on providing people the opportunities to earn it themselves?

Government came up with a bill NREGA - National Rural Employment Guarantee Act - 2005, that guarantees 100 days employment to any adult in the Rural area. However, it is missing one crucial component, guarantee of commensurate output from the States/ Municipalities that execute this program. For all practical purposes, central government just provides wages to people, if they show up for work, even if there is no work.

On one side, people get paid for doing mostly nothing productive, on the other side, the productive part of economy is being starved of labour. People from the farmlands of Punjab and Haryana can testify this. No labourers for the sowing and harvesting seasons.Whosoever is available asks for wages that are many times over what was normal. Labour intensive construction industry is hit equally bad.

It is a double whammy, while the govt is spending tax payer's money on unproductive work, that too something that is locked down for years to come, it is creating supply side constraint for productive part of economy that depends on flow of labour. In a labour surplus country the government policies are creating labour shortage. We are squandering our only competitive advantage in the world, large pool of cheap labour. It is not surprising that we see high inflation in these areas.


Another bad economic decision - Petro products price regulation - When UPA came to power in 2004, under Manmohan Singh, it brought the petro product priving under government control. Contrary to what one would have expected from an economist of Manmohan Singh's stature, he turned the economic logic on its head and killed the open market that was created by the previous NDA regime for the petro products. Many private companies lost their investment and many foreign companies that wanted to enter India, in petro retailing, just pulled their investments out. Now, for last few years, the government is trying to undo its doings by deregulating the petro prices. Once step forward, one step back and a decade lost.

There are so many such instances of economic blindness that it is not funny. 

Are we hurrying things up or are we massively delayed?

Mamta's yesterday statement - "I have just come to know through media that Central Government has notified FDI in retail today. Is it ethical, moral and democratic for a minority government to issue Government order forcefully and hurriedly, when massive protest against it is taking place across the country?"

Mamta says government is going about notifying FDI in retail in a hurry. Oh really! I thought we are already delayed by many decades. What other Asian countries achieved many decades earlier, we are still struggling to get to, and she says we are hurrying it.

We can't wait another 10 years for next set of economic reforms, we are already late. We will waste an entire generation, if we continue to deliberate and dither. Think of a young woman of 20 yrs, graduating from college this year, if new opportunities are delayed by 10 years or even 5 years, those opportunities are lost for her. 

I remember in early '90s, when we were still studying, computer adoption had just began. Anti computerization protests were regular, organized by public sector bank employees, unions, other government establishments, actively supported by the then political outfits in opposition.Imagine if we had succumbed to the pressure and software /IT had not taken its roots in India, where each one of us would have landed. That opportunity, even if it had come 5 years later, would have been a lost opportunity for my generation, because we would have gotten into different jobs, whatever other jobs were available at that time.

Life is constantly moving, we have to move faster than that to make some visible improvements to the present lives of the people vs being ok bringing the progress over many lifetimes. I don't think notifications are hurried, on the contrary, I think they are already way too late.

Cutting the nose to spite the face

If there is one word for the phrase "Cutting the nose to spite the face" it is "Bandh".  Who loses the most - the weakest in the society - daily wage earners. They just won't earn anything on this day. They have to depend on their savings, if any, to scrape through. Common man is the next, as the factories shutdown, they produce less and the produce gets costlier, we don't feel it immediately, but that is the net effect. However, Bandhs do not just mean stopping activity, it is in fact a license to destroy what we have. Bandhs are not considered successful until, a few buses and trains are burned, few shops are looted,  pitched battles are fought with the police, a few firing incidents happen. Band is historic when a few die! Netajis on their part court arrest. They are very respectfully taken in special police vehicles and put behind bars. They are fed and then given a drop to their residences before their favorite prime time serial starts in the evening.

Government registers a case of sedition against the cartoonists for disrespecting the national symbols. What about the netas and political establishment that disrespects the humans and takes away from them their lively hood.

Estimated loss to the economy because of today's Bandh - Rs2000 crore. If we add up all the losses that the country has suffered because of negative political activism till date, it will put to shame all the losses from all the scams put together. 

Mamta Vs Manmohan - economically speaking

When it comes to politics, Mamta wins hands down. 

I watched her press conference announcing withdrawal of support to UPA. Trigger for the decision, as she mentioned, were two issues - diesel price hike and FDI in multibrand retail. Both the issues economic in nature. 

Question -  does she know more about economics than Manmohan Singh? Should Mamta decide country's economic policies?

A quick comparison, (from wikipedia)-

Mamta's educational qualification - 

Banerjee graduated with an honours degree in History from the Jogamaya Devi College, an undergraduate women's college in southern Kolkata. Later she earned a master's degree in Islamic History from the University of Calcutta. This was followed by a degree in education from the Shri Shikshayatan College. She also earned a law degree from the Jogesh Chandra Chaudhuri Law College, Kolkata.

Manmohan's educational qualification -

He attended Panjab University, Chandigarh, then in Hoshiarpur, Punjab, studying Economics and got his bachelor's and master's degrees in 1952 and 1954, respectively, standing first throughout his academic career. He went on to read for the Economics Tripos at Cambridge as a member of St John's College. He won the Wright's Prize for distinguished performance in 1955 and 1957. He was also one of the few recipients of the Wrenbury scholarship. In 1962, Singh completed his studies from the University of Oxford where he was a member of Nuffield College. His doctoral thesis "India’s export performance, 1951–1960, export prospects and policy implications" was later the base for his book "India’s Export Trends and Prospects for Self-Sustained Growth"

Mamta's early career - 

Banerjee became involved with politics while still in school, joining the Congress (I) Party in West Bengal and serving in a variety of positions within the party and in other local political organizations. As a young woman in the 1970s, she quickly rose in the ranks to become the general secretary of the state Mahila Congress (1976–80).She was a college student in the mid-1970s.

Manmohan's early career - 

After completing his PhD, Singh worked for the United Nations Conference on Trade and Development (UNCTAD) from 1966–1969. During the 1970s, he taught at the University of Delhi and worked for the Ministry of Foreign Trade with the former Cabinet Minister for Foreign Trade, Lalit Narayan Mishra. As the Minister of Foreign Trade, Lalit Narayan Mishra was one of the first to recognize Singh's talent as an economist and appointed him his advisor at the Ministry of Foreign Trade. Singh and Mishra first met, coincidentally, on a flight from India to Chile. Mishra was on his way to Santiago, Chile to attend an UNCTAD meeting.

In 1982, he was appointed the Governor of the Reserve Bank of India and held the post until 1985. He went on to become the deputy chairman of thePlanning Commission of India from 1985 to 1987. Following his tenure at the Planning Commission, he was Secretary General of the South Commission, an independent economic policy think tank headquartered in Geneva, Switzerland from 1987 to 1990.

Mamta's track record  -

In 2009, Mamata Banerjee became the railway minister for the second time. Her focus was again on West Bengal. She neglected her duties as a railway minister to concentrate on electioneering in West Bengal.

She led Indian Railways to introduce a number of non-stop Duronto Express trains connecting large cities besides a number of other passenger trains, including women-only trains. The Anantnag-Qadigund railway line of the Kashmir railway that has been in the making since 1994 was inaugurated during her tenure. She also declared the 25-km long line-1 of Kolkata Metro as an independent Zone of the Indian Railways for which she was criticized.

Reuters reported that "Her two-year record as railway minister has been heavily criticized for running the network into more debt to pay for populist measures such as more passenger trains."The Indian Railways became loss-making in her two-year tenure. Even before stepping down as railway minister to become the Chief Minister of West Bengal, she declared that she would be able to handle both the portfolios together. Her nominee Dinesh Trivedi from her party succeeded her as railway minister.

On 14 March 2012, Dinesh Trivedi announced the annual rail budget 2012 that included an all over hike in passenger fares, ranging from 2 paise to 30 paise per kilometre for reasons of safety, along with network expansion and associated modernisations. The rail fare had not been hiked for nearly a decade  putting Indian Railways in ICU as far as its financial viability was concerned. The proposed fare hike would have added 4200 crores to railways income, which while paltry compared to its expenses, would still have saved railways from becoming bankrupt. The budget received enthusiastic support from a wide cross section of society including the general public, industry groups and all five Rail Unions. However, the fare hike proposal in the budget was fiercely opposed by Mamata Banerjee. Although Trivedi initially tried to defend the budget by pointing out that it was necessary for making Indian Railways stronger, Mamata Banerjee forced him to resign as Railway Minister on 18 March 2012

Manmohan's track record -

Following the advice of International Monetary Fund in 1991, Singh as Finance Minister, freed India from the Licence Raj, source of slow economic growth and corruption in the Indian economy for decades. He liberalized the Indian economy, allowing it to speed up development dramatically. During his term as Prime Minister, Singh continued to encourage growth in the Indian market, enjoying widespread success in these matters. Singh, along with the former Finance Minister, P. Chidambaram, have presided over a period where the Indian economy has grown with an 8–9% economic growth rate. In 2007, India achieved its highest GDP growth rate of 9% and became the second fastest growing major economy in the world.

Singh is now a strong supporter of globalization, seeing India's immense labor capacity as a path to delivering Indian goods in a worldwide market and eventually relieving large-scale poverty.

Singh's government has continued the Golden Quadrilateral and the highway modernisation program that was initiated by Vajpayee's government. Singh has also been working on reforming the banking and financial sectors, as well as public sector companies. The Finance ministry has been working towards relieving farmers of their debt and has been working towards pro-industry policies. In 2005, Singh's government introduced the value added tax, replacing sales tax. In 2007 and early 2008, the global problem of inflation impacted India.

Now, I let the readers draw their own conclusion. A litmus test for each one of us though, if you were to send your kids for economics education, who would you send them to - Professor Mamta or Master Manmohan? 

President - A useless expense!

What good is a President for? President has zero power, but a whole retinue of staff and huge paraphernalia that goes with it, all paid for by tax money. When Pranab Mukerjee was eyeing the Presidential position he was looking at it as a retirement home, that has exclusive gardens and lawns! I for one do not want to pay for Mr Mukerjee's morning walks in perfectly manicured gardens.

President is a  rubber stamp, a constitutional necessity. It is a position that is given as a reward for loyalty and is a complete drain on the national exchequer.

Would it not be a good idea to merge the position with the position of the executive head of the government, that is the Prime Minister? We can call this position by what ever name, but there is no sense in having a constitutional head, with zero power, that is different from an executive head.

To make the entire government setup accountable and answerable to the people, the executive head of the government should be directly elected. So we, the people, know who is going to lead the country. Today the situation is such that if you want to know who would lead India after next general elections, you have to either read Madam Sonia's mind or get into the head of RSS Chief or wait for M3 (Mulayam, Mamta and Mayawati) to make their mind!

President for all practical purpose is useless, only time there is a real need for the President is when the government is transitioning. I am sure those functions can be performed by Chief Justice. Let us make the government leaner and efficient. Let's start from the top!

True Federalism

Is India not too big, too complex, too diverse, too varied to be driven by one set of policies and one vision.

Different parts of India are at different development levels, they are grappling with different set of problems, priorities are different. Trying to impose same set of policies whether economic, or for social development,  from a central command and control structure is not working. It is slowing those parts of the country that can grow faster and is compromising those parts of the country where focus has to be on the basic social development.

There is too much control with the center, it is time to restrict that and give states the authority  and responsibility to chart out the course that suits them the best and hold them accountable.

Let the center only handle defense, foreign affairs and ministries related to strategic research and development, for the country as a whole, rest everything including the finance and economic policies should be with the states. There is perennial fight going on between the center and the states with respect to dividing the tax money. Let the center only levy the minimum that is required to maintain the  ministries under its control, rest of the taxes should accrue to the state that is generating the commensurate revenue.

Today, numerous policies and programs are stuck just because not all the states agree to them. Even if the programs and policies are good, they get stuck because they seems to be pushed from outside (center) and because of partisan politics.  We can change that. The states should be able to decide what they want implemented and what they want to block. FDI in retail, insurance, policy on natural resources, reforms in banking, in agriculture, list goes on, all of these should get decided at state level. A mechanism must be created where even if only one state wants to implement a policy it should be allowed/enabled to do so, without waiting for the rest of the union to agree to it. It should be possible to create companies / business entities /legal entities that operate in a state, as if they are operating in an independent country.

This will make state governments answerable to their electorate. Today, bucks gets passed around, state governments blames center and center blames states, development and hence the people suffer. No one knows if the poor development in the state is because of faulty union policies or faulty state policies.

State elections should become more important than the union government elections. The political parties should focus more on putting their best candidates at state levels, they should focus on governing the states better, making them competitive, and improving the lot of people in the states that they govern. This will only happen if the states become more powerful and manage more of their affairs themselves.

I know the present state of the state governments and their governance record is pathetic. In fact, that is precisely the reason why I am suggesting, that we change the structure such that we take away their ailbi of always blaming the center for all the ills. The first principal of good governance and good management is to hold someone unambiguously responsible and accountable for it

It is clear and has been clear for a long time that our current system - both political and administrative - is broken,  what is required is overhauling of the engine and not just change of oil.

Are we really smart?

As a race we don't stop gloating about the fact that we have a rich culture, have a  long histroy, that we concern ourselves with bigger and better things namely, why we exist, why we are born, how to reach nirvana etc etc.

We may be good at pleasing the Gods but we have failed the humanity. Proof of pudding is in its eating, the proof of superior intellect is in first managing the mundane wordly affairs seamlessly, something that people can touch and feel. We have failed miserably there. Our superior intellect can not guarantee that we provide basic amenities to our people.

Major part of country plunged into darkness. The funny thing is, everybody who is a somebody in this area, knew that this is coming, but nobody did anything. It is a known fact that most of the utilities that buy electricity - State Electricity Boards - are broke. These utilities can't invest in basic distribution infrastructure. They can't pay the power generation utilities, which in turn can't setup more power generation capacity neither can they upgrade their power transmission infrastructure. The cycle is broken. It is a known fact that politicians use promises of free electricity to get votes. It is understood that it is populism at its worst, that hurts country's long term growth, but it is still done. It is a known fact that theft of electricity is widespread and is done with full connivance of the utility employees. But it still happens with impunity.

Can we call ourselves smart? I leave that question for the readers to answer. But smart or not, we definitely are a prime example of a dysfunctional state.

Before Status Quo takes over

Manmohan Singh,
Finance Minister,
Government of India

Subject: 6 things to do before status quo takes over

Sir,

Congratulations on taking over the additional charge of Finance Ministry! (Thank God, Pranab Mukerjee is out and so, hopefully, the 1980's economic thinking).

People expect change. They have high hopes from you. Don't let this opportunity slip by. If you wait, status quo will take over. Here are some of the items that you may want to start with.

Get rid of the changes in tax laws with retrospective effect. Make a statement, or come up with a policy stating that changes with effect from back date won't happen going forward.  

Get rid of GAAR, it is arbitrary, ambiguous and open to interpretation. If you must tax transactions that happen abroad but involve assets in India, then make it mandatory for the asset to change hands in India as well, to a newly registered entity. Let that asset gets valued independently and then tax it as per exiting norms. What I am proposing may not be best possible solution, as I am not an expert, however the idea is to take out ambiguity, arbitrariness from proposed GAAR.

Untangle the wires in telecom sector. One of the showcase sectors of our economy, a sector that is an enabler for larger economy, is now bogged down in procedural and legal hassles. The guilty must be punished, but please don't look at maximizing the money thru' auction  and cripple the growth of this industry. Don't kill golden egg laying goose.

Announce a plan to completely get rid of diesel subsidy. Put a timetable in place, clearly showing, when the entire energy sector is going to get decontrolled and deregularized. The money thus saved, should help reduce fiscal deficit and some should get pumped into research for renewable energy.

Implement GST, all the work has already been done. Give it a final push and get it implemented. Roll out multibrand FDI initiative, at least let those states that want to implement it get started. But ensure that those states don't go back and force the businesses to shut down, when the government changes. That will be a kiss of death for the Indian economy.

Put better administrators in charge of government departments. Put some kind of status reporting mechanism in place for all government employees. Hold them accountable. Inefficiency is rampant. Meetings get pushed. Leaves are taken in good measure. Holidays are plenty. Now and then there is a strike.

You know more than anyone else, it is a lot about sentiments and feel good factor. Restore it.


Your Truly,