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If you let your learning lead to knowledge, you become a fool. If you let your learning lead to action, you become wealthy - Jim Rohn

Saturday, June 4, 2011

The new women CMs

The recent state elections threw in two women CM with decisive mandate - Ms. Mamata Bannerjee and Ms. Jayalalitha. A mandate that is absolute and conclusive and has the people's will and of course expectation. The CMs have hit the road in style. Their performance in the next five years remains to be seen. Looking forward to it. At least the start looks very promising with focus on good governance from both women CMs.

This election has been a historic assembly election in West Bengal. People are going to remember this election for long long time. Mamata Banerjee pulled off a landslide victory for the All India Trinamul Congress in West Bengal by defeating the world's longest-serving democratically-elected communist government, the Communist Party of India (Marxist)-led Left Front government, bringing to an end 34 years of Left Front rule in the state. The decades of left rule finally crushed to defeat. The 34+ years of communist rule coming to an end with a ultimate knock out. The Left Government facing the election without its sole mate Jyoti Baasu could not garner support for its policies and governance this time. With communist also losing a close election in Kerala where they lost the majority by a whisker is salt in wounds for the grand old labor party in India. It is time to go back to the table and re-think its policies and more importantly examine why its hand on the people for decades is slowing drifting out. The new India with a booming middle class, needs a refined socialist agenda and not the ones that are currently being pursued which are in some honest opinion little obsolete. The party has to redefine its agenda and bring in revolutionary changes to motivate its followers, particularly the youth.

The state is seeing a non-left CM for the very first time after a long haul. The youth in the state are getting used to this new phenomenon for the first time in their life. There were jubilation after the electoral victory in the streets of kolkata, and a new sense of life. Mamata Banerjee was sworn in as the Chief Minister with a huge gathering of well wishers and supporters. The dynamic leader walk to the writers building, a 0.5 km walk was unprecedented. With People flocking to see the walking CM, a non-left CM in the state of West Bengal in more than three decades was a mesmerizing visual. On the first week at job, the CM made surprise visits to the government hospitals, government offices causing a stir among officials. With the CM still going around in her black Santro, atleast the hard-working didi of WB is determined to change the ways stuffs happen in the state. With more power comes more responsibilities. It is a chance for the regional leader to create a image for herself with good governance. After the Singur episode, Mamata'a image as "development' oriented politician took a beating. Now those things are behind her. Rapid industrialization of the state and hence job creation is a necessity for the state now. Infrastructure and health being other top priorities. The Trianamul congress as a party has to prove, its worthy of a alternative government to the grand old left alliance. Lets see how this women who was running the Indian Railways until now., run this eastern state of West Bengal.

In the south, It was the AMMA storm that was back in the state. With all exit polls indicating a hung assembly, just majority and all those predictions aside, it was AMMA who came ashore with a thumping majority. The DMK facing a wash-out., with not even having enough seats to be the main opposition party. The power cuts in the state, alleged 2G scam involving its ministers, detoriating law and order in state, rising prices - everything bearing in the minds of the voters., did'nt have enough to offer for the sitting government. With most ministers losing, it turned out the DMK hardly put on a fight. The Congress and PMK its alliance partners not doing better either. It was just a losing alliance. Now AMMA is back as CM after 5 years. Now Tamil Nadu has gone between Amma and Ayya (Mr.Karunanidhi) for 3 times. Now Ms.Jayalalitha has become CM for the third time. With a full majority at hand, she deserves a full five year term ahead. The new set of ministers all taking oath the same day, the government was put in place and in action within days of victory. it is also notable the ministry did not include 'tainted' or 'controversially corrupt' former ministers. it had new faces instead. This is a good sign. It has always been true that Jayalalitha had a strong grip on her party ministers and elected representatives. In this government, the CM is everything... if things go good the CM is responsible., and if things go bad... its the same CM who is responsible. This is the way, the party and government is run by the AIADMK leader. In diverse state like Tamil Nadu., this kind of authoritarian leadership helps more that it hurts. The recent interviews the CM gave to the media looks she is determined to perform in her third term. The new proposals from the government are promising which also includes scrapping of schemes introduced by the DMK regime. of course there are controversial decisions of not shifting to the new secretariat building but opting for the old St.George Fort, rolling back Samachir kalvi. But as long as the new government has a vision to improve governance it is perfectly fine to have to its way. Recent reports strongly suggest the CM is determined to solve the power crisis in the state with more emphasis on renewable energy. Energy generation from solar and wind are being considered as effective problem solver which is a welcome decision. The Aim to provide surplus power in the state is a good indication of wise planning. The CM also introduced the free rice scheme for BPL families as part of the manifesto promises. Those are costly subsidies., but the party had to counter manage DMK manifesto which had its own set of freebies. With the state's economic situation in dire need of reform, it is hard to implement all freebies promised without raising taxes on people who can afford. How the CM handles these financial imbalance remains to be seen. It is a challenging job to be fair. The CM has to streamline subsidies. Avoid unnecessary wastage of tax payers money. Provide relief to those people who genuinely need help.

For the DMK, it really cannot do much at this moment. The party just have to manage its role in the state. With not much MLAs around, it cannot make a difference politically. Now all it has is the central ministers in the national government. Having lost its leverage on the Congress government., its up to the Congress to dictate terms with DMK from now on. Personally for the DMK leader, Mr.Karunanithy's daughter having been arrested in 2G scam, the DMK first family has more troubles ahead. With Dayanadhi Maran's name coming up in 2G scam, it is just making it worse.

The democratic India has thrown open two new women CMs apart from Mayawati, the current UP CM. The women politicians are making a mark in India politics. It also explains how regional parties still dominate state politics in this country. The main national parties in the Congress and BJP are not making in-roads into the regional party vote bank. This is good for democracy that regional parties with moderate views are sweeping polls. Both Mamata and Jayalalitha have majority in numbers and have a smooth road ahead. How they drive their car on them for the next 5 years remains to be seen. Ms.Jayalalitha being more experienced and having been a CM twice before has the wisdom, knowledge and is aware of the nature of the job. Ms. Mamata Banerjee does not have this luxury. The dynamic leader might have ups and downs as she kick starts her new job., and may finally settle over a year. Hopefully the aspirations of the voters are taken care of by these new leaders.






Sunday, April 17, 2011

Anna Hazare : The catalyst of new India

Joseph Stalin, the great leader of Soviet Union was once asked about his accent to power in the communist nation and he responded saying "Power was lying on the ground for someone to take it, and i took it". It was kind of exactly what Anna Hazare did in Jantar Mantar early this month. Obviously he did not do it for power, but he grabbed the opportunity to highlight the people's primary concern in Indian society nowadays -corruption. Now Indian people have a 'face' to show and deserve action from government. The Lok Pal bill is next land-mark now. The Aug 15 deadline proposed by Anna Hazare for passing the law is truly encouraging sign that finally we might have some response from the government to tackle the menace finally. The whole country was rocked with series of corruption scandals and the people were getting fed-up with that. The government denies or acknowledged late, all the allegations. It has become 'normal' in the society., and has reached a point were it is being considered no longer a sinful act. Corruption in Indian society has reached new frontiers in the last two to three years. From few crores, it has leaped and bound to thousands and thousands of crores. It cannot be denied it is the horrible reality. The problem is not that people are being increasingly subject to pay money for everything, but is being perceived as the law will never catch up with this, and you could go free. It is no longer sinful to be a corrupt and will never be punished for it. Either the law isn't there or the current laws will allow you to get away with it.

This created a increasing uneasiness among ordinary people that are genuinely concerned about the country. The recent revolutions in the middle east and Africa has made the world more vibrant. None of the rulers are safe. The revolutions are just a start and is going to spread across Europe next. With anti-government protests all around the world, India was no exception. Just that it happens to be a democracy the revolution is not to change the government, but to bring in some social change with the intent of just civil society. The government and other political parties were caught napping. It is very unfortunate that no political party had the credibility to take ownership for such a movement, that in my opinion was long over due and was destined to happen. Almost all parties are in way or other corrupt. The left parties have some credibility, but don't have the trust of the people because of their old-style politics. Politician who come to capitalize on the protest in Jantar Mantar were silently sent back. At last the people are coping up to reality were none of the politicians are clean. No one is trust able. This is the sorrow state of the political class in India currently. Congress has been in power for the past seven years and the system has only got worse. Unless it proves its worthiness by punishing the guilty or by passing stringent laws against corruption, its unlikely to gain people's trust.

It reminds me of the Indian cricket team some years back. (by the way congratulations Team India for winning the world cup. Great job. The way we played, we deserve it.) They had a small set of players and kept rotating among them. New talents were not given enough opportunities. The whole team was manipulated by few individuals who neither had the skills nor the attitude to think big and bring drastic results but were falling on their own weakness and just manage to be part of the team with some sporadic achievements. Just take fielding. it is mandatory now to be a good fielder, if you want to retain your place in the side. and Now India is a good fielding team. Most the times in history, the best batsman and bowlers India found were poor fielders and they got away with that for a very long time. Quality of cricket played by the team was sub-standard. Part of the problem was they were not world class batsman too... though some may had the skills, most did not have the attitude to be a die-hard winner. The whole selection process revolved between a few and new talent never really prospered. The selectors did not do anything radical and was experimenting with the same players for multiple years. It is called Insanity: doing the same thing over and over again and expecting different result. Once we crashed out of the world cup in the Caribbean four years before, the selectors really thought out about the whole process. The old stalwarts were left out and a brand new young team was built. New blood was induced into the team, and team approached the problems in a different way unlike its old players., The plan worked and now we are competing against all top level teams in the world. What we see now is the new India. The generation that is in school now is going to boost this country to new heights. The same is true for political parties in India right now. Almost all parties lack credibility. There isn't one honest soul the whole country can stand behind. Manmohan Singh's credibility has weakened with his age. BJP is completely off base and its come back is really questionable. It has no mass leaders any more., and its morale is still down. The Congress just happens to have an advantage because of that. The congress has taken the second term mandate from the people for granted. In the recent elections in Tamil nadu. People already knew AIADMK was a corrupt government in the past years of their rule, and thought DMK was better. Now DMK itself caught in many scams running into multiple crores, the people are really wondering where else to go. Lets see what the 78% voting percentage say on May 13. There is no party that will step up and assure people of good governance. Looks to me people are really really running out of options. None of the leaders have a place in people's heart, and there is no viable substitute. It is high time some one jumps in and takes the power for betterment of the people. The 72 year old Gandhian could just be that catalyst.

Anna Hazare lead a valiant effort, and great chance for the people of India to jump and cash in on the progress.The society in its current state cannot go on like this. The rule of the law must be implemented. Now that we are 1.2 billion people now, there has to be honesty, legality, law and order in the society within its citizens. If people are not punished, the country is being held captive by few thugs, then neither the country nor its people can prosper. The increasing middle class population in India realizes this and has silently jumped in to voice their concerns. We had notable rallies across India to support Anna Hazare in his fast unto death protest. This is really a good sign. If mass rallies will get things done, then we should do it.

The Lok Pal bill by itself is not going to unroot corruption in India. At least it will be a good start and people who accept bribes would realize they would be punished if caught. Aug 15 is going to be a important deadline. The congress government should take the date seriously and take all efforts to implement the panels recommendation without diluting it. Hopefully the energy among the people remains till then to take this country in the new direction. If the Indian politicians are not willing to take decisive actions before that, the people's power will force them too. So it is better for the Congress government to do something about it, and take credit for it long time.




Sunday, March 20, 2011

Japan's nuclear crisis and global energy

In 2004, i had chance to visit Japan and was there briefly. This was my first trip outside India and into the outside world. I remember the first time i walked out of the airport in the middle of the night and had a glimpse of this modern country i have always heard about, my first instinct was i saw lights everywhere and no people. There were no dark spots anywhere. The country was lit as though it was my house. It just took me off base for a moment. Then i learned later that the bright environment (powered by electricity) is true in all modern world. Then we took a bus from one part of the country to another, and the highway was flushed with lights for miles and miles. The first question that came to my mind at that time, was how can they afford it, and how do they generate all those electricity. So last week event kinds of answers those questions partly.

A significant portion of Japan's energy needs, come from nuclear power. There was a massive earthquake that rattled Japan of magnitude at least 8.9, that shook the north-east part of the country (Sendai) and a massive tsunami followed. Even though the nuclear reactors are designed to handle huge earth quakes, they were no answer to nature's fury of a huge earth quake followed by a huge tsunami all at the same time. The nuclear reactors were shut down, and the cooling process began. However the lack of electricity to channel the cooling was lost, and hence they had to resort to primitive means, like pouring water, and other chemicals (like borine) on the reactor to avoid a meltdown. Thousands of people have died in the tragedy and the country has lost valuables lives. In some cases, whole villages vanished. The relief effort has been complicated by radiation leaks from the nuclear reactors, and the situation is really bad. It is going to be years and years for Japanese to overcome the effects of this disaster and re-live normal lives. On a nuclear scale, the tragedy is given 6 out of 7 (Chernobyl was 7) and with the situation still unfolding, we will know more as the days progress. As a result of this nuclear accident, China has suspended its plans to build new nuclear plants in China. The whole nuclear energy generation and its safety is back in lime light throughout the world. Can the world really afford these accidents. There is a possibility that radiation might reach other neighboring countries. Even thought the nature's tragedy of earth quake and tsunami have come and gone, the man-made tragedy of the radiation leak is here to stay for a long long time.


There is a huge economic cost because of the tragedy. The global economic picture can get complicated and can re-balance global interest which can turn out to be economic aftershocks. Japan now has a herculean task of re-building the nation. The presence of radioactive elements in the atmosphere / food, have made it worse. Whether the regions are inhabitable any more is itself questionable. Japan makes a lot of money from tourism, and its going to miss that for years to come. Who would want to visit a nation, which has a possibility of radioactive materials present in atmosphere. Who would want to start a business there, or make an investment. The process of clean-up is going to cost the Japanese government a lot of money (in Yens) and it explains the recent rally of the Yen against all major currencies. Japan had its AAA ratings cut just couple of weeks prior to the tragedy. Its debt to GDP ratio is somewhere around 220%. So the borrowing cost of Japan is going to be high (interest), if it goes to the market for rebuilding money. At the same time, they hold US treasury bonds worth $900 Billion dollars. It is an asset, it can use. Countries have foreign exchanges reserves for a rainy day, and now its pouring outside. For now, Japan has stated it won't dilute its treasury reserves to calm the US bond market, but that will be short lived. It does not make sense to borrow money from the market at more interest rather than to sell the US treasury bonds and use it in reconstruction effect. If Japan is not going to use those now, when is the right time? This will create a new problem for United States. The T-bills available in the market by a Japanese sell-off is going to drive the price of T-bills down. The United States is borrowing money for low interest as of now through their t-bills. If there are no buyers, the US FED has to buy them which is most likely the case. This is usually new money supply, that will increase the inflation in the US and the world around. Even if this doesn't happen, at the rate at which the US FED is buying T-bills now, it will be the largest holder of T-bills in one year. So there is a possibility of a cascading effect in world economy because of this tragedy in Japan. We need to wait it out to watch.

The Japan nuclear tragedy has once again brought to light the hunger for energy for economical activity. The energy that everyone needs to sustain the current growth and improve their economy. But as the tragedy indicates, everything comes at a COST. There is too much energy consumption around the world, and humans are finding new ways to generate energy, and things go wrong because not everything works as we expect. The concept of fossil fuels like coal, oil are running out, and countries adopt off-shore drilling of them. The recent oil spill in the US gulf is the same problem in different format. The current rate of consumption of energy like oil is completely unsustainable. The assumption that nuclear energy is going to solve the energy needs have also come under the scanner., and looks it might even blow up the whole world. So basically, the world is running out of options on energy needs. It must be true, that oil and coal are running out, nuclear is not safe, wind and solar energy can supplement the supply and cannot be main sources of energy and still mankind needs energy for everything. The consumption driven model of economy needs a re-visit and new technology may address this issue in future may be. I strongly encourage readers to look for the concept of "peak oil" in the internet. It is worth a read.

As any other country, India too needs energy to fuel its growth. A bulk of its oil is imported. After the nuclear tragedy, questions are being raised on the safety of its own reactors. Plans to set-up new nuclear reactors all over the country with the help of other nuclear donor nations (as a result of civil nuclear agreement with the USA) will come under scrutiny. There are going to be more regulations, that are going to postpone implementations of projects. India also needs to modernize its Railways. India needs to encourage mass transport. Indian Railways are integral part of the development. It is impossible to provide a billion people with oil, if everybody has a car. We cannot sustain it with imports. Believe me, we cannot sustain even with "small" cars... its still needs imported oil. Only Railways can solve this problem. The recent Railway budget is just a election promise, and has no forward looking plans. It is just a bunch of jokers coming up with the same useless document year after year, and the media just has a talking point about it when the parliament is on. Not anything is changing and it doesn't needs any attention i think, it is just a yearly ritual. How about a budget that says, its is putting infrastructure in a year, for connecting the four big cities of South India - Chennai, Bangalore, Hyderabad and Bombay with dedicated rail lines. A passenger or a cargo train leaves every three hours from one destination to another round the clock. This is what is going to move Indians around cheaper. You could get rid of all oil dependent buses, cars from the roads. The Indian Railways can make more money in the process with quality service. This is what will bring economic success to India in the long term. It is really pathetic to see the Railways has not evolved much since Independence. The trains still resemble the ones we see on pre-independence black&white videos. The rail infrastructure has not made significant marks so far and as of now compared to its counter parts in Europe, Indian Railways can only be looked upon with sympathy. Lets hope the metro rail projects in major cities ignite expectation from public to demand equal quality service/facility for long distance travel. India needs a long term plan on its energy needs, and the current annual railway budget is a tool for the government for political publicity as of now.

Unlike other natural disasters, the crisis in Japan is going to have long term consequences because of the nuclear disaster. The revolutions in middle east and the bombing of Libya starting yesterday by western nations to enforce a no-fly zone, they are all consequence of the same problem of "satisfying ones energy needs". Governments around the world plan for innovative ways to solve their regional problems with the well being of local population in mind, the conflicts can be controlled or tolerated. Or it could get out of control anytime.

Saturday, February 5, 2011

Revolutions in the Middle East

Trends Journal is a reputed organization, that comes up with predictions or trends across the world. They rightly predicted the world economic crisis of 2008, and the ascent of Gold prices in the first decade of this century. Recently in December 2010, in their year end report, Trends Journal came up with predictions for 2011. Out there in the top predictions, was the youth of the world will unite, and there will be civil unrest across the world. It hasn't been too long since then, In January of 2011, rightly so, there was a revolution in the north African country of Tunisia and its President of 23 years was ousted in a matter of days. It all started with a self-immolation of a Tunisian youth Mohamed Bouazizi on December 17' 2010 citing unemployment and poor living conditions with no hope. What started as minor protest turned out into a huge revolution in the country and within a month, the leadership had to take an exile outside the country it had fondly ruled for more than two decades. As always as history repeats, a small incident in a part of region who no one notices, can overthrow mighty dictators and even could trigger wars. The assassination of Archduke Franz Ferdinand triggered the first major war in the modern world, namely the First World War. They often turn out to be the triggers, to long time issues faced by the people.

The major reasons for the revolutions, agreed universally across the press are
1. Rising food prices,
2. Rising unemployment,
3. Political corruption.

It is coupled with other problems, common to the middle eastern countries, lack of political change because of dictatorship, no freedom of speech or expression, lack of opportunity, and over all hopelessness. The Internet facilitated the revolution through social network sites like facebook, twitter, etc., where people came to know each other in cyber space, and realized people in the country share the same woes. It is not the technology that creates people's movement. But it just serves as a medium to bring out the aspirations of the people. The media often exaggerates the role of internet for sensation. In real-time, a successful revolution takes all people together, rich and poor, literate and illiterate who look for genuine change. If the revolution is just based on internet, it may fade in a matter of days, and wouldn't sustain the changes accomplished. Now there is a interim government in place which has promised to move out in six months, and lets hope we have a free and fair election in Tunisia, which represents the aspirations and has the confidence of Tunisians.

The Tunisian revolution took a sudden turn into other middle eastern nations., which have the same degree of the same problem. Now, there is a revolution in Egypt to oust the President of Egypt Mr. Hosni Mubarak who has been in power for 30 years now. The median age of an Egyptian is in mid 20s. This means half of the people of Egypt haven't seen a President other than Mr. Hosni Mubarak in their lifetime. Unlike Tunisia, Egypt is bigger in size and population, and is a strategic power in the region, with the Suez canal at its whim., it has trade importance. Bulk of the oil is exported to Europe through the Suez Canal. There have been street protests all over Egypt and yesterday we had a "Departure day" protest. In spite of that, Mr. Hosni Mubarak has still managed to hold-on to power still at least. He has appointed a new cabinet, a new Prime Minister, and new vice-President. The vice-President being a first of its kind in 30 years of Mubarak's presidency. This move suggests all is not well in the Egypt ruling class, and at least they acknowledge the protests are out of genuine anger. With the intensity of the protest, it looks like Mr. Mubarak, a close ally of western powers including the United States for 30 years, will be leaving or its safe to say, it is the "beginning of his end" of power in Egypt. The military is co-operating with him so far, and a lot depends on its role. We will wait it out to see how it unfolds in the next few weeks.

The revolutions in Tunisia and Egypt have created a domino effect on other middle eastern countries in Jordan,Lebanon, Yemen too. Jordan has a monarchical system of government, with the king appointing the Prime minister. The king has appointed a new Prime minister on Feb 1 2011, after initial protests. Most media have mentioned the Jordanian kingdom still has respect with the Jordanian people, and may survive this scare. But looks Yemen's ruler are not going to be that lucky. Unemployment is as high as 45% in Yemen and its President Mr.Ali Abdullah Saleh has been its ruler since 1978. Yemen continues to be a poor, impoverished, backward country in the middle east. Prior to this, Yemen has been in the news very often for bad reasons, like the frequent American drone attacks inside Yemen on suspected terrorists, and many evolving new radical splinter groups calling Yemen its home., which the western nations call it a serious and real threat. Recent attempts like the "underwear" bomber on the Detroit bound flight, had traveled to Yemen and may have been trained there. So it appears, there are inherent problems in Yemen with massive youth unemployment that people become radicalized. It is also a possibility, that religious extremist organizations can exploit the situation and rise to power in this uncertain period. The President of Yemen has went on record, saying he is not going to run for another term in office when his current term expires in 2013. This is a sign of him losing grip, and offering concessions to people. If the people manage to throw out Mr. Hosni Mubarak successfully in Egypt, then Yemen has high probability that it would take center stage of revolution next. On its western side, it could be Libya. Libya has authoritarian rule from its President Gaddafi for over 40 years, the longest serving living leader.

Almost all the governments in the middle east are authoritarian dictatorship or it is a puppet government of the western nations historically. There isn't freedom of speech or expression or an open society in this part of the world for a long time. Leaders have always not evolved from the masses but just appointed by powerfull segment of the population. Culturally all these countries are same., and go back in history for thousands of years. It is a normal reaction of the people to be inspired when people's movement in neighboring countries manage to throw over the leadership and ask for a increasing say, on who they should be ruled by. The current ruling class have no big legitimacy and they bank in on the oil wealth and have managed to survive politically, and have not earned its citizen's loyalty. The powerful rulers amaze wealth worth billions of dollars for their family, and it is just a matter of time they become targets of ordinary citizens, whose life has become more difficult than usual. The western nations, prefer a stable middle east and have helped the dictators be in power with money and weapons, for the sake of stability in the region, and hence oil supply to the growing world. Now that the western economies in financial crisis themselves, this set-up is being challenged.

What is next? It appears the domino effect is going to spread at least in "principle" to other parts of the world, not just in middle eastern countries. However the success of them isn't that clear and remains to be same. With capitalist governments being subject to scrutiny after the recent economic crisis in the world, people have become emboldened to revolt. Protest could hit Europe. We saw the protests in Greece, Ireland recently. Portugal, Spain have a debt problem, and in the days to come, we might see similar protest there too. Eastern European countries are in financial mess, and we could see massive movements there. The former soviet blocks are vulnerable. Increase in food production and labor market improvements are necessary. Youth employment must go up in any growth. Protest spreading to Pakistan is a realistic scenario, with the present government being inefficient, and unable to deliver. Violence is on the rise in recent years with sectarian clashes. The predator drone attacks in the country by US, has angered and raised anti-western feelings. The inability of the government to stop them, has made the government a target for the people. Inflation in the country is running at record levels. Recent handling of relief efforts in earth quake, floods by the government was poor.

India context:

The problems that created the unrest in middle east, namely, price rise of essential commodities, unemployment, corruption apply to India as well. If people come out and protest in the streets else where, it is a possibility it will happen in India too. Unemployment is masked with the family system intact. But the government of India is no safe either. The price rises and corruption are so rampant in the country, if a revolution is needed to stop them, then we should welcome it. It will be a revolution to refine the system and bring in significant changes to eradicate corruption in government and politics. Since its democratically elected, people have a chance to overthrow rulers every 5 years., but if the elected officials do not want to solve fundamental issues facing the people, then a revolution in place to make them do it, is not a bad option. If things don't happen voluntarily it needs to be enforced. I believe, the recent arrest of former telecom minister Mr. Raja in the 2G scam is just a congress government reaction, to let the people of India know, it is serious about corruption. Obviously the Congress government knows, the domino effect would come to India, if it doesn't react, and Mr. Raja is one easy target.

Revolutions happen through out history. It is very interesting, we often highlight the rallies in Europe as 'protests', rallies in middle east as 'revolutions'. Both have the same effect of overthrowing the current ruling class. In Europe its more "anti-capitalist" movements taking hold, and in middle east it is "anti-dictatorship" rallies. Usually the system gets refined when masses protest. At the end of a significant revolution, some of people's problem are solved, and some aren't. If the revolution leads to fundamental changes in society, then it is good. If the revolution merely changes leadership and there is no significant improvement in government policies, practices, standard of living for citizens, the revolutions merely fail like the Orange revolution in eastern Europe. In some case, they go from bad to worse. History will judge the merit of these revolutions and its after-affects on people. At least it is true that the current status quo is not good and deserve's people's movements across the world.

Saturday, January 22, 2011

Inflation Nation

Anyone who goes to his local grocery store in the corner of the street realizes that the cost of basic food and vegetables have gone up many folds in recent months. The story is similar in almost all commodities across the various segment of people. Unfortunately it affects the poor people more than the rich people. This is because the percentage of money allocated for food is higher in the lower income group than others. Any price rise will affect the BPL (Below Poverty Line) and lower middle class segment of the population directly. Since the majority of Indians fall in this category its not a pleasant environment. Vegetables are part of regular Indian meal and they are consumed in abundance compared to other western nations. Onions and tomatoes are basic ingredients in any Indian food preparation. When the price of these items go from Rs. 20 a kilogram to Rs. 80, the ordinary people have the reason to be upset. It affects their monthly budget. Prices rises are significantly gone up for dhaal, oil, sugar and you name it. Even construction material cost have gone up making land, housing cost go through the roof over years now. Bottom line, the price rise is across board through out the country. We have the economist Prime Minister in Dr. Manmohan Singh, and its wondering what does he think conceptually on this. The recent press conferences from him merely reflects his political face rather than his economic thoughts.

The government as usual has come out against the rising pricing prices with more words, than actions, and has blamed it on the term "inflation". Inflation according to the government is the reason for price rises. Contrary to what the government says, inflation is NOT price rises. Price rise is the 'consequence' of Inflation. The Inflation itself is a concept of lose monetary policy (that is originally proposed by the government). The government completely hides this big elephant below the mat and propagates its version of story across the country. And in many ways succeeded. Inflation can be summed up as : too much money chasing too little commodities. People posses the money and are willing to pay more for the commodity that is in scarcity. lets take the example of onion price in reason days. The government is conveying a notion that the price of onions have shot up, because the of "more rain" in Maharashtra and Gujarat, the bigger producers of onions. This may be part of the reason, but not the entire problem. Politician always are comfortable to blame it on the seasonality factors. It suits them to hide the truth, and the listener for some reason buys that argument. If that was entirely true, it should always be true that people in a remote north Indian state of , Assam or Nagaland consumed a significant percentage of onions grown in Maharashtra or Gujarat. This is not the case. Bulk of the perishable items can only be locally grown and consumed in countries like India, where we lack huge storage facilities.
It would make sense to believe, the supply for the local community has come down because of loss in production or artificial demand creation facilitated by middle men and hoarders.
When the government managed to blame it on the rains for onions, what is the explanation it can give to the rise of price of cement, for example. It is just a chemical that is artificially produced. Its prices have gone up still. So the reasons for price rises are not what the ministers say in press interviews, the problem is bigger than what it is.

There are two kinds of inflation. Anticipated steady inflation and unanticipated inflation. The later is more lethal than the former. When people expect inflation to occur steadily over time, people are prepared for it. They make financial decisions based on that. The concept of leasing home dwelling is a good example. A family walks into a home, it pays the landlord a substantial amount, say 10-20% of the value of the house. They reside in the house for a predetermined period of time, say 5 years. After the lease expires the landlord gives back the same exact money. The assumption in this trade was the revenue generated on the initial principal equates to the rent on the property in the period. This is a classic case, where there are marginal inflation and no boom boom inflation. Both the owner and tenant benefit in the transaction. However these days, these deals are no longer common. It is because of unanticipated inflation prevalent in the recent decade. This crushes out the savers. Anybody who has money in the bank lose the value of money they hold. They do not anticipate the loss they make on risk free saving. It is just a wipe out and eaten out by inflation. Fixed income group of people lose their livelihood in the process, for example retires. The interest rates prevalent in the market and the ones published by RBI (Reserver Bank of India) do not do ample justice to these people.

For today's Indian problem of Inflation, the RBI does have a major role. It is merely a tool in the hands of the government. Usually the RBI publish and maintain interest rates on the market. As of now, the interest rate in India is around 6%. What it means is a person who has money in the bank, say Rs. 100/- gets a annual interest of 6%. So he ends up with Rs.106/- end of the year. It is the interest acquired on the principal. No risks, no hassle savings. The problem with that is - the real inflation is more than that. It is in double digits, with food inflation at 16%. So what it basically means is, the commodities he bought of Rs.100/- a year before is now worth Rs. 116/-. So basically the money has lost value in spite of the interest. The saver actually lost money by having it idle. Ideally interest rates must be higher than the inflation to encourage savings. Mathematically a 7% annual rise, doubles the value in 10 years. Savings are very important for the growth of the society. Savings create capital and create wealth and in turn create jobs. India really needs a high interest, low inflation society for a long term growth. In Brazil today, the interest rate is more than 11%. The Brazialian real has appreciated 35% against the US dollar in the last year alone. India should learn from Brazil.

The important thing that really really worries me is the RBI 'policy on inflation' where they "expect" inflation at 4-6% and consider that acceptable. Meaning they want a price rise of 5% a year on every Indian Citizen. How many of them make a pay rise of 5% a year at their work. Why can't we have it at less than 1 or 2 percent, like in most developed countries and in likes of China, Brazil. Economic principles are same across any nation of any size and richness.

When i mentioned the lose monetary policy followed by the government, it means low interest rates, and more importantly a lot and lot of printing artificial money, or fiat currency - rupees. The RBI prints money and it prints a tonne of it. This is the fundamental problem contributing to Inflation in India. It is just been 5 years, we have moved from abundant Rs.500 rupee bill to Rs. 1000 rupee bills. Until 5 years before the Rs. 1000 bill wasn't common. Now its everywhere. This is bad, and its going to cost the country dear. It is just a matter of time, they come up with Rs. 2000 or even Rs. 5000 rupee bills. This is the real problem. So now we know, why too much money chases too few goods. Countries create money out of thin air, and prosperity cannot be achieved through this. It generates a artificial period of growth, and eventually inflation will catch up, and will lead to ruins. The value of currency must go high and not low. These economist you see on TV say, the money losing value is a good thing because it encourages export to other countries. It is a void argument. It makes the exporters become poorer. The society becomes rich only on production and savings., and not by export based on cheap currency parity. If the government of India increase the interest rates significantly and STOP money printing, encourage production, the inflation will ease. The Prime minister Dr.Manmohan Singh, one of eminent economist the country has seen, realizes this? Isn't this basic economics. The counter argument, the RBI may make is to show the forex reservers accumulated by India that accounts to over $300 billions. Technically India can print as much money as the foreign reserve it holds. Unfortunately the foreign reserve itself is a fiat currency. Someone should ask Mr. Subba Rao, the RBI governor, how much Forex reserves does the Chinese have (they have 3 trillion), and why is the chinese yuan lot stronger than the Indian rupee vis-a-vis the US Dollar. (~6 yuan = 1USD).

For centuries, food production has been India's life blood. I am in all favor of food and farm subsidies in India. Agriculture is the primary occupation in the country and is monsoon dependent. The government must subsidize it and PDS (public distribution system) has to be made more efficient. This will reduce the inflation pressure on the BPL and middle class population. At the same time, i am against any other form of subsidizes like color tv sets, marriage funds, free housing, and other junk schemes these politicians come up at the time of elections. These are complete waste of money and affect the regular market structure. For example the cost of constructions materials have gone up after the Tamil Nadu government's "thoguppu veedugal" scheme, where the government gives free money to people to build homes. the government has no role to play in these things. It causes more problems than it solves. The other one is by the same government to pay insurance premiums to big health insurance companies for poor people to access doctors and hospitals when they get sick. This is a completely bogus scheme that is just a attention catcher than really benefit to people. If the government wants to give good health care to poor, it must refine the heath ministry and provide efficient and modern health care through the government hospitals that are already in place and are functioning inefficiently. That would give longer life for the poor.

The RBI and government have made India, an inflation nation. The government has to come up with policy that will encourage production and savings. Self-sufficiency in food can only be attained by that. Rationing everything is not going to solve the issue. It provides temporary relief but does not solve the problem. We need to move to an environment where prices remain stable, food production increases year after year. Printing money and pretending India is growing at a good rate, with such a huge inflation is very harmful. No growth is better than bad growth.

Thursday, January 13, 2011

Indian Judiciary : It is a big joke

One of the prominent failures of post Independent India, is its Justice delivery system. Even after 63 years of independence, the system never refined itself. Most of the time, justice is delayed, diluted, delusional and hence denied.

The country now faces a serious challenge in refining its slow judiciary process sooner or its going to regret on the consequences of it. The Justice delivery system is painfully slow, and for lack of better word, its incompetant. Justice delayed IS justice denied. Last week we had two important happenings, that managed to make it to the main page. One of which is the accusation that former Supreme Court Chief Justice K.G Balakrishnan's son-in-law, accumulating huge wealth disproportionate to known sources of income in Kerala., and other being the 40+ year old Rupam Pathak stabbing and killing the sitting BJP MLA Raj Kishore Keshari in broad day light in Bihar, in front of a huge gathering of people in his home constituency. To put it simpler, the former is the problem and the later is the 'consequence' of the problem. Let the Indian penal code define, who is punishable and who is not. I am pretty positive, nothing is going to come up significantly in either case. But everyone has to admit, the whole system is ripped of and needs drastic changes. The Chief Justice in Supreme court is a unique distinction and is the top post a Judge can ever make it to. He would know the law than anybody else, I would assume. How could someone close to the person who managed to be Chief Justice of India, be accused of unlawful activity. Did the CJ know about it. what is his role in this. what credibility does he have. who appointed him to be CJ and why. Looks as usual as it always happens in India, dishonest people go to the top of the beurocracy. K.G Balakrishnan may be proved innocent and he may have not a role in this. I am not trying to pre-judge him prior to active investigation being made.. It is not just about K.G.Balakrishnan being good or bad, but it is just a case that firmly suggests, not everything is good, with people who are supposed to fix the country's problem. In the Indian legal system, the judges are considered unquestionable, and their honestly and credibility not debatable. This is absolutely crazy. It may have been true at some point in the past, but not anymore. The country has to wake up to reality, and pin credibility into the judicial system. The whole system of working needs to be reworked upon, and made efficient and transparent.

Judiciary is a big joke in India. Remember the last person who was punished for crime ? Either he was so notorious to be left out in the open, or he did'nt have the money for his bail. Most people who are not financially viable often get caught in the mess. If you have the money power, you can get away with almost anything including multiple murders. This is a sorry state of the Indian justice delivery system now. The system fails to deliver justice, and the result of that is people take law into their own hands and punish each other. There is a tacit acceptance to this action in society. This will lead to uncivilized society. The case of Rupam Pathak is a classic case of it. There was a FIR filed against the local MLA by Rupam sometime back over sexual allegations. It appears, the case made no head-way forward. Preliminary reports indicate Rupam pathak was frustrated with no action being taken against the MLA and decided to stab the MLA herself as an act of revenge. In my opinion, violence cannot be a part of life. No one violent has a place amidst the society. They must be arrested and isolated from society. The trial may bring the truth out, and we will discuss then who is right and who is wrong. But the frustration with regular legal process is very active in minds of people who wait for justice in the Indian courts. This cannot be denied.

There are a tonne of legal disputes in Indian courts today, that will take generations to solve. what is the expectation for the person who is dependant on those verdicts. When a trial happens over long periods of time, people change stands, witness become hostile, the evidence no longer is fresh, people involved in trial lose motivation. Just dragging a case for years and years is judicial cheating. The whole justice system is flawed in the process when it does that. Land disputes and property disputes, needs to be solved as soon as possible, so that people can get on with life. So that they can make an investment on them, and bring in employment and create wealth. We have people going to the court with the intention of just to extend the problem for long. The ordinary people feel left out. The dishonest segment of the population benefit from the process. The lawyers and judges make money in this flawed process. In spite of huge backlogs of work, the judges go for summer vacations, just like school students, often leading to inefficient man-hours of operation. People launder in jails for years, because the judge hasn't had time to "get to the case". Murder cases that have solid evidence on the initial period lose steam over time, and the witness turn hostile, because often they are subjected to pressure. The Shankaraman murder case in Kancheepuram in which the Kanchi mutt was accused of being involved is an example. Almost all the witness have turned hostile and the proceedings have gone no where. The Judicial system neither helps the innocent or witness, but plays as a good tool for persons who are aggressively dishonest, and exploit the sytem to their advantage.

When the legal system doesn't delivery just like it is happening in India right now., it always leads to social unrest and revolution. It is high time the central government recognize this problem and enact laws and overhaul the system. The following are items that the people need in that.

1. Find resources to clear backlog of cases all over India. Ensure speedy disposal.

2. Atleast new legal cases, needs speedy verdicts., say vital cases like murder, rape, financial frauds are attended to and verdict executed in 4 years.

3. Protect witnesses.

4. Punishment, if found guilty.

5. Hold Judges accountable and punishable, if found involved in mal-practices.

6. Simplify the justice delivery system, and make it RELEVANT in society.

The whole appeal process is ridiculous. This has to be simplified and needs a time sensitive requirement in it. Punishment MUST be delievered if found guilty for all. Rich or poor, younger or older, man or woman, if found guilty in the eyes of the law, punishment must be executed without delays. Every court case should lead to a "logical" conclusion. Only strict punishments are going to help refine society. There are multiple clemency petition pending in the table of the President and Prime Minister. They must be attended to, and punishments enforced now. Only this will invoke confidence in people to go to courts seeking Justice.

The other face of the same problem is the multiple commissions that the government set-up after every tragedy. Those commissions take years to reach a conclusion and often go no where. At the end of the process, the people realize from the report that its just a FYI on what happened, but isn't serious about providing punishment to guilty. Indian politicians take honor in being named for bad reasons in those commissions. Any commission that runs for more than a year, is a complete waste of tax payer's money. Take the famed example of Bhopal Gas tragedy investigation/verdicts. It was a tragedy where thousands of people suffocated to death, and probably died thinking the world was coming to an end. The Indian court took the case, and delivered a verdict, a piece-meal compensation after almost 25 years of the tragedy. The case really deserves more attention than that. An the end of the day, the verdict sounded like a automobile accident case in some highway in India. What was the court doing with this case for decades? 25 years is really long time in anybody's watch except for the clocks in Indian courts. what many things happened in this 25 years, We had multiple governments, Olympics, football/cricket world cups, regime changes all over the world, wars, etc.... and the court was sitting on this investigation during that time. A delayed verdict like that is an insult to the people of India who have lived through those tragedy in the cold December of 1984. What is the intention of the verdict? It was just reduced to a formality. It is humanly unjust to treat it like that. What explanation does the court have for the thousands of people, who are living now but are physically impaired because of the gas leak. Somebody must be pinned responsible for it., don't you think. Not everything happened by itself. If the incident had happened in rich western countries, things would have been much different.

India has a lot to learn from other western countries, how the rule of law is enforced, maintained and safe-guarded. We have to admit, things are far better in advanced countries. The Indian society is a tolerant, obedient society by history. The family values are still very much intact. In spite of the vast diversity, there is a feeling of nationalism, patriotism, respect and moral values. So it is just a matter of enforcing law and winning back the confidence of the people.

For most of Independant india, the Congress government has ruled the country. So the Congress party is responsible for this judicial mess, relatively. It must have been fixed long before as it has become monster today. The people will wake up and we will have a law-less society in the near future, if the govenment does not act now. Manmohan Singh is credited with bringing back India to global stage economically in the 90s as the finance minister. Can he deliver again this time by refining the Indian Judiciary as a Prime Minister.

Sunday, January 2, 2011

New year 2011 : looking forward

The 2011 is here. And i believe its going to be a very interesting year as it is promising to be in all aspects of the society. In february we are going to have the cricket world cup jointly hosted by India, Sri lanka and Bangladesh. It is most likely Sachin Tendulkar's last ODI world cup. Can he win it for India. The long innings of Sachin as a best batsman the world has seen, and the records he created, most of them unimaginable till recently really deserves one. Australia had a good decade and looks it may not be able to repeat its performance this time. A lot depends on Ponting, if they have to pull it off one more time. As a Indian, i want India to win the world cup, and at the same time want the best team to win. Lets see how this works out. South Africa and England have been good recently, and they can pull it off. Can they pull it off in sub-continent pitches, is the dilemma. Sri Lanka has its young guns firing in Mathews, Pereira, Malinga. Can they repeat the 1996 experience? Who will be the Sanath this time ? Lets see. Bottom line, It is going to be competetive cricket. A good tournament is on the cards. The security in India is going to come under focus again. There could be possible scare tactics in the build up to the biggie, especially since Pakistan is left out as a host which is very unfortunate. It has to be seen, how the Indian government is going to deal with it. Everything looked fine, until the recent Varanasi bombing, which killed a child, and left dozens injured. There home ministry has to really have it under control. It is going to be a an uphil task for the security establishment. Any incident that is significant, can force countries like England, Australia and New Zealand to re-consider venues. They were already succesful in eliminating Pakistan venues from the tournament citing security reasons. The shooting incident against the visiting Sri lankan team was the final nail in the coffin for international matches in Pakistan soil. It is going to be years, before cricket matches return to its venues. Pakistan has had a bad year on and off the field too, with most people seeing their cricketers corrupt and with attitude issues. Its high time, they come in with a bang, and lets see their reverse swings and the fighting script when the coutry is not in best times.

Congress government has a string of state elections due. What in West Bengal. Can Buddha come up with a miracle, given the fact its trusted leftinent Jyoti Baasu is no more to help them out. It will be the first election without Baasu around in its 30+ year of successful election victories. Will the People of Bengal trust Mamtha Banerjee. Can left extend its record. I wont be surprised, if the Left manages to pull it off 'one more time' particulary if it could divide its opposition. Remember they told, the left is in bad shape in the 2006 assembly elections., but it managed a confortable win. The other question for Congress(I in Tamil nadu, what is going to happen with its alliance in DMK, which is going to have a tough election ahead. Will the congress stay with it? Will the freebies work? After the 2G spectrum scandal, DMK is viewed more corrupt. Can it do a image make over before May elections? Will the congress go with Jayalalitha this time around. Remember the famous "tea party" that Atalji and Advanji will never forget. Now that Sonia Gandhi's Italian origin is no longer an issue, things could change very fast than you think. Any alliance can happen. Current trends indicate, most likely the DMK will be voted out of power particulary because of ultra-inflation. The Congress is most likely to under perform until it get the price rise of essential commodities under control. The PM Manmohan Singh has told, the Government will go the extra mile to recede inflation. Lets see what happens. The interest rates are going to go up atleast two basis point in 2011. The supply side has to be taken care as well., now that we had a good monsoon.

Out of everything else, the world economy is probably one thing that stands out in 2011 expections list. Everyone has a opinion on them. In my opinion, it is going to be a very very interesting year. European union is being tested. The countries that came together under one banner in currency and trade, looks to be degrading because of political independancy of member nations. Can they stand to gether? The biggest challenge is what happens if Portugal and Spain look out for a bail-out from EU? This is a OMG moment for European union. Can the Austerity measures in Britain reap gains over time. Will its people accept those measure. We already have seen student protest getting out of hand in London. Is it going to spread to other demonstrations in the EU member nations. We are definetely going to see this evolve through out this year. Will the Chinese step into helping EU with its debit problems. If so, who is going to buy US debts? China can use this oppurtunity to diverse its investment away from US treasury bills. Is it a good investment for China in the long run, probably yes. The Markets around the world managed to reap some gain in 2010. According to suveys conducted by renowned journalist, it is going to be better year than 2011. But the Alarmist think the other way. The value of gold has gone up 27%. Where is it headed ? If the Alarmist are right, they it could make 30% more this year on gold. The value of oil is going to be interesting, as China and India grow rapidly in spite of Western economies boosting price. If the western economies dont come out of slow down, it is going to be hard on people. A $148/Barrel crude is payable during good times, but is terribly bad at the time of a down turn. The US economy has come out of coma, but still with 9.8% unemployment is nowhere near the normal. The way he is being playing this season, Tom Brady can win the Super Bowl, one more time for the Patriots.. atleast looks like, but Americans have something more to worry this year, that is how does the economy play. It is going to be closely watched, by markets around the world. Can it make a come back this year ? Will the QE2 be complete, most likely yes. Will there be QE3 in 2011, most likely yes. There are monetary benefits for the FED to do more QEs.

Wikileaks had made a significant mark on news reporting this last year. The publishment of leaked cables, has provided a new platform for news-savy people, who think they discover and expose new materials, that are not published by huge corporate medias. Wikileaks is probably going to come up with more articles of such sorts, and is capable of "displacing" world opinion on not only leaders and beaurocrats but also the people. what comes out of wikileaks is probably going to be more relevant here after than anytime before. The freezing of its funds, its founder Julian Assange's arrest and alienation is going to slow down Wikileaks, but whether the pressure can be sustained remains to be seen. All wikileaks would aspire for is 2-3 significant exposures in the year to have it credibility going.

One of my good friend, asked me, what would you like to happen this new year that is going to make me happy.... As a Indian, and cricket lover, no wonder i told him, an India win in world cup final 2011, at least for Sachin sake.