Friday, 30 June 2017

Bank's bad loans, a global phenomenon

  • Total non performing loans (NPL), world wide, are about $3 Trillion (i.e. Rs. 200 lakh crores) i.e.  4.2% of world GDP. 
  • European banks have NPL's of 1.2 trillion Euro, Italian banks NPL's are 360 billion Euros i.e.20% its GDP & 15% of total loans.
  • In many advanced countries loans supported by artificial collateral values, real estate & equities, are face increasing risks. Debts based on low interest rates are unsustainable because any normalization threatens insolvency of over-indebted borrowers.
  • NPL problems are apparent in emerging markets viz. India,China & Brazil also. India's NPL's are over $150 billion i.e.15% of bank's assets. The problems are driven by over-leveraged borrowers, PSU's, family owned conglomerates, infrastructure companies and govt-driven trophy projects with dubious economics to which PSU banks are pressurized to lend.
  • China's NPLs are 15% of total loans i.e $1.3 trillion with potential losses equivalent to 7% of GDP (forecasts are at 20% of GDP).
  • In the past, Bank's crises are due to lending to real estate sector, leveraged buy-outs and telecommunication sectors. Current crises involves apart from these, lending to over valued housing markets and energy sector as well. Lending to energy sector alone amounts to $3 trillion, where borrowers are struggling to service the debts due to falling prices, weak growth, over capacity, rising borrowing costs and in some case cases weak currency.
  • Seeking higher returns banks have financed less-credit worthy borrowers. Abundant liquidity have increased asset prices and banks have financed against these over valued assets. Low interest rates have allowed weak borrowers to survive.
  • In developing economies, strong capital inflows seeking higher returns has encouraged increased leverage. State policies encouraged debt funded investment & consumption to create economic activity have resulted in problems.
  • Highly leveraged banking sector problems can trigger doom loop. Small loss can wipe out out significant portion of its capital increasing risk of insolvency. For example a 5% assets loss can result in erosion of capital buffer by 50%.
  • Large banking systems facilitating payments and essential supply of credit and any banking disruption could result in economic slowdown.
  • Solutions to banking crises requires capital infusion, strong earnings, isolation of bad loans and industry reforms. The ability of banks to write off losses is limited. Low & negative interest rates lower banking profitability.
  • Banks business models requires reforms for entailing consolidation and reduction of costs which are unlikely due to fear of loss of jobs and lack of competition. Access to new capital is limited. Inefficient bankruptcy procedures are barriers to new investments in banks or distressed assets. 
  • In emerging markets, reluctance to foreclose because of politically difficult business closures and job losses. Political factors are impeding recapitalization of banks.
  • After the 2008 crisis, new regulations were made to make banking system safer and eliminate the need for future tax payer financed bailouts. The success or failure of new regulations will not be known until next crisis. But in major crises still govt guarantees would become necessary for payment systems functioning.
  • The financial system acts as reservoir of deadly pathogen - bad debts  - which is spread by banks creating financial crisis.
Careful person seldom commits a mistake

My View:
Banks have deviated from traditional banking business in pursuit of higher returns indulging in high risk activities with the money which is not theirs. Underlying ethical corruption is the root cause. As long as political meddling continues banks losing money is certainty. Viability of new projects funding must be done very carefully and debt/equity ratio should be ensured in safe limits. Banks should never fund high risk financial products which are speculative in nature. There is only one way to deal with NPL's. Liquidate them at prevailing market rates and write off irrecoverable amounts. Recapitalize banks and direct them to do future banking prudently. Any other method is only postponing the eventuality and more expensive at the end.

GST: Is it a game changer or name changer?

Goods & Services Tax (GST) is a destination based indirect tax throughout India that replaces all indirect taxes levied by the central and state governments. 
  • GST in its simplest format is 'one nation, one tax'. But in its mangled format consists of CGST, SGST, IGST and six tax slabs. Petroleum products, alcoholic beverages, property registrations, electricity duty etc, which are money spinners for centre and states, are kept outside the purview of GST. Hence GST in India is no different than existing VAT.
  • In Singapore GST is 7% on all goods or services.
  • USA being a federal republic, state and local governments fiercely defend their autonomy. At present, there is neither federal tax nor GST on goods and services.
  • Modi (as Gujarat CM), Jaitley (as opposition leader in Rajya Sabha) and BJP (as opposition party) vehemently opposed GST bill of UPA for several years on the pretext that states will lose their autonomy and is in violation of federal spirit of constitution. And GST Network and databases requirements fulfillment is several years away.
  • So far states enjoyed financial autonomy with freedom to levy taxes to fund its governance, welfare & development activities. VAT forms bulk of their revenues and with GST, states are at the mercy of centre until it releases their due share of GST collections and also compensate transition losses for five years. Our central government is notorious for scrutinizing the state's claims for several months before releasing the amounts to states. With GST, Modi has undermined states autonomy and converted them into another level of Municipalities that will survive at the mercy of Centre.
  • Now Modi as PM, Jaitley as FM and BJP as ruling party, suddenly discovered that GST could be India's biggest tax reform, that will facilitate ease of doing business and boost GDP growth by two percentage points and will become a game changer. 
  • GST Bill which is a constitution amendment bill that requires passage by states also and in the process several items like alcoholic beverages, land registrations, electricity duties etc were kept outside GST. Centre too has its own interest in keeping petroleum products outside GST which yields huge revenues. Also yielding to states instead of one slab taxation we have six slabs viz. 0%, 3%, 5%, 12%, 18% and 28%. And also SGST levied by states, CGST levied by centre and IGST shared by centre & states. Thus Modi & Jaitley squandered a huge opportunity and mangled GST is no different from VAT and hence will become just a 'name changer', not a 'game changer'.
  • GST's threshold limit of Rs.20 lakhs and its complexities will compel small entrepreneurs not growing beyond Rs.20 lakhs to avoid GST and mushrooming of small enterprises outside GST is a certainty. 
  • GST processes all being online with computers and internet and ironically only cities and most towns have robust connectivity and rest of India is mostly unconnected. Even databases are not fully ready.
  • Australia, a country with 24 million population,  introduced GST in 2000 with one full year for transition and databases preparation. Yet economy retracted for several quarters and looked up only after three years. 

Tax policy is as good as its administrators.
Any policy which hurts a honest man on street, is a bad policy.

My View:
Any disturbance or calamity whether man-made or natural, hurts the poorest people most. GST will result in dismantling the existing taxation system and installing new system on a cut off date. How ever simplified GST might be, understanding, clarity and adaption by all spectrum of traders will take several months. In the meantime supply chain of commodities will get disturbed and shortages and inflation is imminent. No one is clear how the impact would effect civic life. Like demonetization, intended good may happen after some time, unintended consequences would be immediate and is sure impact poor peoples lives and livelihoods. How many lakhs of jobs, especially in informal sector, will vanish will never be known. Most Indian laws, rules & policies are good. The problem is with tax administrators saddled deep rooted corruption, indifference and lethargy. Among all virtues of Indians, tax evasion is also an important virtue. Modi & Co so far made no attempt to control corruption except at himself. Not appointing Lok Ayuktha even after 3 years of passage of Act is indication of his respect for constitution and laws of the land. Modi hasn't learned any lesson from 'failed demonetization' which destroyed informal sector and impacted agriculture greatly pulling down GDP growth by 2 percentage points. Now, hurried roll out of GST, mangled beyond recognition, will not have a smooth ride and its impact stories will start surfacing incessantly after 2-3 months. Then nothing can be done except sympathizing poor who will be suffering most due to Modi's reckless adventures only to please FIIs and World Bank rather than people of India. Above all is his deep rooted desire to show off as a greatest reformer of the nation, not knowing what exactly he is doing.

Wednesday, 28 June 2017

Opposition in Parliamentary Democracy.

It’s believed that Indian polity has been able to sustain its democratic nature because of the constant scrutinizing by  opposition parties. A party might not be able to form the government at the center because of the lack of majority, but that doesn’t take away the responsibility of acting as a watchdog of the ruling party. When it comes to questioning the government and preventing them from taking negative strides, parliament is the most suitable platform for the opposition to leverage.
  • Power is supposed to beget its own opposition. It is the soul of democracy. Healthy opposition is very necessary in a democracy. The Opposition’s main role is to question the government of the day and hold them accountable to the public.
  • Opposition is expected to express the will of defeated people, their anxieties, anguish and hopes, to speak for the poor, dis-empowered, minorities and the oppressed.
  • Any Government has to remain answerable to the public at all times, and a good Opposition can put the spotlight on serious issues and have them resolved quickly.
  • The way opposition parties work together can influence the outcomes. If they succeed in working together and in building the political numbers they increase their chances of toppling the government.
  • Opposition’s formal role in Parliament is to hold the government to account. That often means opposing what the government does. It always means questioning what the government is doing.
  • The other major role is proposing alternatives to what the government is doing so the public gets the benefit of political debate between different directions.
  • An active Opposition will also debate legislation vigorously in the House and during the Standing Committee process to ensure the legislation receives careful consideration.
  • Opposition is not just about opposing the Government. There are occasions when the Opposition agrees with the Government. These are where it is simply in the wider public interest that a problem is fixed, and the solution the government is proposing has wide support, and it is hard to disagree with it.
  • Opposition parties don’t have the same resources as the Government and the Executive, so they have to work twice as hard to get the same results. The Government has access to government departments and advisers to form their policies, where as the Opposition often has to go down different avenues to source the same information.
  • It’s also really important that the leader keeps a close eye and ear on what the public is saying, needs and wants. Because problems are often caused by the Government not delivering.
  • Leader of the Opposition has the additional job of working to present an alternative government, which of course involves other opposition parties, or potentially government parties that are part of government. He has to work with other parties to present an alternative government.
  • The Opposition’s role is only partly to “oppose, oppose, oppose”. The role more constructively as holding the government to account. In a positive way, opposition can cause government to adopt positive proposals.
  • Opposing the Government is most useful for an opposition in defining its own position. Oppositions get a hearing when giving a view on what the Government is doing.
  • There is a political risk to a party in loss of identity, subordinated to the common good whether in opposition or government.

My View:
In India, we have a large number of political parties. There are a few parties which have a definite socio-economic programme to work for. There are many parties which do not have any coherent programme or policy. Their purpose is simply to aspire to come to power by hook or crook. It is the duty of the opposition party to support the ruling party for the acts that are in national interest. There are unscrupulous politicians who buy the votes with money. They make false promises which they know they cannot fulfill. It is, therefore, essential that the role of money power should be entirely eliminated from the electoral process. The opposition should guide the countrymen to more desirable objectives of socio-economic achievement.

Naveen Patnaik, Mr.Clean

Naveen Patnaik,
Chief Minister of Odisha since 2000
  • Naveen Patnaik was born on Oct 16, 1946 in Cuttack from Biju Patnaik, former Chief Minister of Odisha. He was classmate of Sanjay Gandhi at Doon School, Dehradun. He lived in USA until 1997, away from politics. Patnaik's interest in art and culture drew him into the charmed circle of the rich and famous including Jacqueline Kennedy Onasis.
  • When his father passed away in 1997, the mantle of continuing his political legacy fell on Naveen Patnaik, then 50 years old. He formed the BJD and was elected an MP from his father's constituency in Aska. He said, "I had inherited my father's responsibilities, not privileges. One of the members of his family had to continue his legacy of social responsibility." 
  • In the 2000 Odisha assembly elections, the BJD trounced the ruling Congress and won 68 of the 147 seats, just five short of the majority. Patnaik resigned from the Union Ministry, formed an alliance with the BJP in Odisha and took over as Chief Minister. 
  • He moved into Naveen Niwas that his father built near the Odisha airport occupying the servant quarters instead of the main building which he converted into his residential office. He is a bachelor. He lives life of austerity wearing only simple white kurta-pyjamas.
  • He decided to break the alliance with the BJP in 2009, over Kandhamal communal riots 2008. The BJD contested the elections without any seat sharing arrangements and won a clear majority.
  • Now into his fourth consecutive term, Naveen Patnaik has completed 17 years in the saddle and has joined the list of the longest serving chief ministers of the country (The late Jyoti Basu holds the record of being 23 years at the helm in West Bengal).
  • In 2014, at the height of the Narendra Modi wave, the BJD won a whopping 117 of the 147 Assembly seats and made a clean sweep of the Lok Sabha seats winning 20 of the 21 seats.
  • He is the only chief minister of India who does not speak the regional language of the state. However, he possesses great mastery over the Hindi, French and English. At rallies, he delivers Odia speeches written in Roman alphabet.
  • When Patnaik took over in 2000, Odisha had the country's highest poverty level at 59%. By 2012, the poverty level was down to almost half - 32.5% - the highest reduction in poverty among all Indian states during that period.  Under him Odisha's GDP grew an average of 6.66% annually. Per capita income has grown six fold and touched Rs 66,890 last year. Odisha imported rice from Punjab and Haryana in 2000. It now produces surplus rice. Its anti-poverty programmes and welfare schemes for women have been emulated by the rest of India.
  • He uses a compact no frills Suzuki SX4 bought by the state government six years ago. He refused to have his office chair refurbished though the leather seat is fraying at the edges. Nor has he changed the floor tiling saying the money is better spent on development works for the people of the state. 
  • He bluntly tells his officers to observe 3T's: Team spirit, Transparency, effectively use Technology and put end to PC (percentage commission) culture.  He gave bureaucracy a free hand and encouraged them to come up with innovative solutions.
  • In his first meeting with ministers and bureaucrats of the state, he was repelled by their obsequious behavior, saying their only interest was to find out what was his price. He went about cleaning the Augean stables with political astuteness and ruthlessness that surprised all. He was a mild and incorruptible political leader, and his first tenure in office was marked by his attempts to establish a transparent and corruption-free administration. In the process, he had to act against a corrupt bureaucracy and also some senior leaders of the BJD. He focussed on appalling poverty that had beset the state. He would drop ministers even at the hint of a scandal not fearing political consequences.
  • Naveen Patnaik was felicitated by the United Nations (UN) for an effort to evacuate nearly a million people ahead of tropical storm, Cyclone Phailin, that made a landfall on coastal Odisha in October 2013.
  • Naveen Patnaik's attempts to bring in transparency in the system and his massive drive against corruption in high places, including his own BJD, has given him the epithet of "Mr Clean". An honest, clean and credible image has become more important than the record of economic performance as the key parameter in accounting for the popularity of chief ministers.
  • In 2004, Naveen Patnaik, 57, has grabbed the top slot as the best chief minister.  His impeccable credentials: caring and clean image, credibility, accessibility, and leadership qualities are the things that made him most popular Chief Minister.
  • Patnaik still remains by far the tallest leader of the state. He remains unwaveringly focussed on the development of the state and pursues it with relentless zeal. He has no ambitions to move to the centre. His frugal lifestyle ensures that he has a squeaky clean reputation though some of his ministers and MLAs are now dogged with charges of scandals and scams. 
  • Patnaik remain unfazed by criticism. He says the lessons of the office have taught him to be "attentive to the requirements of the people, to always keep your ears open to their problems and try to deal with them as effectively as he can. If Patnaik follows his simple but effective mantra and sets his party in order, a fifth term should come his way.
  • In the recent Panchayat elections, although the ruling BJD won two thirds of the seats, the BJP won a third of the seats saw its vote share shoot up from 16% to 32%. BJP displaced the Congress as the main Opposition party and can pose a threat to the BJD in the 2019 Assembly elections. 
  • Today, after 17 year, despite signs of anti incumbency and BJP emerging as a credible alternative, Naveen is still by far the tallest leader of the state remaining unwaveringly focused for development of the state pursuing with relentless zeal. He has no ambitions to move to Delhi. Despite his clean image, there are concerns about autocratic behavior, his reclusiveness, overreliance on coterie and lacking second line of leadership etc had its impact. But he remains nonchalant. If Naveen sets his party in order, a fifth term could be well within his reach in 2019.
Some excerpts from his interview

One must beware of ministers who can do nothing without money, 
and those who want to do everything with money ... Indira Gandhi

Start where you are, with what you have. 
Make something of it and never be satisfied ... George Washington Carver

My View:
Naveen Patnaik inherited shattered economy of Odisha, from Congress in 2000. Without much help from Central Government, he made significant progress since then, even though much more is yet to be done. A media & publicity shy person he is, yet he made impact on the people of Odisha which is a very much better place than he founded it. His presence in social media is very minimum. Modi should learn lots of lessons from him, who has the habit of talking too much and bombards publicity from all corners with selective truths and blatant lies and highlighting even his failures as grand successes. One of the poorest & backward states, Odisha even today with per-capita income (ranks 27 of 33) is significantly lower than national average and is only better than MP, Jharkhand, Assam, Manipur, UP & Bihar. Modi hasn't given any special assistance to Odisha during his 3 years, despite requests from Naveen Patnaik.

Tuesday, 27 June 2017

Why Modi opposed GST for 6 years as Gujarat CM?

Modi was opposed to the GST Bill for six years when he was the Chief Minister of Gujarat. Maharashtra, Tamil Nadu and Orissa also opposed certain provisions of the then GST Bill. Congress's version of GST was a radically different which included petroleum products & alcoholic beverages as well. The present GST excludes petroleum products & alcoholic beverages. In addition, road tax and passenger tax, toll tax, stamp duty, electricity duty, tax collected by panchayat / muncipality won’t get subsumed in GST. VAT or sales tax on petroleum products contributes to nearly 33% of state revenues, and Centre also earns huge amounts as excise duty on sale of petroleum products. States don’t want to lose the significant revenue currently earned from state excise duty which is as much as 25% of total revenue. GST could have become a reality "at least" four or five years back and India by now could well have been on the path to prosperity had it not been for one Narendra Modi and his party who conspired to scuttle UPA's honest efforts in marshalling the reform. Then BJP-led opposition said Congress’s GST Bill push would weaken states, even called it unconstitutional. After 2014, Chief Minister Modi became PM Modi and his thoughts on GST changed. Between 2011 and 2014, UPA tried to pass the GST Bill with the support of the principal Opposition party BJP but failed. 

My View:
The GST ensures middle & lower class consumers doles higher amounts as GST while rich people doles out lower amounts. While centre ensures its revenues would significantly go up it doesn't care what states lose except giving guarantees of reimbursement for a period of five years. Modi & Jaitley's past three year record shows reimbursement process is saddled with numerous queries and actual reimbursement will be in bits & pieces with delays of few years. GST council decides on future GST rates etc, it is clear that no single or group of states will be able to force any decision as they want while centre could easily do that. This undermines basic constitutional structure of constitution granting fiscal autonomy to states. Worst is that GST bill was introduced as 'Money Bill' in Lok Sabha and Rajya Sabha can only advise Lok Sabha, where as in reality it is a constitution amendment bill to be passed by both the houses. GST laying foundations for economic prosperity is imaginary, prosperity must be within the framework of democratic principles and not at the expense of independence. India is large democracy with complexities and diversities and there is no single pill like GST which can overnight transform it from poverty to riches. Once the euphoria subsides, GST will be like VAT, 10 years ago.

Modi's Illusionary of reforms

Modi is a Hindu zealot disguised as an economic reformer, or the other way round? Modi has pandered to religious sentiment by appointing a rabble-rousing Hindu prelate as CM of UP. Modi’s government is the strongest in decades. The opposition is hopeless. The low oil price of late has been boosting growth by perhaps two percentage points a year. India is young. He has not come up with many big new ideas of his own (the GST and the bankruptcy reforms date back long before his time). Over a quarter of the people joining the world’s workforce between now and 2025 will be Indian. And there is enormous scope for catch-up growth: India is the poorest of the world’s 20 biggest economies. Modi, in short, is squandering a golden opportunity. 
  • But he has also pushed through reforms and these are deceiving. 
  • The GST, is unnecessarily complicated and mangled, greatly reducing its efficiency. Keeping petroleum products and liquor outside GST is unnecessary. A simple GST might have added two percentage points to GDP growth. The complicated version will probably yield less than half that and only after a painful transition.
  • The new bankruptcy law is a step in the right direction, but it will take much more to revive the financial system, which is dominated by state-owned banks weighed down by dud loans. The government has known about the problem for years but has done little to resolve it.`
  • When Modi was elected many business leaders winced him as a reformer promising “minimum government, maximum governance”. It was hoped that the state apparatus would be aimed away from trying to do everything and towards providing basic services, such as education, health care, a functioning market for land and labour, a working judiciary, and a stable and predictable regulatory environment in which the private sector could create jobs. Three years on, those hopes are fading. 
  • Corruption seems to have abated, at least at the highest levels of government. But he has demonstrated little appetite for the reforms which would bring sustained growth that could transform the lives of Indian citizens.
  • Analysts estimate that low oil prices alone has boosted GDP by 1-2%. Modi also benefited from the tenure of Raghuram Rajan, whose inflation-targeting regime has helped keep prices in check. (Mr Rajan was, in effect, sacked by Mr Modi in 2016.)
  • Growth of 7% or so is nothing to scoff at. But Modi’s ministers speak of an economy expanding by 8-10% a year is necessary to absorb the 1 million Indians who enter the labour market every month. Achieving this would require deep and broad reforms.
  • The central government’s response to the difficulty of buying land to the reform of rigid labour laws, has been to pass them to the states. 
  • One of the big reforms it has undertaken, demonetization of 86% of currency, in an effort to curb the black economy was counterproductive, hamstringing legitimate businesses without doing much harm to illicit ones. It was certainly brave but did not make it a sound policy. Lack of planning and unclear objectives mean the exercise has damaged the economy; its potential benefits remain hard to judge. It seems to have paid off politically. The BJP thumped opponents in UP elections in Feb 2017. People queued for days on to exchange old banknotes but were apparently consoled by claims that the rich were suffering far more (they were not).
  • He is no good at working systematically to sort out the underlying problems holding the economy back. Lending to industry, which once grew at 30% a year, is contracting, for the first time in 20 years.
  • Infrastructure projects are stalled for lack of cash and corporate India is in the doldrums. 
  • Modi should have recapitalized state-owned banks and sold them off, to get loans flowing again. 
  • Too often, he ducks essential reforms. When courting voters he talked tantalizingly “I believe that government has no business to be in business,” he proclaimed. But the much-discussed privatization of state-owned firms is yet to take place. The problem is that Modi is not that brave as he exhibits. 
  • Modi has proved the exception rather than rule. “We elected a radical, we got a tinkerer,” rues a banking boss.
  • He should be working to simplify the over-exacting labour law, property purchases are a forbidding quagmire; try to improve the quality of registers to reduce the scope for disputes. 
  • His government recently created havoc in the booming beef-export business with annual earnings around $4 billion (nearly a third of the country’s trade deficit) from exporting beef, and last year was the world’s biggest exporter of the product. But nearly all of it comes from buffalo, not cow.
  • Modi has kept the focus on smaller projects at the expense of broad reforms. The government has proved adept at dealing with the consequences of bad policy rather than recasting policy itself. One scheme put forward by Modi bailed out state-owned electricity-distribution firms at vast expense, because their weak financial position was hampering efforts to electrify rural India.
  • The “Make in India” campaign, designed to lure foreign manufacturers, has loudly proclaimed the country open for business, organizing conferences and photo-opportunities for Modi and foreign bosses. But little has been done to tackle the shortcomings that discourage foreigners from building factories in India.
  • Most economic activity takes place in the shadows. A round nine in ten workers toil in informal jobs. One of the aims of demonetization was to bring more of India into the open. If it has achieved that, it is only by clobbering the informal sector rather than helping the formal one.
  • Companies deemed to earn excessive profits are hounded: makers of stents, pharmaceuticals and seeds have been forced to cut prices recently.
  • A plan to improve the skills of 500 mn Indians by 2022 has been hastily dropped. A Rs. 400 bn public-private fund unveiled in Dec 2015 to finance infrastructure is reportedly yet to find a single investor or project. This government moves from decision to decision, without checking performance or compliance.
  • Senior ministers relegated to the edges of a policy making machine run by a tight group around him, few people know what Modi has in mind. But most conclude that his core beliefs are already in evidence. And with the economy ticking along nicely thanks to the oil dividend, overhauling it has not required, or received, much attention.
  • GDP growth faltered in the latest quarter. The sag seems to have begun before demonetization but has been aggravated by it. Creation of ever fewer jobs in the formal sector have added to a recent sense of economic malaise. Political attacks on the government’s job-creation record are common.
  • Rules issued in May to protect cows have put in jeopardy buffalo-meat export industry as well as dairy and leather producers. State governments are caving in to demands for farmers’ loans to be forgiven, that will bring short-term relief but make it harder for farmers to borrow in future. It could also add two percentage points to the fiscal deficit, nullifying the hard-won consolidation of recent years.
  • If the economy falters, Modi may will try to maintain his popularity by stirring up communal tensions. That is how his BJP first propelled itself to government in the 1990's. 
  • Modi himself was chief minister of Gujarat in 2002, when rioting for over 2 months, killed at least 1,000 people, most of them Muslims. To this day, he has never categorically condemned the massacre or apologized for failing to prevent it.
  • Hindu nationalist thugs intimidate those who chide the government for straying from India’s secular tradition, or who advocate a less repressive approach to protests in Kashmir, India’s only state with a Muslim majority. 
As prime minister, Modi has been just as careful to court militant Hindus as jet-setting businessmen. Modi himself has become the object of a sycophantic personality cult. The prime minister may intend all this as a way to keep winning elections. But it is not hard to imagine it going disastrously wrong. Modi’s admirers paint him as the man who at last unleashed India’s potential. In fact, he may go down in history for fluffing India’s best shot at rapid, sustained development. And the worries about a still darker outcome are growing. Modi’s backers fear more erratic decision-making would be an expensive way to conceal an absence of reform. If he continues in this vein, Modi will leave India a little better off but otherwise not much different from how he found it.

My View:
Any reform will create initial disturbance and after stabilizing the fruits will be seen with passage of time. Aggressive reforms are necessary only when economy is in distress. Otherwise step by step reforms eliminating ills of the existing system is most preferred. Last year our economy was doing reasonable good with GDP growth of 7-8% better than China. Modi's senseless demonetization was utterly unwarranted which almost destroyed informal sector and agriculture. Even before it has shown any signs of recovery, adventuring GST (in mangled format) now, without adequate transition time will only complicate matters and its devastating effects are beyond imagination or prediction. His hurried nature of financial reforms indicate that his objective is to please FII's and World Bank for ratings upgrade rather than any sincerity towards poor people of the country and his deep desire to go down in history as 'the greatest reformer of India'. It is design of God that deep desires will never get fulfilled. History is testimony that never results would be as predicted. Commonsense tells me that when goings are good, it makes sense to adopt slow and seamless changes and poor and vulnerable are never subjected to any discomfort. Alas, if Modi has that much of serenity of mind, he wouldn't have become PM at all.

Monday, 26 June 2017

Emergency 1975 Vs Gujarat pogrom 2002

1975 Emergency was preceded by problems like bad economic conditions due to 1971 Pakistan war and 1974 oil crisis. Strikes and protests were everywhere. On June 12, 1975 Allahabad High Court Justice Jagmohanlal Sinha while delivering judgement said that even though her violations were relatively minor, Indira Gandhi was guilty of corrupt practices in her election to the Lok Sabha in 1971, and the law allowed for only one punishment - declaring her unseated. The Times of India described it as "firing the Prime Minister for a traffic ticket." On her appeal for stay on June 24, 1975, Supreme Court Justice Krishna Iyer granted a conditional stay of the order and that Indira Gandhi could participate in the parliament proceedings as Prime Minister, but without a vote. “There will be no legal embargo on her holding the office of Prime Minister,” Justice Krishna Iyer added. The very next day, in the dead of night, Indira Gandhi imposed Emergency, imprisoned leaders of the Opposition and imposed press censorship.

My View:
None will dispute that Emergency 1975 was very bad undermining citizen rights and opposition leaders and any body opposing government was put in jail without following any process of law and constitution undermined. In contrast the Gujarat pogrom 2002 after Godhra train carnage, what happened in Gujarat was not a spontaneous uprising, it was a carefully orchestrated attack against Muslims, and the attacks were planned in advance and organized with extensive participation of the police and state government officials at the behest of Gujarat Chief Minister Modi. In the riots which lasted for over two months more than 2,000 people were killed out of which 250 were Hindus and rest Muslims. There was widespread destruction of property. 273 dargahs, 241 mosques, 19 temples, and 3 churches had been either destroyed or damaged. It is estimated that Muslim property losses were, 100,000 houses, 1,100 hotels, 15,000 businesses, 3,000 handcarts and 5,000 vehicles destroyed. This scale of violence, destruction & killings simply can't happen for over two months if there was governance. Now, our beloved PM Modi talks about democracy and wants us to forget 2002 and remember 1975!

Friday, 23 June 2017

Rajadharma: Ten duties of the King

King’s responsibilities are demanding, and the role of wise counsel is important. King’s main duties were to defend his realm, maintain peace, administer the law, and do justice. A king should take care not to punish the innocent while being alert to see that those who have to be punished do not go unpunished. An uncanny alertness alone can detect the sly enemy who masquerades as friend to overthrow the king. Loyalty and truth preserves the king, and he upholds his throne by righteousness. The king gives stability to the land by justice, but a man who takes bribes overthrows it.

Ten Duties of the King are:
  1. Liberality, generosity, charity.
    The ruler should not have craving and attachment for wealth and property, but should give it away for the welfare of the people.
  2. High and moral character.
    He should never destroy life, cheat, steal and exploit others, commit adultery, utter falsehood, or take intoxicating drinks. 
  3. Sacrificing everything for the good of the people.
    He must be prepared to give up all personal comfort, name and fame, and even his life, in the interest of the people.
  4. Honesty and integrity.
    He must be free from fear and favour in the discharge of his duties, must be sincere in his intentions, and must not deceive the public.
  5. Kindness and gentleness.  
    He must possess a genial temperament. 
  6. Austerity of habits.
    He must lead a simple life, and should not indulge in a life of luxury.  He must have self-control.
  7. Freedom from envy, ill-will, enmity.
    He should bear no grudge against anybody.
  8. Non-violence.
    Which means not only that he should harm nobody, but that he should try to promote peace by avoiding and preventing war, and everything which involves violence and destruction of life.
  9. Patience, forbearance, tolerance, understanding.
    He must be able to bear hardships, difficulties and insults without losing his temper.
  10. Non-opposition, non-obstruction.
    That is to say that he should not oppose the will of the people, should not obstruct any measures that are conducive to the welfare of the people. In other words he should rule in harmony with the people.
My View:
Modi doesn't have any of the aforementioned propensities of a ruler and hence unfit to rule the nation. He never walks the talk. Reminiscences of Gujarat riots 2002 when Modi was CM of Gujarat is a blot of his unfitness in public life. Doles out lies with ease and never answer parliament questions directly. Prefers to address public meetings and TV addresses where he need not answer any questions directly. A worst demagogue and brands who ever opposes him as anti national and unpatriotic. Never bothers to fulfill his election promises except when people takes it to streets. Worst is his unfulfilled promise (to double farmer's income in five years) to implement Swaminathan committee's report to alleviate agriculture to remunerative avocation with profits of at least 50% of expenses. After three years he is yet to take first step in this direction and farmer suicides continues unabated. His attitude towards extending support to AP as per AP Reorganization Act 2014 and not implementing promises made in parliament and during elections is worst of its kind. He  only takes money from people and spends on his fancy projects and personal glorification. GST bill, widely publicized as a single pill for economic prosperity by Modi & Jaitley today, while seemingly doing good, undermines the autonomy of states, strengthens centre and weakens states, and rolling it out without adequate preparation is likely to impact economy, higher inflation in short run and livelihoods of vast number of people in informal sector (90% of population and 45% of GDP) who operate on razor thin margins. Ironically, it was Modi who has consistently opposed the GST for seven years, when he was the Chief Minister of Gujarat saying "GST kabhi safal nahi ho sakti". It was Congress led UPA which brought the GST issue but Modi and Jaitley opposed its implementation. Demonetization is the worst thing that happened and his audacity to publicize it as a success indicates his deep moral corruption. Alienating minorities and Muslims especially in Kashmir by deploying half of the army with economic and political activity reduced to zero is threatening integrity of nation like never before. Chasing the citizens for tax compliance is unheard in any democracy. Institutions reduced to virtually dormant state indicates his dictator attitudes. The funniest thing is that his public acceptance is still higher at 61% (down from 68% in first year) apart from winning elections (mainly due to weak alternatives) and it is matter of time people realize his true personality sooner or later but by which time damages inflicted would be huge. Above all our relationship with all neighbors have soured during the past three years and war with Pakistan is a possibility any time. 

Modi's Minimum Government, Maximum Governance

  • By definition "minimum government, maximum governance" is meddling with citizen's lives as less as possible and maintaining taxation at essential minimum levels while delivering citizen services effectively & efficiently. It is not just small size of cabinet and abolishing infructuos committees or institutions.
  • World Bank's perspective of good governance is “the manner in which power is exercised in the management of a country’s economic and social resources for development”.
  • In 2014, as most of the Indian elite supported the BJP during the Lok Sabha elections to its slogan: minimum government, maximum governance. Apart from this slogan, there seems to be little or no understanding for Modi & BJP what small government meant.
  • Two years after Modi was sworn in as prime minister, it’s more than obvious that minimum government, maximum governance was simply a slogan meant to woo a rather small – and ultimately politically useless – section of the Indian elite.
  • In recent months many have expressed their disappointment in the Modi government’s ability to live up to the promise of minimum government, particularly when it comes to running the economy. And in the bargain, we’ve ended up with more government in places we least expected—telling us what to eat and how best to be patriotic.
  • Modi government’s so far has largely focused on using technology to monitor bureaucrats and streamline business processes to ensure files are pushed faster and decisions taken with speed. Important as these reforms might be, they are neither substantive nor radical enough to achieve the goal of maximum governance.
  • The centralization has resulted in destroying the bureaucracy’s ability to take decisions as bureaucrats at the highest levels who simply wait for signals from PMO. 
  • From increased taxes to controlling what Indians will eat, watch or speak, the government seems to be getting more intrusive.
  • During Modi's 10-year stint as chief minister of Gujarat, there is no evidence of reduced spending or examples of unneeded government functions being jettisoned are provided.
  • Since 2014, size and function of the government has been decided by a number of political factors no different from how the Congress or any other state party would do it.
  • After the November 9, 2014, reshuffle, Modi’s government had 65 ministers which was 14 more than the last government with a majority in the Lok Sabha: Rajiv Gandhi’s 1984 ministry.
  • On taxes, the government introduced two new cesses since 2014. Eating out, to take one example, now means shelling out a fifth of your bill to the Union government.
  • Even worse, the Modi government isn’t even passing on this extra money to the state governments (who do the actual work of running development projects even as the prime minister organises yoga soirees). A transfer to the states of 6.3% of the GDP was budgeted for 2015-'16, the Union government only passed on 6.1%.
  • During his 2014 campaign Modi mentioned that government has no business to do business. But none of the PSU's were privatized or divested so far. The Indian tax payer under Modi still continues to subsidise the government’s efforts to run loss making airlines, hotels and banks.
  • Indian public sector banks are running crony capitalist dacoity, offering terrible loans to politically connected industrialists which were never paid back. In 2015, SBI wrote off a whopping Rs 21,313 crore in bad debts.
  • Modi said in an interview to the Wall Street Journal in May 2016. “You can’t suddenly get rid of the public sector, nor should you." It is clear that after becoming PM, Modi has made a U-turn on his “government has no business to do business” point-of-view.
  • Free market economies work best when the government makes a broad set of rules and lets private capital do the rest of the work. 
  • Modi government went to the trouble of laying down detailed rules for matrimonial sites. 
  • New aviation policy is attempting to directly control airfares, capping fare for flights of less than an hour duration at Rs 2,500. 
  • Government’s draft Geospatial Information Regulation Bill proposes near-draconian controls on business and individuals, making and using maps of India which was described as a return to the License Raj.
  • Trying to control what people see, eat and speak. BJP bringing in a stringent law outlawing the consumption of beef in Maharashtra. Modi’s government announced a new scheme to promote Hindi in areas such as North East and South India, another addition of responsibility.
  • Citizens surveyed on Modi Government's satisfactory performance after completion of three years stands at 61% is down from 64% that was last year and 68% at the end of first year of Modi Government.
  • The failure to deliver is a consequence of an obstructionist political opposition and an over-reliance on bureaucrats who constantly block new ideas. But this narrative will not take the Modi far. Voters want maximum action not maximum blame. 
My View:
Modi has no habit of walking the talking. His reluctance to appoint SC & HC judges as recommended by collegium, believed to be non-BJP loyalists resulted in 40% judge positions vacant for over two years greatly effected justice delivery system, which is contradictory to "minimum government, maximum governance" is one example. Modi suffers from worst possible type of corruption; an insatiable desire for personal glory at any cost; an extremely deep moral and spiritual corruption. Modi belongs to the line of autocratic ideologues rather than the western tradition of revolutionary neo liberalism, or marxist rationalism. He also represents the worst aspect of democracy: a demagogue who caters to an irrational populace’s cravings for self-identity and release from self-responsibility. He might not have taken any bribes in recent years but there is no way he could have risen to his position without having made massive and horrendous economic & moral compromises ... as described by Jayant Bhandari in

      Wednesday, 21 June 2017

      Modi's rule: Our democracy in peril

      Modi's three year rule is characterized by ...
      • Disregarding democratic principles for economic progress and shunning democracy for majoritarianism.
      • With his anti minorities attitude and a Hindu hardliner, Modi can hardly be a true statesman.
      • There is a lot of difference between governing a state and an entire country full of diversity, which he doesn't realize.
      • People’s desires for economic progress have been channelized into the sentiment that democracy isn’t working for them. 
      • He is making people believe that shunning democracy and sacrificing a few democratic values paving way for authoritarianism is an easier way out.
      • Economic progress and diplomatic fanfaronade are made more important and fundamental rights, individual freedom and secularism have been reduced to useless hyperboles.
      • Dissenters have been pushed to the periphery and have been blamed as anti-nationals, for whom petty personal freedoms are more important than the nation’s glory. 
      • Complete faith has been bestowed into the PM and questioning him means going against the nation’s sentimentality. 
      • A brand new nationalistic discourse has been charted. You are either on the side of your nation or on that of abhorrent Islamic neighbor.
      • It has never been controversial to be secular in this country. While just a few years ago it was largely considered a virtue, secularism today stands abused and bastardized. 
      • The pride associated with being secular for over six decades since the inception of our Constitution has been reduced to the malicious fallacy of being minority appeasers.
      • He is not directly propagating chauvinist nationalism and aggressive jingoism, but he is basking in its glory.
      • He is hypersensitive to any criticism or even analytical critiques.
      • Today, the country is completely divided on communal lines with Muslims and Christians being considered enemies unless they bow down to majoritarianism. 
      • There has been rising violence and hooliganism against Muslims and Dalits in the name of cow protection. These are law and order problems unacceptable in any civilized society.
      • Dalits feel that discrimination against them has increased since Yogi Adityanath was appointed CM of Uttar Pradesh. 
      • When the PM and Yogi Adityanath do not wholeheartedly condemn atrocities against minorities, it gives a free hand to those who believe in an aggressive communal Hindu nationalistic ideology.
      • It is true that previous governments and political parties have exploited both Dalits and minorities, indulging in vote bank politics and have contributed little to their upliftment. Failures of the past do not justify wrongs of the present. National Commission for Minorities is not having a single member for months now. 
      • Modi puts his foot down against the Sangh Pariwar, occasionally. Modi praised Mother Teresa for serving the poor  “As Indians we feel proud about the canonization of Bharat Ratna Mother Teresa.” 
      • RSS Chief Mohan Bhagwat had in 2015 said that Mother Teresa converted people to Christianity in the name of serving humanity and demanded that the Bharat Ratna bestowed on the Saint in 1980 be withdrawn.
      • Last year Modi cited quotes from the Quran and said Islam was “a religion of peace”, is another example. But there has been no conscious effort on his part to keep the country’s secular fabric intact.
      • Neither can Islamic fundamentalism be controlled nor RSS’ dream of a Hindu Rashtra be realized by resorting to lawlessness and savagery. On the contrary, it could backfire and more people could get disillusioned and take recourse to Islamic fundamentalism.
      • There is contradiction between our Constitutional values of pluralism and equality and the concept of Hindutva. 
      • Indian’s dreams of development and progress and to making our country a fast-growing economy will be successful only only there is harmony.
      • It is an irony that while millions across the world are giving up their lives for democratic values, today a large number of Indians find no virtue in democracy. 
      • As Modi is confident of his victory in the 2019 general elections, it’s just a matter of time our democracy gets reduced to a farce.
      My View:
      Instead of engaging people of Kashmir valley with economic progress and politically, deploying half of Indian Army and their resistance of military atrocities reflected by stone throwing even by women and school girls doesn't august well with our democratic principles. Voter turnout in recent Srinagar Lok Sabha bye-poll from 64% in 2013 to under 7% is glaring and worrying example of total alienation of Muslims in Kashmir by Modi government. Unless some drastic steps are taken, which is unlikely by authoritarian Modi, it is matter of time we end up losing Kashmir forever. Modi's senseless demonetization busted all sections of people and GDP taking a big hit. Today's farmers unremunerative prices is attributed mostly to currency shortage, consequent to demonetization, still prevailing especially in rural India. And his farmer loan waiver loan announced for winning UP elections is resulting in announcing the same by all states, one after other. GST without enough lead time for preparation is likely to hit supply chain of most commodities resulting in lower GDP apart from higher inflation. Demonetization and GST roll out, without preparation and mitigation, and farmer loan wave offs , Modi in fact is destroying economy while talking of high speed reforms.

      Monday, 19 June 2017

      Confucius: Quotable Quotes

      Confucius was a Chinese thinker and social philosopher, whose teachings and philosophy have deeply influenced Chinese, Korean, Japanese, and Vietnamese thought and life. Died 479 BC (aged 71–72).
      • By three methods we may learn wisdom:
        First, by reflection, which is noblest;
        Second, by imitation, which is easiest; and
        Third by experience, which is the bitterest.
      • It is more shameful to distrust our friends than to be deceived by them.
      • Hold faithfulness and sincerity as first principles.
      • Forget injuries, never forget kindnesses.
      • Act with kindness but do not expect gratitude.
      • In a country well governed, poverty is something to be ashamed of.
        In a country badly governed, wealth is something to be ashamed of.
      • To be wealthy and honored in an unjust society is a disgrace.
      • To see what is right and not do it is the worst cowardice.
      • All good things are difficult to achieve; and bad things are very easy to get.
      • The gentleman understands what is right,
        whereas the petty man understands profit.
      • Settle one difficulty, and you keep a hundred away.
      • Never contract friendship with a man that is not better than thyself.
      • If you don't want to do something,don't impose on others.
      • What you do not want done to yourself, do not do to others.
      • Ability will never catch up with the demand for it.
      • He who will not economize will have to agonize.
      • To see and listen to the wicked is already the beginning of wickedness.
      • To be poor without murmuring is difficult.
        To be rich without being proud is easy.
      • The cautious seldom err.
      • Wise man adapts himself to circumstances.
      • Think of tomorrow, the past can't be mended.
      • Respect the gods and the devils but keep them at a distance.
      • Learn avidly. Question it repeatedly. Analyze it carefully.
        Then put what you have learned into practice intelligently.
      • If you are the smartest person in the room, then you are in the wrong room.
      • If things far away don’t concern you, you’ll soon mourn things close at hand.
      • When everyone hates a person, you should investigate thoroughly,
        and when everyone loves a person, you should also investigate thoroughly.
      • Wherever you go, go with all your heart.
      • Artful speech and an ingratiating demeanor rarely accompany virtue.
      • If you want to make a stand, help others make a stand, and if you want to reach your goal, help others reach their goal. Consider yourself and treat others accordingly: this is the method of Humanity.
      • Characteristics of a superior man:— in his conduct of himself, he was humble; in serving his superiors, he was respectful; in nourishing the people, he was kind; in ordering the people, he was just.
      • When words lose their meaning, people lose their freedom.
      • Without the rules of propriety, respectfulness becomes laborious bustle; carefulness becomes timidity; boldness becomes insubordination; straightforwardness becomes rudeness.
      • Life is really simple, but we insist on making it complicated.

      A very wise quote is a spectacular waterfall!

        Sunday, 18 June 2017

        Chatur Baniya, de-legitimization of Mahatma

        BJP President Amit Shah de-legitimizing Gandhi as 'Chatur Baniya'

        • Jamnalal Bajaj once told Gandhi that he was a foolish Baniya, always maintaining the accounts. 
        • Modi & BJP re-writing books and history to edit Jawaharlal Nehru out of public memory using social media spreading wonderfully inventive and salacious stories about him is an errant nonsense. 
        • Now BJP & Modi are trying to bring Gandhi down in national imagination, cheapening him as a Baniya — all because they want to get at the Congress Party. 
        • These chelas of  Sardar Patel are loudly claiming for pitting him against Jawaharlal Nehru, with all their wonderful fictionalized accounts of how Gandhi cheated Patel out of the Prime Ministership of free India. 
        • But they still go to Rajghat every year. They try to imitate charkha-spinning. When it suits them, some of them go as far as observing a ‘fast’.
        • Gandhi has been abused all his life and much more after his death. Gandhi had been a beneficiary of some of the choicest abuses from many quarters — the Tories, the Communists, all those Hindu Mahasabhaites, at times even Ambedkar was unsparing. But they all argued with Gandhi's ideas, questioned his actions and programmes, but nobody called him a Baniya, leave alone a chatur Baniya. 
        • What BJP is doing is to de-legitimise all those institutions, ideas, ideologies, individuals who were associated with the freedom struggle, nationalist movement and transformation of India into a modern state. 
        • Gandhi's desire that the Congress should convert itself into a non-political Lok Seva Sangh, for reconstruction of India,was one of the most misunderstood and cited out of context. Ironically, Congress Party didn’t dissolve, its social and political programmes geared for electoral politics, static government and it has for the six decades come to symbolize the establishment to the Indian people.
        • Gandhi knew very well that after the British left, the Congressmen were not going to retire to the jungle and leave the political field open for the Hindu Mahasabhaites or the Communists to take over the arena. The Congressmen were not so unworldly as to leave the field for all those forces which had opposed freedom struggle, sided with the colonial authorities. Congressmen's Political life cannot simply be brought to an end! Congress now has to govern, not to oppose government. So it will have to function in a new way, staying within politics.
        • BJP are getting good at twisting and distorting. Their insinuation that somehow a power-hungry Congress disregarded Gandhi's ideas about the Lok Seva Sangh is totally bogus. Gandhi knew about organisation, control, order, and power; never in his wildest of dreams he could countenance a situation where the most formidable organisation — the Indian National Congress — would have vacated the commanding heights of Indian politics and left the field for the Savarkarites and Mahasabhaites to take over the store. 
        • This cherry-picking from history to denigrate national leaders and inject poison in people’s minds cannot be the basis of any national progress.
        • BJP is firing shots at Nehru and now at Gandhi. Watch out, they may reduce Sardar Patel to just a Patidar. BJP may be good at counting votes and notes, but Congress cannot keep quiet in the face of the creeping institutionalized shoddiness in India’s political life and public space. 
        • Finally the quality and content of our nationalism cannot be dictated by a demagogue.

        Political language is designed to make lies sound truthful and murder respectable, 
        to give an appearance of solidity to pure wind ...  George Orwell 

        Life of riches, is not a rich life

        • Poverty is deprivation. Deprivation of food, water, shelter makes you realize the importance of life and teaches you ways to survive, means to exist. Deprivation of opportunity teaches you that lives are unfair, you've got to accept it, you've got to fight against it, and you have to fight to find a place to stand and mark your presence. Deprivation of power teaches to take a different route, which is full of hard work and struggle. Deprivation of riches makes you fearless.
        • Poverty and deprivation makes you appreciate the smaller things in life that many take for granted. 
        • Money helps you achieve your goals, provide for your future, and make life more enjoyable, but merely having the stuff doesn’t guarantee fulfillment.
        • There is a danger that increased income can actually make you miserable. Your desire to spend grows with it. The key is finding a balance between having too little and having too much, and that’s no easy task. Money can’t make you happy if your increased wealth brings increased expectations.
        • The so called riches that money can buy actually leaves you poorer in happiness, health, and relationships.
        • Rich life is purely personal. It is how you spend your time, not with the things you own. Whatever it is that makes you happy while you’re doing it, do it. A rich life is about spending time on whatever is valuable to you. 
        • Letting go of anger or hurt rewards one with peace of mind, a priceless freedom. The act of forgiveness is a true testament to your inner strength.
        • Gentleness is one of the greatest virtues. The ability to be strong without being abrupt or harsh is a rare and valuable quality.
        • Patience isn’t easy in this age of instant gratification. With patience, you can achieve things over time that may seem impossible.
        • Gratitude develops out of humility. With gratitude and humility, right actions come naturally. Gratitude ought to be a way of life. Be grateful but don't expect gratitude.
        • Generosity is a sign of emotional maturity. Being generous is being thoughtful and considerate without being asked. Generous people experience the richness of life which a selfish person cannot even dream of. Selfishness brings its own revenge. Be sensitive to other's feelings.
        • Kindness brings its own rich rewards—inner peace, happiness, and the knowledge that you are making a real difference in the world. It is better to treat a friend with kindness while he is living than display flowers on his grave when he is dead. Kind words never hurt the tongue.
        • Compassion is to understand and feel another’s pain is a truly selfless act. It allows you to appreciate the areas of ease and plenty in your own life. What good is intellectual education without understanding human dignity and compassion? 
        • Love is making emotional connection with others, whether it’s your partner, family, or friend, brings an abundance into your life that money can never hope to match.
        • Vulnerability is letting down your defenses and showing your weaknesses allows others to see the full picture, not just a silhouette. Being vulnerable builds trust in relationships. By consciously letting others in, initially unremarkable relationships could blossom into great friendships.
        • Contentment is realizing you already have abundance in your life brings serenity and contentment. Achieving this in a materialistic world takes a special skill.
        Be a better person: Resolve to be tender with the young, compassionate with the aged, sympathetic with the striving and tolerant of the weak and wrong. Because some time in our lives we would have been all of these ourselves.

        The fortunate man is he who, born poor, or nobody, works gradually up to 
        wealth and consideration, and, having got them, dies before he finds 
        they were not worth so much trouble ... Charles Reade

        My View:
        We all get enlightenment of life, usually in later years. The winner is who gets it early. There is nothing wrong in sensual pleasures and enjoying them within the framework of social norms and laws of the land. Renunciation is not running away from life's responsibilities but changing our attitude towards life. It is important we lead our lives in such a way that at the end we leave this earth a better place than we found it. We must maintain consumption and emissions to minimum. Leading life of austerity and contentment enables us enjoy richness of life. We should thrive to fulfill our responsibilities towards nature, society, work, family and self - in the same order.

        Saturday, 17 June 2017

        Gorkhaland's statehood struugle

        Gorkhaland's unrest and violence
        Violence in Darjeeling for Gorkhaland's statehood sparked off by Mamata Banerjee's government decision to introduce the Bengali language in schools. Indigenous Gorkhas, who mainly speak Nepali, are furious. Gorkha Janmukti Morcha (GJM) warned that "untoward" events could happen when the general strike starts and within a week 7,000 tourists left Darjeeling hills. The troubles have dealt a major blow to the region's crucial tourism industry. Bimal Gurung, head of the GJM, told that his warning to the tourists was for their own safety as the events could worsen anytime if his group launches a full-scale campaign for a separate state. The Gorkhas have been campaigning for decades for a homeland. They say Bengali-speaking outsiders have exploited their resources and imposed their culture and language. A similar agitation in 2007 led to the granting of some administrative powers to local people. 

        Now the question is when Telangana is separated from Andhra Pradesh, due to people's sentiment and diversity of cultures, Gorkhas asking for Gorkhaland is in order. Similar such demands could crop up in at least 14 states, in future. Where are we heading for?

        Also read: Reviving Gorkhaland

        Thursday, 15 June 2017

        GST is with wrong rules

        Among all arms of administration in India, the one dealing with commercial taxes (excise, customs & sales tax) is saddled with corruption of mind boggling proportions. The attitude in the tax administration is that all taxpayers are potential criminals and that subject them to taxation is a matter of identifying and controlling them and catching those who cheat. No modern tax system can function on fear alone. Tax administration requires an environment in which citizens are induced  as a social norm to comply with tax laws or by threat of punishment for non-compliance at minimum cost. Tax administration's task is to prevent pervasive non-compliance. Some taxpayers always comply because they do not have opportunity and are risk-averse. They think it is the right thing to do, and other right-thinking people are also complying.  Efficient services to taxpayers facilitating reporting, filing and paying taxes is a more cost-effective method of securing compliance than countering non-compliance. Since no tax administration is perfect, explicit provision should also be made to deal with mistakes. Tax administration should never be overloaded with impossible tasks and the propensity of governments to alter tax legislation frequently. Both tax officials and taxpayers must know what the tax law is and how it will be applied.The tasks of tax administration consist of identification, assessment, and collection. Due to limited resources tax systems have tended towards ‘self-assessment’ of their tax liability and pay. Inducing citizens to comply with tax laws is difficult with large informal sectors, poor salaries of public servants, ineffective legal systems, and distrust of government. The key to success lies in evolving a strategy, with the available resources, minimize the scope for non-compliance and to maximize the likelihood of detection and punishment of non-compliance. Each country must evolve its own strategy, depending on its own circumstances and background.

        Read the detailed analysis  GST: Right intent. Wrong rules

        GST: Right intent. Wrong rules (Page 1/8)
        GST: Right intent. Wrong rules (Page 2/8)
        GST: Right intent. Wrong rules (Page 3/8)
        GST: Right intent. Wrong rules (Page 4/8)
        GST: Right intent. Wrong rules (Page 5/8)
        GST: Right intent. Wrong rules (Page 6/8)
        GST: Right intent. Wrong rules (Page 7/8)
        GST: Right intent. Wrong rules (Page 8/8)

        A fine is a tax for doing something wrong. 
        A tax is a fine for doing something right.

        The income tax created more criminals than any other 
        single act of government ... Barry Goldwater

        Collecting more taxes than is absolutely necessary 
        is legalized robbery ... Calvin Coolidge

        My View:
        Theoretically, GST is a very radical reform aimed at improving economy, ease of doing business, etc. But hurried implementation has many pit falls. GST undermines federal freedom of states guaranteed by constitution. Centre will become too strong and the states too weak. USA has not adopted GST not to undermine federal structure, spirit and autonomy of its states. Not good for India with massive population and diversity.

        Changing trajectories needs considerable preparation, effort and time. Ignoring any of them is not only detrimental but also catastrophic. The hurriedly rolled out GST with just three months of transition, ignoring the complexities like deficient infrastructure, IT knowledge, creating awareness, training, grievance remedial processes, etc are likely to impact large number MSME exporters with exports share of 45% and could impact exports and economy. GDP likely to come down by few points during first year. While long term benefits are imagination & illusion, short term pain is guaranteed and could even pull down already ailing economy impacted by mindless demonetization, low growth, low inflation, stagnant consumption, high joblessness and distressed agriculture. GST is certain to impact informal sector further, which provides livelihood for 90% of people and already destroyed by demonetization.

        A decade ago we were told VAT will resolve all incongruities and corruption that engulfed sales tax but see nothing happened. Tax policy is as good as it is administered, by authorities who are blatantly corrupt.

        Wednesday, 14 June 2017

        Low inflation is an anemic economic condition

        • Low inflation at 2.28%, IIP at 3.12% is due to low food prices and only indicates anemic state of economy which is unable to produce more and spend more. There is  no need to greet 'low inflation' with a hurrah, which is a symptom of ailing economy.
        • Modi administration has laundered away savings due to low oil prices on his mindless adventures in the name of reforms.
        • Make in India campaign without any ground work has deindustrialized India and our economy dependent on Chinese imports so much like never before.
        • Low food prices and low consumption has not increased the consumption pattern. Low consumption is injurious to market economy and indicates declining economy.
        • Farmers are on street agitation due to prices not even covering production expenses.
        • Low crude oil prices for last three years even though good for consuming countries like India is destroying economies of oil producing countries.
        • RBI's higher interest rates and not cutting them are not indicative of inhibiting expenditure and holding back consumption. It is weak demand that is culprit.
        • Higher inflation within a band is preferable, because it means economy is moving and sputtering.
        • It is Modi & BJP's failure to spur growth even after three years. Blaming predecessor doesn't work beyond two years.
        • The over publicized 'demonetization' has failed to achieve any of its stated objectives but has jolted informal sector which operates on cash that brought its economy to its ominous halt. What ever good it may do in long term, demonetization has proved to be painful and disastrous in short term.
        • The other big decision of Modi administration is uniform GST rate across nation, w.e.f. July 1, 2017, is supposed to improve tax compliance and governments will be able to spend more money on infrastructure and enable people to produce more, sell more and buy more and will result in economic growth. Paradoxically, benefits might come only in long term but its devastating short term effects are to be coped with by our already ailing economy. The transition to GST and its impact on lower tax compliance might persist over an year. 
        • There is hardly any activity on ground. Economy needs a push. GST is going to be a speed breaker rather than a stimulus at least during first year. It is not going to energize our economy, which at the moment is going nowhere.
        • Low inflation, low growth, demonetization and GST are aggravating the already bleak situation and when economy will become better is a million dollar question? In the meantime, how many will vanish or perish?

        Inflation is taxation without legislation ... Milton Friedman
        Inflation effectively transfers wealth from savers to borrowers.

        The government will always tell you that it wants low inflation. 
        The real issue is the horizon over which to bring inflation down ... Raghuram Rajan

        My View:
        Low inflation and low growth are features of rich & developed nations. Their economy is largely dependent on consumption. Yet they grow rather slowly. For a developing nation like India with considerable infrastructure activity, higher inflation rates within a band is necessary for good growth associated with job creation. Here, RBI's primary role is to contain inflation within the band by managing interest rates and bank's CRR & SRR ratios. India with 40% people below poverty line and half of the population without personal latrines, low inflation and low growth regimes are undesirable. Modi government resorting to high speed & high risk financial reforms only to please rating agencies and foreign financial institutions, indicates his lack of understanding of the ground realities and exposes his incompetency as a sound economic manager. Today, instead of creating a million jobs every month, reckless Modinomics resulted in deindustrialization, exorbitant Chinese imports, loss of millions of livelihoods in informal sector is what he has done so far. Modi must realize that perpetual promises and blaming predecessors work well during initial years only but not during fourth year. Prolonged low inflation resulted in agriculture becoming a loss making activity and with no support from government, farmers have taken to streets. GDP growth with  job losses is an astonishing feature of Modi's achievement. Pep talk & unsubstantiated publicity won't do any trick.