Saturday, 8 December 2018

It is expensive to be poor

Most wealthy people believe that poor people today have it 'easy' because they can get government benefits without doing anything in return. This is an infuriatingly obtuse view of what it means to be poor - the soul-rending omnipresence of worry and fear, of weariness and fatigue. This can be the view only of those who have not known or have long forgotten what poverty truly means. 'Easy' is a word not easily spoken among the poor. Things are hard, the times are hard, the work is hard, the way is hard. 'Easy' is for uninformed explanations issued by the willfully callous and the haughtily blind.
  • It is extraordinarily expensive to be poor. The less money you have, the more expensive many things are likely to cost. When your income is only just enough to cover your basic living costs, even modest unexpected outgoings can push you into debt. 
  • It’s no secret that the poor pay more. The poor pay more by living in food deserts, by having to commute longer distances and stand in longer lines to buy or do just about anything, by not having enough cash on hand to shop when items are on sale, by receiving less efficient. At the same time, prices increase every year, even as wages stagnate. For those who struggle to make ends meet, it means paying for anything takes deeper chunks out of their limited income.
  • The more affluent you are, the more likely it is you’ll be able to access credit at low interest rates. Poorest households spend about 25% of their monthly income servicing debts.
  • Poor people usually have hard time getting credit. Doorstop lenders and extortionate companies target poorer customers because they are the least likely to have other options. 
  • The poor people earnings are more heavily taxed than the earnings of wealthier citizens.
  • Minimum-wage jobs are physically demanding, have unpredictable schedules, and pay so meagerly that workers can't save enough to move on.
  • Many poor people work, but they just don’t make enough to move out of poverty.
  • If you’re earning is just enough to cover rent, food and bills, finding regular extra income can be a struggle.
  • Easy credit has been similarly disastrous for households struggling to make ends meet. Government policies have only exacerbated this situation.
  • The homelessness and crippling debt are being inflicted deliberately, in an act of sadism.
  • The current situation – where people are forced into crippling debt trying to sustain themselves and their families – is a genuine moral catastrophe.
  • Low-income households are facing a difficult 2018, with rising prices, frozen benefits and a wage squeeze all putting further pressure on household incomes.
  • The poor man's hardships are endless, but the point is: Being poor is anything but easy.

The rich get richer, and the poor get poorer. 

Sunday, 4 November 2018

Poverty, human rights & dignity

Poverty is not an original state, nor are the poor the victims of their own faults and weaknesses. Nor is it due to shortcomings in personality or morality, or failures in family or upbringing. Poverty is about exclusion, physical and economic insecurity, fear of the future, a constant sense of vulnerability. Poverty is created by societies and governments. Poverty is experienced as individuals, family and communities. Poverty is embedded in complex of policies, interactions and relationships.
  • Poverty is self-sustaining. In the modern economy, once a person or group is caught in its trap, it is hard to escape the cycle of poverty. It destroys self-confidence and the capacity to organize collective action and response. 
  • Economic globalisation, which include the privatisation of state resources and functions, and the introduction of charges even for the most basic needs reinforce the cycle of poverty by cutting off possibilities of social mobility. 
  • A powerful economic and political class emerges on the back of this poverty, with no interest in social reform, creating further obstacles to equitable distribution of resources. In this way poverty leads to social exclusion.
  • Poverty negates the realisation or enjoyment of human rights. The purpose of human rights, a life in dignity, is rendered impossible by poverty. The daily struggles of the poor constantly humiliate them. 
  • There is no real possibility of poor people enjoying rights, whether civil and political or social, economic and cultural, without resources such as education, physical security, health, employment, property, participation, and due process - all of which poverty negates. In poverty there can be no control over one’s life chances or even everyday life.
  • Existence in hovels without the basic amenities of life allows no time or ability for self-reflection, essential for identity, self- realisation, or making moral judgments. Poverty generates habits of subservience and docility that denies the premise of the equality and dignity of all persons. 
  • Poverty also forces persons into slavery and bondage, and stories of parents selling children into slavery out of desperation are now common place in states like India, Bangladesh, and Nigeria - and many other parts of the world. 
  • A poor man cannot support his family and tends to draw away from it, burdening the wife with additional responsibilities to sustain the family.
  • Poverty creates or reinforces divisions within the family, in which the male members get priority over scarce family resources. In this way poverty subverts decent and fulfilling family life. 
  • Family is the natural and fundamental group unit of society which is entitled to protection by society and the state.
  • Poverty not only deprives and demeans the poor but also affects the affluent and society. It sharpens inequalities and leads to crime, law and order, as the poor resort to various forms of self-help to eke out a living, including thefts and robberies. Security becomes an obsession for the middle classes, turning their suburbs into fortresses. The slums that grow out of poverty breed diseases and environmental degradation that can scarcely be contained within the confines of the slums. 
  • In the modern age poverty poses a major threat to social consensus and political stability. Poverty erodes the moral fibre and the moral cohesion of a society. It destroys the self-confidence of the people caught in the cycle of poverty, and leads to the waste of resources. 
  • Ideology is used to justify the limits on the role of the state in providing social welfare. Disparities of opportunities and incomes have increased in recent years. The poor can make themselves heard only by irregular demonstrations, to limited effect. 
  • We need fundamental social and economic reforms to ensure all its residents a decent life in dignity which is so eminently within reach, based on its wealth and resources.


Dignity is defined as the quality or state of being worthy, honored, or esteemed. Dignity is as essential to human life as water, food, and oxygen. The stubborn retention of it, even in the face of extreme physical hardship, can hold a man’s soul in his body long past the point at which the body should have surrendered it. Without dignity, identity is erased. In its absence, men are defined not by themselves, but by their captors and the circumstances in which they are forced to live. Apartheid was a clear case of direct attacks on individuals’ dignity and this was not limited to a few individuals but on multiple generations of native South Africans. How an individual reacts when his or her dignity is violated. The most common reaction is to keep reliving the torment through flashes and nightmares and eventually convincing oneself that the only way out is to seek revenge. Loss of dignity is a gradual loss of individuality.
  • The saddest thing in the world is not poverty per se; it's loss of dignity.
  • Those at the bottom of the economic ladder lack dignity, and it is the job of the rest of the world to help give it to them.
  • Some of the poorest people are the most dignified. And some of the richest lack dignity. If I fail to treat someone with dignity, it is me, not them, who is undignified.
  • Extreme poverty is undignified – sometimes communities or individuals do find themselves helpless and in need of crisis or ongoing assistance. Whether in city or countryside, very poor people tend to work for a better life.
  • Former president of Haiti Jean-Bertrand Aristide has pleaded “help rebuild the country, moving from misery to poverty with dignity".
  • Amartya Sen (and others) defined development as freedom rather than just economic or social progress, and the concept of dignity takes us a step further along that road.
  • It is said that if you can’t measure it you can’t manage it. While most poverty measures are disputed, dignity is perhaps the one thing that humans across the globe, in myriad different contexts, most instinctively recognize and long for.
  • Dying with dignity is the greatest shift in morality in this generation. If a person is diagnosed with a terrible terminal illness, or is in intolerable pain, why force that person to suffer? There is a big difference between suicide, euthanasia, and dying with dignity. Suicide is self-inflicted. Euthanasia is ending life without consent. Dying with dignity is neither suicide nor euthanasia; it is respect for the individual. An adult who, for very good reasons, consents to die should have that right. Frostbite would not be a good reason. 
  • Each person has a sense of worth or value, sense of the price of his personality, his dignity. Personality, dignity, is the center of attention in people’s relationships. Demeaning of dignity is almost the only reason for conflict. Those who lost it are humiliated.
  • The genuine price of a man is the truth about him. Everything that increases a man’s dignity is goodness, everything that decreases it – evil. 
  • Internal freedom is freedom from fear of being judged, of being charged a low price, and freedom from doubts about dignity. The only fear an internally free man has is fear of going against his conscience. Society knows freedom when its people know dignity.

Friday, 2 November 2018

We are the IAS

These are the assumptions an IAS officer lives with, and the reality there:

  • We are in this service to serve.
    The truth is, we scarcely behave as servants.
  • We handle vast sums of money and human resources;
    we do not possess any expertise for this task. We are not trained accordingly.
  • We have a very high opinion of ourselves and our “intelligence” and “experience”, and think people respect us for what we are.
    In reality, people genuflect before us due to the power we wield to either do benefit or damage.
  • Over the years we have developed the tendency to distribute largesse, whether in kind or in ideas.
    In reality, we do not own what we distribute.
  • We are paid to manage things efficiently and create systems.
    In actuality, we thrive on mismanagement and chaos because that gives us the power to choose some over others.
  • We are supposedly the steel frame.
    In reality, we have no long-term vision. We take adhoc decisions, looking to what the authority above us wants.
  • We exploit the system for preferential treatment — for ourselves and people known to us.
    We are hypocritical enough to say we do it to “help” people.
  • We know if we create systems where everyone has easy access to services, we shall become superfluous.
    So we let things be.
  • We love to expand and enhance our sphere of work.
    We do not bother to place systems to bring in the needed efficiency.
  • Worst of all, we are the most pompous, officious and ill-bred set of people.
    And we have the nerve to say we work for the people of this country.
  • In reality we have no stakes in this country — our children often study abroad and we have created a niche cocoon of the luxuries this system can give us.
    We have no empathy with the larger populace, though we are always careful to make the right noises.
  • If there were any justice, we would have long been extinct.
    But we are too powerful to let ourselves be annihilated.

We are the IAS.

Why Modi built Sardar Patel statue?


The Statue of Unity, depicting Sardar Vallabhbhai Patel, is being championed by Prime Minister Narendra Modi, but there is far more to the story of this expensive project. It was Dy PM Sardar Patel  who banned RSS in the aftermath of Gandhi's assasination said "the RSS was not involved... his assassination was welcomed by those of the RSS ...". Golwalkar repeatedly pleaded with Patel, but Patel remained firm. He lifted the ban only after the RSS pledged to stay away from politics, not be secretive and abjure violence and professed "loyalty to the Constitution of India and the National Flag". After removal of ban, RSS hoisted the flag at their headquarters on 26th January 1950. 
  • The hope is that this monument to Patel will attract lakhs of tourists, but there is far more going on with this strange and expensive statue.
  • The statue was a bold assertion of Gujarati nationalism as it was to give Narendra Modi a political lineage to distinguish him from the parent RSS, which sat out the freedom movement. 
  • Why he didn’t build a statue of Guru Golwalkar or Deen Dayal Upadhyaya or V.D. Savarkar. Or even Subhash Chandra Bose, speaks volumes about his designs to snatch Patel's legacy from Congress.
  • Patel is a historic Indian figure - crucial to the Indian independence movement and political organisation of postcolonial India. This on its own, though, does not exactly warrant building the ‘world’s tallest statue’ in his honor. Rather, it is the contemporary politics of Modi’s nationalist project and its model of development that explains Patel’s extraordinary memorialization. 
  • During his term as Jawaharlal Nehru’s Deputy Prime Minister, Patel negotiated - through diplomatic tact underpinned by the threat of force - the incorporation of the 562 princely states of colonial India into the Union of India. This earned him a reputation as the “Iron man of India” and as the unifier of India.
  • Today, the assertion of Indian unity has political meaning beyond the incorporation of the princely states into modern India. Within the Hindutva view of India, unity must be centred around Hinduism and India as a distinctly Hindu civilization.
  • Modi’s statue project seeks to emphasise moving away from secular leaders like Jawaharlal Nehru. Patel’s reputation as an ‘Iron man’ and his willingness to use force to unify India is a counter to Nehru’s nonviolent foreign policy.
  • The statue is connected to Modi and the BJP’s promise for development and investment. In Modi’s time Gujarat was known for authoritarian leadership, communal tensions, and largely jobless, GDP growth.
  • Many believe that BJP has become aware of lack of faces among in the ranks in the list of freedom fighters and that the statue might be a gimmick ahead of elections.
There were so many iconic personalities of independence struggle but the reason why Modi selected Patel for 'Statue' is due to his Hindutva inclinations despite banning and RSS and professing secularism is due to his hatred towards Nehru and Congress and that Gujarati Patel would have become first PM in the absence of Nehru. What he ignores is Patel and Nehru - admiration they had for each other. Patel, in his reply to Nehru on August 3, 1947, wrote "Many thanks for your letter on the first instance. Our attachment and affection for each other and our comradeship for an unbroken period of nearly 30 years admit of no formalities. My services will be at your disposal. I hope for the rest of my life, you will have unquestioned loyalty and devotion from me in the cause for which no man in India has sacrificed as much as you have. Our combination is unbreakable and therein lies our strength. I thank you for the sentiments expressed in your letter." No matter what ever Modi does, Patel remains Congressman and his legacy belongs to Congress. Never to RSS who were hand in hand with British during pre-independence days.

Tuesday, 30 October 2018

Sardar Patel statue - farmer's fume

The world's tallest statue, the Statue of Unity dedicated to the iron man of India Sardar Vallabhbhai Patel is all set to be unveiled by PM Narendra Modi on October 31, 2018, the birth anniversary of Sardar Patel. The work of 182-meter tall statue has been completed after round the clock work by 3,400 labourers and 250 engineers at Sadhu Bet island on Narmada River in Gujarat costs Rs.3,000 crores.
  • The 182-metre (597 ft) statue is the tallest in the world and is twice the size that of Statue of Liberty in New York City, which stands at 93-metres and four times the size of Christ the Redeemer in Rio de Janeiro. It is built from 90,000 tonnes of cement and 25,000 tonnes of iron.
  • Larsen & Toubro won the contract in October 2014 for its lowest bid of Rs 2,989 crore (US$420 million) for the design, construction and maintenance. Gujarat government is reported to have paid more than half of that amount. The remainder came from the central government or public donations.
  • Work on the statue started in December 2013 and was to be completed in 42 months. This was extended by another four months because the critical design phase took longer than expected.
  • "Instead of spending money on a giant statue, the government should have used it for farmers in the district," Mr Vijendra Tadvi, a 39 year old farmer, said, adding that farmers in the area still lack basic irrigation facilities. The statue is complete and Mr Tadvi has found more work as a driver on construction sites. But he is still unimpressed by the government's largesse. All of this is about 10 kms from Mr Tadvi's village, Nana Pipaliya, in the largely poor, rural and tribal Narmada district. Many of its households continue to live in hunger, primary school enrolment has been falling and malnourishment persists, according to a report published in 2016 by the state government.
  • But the government believes the memorial will boost the district's economy, as they expect about 2.5 million annual visitors. 
  • According to the 2011 census, some 85% of the district's working population is engaged in agriculture, a sector which is dominated by small farmers who own two to four acres of land.
  • In the shadow of Patel's statue, farmers have resorted to stealing water. They say they can see the water passing by their farms through a canal that transports it from the dam, but it's illegal to divert the water so they are forced to steal it. One of the farmers said he had laid a pipe underground from the canal to his farm, adding that nearly all farmers in the area did this to survive. "We don't have any option but to take the water illegally as there are no sources of water left for us."

Modi’s penchant for talking big and doing nothing has a chilling similarity with Mussolini’s Fascist Italy is that in the Mussolini regime, politics starts to be less concerned with the act of governing people in an efficient way, for instance, in solving their economic problems. Instead, it is focused more on the spectacle of power, on the visual and impressive display of symbols, myths and rituals and impressive speeches. In terms of everyday life this takes the shape of a domination of form of visual appearance, effects over the content. It also means that politics ceases to be measured by political criteria. Politics itself assumes the form of an artistic act. Ever since Modi became CM of Gujarat in 2001 and then PM in 2014, he has done nothing for the farmers of India in general and farmers of Gujarat in particular, except doling out empty speeches. Needless to say this Rs.3,000 if spent for the benefit of farmers would have changed the course of farmer's lives in about 4 districts forever. Alas good things are rarely done.

Sunday, 28 October 2018

Income-tax act, a national disgrace

In 1991, Nani Palkhivala called the Income-tax Act “a national disgrace” because of its “maddening instability“. He expressed anguish at the “pathological change mania” that had gripped the Finance Ministry which caused it to make repeated and mindless amendments to the Law. He also expressed disappointment with the Indian public who endured injustice and unfairness with “feudalistic servility” and “fatalistic resignation“.
  • Administrative justice demands compromise. There is no pre-determined solution to the problem of tempering power with justice. 
  • The cardinal error is to mistake amendment for improvement and change for progress. 
  • A stable fiscal policy is to a nation what a stable family life is to an individual.
  • The obsessive attitude that the exercise of power must take the form of churning out new laws and regulations is shared by the legislature and the rule-making authority alike.
  • No class of people stands to benefit more in the long run from just administration than the administrators themselves.
  • Government depends upon the approval of the governed.
  • Fair play in administration will enlist the citizen’s sympathies and will enormously reduce the friction with which the machinery of government works.
  • Good administrators should take care that the machinery is properly tended and that the lubricant of justice is supplied in the right quantity at the right points.
  • Today the income-tax Act, 1961, is a national disgrace. There is no other instance in Indian jurisprudence of an Act mutilated by more than 3300 amendments in less than thirty years.
  • The tragedy of India is the tragedy of waste – waste of national time, energy and manpower. Tens of millions of man-hours, crammed with intelligence mild knowledge – of tax gatherers. tax-payers and tax advisers – are squandered every year in grappling with the torrential spate of mindless amendments. The feverish activity achieves no more good than a fever.
  • We legislate first, and think afterwards. Sections are introduced which never come into force, because they are repealed or substituted before the date they are scheduled to come into operation. In the event, complexity is heaped upon complexity and the confusion becomes worse confounded.
  • Legislative work expands so as to fill the time available for its completion. This is a branch of Parkinson’s Law and its operation has caused Parkinson’s disease in the body of our fiscal code.
  • The avalanche of ill-conceived changes and complications, which may be compendiously called “legal litter”, is mainly responsible for the poor quality of our tart administration.
  • In the UK there are less than 29 million income-tax payers but the number of references filed in the High Court is only around thirty in a year. In India there are only five to seven million income-tax payers but the number of references filed in our High Courts is around 6,500 a year, in addition to about 1,500 writ petitions. These figures reflect the tremendous public dissatisfaction with the quality of the law and of fiscal administration. 
  • The situation is continuously aggravated by the deluge of new amendments – the indigestible verbiage; and the flood of litigation is heavier today than ever before.
  • These are people that have lost the power of astonishment at their own actions. When they give birth to a fantastic passion or foolish law, they do not start or stare at the monster they have brought forth… These nations are really in danger of going off their heads en masse, of becoming one vast vision of imbecility ... G. K. Chesterton, in his essay “The Mad Official“.
  • The rot begins when wild actions are received calmly by society.
  • We Indians are a “low arousal” people. We endure injustice and unfairness with feudalistic servility and fatalistic resignation. The poor of India endure inhuman conditions. The rich endure foolish laws and unending amendments which benefit none except the legal and accountancy profession, and instinctively prefer to circumvent the law rather than to fight for its repeal.
  • One of the main reasons for India’s backwardness and stunted development is that we as a nation have no sense of time at all. We are individually intelligent and collectively foolish. 
  • Taxes are the life-blood of any government, but it cannot be over-emphasized that the blood is taken from the arteries of the tax-payers and, therefore, the transfusion has to be accomplished with the principles of justice and fair play.
  • Let us never forget the wise words of Justice Hughes who observed that no democracy can survive without respect for laws and institutions, but that in a free democracy laws and institutions will command that degree of respect which they deserve.

Tuesday, 9 October 2018

With majority eluding in 2019, BJP has to accommodate allies

As things stand at the moment, it is unlikely for BJP to get simple majority in 2019 elections but will retain the position of the single largest party. Assuming that large parts of the opposition remain together, BJP may hold on to at best 210 seats in the Lok Sabha. This would bring the BJP to the size of the Congress in the last UPA government. 
  • Regional parties that are not currently in it but have been at one time, like some of the Tamilian parties, may join in. Which were once there but have become opponents (TDP, BJD etc.) could join again or remain neutral. Therefore, even if the BJP loses 70 or 80 seats, it should still be possible for the party to return to power.
  • This will be an entirely new situation for Modi, who became the chief minister of Gujarat without having fought a single election. He has always led a majority government. A few months into his term, Gujarat burst into flames.
  • Modi's only experience is as a CM in heading government where he controlled the full majority and often a two-thirds one. Old leaders were sidelined. New loyal faces were brought in. Modi picked and chose his Cabinet and dominated by holding all the key portfolios.
  • Amit Shah, the second most powerful leader in the country today, was not given cabinet rank and was kept as MoS in the decade he served under Modi in Gujarat.
  • Modi’s brilliant campaign of 2014 then produced a similar situation in Delhi and he was the undisputed leader of a party that had previously had some divisions but was always more disciplined than the Congress. Old leaders like LK Advani and MM Joshi were shunted out. Others like Sushma Swaraj had to submit. The party is seen as a big happy family today but it is not. BJP also has many who are capable of doing more but are being deliberately held back. With BJP having less than 210 seats, these individuals & regional leaders will assert themselves in a way that they are not doing now. 
It will be fascinating to see how Modi, for the first time in his political life without a majority, will manage the ambitions and the conflicts. At 210 seats, the position of the PM will be like that of Manmohan Singh. He was wrongly seen as weak, rather than the position of a man whose allies have a veto on his actions. There is no defence against such allies except for martyrdom. One can sacrifice the government, or one’s position, and move on. But if one wants to lead in a government where the majority is missing, then allies will have to be accommodated. This is something which Modi never did. Running a minority government requires flexibility and the ability to swallow humiliation. Allies will make sure that their hold is made public and this will mean getting the government to bend a few times. It will be fascinating to see how Modi manages this, particularly for those who have observed the meteoric trajectory of his career. Minority governments and khichdi coalitions has not hampered India’s economic and social growth. Those who fear a minority government or a hamstrung BJP should not despair. Coalitions are not evil. What will be instructive will be to see how Modi manages one.

Modi & Amit Shah duo would like to sit in opposition and allow a 'kichdi' coalition take charge and collapse with its own contradictions in an year or two and win back in mid term polls emulating fall of Janata Party and return of Indira Gandhi in 1980. Although not easier, RSS have given clear direction that it would like Modi to pave way to more acceptable person like Nitin Gadkari to lead BJP lead NDA government. Easing out Modi & Shah is a big challenge for RSS and softliners. 

Monday, 8 October 2018

Communism, Democracy & Socialism

  • Communism and democracy are two different ideologies that have rendered great impact in the world. Communism can be termed as a socio economic structure that stands for the establishment of a classless, egalitarian and stateless society. Socialism is an economic system while communism is both an economic and political system. Communism is regarded as an extreme form of socialism.
  • Democracy is a political system of governance either carried out by the people directly or by elected representatives.
  • Communism is a political ideology that is based on a common ownership, mainly concerned with equality and fairness. In communism, the power is vested in a group of people who decide the course of action and decide on the activities of the public. They may interfere in the public life of others. On the other hand, democracy also stands for equality in the society, is governed by a group of elected people. Democracy is a rule by the people and the elected representatives are bound to fulfill the wishes of the society.
  • In communism, the government has complete control over the production and distribution of goods and all the resources and is shared in the society equally. But in democracy, this aspect is not there.
  • In communism, it is the society that holds the major resources and production. This prevents any single person or a group of people from raising to a higher position than others or becoming rich. In democracy, free enterprise is allowed, which means that people or groups can have their own businesses that can lead to rich and poor in society.
  • Socialism supports the view that the goods and services produced should be dispensed based on the productivity of an individual. In contrast, communism believes that the wealth should be shared by the masses based on the needs of the individual.
  • In socialism, personal properties can be kept, socialists make sure, however, that no private property will be used as an instrument for oppression and exploitation. Communism treats all goods and services as public property to be used and enjoyed by the entire populace.
  • Democracy is based on the principle that all citizens have equal rights. In democracy citizens have certain liberties and freedoms that are protected by the constitution. In communism private ownership is not allowed whereas in democracy it is allowed.
Socialists regard capitalism as a threat to equality and public interest. They believe, however, that there is no need to eliminate the capitalist class because it can be used as a good instrument in the transition to socialism as long as it is properly controlled. Socialists also believe that capitalism can exist in a socialist state and vice versa. From the point of view of the communists, capitalism must to be destroyed totally in order to give way to a classless society.

Politics and Policies

Politics is defined as a science or art of governing, especially governing a political entity like a nation. A policy is defined as an overall plan that embraces the general goals. A policy is a course or action that is proposed by a government, an individual, business firm, or a party. It is not that political parties adhere to certain policies, but almost all individuals have policies. Most companies follow policies. A policy is a commitment or statement of intent. A policy is a set of rules or principles that guide decisions. It is because of the policy that people, an organization, or a party is held accountable.
  1. Politics can be defined as a science or art of governing or government, especially governing a political entity like a nation. A policy can be defined as an overall plan that embraces general goals.
  2. Politics refers to authority and refers to public life. Politics generally revolves round government and its activities. Politics is a term that refers to the organizational process.
  3. Policy can be termed as a “principle.”
  4. A policy can also be termed as a commitment or statement of intent. It is because of the policy that people, an organization, or a party is held accountable. Policy is a set of rules or principles that guide decisions.
  5. Political parties run the government which all adhere to certain policies.
  6. A policy can also be said to be a course or action that is proposed by a government, an individual, business firm, or any party.
  7. Politics refers to the theory and practice of governance.

Saturday, 6 October 2018

Responsibility is the price for freedom

Freedom exists only within a framework of rules. Freedom is simply an opportunity to find a definition for yourself, a true, authentic individuality, and a joy in making the world around you a little better, a little more beautiful. Excise and enjoy your freedom in true sense. 
  • Like so many things in life, freedom is not free. We cannot justifiably have one without the other. The more comprehensive and diversified the social order, the greater the responsibility and the freedom of the individual. 
  • Freedom is inseparable from responsibility. If I have the freedom to think, it is my responsibility to think positively. If I have the freedom to speak, it is my responsibility to speak properly and meaningfully. If I have the freedom to act, it is my responsibility to act correctly. I have no right to excise my freedom to breach other’s privacy. 
  • If you don't want to take responsibility, you can't have freedom either. If you shun responsibility, you have to accept slavery in some way or other.
  • Freedom of choice which means freedom to choose, to act in this way or that way, to do good and evil. Every individual’s freedom is limited by the others. 
  • Nothing can satisfy a human need and greed (be it for freedom as well). Extreme freedom results in catastrophe and responsibilities prevent it.
  • Those who do not have enough freedom will inevitably crave more of it. 
  • Freedom is just not limited to speech, thought, follow a particular religion etc but freedom from fear, anxiety, worry etc are also equally important. Freedom is an amazing thing, but as with most amazing things, too much of it can be more than you bargained for. Especially if you’re not prepared to handle it.
  • There is an important dimension to freedom that is often forgotten: freedom of will. 
  • Our freedom may be constrained and our choices limited, in the moment when we choose, we experience freedom. 
  • True freedom is closely linked to self-control. Only a self-disciplined person can decide to do something and accomplish it. True freedom is the freedom to follow one’s conscience and maintain one’s personal integrity. This is freedom of will. It leads to more of a sense of liberation and fulfillment. 
  • The joy of freedom is not only to be able to choose, but to be able to choose well—to choose the right and the good, and be responsible for the outcome rather than blaming.
People like freedom because it gives them a sense of mastery over things and people. They dislike responsibility because it constrains them from satisfying their desires. Every thought, word and deed in our lives shapes our character. We create our own character through the decisions we make.

Friday, 5 October 2018

Urban Naxal: Labeling to malign

Eminent historian Ms. Romila Thapar
“We were all born Indians, lived as Indians all our lives. (The five arrested) activists are fighting for good causes and terming them urban naxal is a political move,”  the eminent historian Romila Thapar said. She asked government to define the phrase “urban naxal”, saying either they do not understand the meaning of the term or the activists like her do not.

She petitioned the Supreme Court against the house arrest of five Left-leaning activists Varavara Rao, Arun Ferreira, Vernon Gonsalves, Sudha Bharadwaj and Gautam Navlakha and said these are the people who are fighting against social injustice. The five activists have been under house arrest since August 29. Supreme Court in its judgement on Sept 28, 2018 refused to interfere with the arrest of the five rights activists.

“We were all born Indians, lived as Indians all our lives. These activists are fighting for good causes and terming them urban naxal is a political move.  First ask the government to define the term urban naxal and then tell us how we fall into this category.", she said. 

Politicians including Maharashtra Chief Minister Devendra Fadnavis have referred to the five activists as “urban naxals”. “Any democratic institution cannot take law into its hands. It has to go through a certain procedure. Arrests are the last step of a probe it is not the first step of an investigation,” Ms. Thapar said. "Arbitrary arrests on implausible charges means the police can walk into our homes and arrest us — either without a warrant or a warrant written in a language we don’t understand and then accuse us of activities about which we know nothing.”

When the state takes itself too seriously, it begins to suspect all dissent. Labelling helps in defining and maligning opponents. It also helps obfuscate the issues and distract public attention.  It is a political strategy of “labelling to malign”. Urban Naxal is today’s label and Anti-National was a label popularized by BJP in the recent past. We are now at a juncture when disliked dissent is sought to be suppressed through legal subterfuge and clever naming. Labels such as anti-national and urban Naxal are glibly employed by Modi regime that seeks to become overbearing both in law and the sphere of ideas.

Thursday, 4 October 2018

IL&FS: Rs 91,000 crore mess

IL&FS Head Quarters at BKC, Mumbai
IL&FS Financial Services MD & CEO Ramesh Bawa along with four independent directors and a non-executive director quit on Sept 21, 2018 just hours after the parent IL&FS informed lenders that it would be unable to make payments on ₹250 crore of debt falling due. On Sept 30, 2018, rating agency ICRA had downgraded IL&FS citing factors like liquidity pressure and high debt levels - to BB from AA+. The central government on Oct 1, 2018 dissolved the 15-member board of IL&FS in a move to revamp investor confidence scalded by the firm’s defaults and fears of a credit freeze. The board was replaced with a new six-member panel headed by Managing Director of Kotak Mahindra Bank Uday Kotak. The board of IL&FS has unanimously appointed Hemant Bhargava, Managing Director, LIC and nominee on the board of the company as Non Executive Chairman with immediate effect. The newly-appointed board is expected to chalk out a resolution plan and submit its first take within 15 days.
  • The troubles at IL&FS had been intensifying since July, when the company's founder Ravi Parthasarathy has resigned as the Non-Executive Chairman of IL&FS, which he served for over 30 years, citing health reasons. Parthasarathy, an alumnus of IIM Ahmedabad joined the IL&FS in 1987 as President & Chief Executive Officer and was appointed as Managing Director in 1989. He was later designated Executive Chairman of the company.  
  • IL&FS also failed to repay corporate deposits subscribed by the Small Industries and Development Bank of India (SIDBI). It only repaid ₹50 crore out of 250 crore.
  • Some group companies have started defaulting on repayment of commercial paper and other instruments to the tune of ₹300-400 crore. 
  • IL&FS Group has shown a loss of ₹2,670 crore for the year 2017-18 in consolidated balance sheet. The leverage is about 13 times as the borrowing of about ₹91,000 crore is on on the base of equity capital and reserves of about ₹6,950 crore. IL&FS is burdened with a consolidated debt of around ₹91,000 crore, of which ₹55,000 crore is housed in the special purpose vehicles created to build infrastructure ranging from roads to power companies. 
  • Among the public sector banks, Bank of India has the highest exposure of Rs 2,388 crore. The company also owes Rs 1,841 crore to Yes Bank, the maximum among private lenders.
  • IL&FS has deep business ties with the roads ministry and its agencies such as National Highway Authority of India. States and the centre, including their agencies, owe as much as ₹16,000 crore in receivables to ILF&S. The company claimed in its recent letter to its employees stated that "had the concession authorities released our monies", IL&FS would not be in the current situation.
  • IL&FS was due to repay ₹1,066 crore of its debt by October and around ₹1,953 crore between September 26 and September 30. The company needs an immediate capital infusion of ₹3,000 crore and is planning a ₹4,500-crore rights issue. 
  • LIC and ORIX Corporation are the largest shareholders in IL&FS with their stakeholding at 25.34 % and 23.54%, respectively. Other prominent shareholders include ADIA (12.56%), HDFC (9.02%), CBI (7.67%) and SBI (6.42%). 
  • Its woes are shared by other infrastructure funding institutions in India that have been unable to cope with projects that have got stuck and become unviable. IL&FS needs nearly ₹15,000 crore in financial support to avert a collapse and could only be saved if lenders agreed to take a big haircut.
  • IL&FS had compromised on corporate governance and risk management norms. The risk management committee of IL&FS did not meet between 2015 and 2018, except once in July 2015. IL&FS has not been able to take up any new infrastructure projects after 2015.  
  • The fact that the company continued to pay dividends and huge managerial payouts regardless of looming liquidity crisis shows that the management had lost total credibility. The company paid dividend of ₹65.70 crore in 2017-18. The company posted a standalone profit of ₹584 crore in 2017-18. Average managerial remuneration increase was 66% in 2017-18 and the average salary increase of other employees during the year was 4.44%. Last year Ravi Parthasarathy, the Chairman, got a 144% jump in remunerations to ₹26.3 crore, Hari Sankaran, Vice-chairman and MD, got a 3.86% hike to  ₹7.7 crore and Arun K Saha, Joint MD & CEO, 10.43% hike. 
  • The financial mismanagement of the IL&FS is apparent from its rapid debt built up and misrepresentation of true state of financial fragility, which is being reflected in unprecedented rating downgrade from highly rated to a default category.
  • The report also warned about repercussions due to lack of authentic information in the market about the financial status of 169 unlisted group companies of IL&FS.
  • The group will sell its corporate headquarters in Mumbai’s Bandra Kurla Complex (BKC) to raise funds to stave off repayment challenges and switches to an asset light strategy. The sale of the corporate headquarters is expected to fetch Rs 1,300-1,500 crore. IL&FS is also planning to sell some 25 projects, which will reduce its debt by Rs 30,000 crore.
  • The Ministry of Corporate Affairs got a lookout notice issued for former directors Ravi Parthasarathy and Ramesh Bawa, and serving directors Hari Sankaran, Karunakaran Ramachand. However, Ravi Parthasarathy is in London at the moment for medical treatment and there is no clarity about when he will return. All others are said to be in India.
  • Board directors can’t be absolved of their obligations by resigning abruptly. That wouldn’t absolve them of any wrongdoing. The government on Mon Oct 1, 2018 ordered an investigation by SFIO into IL&FS and its subsidiaries after they failed to make repayments on time, damaging investor confidence and sparking fears of defaults by other NBFCs that roiled the markets. 
  • The Serious Fraud Investigation Office (SFIO) kicked off its probe into financial irregularities at IL&FS by questioning the top management, searching the group’s offices and gathering information from its servers. The agency will also question the ousted directors and former chief Ravi Parthasarathy. 
  • Apart from the board members sacked on Oct 1, 2018, the agency will also question those who resigned recently amid defaults and rating downgrades. For instance, Ramesh C Bawa quit as chief executive and managing director of IL&FS Financial Services on September 21, the day it defaulted on an IDBI letter of credit that came due. 
  • Gujarat Urban Development Company Limited (on behalf of the Government of Gujarat) and IL&FS are jointly developing Gujarat International Finance Tec-City (GIFT) project since 2006 when Modi was  CM of Gujarat. IL&FS is an 50:50 investor and co-developer in the project. About 866 acres of real estate is to be developed for commercial, residential etc to provide one million direct & indirect jobs in Financial, IT & BPO segments. After 12 years and as on Jan 1, 2018, the GIFT city has 2 million sq.ft. operational and 3 million sq.ft. under development out of has 62 million sq. ft. in its master plan. GIFT has attracted about $1.5 billion in investments. About 150 companies have started operations employing just 8,000 people. The city hopes to employ a million one day.
  • "It is completely baseless to say that ₹70,000 crore worth of project (GIFT City) has been handed-over to IL&FS. In all the phases of GIFT City development, only ₹10,000 cr is projected to be spent on entire infrastructure development," says the Gujarat government.
  • The Congress on Sept 30, 2018 stepped up its attack on PM Modi, with party President Rahul Gandhi alleging that public savings (funds from SBI and LIC) was being used to bail-out the debt-ridden IL&FS group. 
  • The Congress has raised the issue and warned of "an impending 'Lehman Brothers-type' economic crisis facing the country". The IL&FS crisis has also dented equity investors confidence in the entire NBFC space. Congress party has called for a forensic audit of the group over the disbursement of ₹42,000 crore in the last four years.   
The central government's swift action to seize control of IL&FS, within hours of payments default, and ordering investigation is more typical of China's command-and-control economy than a free-wheeling democracy like India, stunned investors by surprise. It indicates that Govt, FM, PM etc are aware of the situation for the past several months but actions were announced in a dramatist manner. The restoration of confidence of the money, debt and capital markets, the banks and financial institutions in the credibility and financial solvency of the IL&FS Group is of utmost importance for the financial stability of the nation. Modi & Jaitley have few options since the economy was already grappling with surging fuel prices and a plunging currency and widening fiscal gap. Any company going bust due to mismanagement, reckless spending, non transparent operations, financial frauds, political corruption etc and Govt attempting to recapitalize with a hope to turn around is generally futile. Very rarely, say 1 or 2 in 100 will succeed. The classic examples are Air India, BSNL which went from bad to worse to worst. The best way is to wind up these companies, liquidate its assets and pay up prorata due amounts to creditors even if it entails loss of credibility. That would at least send clear message that government will never bailout any company at the expense of public interest. Lenders are hopeful of recovery with 10-15% haircut, but when it really happens it could be as high as 25-30%. Govt must ensure that who ever has committed process violations must be prosecuted and punished, but in India the statistics show dismal 6% conviction rate. The new board members suffer legacy issues and none has any experience in infra space to handle the crises and instill market confidence.

Wednesday, 3 October 2018

Hinduism, Islam and Christianity are equal

  • Retired Chief Justice of the Delhi High Court, Ajit Prakash Shah, declared scathingly, “The Republic of Intolerance that India has turned into in the last few years reflects and confirms to us our collective psychological malady, where we have lost sensitivity to the pain of our fellow citizens, and have become numb to the increasing loss of rights as citizens.”
  • Justice Shah confessed that his own roots were seeped in saffron: “My grandfather was one of the founding members of the Hindu Mahasabha in pre-Independent India. I grew up reading the poems of Veer Savarkar.”
  • He said, “Until the day the RSS declares that Islam and Christianity are equal to Hinduism and other religions born in India, there will be little scope for social harmony.”
  • He said that those who lead the mob violence are clearly doing so with impunity, while fear spreads amongst the minorities. The mobile phone and the violent content it brings to you has become a terrorising device, with mob lynchers recording their acts and spreading them.
  • The home ministry has directed wide publicity of the severe punishments that participation and abetment to mob fury can draw, it needs to be seen how sincere the government is in implementing this stated intent, Justice Shah said.
  • The Indian media has been a big disappointment. “Far from questioning the government on behalf of the people, the media today circulates fake news and questions those who question the government. If the media at large feels compromised, barring a few exceptions, then democracy is in peril. Lynchings have to be condemned by news anchors, not used as ‘masala’ for prime time television,” he said.
  • Justice Shah said that in the recent judgement of the Supreme Court directing continued detention at home for activists accused of conspiracy, the value was is in the dissenting verdict of Justice DY Chandrachud. 
  • “Dissent is being curbed. Sloganeering is becoming a test of patriotism. When Akhlaq was killed, it wasn’t his body that was sent for post-mortem first. It was the meat which was sent for testing,” he said, pointing out the prejudice in the law and order machinery.
  • “When violence happens in small doses, and regularly, we find it hard to remain angry, and accept it as commonplace.”
  • The hope for the nation lies in common citizens refusing to accept any deviation of the founding values of the Constitution, Justice Shah concluded.

The one-day event saw nearly 2,000 people register to attend and listen to various speakers, which also included the articulate MP Shashi Tharoor and student leader Kanhaiya Kumar.

Thursday, 20 September 2018

Every employee rises to incompetent levels

Laurence J. Peter first formulated and named the phenomenon in 1969, in a satirical book "The Peter Principle," where he stated that "In a hierarchy every employee tends to rise to his level of incompetence ... in time every post tends to be occupied by an employee who is incompetent to carry out its duties ... Work is accomplished by those employees who have not yet reached their level of incompetence." 
  • You will see that in every hierarchy the cream rises until it sours.
  • An employee does well. He’s rewarded with a promotion. He does well in that job, and is promoted again. This continues until the point he is no longer performing at a level deserving of a promotion, which leaves him at a level where he is incompetent.
  • Being incompetent, they do not qualify to be promoted again, and so remain stuck at that final level for the rest of their career. 
  • What’s true in general is often not true in particular. 
  • A company that relies too heavily on sales as a criterion for promotion pays twice for the mistake.
  • When good worker is promoted as supervisor and if he turns out incompetent then the firm lost a good worker and is saddled with a bad supervisor.
  • One of the greatest pieces of self-awareness is the knowledge that management, whatever its perks, might not be worth the burdens it will impose on you.
  • If a top-selling colleague from your team just became your new boss, it might be time to move on.
  • Certain groups of managers – notably women and minorities — who weren’t promoted despite their competence and so didn’t get the chance to reach their level of incompetence. 
  • The traits of good followers are nearly the same as the traits of good leaders. They “manage themselves well; are committed to the organization and to a purpose, principle, or person outside themselves; build their competence and focus their efforts for maximum impact; and are courageous, honest, and credible.”  If everyone were like that, the Peter Principle would probably never have been written.
  • Percussive sublimation, in turn, is related to the Dilbert principle, which maintains that the real purpose of the hierarchy is to provide managerial roles that will minimize the ability of those employees to interfere with the actual work being accomplished by more productive staff members.

Wednesday, 19 September 2018

Who is trying to bring down PM Modi?

The right-wing Rashtriya Swayamsewak Sangh (RSS) in India kicked off a three-day conclave in Delhi on Monday by praising the main Opposition Congress party for securing India's independence. It also clarified it did not believe in a Congress-mukt (Congress-free) India but a sarvalok-yukt (all-inclusive) India. It came as a surprise because the RSS' prime minister, Narendra Modi, has spent four years spewing venom against the Congress, its prime ministers and the family that holds the party together. Certainly, the RSS revealed its changed thinking when it invited Congress chief Rahul Gandhi to this conclave. Despite Rahul's surprise hug for Modi in Parliament, better sense prevailed and he spurned the RSS invitation (unlike former president Pranab Mukherjee, who attended an RSS function in Nagpur in June, thinking he was laying the ground for himself to head a coalition government after the 2019 election). And though the RSS is eternally tainted with the assassination of "Mahatma" MK Gandhi in 1948, it has occasionally flirted with the Congress as evidenced by the fact of dozens of RSS men named as culprits in the 1984 anti-Sikh riots.

Still it is surprising that with a majority government still in the saddle and about eight months to go before the parliamentary election, the RSS finds it necessary to extend an olive branch to the main opposition party. It cannot be, as the RSS claims, that it is a misunderstood organisation and that this exercise is meant to dispel the wrong notions surrounding it. The RSS thrives on a certain element of mystery and myth given its rigid hierarchy and organisation and its para-military nature. There is only one explanation for the RSS's current behaviour: it has read the writing on the wall that its government is on its way out. Hence it is building bridges with opposition parties, because it fears what may come once Modi is out of power.

That things are not going well for Modi is evident from various other recent developments. NDA allies like Nitish Kumar's Janata Dal (United) have started acting tough. The Bihar chief minister, who till recently was silently facing all-round opprobrium for dumping his electoral partner (the Rashtriya Janata Dal) and hitching his wagon to the BJP, is now demanding his pound of flesh before the next parliamentary election - he does not want just a handful of seats to contest and has formally inducted Prashant Kishor, the data-genius behind Modi's 2014 victory, into his party to ensure it remains the senior partner in any future electoral alliance in Bihar. Telangana chief minister K Chandrasekhar Rao has demanded an early assembly election in which he hopes to do well, and he is least bothered about Modi's pet project of a simultaneous parliamentary and assembly election. Even Ram Vilas Paswan, a dalit leader from Bihar who is reliably a political weathercock, has been talking about leaving Modi's National Democratic Alliance (NDA). The rats are obviously deserting the sinking ship.

The RSS would likely be concerned. In Delhi there is a general expectation that Modi's parliamentary tally will decrease to around 150 seats following the 2019 election, and while that would ordinarily be enough to remove a leader and replace him with someone acceptable to coalition partners (who have been silently licking their wounds of neglect the past four-plus years), the RSS also knows that removing either Modi or party chief Amit Shah will not be easy. Both these gentlemen are apparently willing to sit in opposition and let a coalition government totter about for two to two and a half years before finally collapsing under the weight of its own contradictions. Modi fashions himself after iron lady Indira Gandhi, and like her, might bide his time to return to the top post as she did in 1980, after a nearly three-year hiatus.

This does not suit the RSS, which would rather try to retain governance under a different prime minister, heading a coalition that was much like the late Atal Bihari Vajpayee's government. There are various advantages to this: to consolidate much of the hidden social work and deep changes in the education sector that the rightwing has undertaken since May 2014. Modi has been such a polarising figure that a replacement government would want to first of all undo much of the damage to institutions that he has inflicted, in the name of getting things done, where his will was supreme over any Constitutional nicety or propriety.

First things first, however: the RSS has to save its own skin. There are many political parties who would like to give the RSS cadres a thrashing of their lives. The RSS must be highly conscious of the fact that the atmosphere against it will change drastically once Modi loses power. Hence, the RSS top brass have humbly recounted Congress's contribution of independent India's history, and have extended the peace pipe to Rahul Gandhi. It is a heartening sign for Indian democracy that Rahul has showed the RSS its place - that it does not rule supreme over all Indians, but merely over a sullen part of society, whose achhe din are hopefully soon coming to an end.

Monday, 17 September 2018

IL & FS ruckus - Domino effect

The IL&FS downgrade has lessons for many other financial market constituents
  • The ruckus that has followed the recent credit downgrade at project financier Infrastructure Leasing & Financial Services (IL&FS) highlights how financial troubles at a single institution in India can set off a domino effect across the entire financial system. 
  • IL&FS and its subsidiary IL&FS Financial Services enjoyed high credit ratings and seemed to be a go-to name for short-term lenders until reports leaked out a week ago that the subsidiary had missed due dates on commercial paper, while the parent had defaulted on deposit dues to SIDBI. 
  • Thereafter, rating agencies ICRA, India Ratings and CARE swung into belated action to abruptly downgrade IL&FS and its subsidiary from high investment grade (AA plus and A1 plus) all the way to junk status (BB and A4). With the ratings falling off a cliff, the 30-odd mutual fund schemes holding a ₹3,500 crore exposure to IL&FS entities were forced to take sudden write-downs, jolting their investors. 
  • Domestic banks and insurers, also said to hold significant exposures to the group, may soon have to follow suit. IL&FS, meanwhile, is in parleys with its major shareholders LIC and SBI for a lifeline, which may not go down well with the latter’s policyholders and investors.
  • There are lessons for almost all financial market constituents from this episode. For rating agencies, it is a matter of concern that, though the stretched liquidity position of the group was known for some time, it took an actual default for them to revisit their investment grade ratings. 
  • Though the raters repeatedly flagged loan book concentration, high debt levels and the dire financial straits of group firms in their reviews, they seem to have pinned their hopes on IL&FS’ big-name promoters (LIC, Abu Dhabi Investment Authority, SBI, Central Bank) to bail it out of its troubles. This exposes the fragility of the ‘structured obligation’ ratings often handed out to weak entities hailing from marquee industrial groups. 
  • The mutual fund industry too does not come out of this episode smelling of roses. Instead of restricting their exposures to the high-risk paper to their ‘credit risk’ funds, fund managers also parked it with their liquid and low duration funds, despite marketing them as low-risk alternatives to savings bank accounts. Here, SEBI should revisit its recent fund categorisation rules to ring-fence these categories of debt funds from credit risks. For banks, this again drives home the risks of funding long-gestation projects with short-term money.
  • Overall, even if IL&FS manages to tide over this episode, it has underlined the need for institutional investors in the Indian bond market — banks, mutual funds, pension funds and insurers— to build their own capabilities for independent credit appraisal instead of over-relying on rating agencies for their investment calls. Of course, this does not absolve rating agencies of the need to to be proactive rather than reactive with their rating actions.

Every one would like to invest in profit making companies and none would be interested in loss making companies even with a pole. Raising Rs.4,000 crores might enable IL&FS to fulfill payment obligations but problems remains where they were. Like most infrastructure companies that are on the verge of collapse, its investments in infrastructure will result in massive haircuts even if they are able to salvage. IL&FS with Rs.100,000 crores exposure is another big NPA. Its share price tumbled from Rs.94 in Jan'2018 to Rs.27 today (17/9/2018) i.e. depreciation of 71% in the current year. 

Indian economy's headwinds

India's GDP growth has peaked in the first quarter and going ahead some moderation is expected as weaker rupee and rising oil prices remain two major headwinds for the Indian economy, Credit Suisse said. 
  • The 8.2% GDP growth for the April-June 2018 quarter of this year, though "encouraging", was largely owing to base effects. 
  • The Indian economy grew at 8.2% on good show by manufacturing and farm sectors, according to official data. 
  • Monsoon deficit is now at 6% and the acreage under kharif sowing is flat year-on-year.
  • Weaker rupee and rising oil prices remain two major drag factors for the economy. These two headwinds could turn out to be a double whammy for India, exerting an upward pressure on inflation and downward pressure on growth, the report said.
  • The core inflation is inching up and all these factors could prompt the RBI raise interest rates. Higher interest rates will have a negative impact on growth expectations.
  • On the positive side, Credit Suisse expects economic growth to gradually get support from strengthening bank balance sheets as more companies exit bankruptcy, and as GST implementation progresses further which should provide a much more conducive environment for the investment growth to pick up.

As on Sept 17, 2018, Sensex drooped by 4% and USD INR also shed 4% during this month. INR lost almost 13% against USD, during 2018 and earned dubious distinction of the worst performing Asian currency against USD this year. Some reports point out that Indian economy is better than only Turkey, Argentina and Venezula, which is worry some. Weakening rupee, rising oil prices, widening current account deficit, inflation & interest rates ready to take off, our economic pundits are clueless of what to do and are simply staring. Any thoughtless intervention will only widen CAD pushing inflation up. Not intervening while economy is on slippery slope is also wrong. Steadily FE reserves are getting depleted. No reserves are adequate enough, when economy is facing headwinds.

Sunday, 16 September 2018

Justice should be tempered with mercy

'Mercy' is compassion or forbearance shown especially to an offender or to one subject to one's power.

'Justice should be tempered with mercy' has a reference to Portia's speech in Shakespeare's The Merchant of Venice. It means the offender may have justly deserved a harsher punishment. If justice is tempered by mercy, it is adjusted to satisfy the idea of ‘mercy’. Hence the judge is less severe.

If someone has done something wrong, justice often leads to punishment, whether by a parent or teacher towards a child, or by a court towards a person who has committed an unlawful act. Punishment can sometimes be harsh. It suggests that while justice be done, the punishment has to softened by kindness. 

No one can accept that "eye for an eye" or "tooth for tooth" or the "law of retaliation" is just. Any justice untouched by spark of humanity or mercy is savage as justice is not tempered with mercy. If you forgive no man their trespasses neither will your father forgive your trespasses.

Criminal courts are halls of justice, not halls of mercy. Prosecutors often ask for the maximum penalty for the offense to be leveled against the defendant. Justice ought to be tempered with mercy, as mercy can make for good public policy. Almost all of those who go to prison are poor, and the handful who aren’t the state seems determined to make broke before they are released. When a judge sends someone to prison, the goal should be not just to punish them for their crimes, but to ensure that when they are released they become productive members of society. Making sure an inmate is financially wiped out upon release isn’t the way to do that.

Justice is not equivalent to meted punishment for moral and legal wrong. Justice is relinquishing what is due. When justice is abused, law rarely repairs the social rift. Instead it discourages repeated social rifts. If the criminal is ungrateful he will continue his behavior. Society may choose that risk rather than ruining the life and reputation of an individual over a single incident of indiscretion.

Once a junkie, always a junkie.

Very rarely people change themselves, especially for good. In the name of civilization, humanity and religion, if punishments are lenient, it promotes and encourages wrongdoings which are inherently profitable. Unless risk is high and profit is low, people will be tempted towards wrong doings. Therefore punishments must be harsh.

Saturday, 15 September 2018

Support local businesses

Locally owned businesses play a central role in healthy communities. Small business ownership has been a pathway to the middle class and continues to be a crucial tool for expanding prosperity and community self-determination. When a consumer supports his local business owners, he enjoys benefits he can’t possibly get from shopping at national chains. Here are some reasons to support your local entrepreneurs. 
  • Improves family health.
  • Locally owned businesses contribute much to local causes.
  • You will know the people behind the product.
  • Preserves uniqueness of your community.
  • Better customer service. 
  • More personalized service. Small business owners will bend over backwards for every customer, because every single customer matters when they are small.
  • Locally owned retailers recycle a much larger share of their revenue (~52%) back into the local economy than the chain retailers (~14%), enriching the whole community. Similarly, the local restaurants re-circulate an average of 79% of their revenue locally, compared to 30% for the chain eateries.
  • Locally owned businesses create more local jobs and provide better wages and benefits than chains do.
  • Entrepreneurship fuels economic innovation and prosperity, and serves as a means for families to move out of low-wage jobs and into the middle class.
  • Local stores require little infrastructure and make more efficient use of public services than the big stores and shopping malls.
  • Local stores help to sustain vibrant, compact, walkable town centers and in turn reduce sprawl, automobile use, habitat loss, and air and water pollution.
  • A marketplace with several small businesses is the best way to ensure innovation and low prices over the long-term.
  • A multitude of small businesses, each selecting products based, not on a national sales plan, but on their own interests and the needs of their local customers, guarantees a much broader range of product choices.
  • Shopping local is more important than people think. Even the value of your home goes up.
  • Local small businesses outperformed their peers in income growth, employment growth, lower poverty rates and lower levels of income inequality. 
  • Communities with a larger share of local businesses have more social capital, stronger social ties, higher levels of civic engagement, and better success solving problems.
  • More local businesses ensures lesser usage of automobiles by as much as 26%.
Enacting policies that strengthen small businesses and expand opportunities for local entrepreneurs is one of the most effective ways of reducing inequality and expanding the middle class. In India, government finds it difficult collect taxes from large number of small businesses, especially in informal sector, and tendency has shifted to promoting larger businesses for better tax realization and in their quest for taxes collection simply forgot their fundamental responsibility of reducing rich-poor gap.  Modi and Jaitley are guilty of  inflicting deadly blows to 'informal sector' which provides livelihood to >60% of the people with their 'hare brained demonetization' and 'haughtily designed & implemented GST' which almost pushed the entire Indian economy to the brink of collapse.

Wednesday, 12 September 2018

Our brains won't let us make economical choices on healthcare

Standing under a sign reading “pain relief,” I scanned the shelves, my legs throbbing after a 10K race that morning. I spotted a familiar red box: Tylenol Extra Strength, 100 pills for $7. Right next to it was the drug store’s generic version, offering 100 pills for $5. This should have been a no-brainer. I’m a physician, and I know the active ingredient, acetaminophen, is the same in both. It’s a simple molecule — a six-carbon hexagonal ring at the center with two side chains poking out — something any biochem major could manufacture in an afternoon. The U.S. Food and Drug Administration also makes certain that generic and brand-named drugs are identical. There were only two differences here: the packaging and the price. And yet I grabbed the more expensive box of pills. In that moment, my mind played a common trick on me — one that tells us why it’s so difficult to rein in healthcare costs. When it comes to our health, we are convinced that more expensive is better. If a brand-name pain reliever costs $2 more, we believe it must be safer and more potent. If a diagnostician wants to run duplicate tests, we shrug and agree. If a surgeon recommends a more complex and costly procedure, we presume there must be a good reason.

But why do we perceive that expensive is more effective? Expensive medications tend to make us feel better, even when they’re no different than cheap generics.

In a German study, people were asked to evaluate a side effect of two new anti-itch creams. Both were exactly the same, both fakes, but one came in a handsomely designed blue box and the other in a white box with bad orange lettering. Patients who used what they perceived to be the more expensive drug reported a much stronger physiological response. 

It’s not just patients who fall prey to such price-distorted perceptions. A 2016 study in JAMA Internal Medicine found that roughly 1 in 10 doctors still believe generic drugs are less effective than the brand-name versions. 

A doctor’s referral is the equivalent of a brand-name packaging. A study looked at adults who needed a knee or hip MRI. MRIs are virtually the same everywhere, but prices vary widely. Still patients went where their doctor suggested, bypassing an average of six lower-priced MRI providers on their way. Patients shelled out significantly more in co-pays and deductible expenses, but only 1% bothered to compare MRI prices in their area.

Americans are told again and again that we spend nearly twice as much on healthcare as other high-income nations (and get poorer clinical outcomes). Still, we keep treating healthcare like any other retail product or service, assuming that competition will boost quality and lower prices. But competition isn’t effective because consumers are unable to act rationally when it comes to medical decisions. We need to acknowledge this and help doctors and patients make smarter decisions.

Patients can make a habit of asking if there is a generic alternative for prescribed drugs. Similarly, before choosing a hospital or surgeon, they should be encouraged to review data from independent researchers. Often a friend or colleague’s recommendation of a “great” doctor or hospital is contradicted by the objective data. Businesses and government purchasers will have to play a bigger role.

In the Pacific Business Group on Health, a coalition of companies, crunched the numbers on hip replacements. PBGH found that hospitals charged $30,000 to $120,000 for the procedure. The more expensive locations may have luxurious lobbies and slick marketing materials, but their outcomes were no better. So PBGH members decided to contract only with in-patient facilities that would accept the $30,000 rate. Every hospital in California agreed to the new price.

Our brains conflate higher prices with higher quality and we could also nudge consumers toward wiser choices at the point of purchase. Perhaps it’s time for the FDA to step in and demand that other drugs with identical generic alternatives, carry a new warning label: This product is no better than the less-expensive generic. Had I seen that warning, I’d probably have put that Tylenol Extra Strength back on the shelf.