Euro Debt Crises - a discussion

This post is in continuation to my previous post "The euro area's debt crisis", below you can find a series of discussion I had with Karthick and Yeshwant.  I thought it is worth posting it for two reason, one, I could register our discussion so that it doesn't get lost, two, I felt the discussion would immensely benefit fellow readers too.  Happy reading :) as always, your comments, thoughts, questions are most welcome.

You didn't talk about the rise of Euro crisis. A Little of history of why Euro? could help. Why some countries opted out/were opted out ? I would like to know was Germany/France hesitant against Euro and if so why ?

The purpose of the write up (Euro Debt Crises) was essentially to highlight the mounting public debt by countries in the Euro zone and gross fiscal irresponsibility by the ECB.  We have discussed enough about the birth of the crises, it all started off with mortgage defaults which ultimately lead to failure of the banking system in the west, and that had a  contagion effect.  Still if you are interested, we can work on a detailed cover story analyzing the birth of the crises, well, “why Euro” is a topic in itself :), could not have done justice with just a para on it.

Well, Germany isn't opposing the Euro publicly, but somewhere the insiders want to dump the Euro as they feel it is an unnecessary financial burden, the fundamental question raised is, why the average German taxpayer should pay for making up the losses of Greece, Spain, Portugal?  which could otherwise be used to fuel their own economic growth.  Some even argue that the weak Euro is the reason behind Germany's recovery :-) (Very political and controversial).

The countries in the Euro zone wanted to leverage the financial strength of stronger Euro nations like that of the Germany and France to raise money from the international markets to fund their budget deficits (which is used for large scale bank bailouts), otherwise it is virtually impossible for Greece or Portugal to raise money at tolerable / sustainable rates of interest, given their fiscal position.

Restructuring a insolvent country's debt. What does this mean ?
 
Sovereign Insolvency is when a country is unable to service its debt obligations.  Restructuring is nothing but revisiting the rate of interest and bond tenure in order to make the debt repayable which would otherwise become a bad debt.

We cannot see this only in the light of Sovereign debts/Fiscal deficits. I guess UK, Italy too run huge deficits. The problem is unequal distribution of wealth and supply [goods, Man power]

Not just the UK, even the US runs mammoth deficits, but the US and UK have their respective dollar and pound to fall back upon.  Since the dollar is considered a global reserve currency, the global trade is dominated by the dollar and pound, hence it is easier for the US to raise money from the international markets to fund its deficits or even print money (though this would result in hyperinflation).  And the Euro was proposed to challenge the virtual monopoly of the dollar and rest is history.

This brings us to the fundamental question, how was the value for Euro as a currency determined ?  How is exchange rate determined for the first time? I understand later, it is the open market operations that determine. Still, How is china able to control it's remnibi internally ? Isn't it a violation to set currency exchanges if they were part of WTO ?

Well, there are primarily two ways by which value of a currency could be determined (This calls for a separate, more serious discussion in itself), one, exchange or market determined which is referred to as free float two, a fixed exchange rate regime also known as Pegged system.  A lot depends on capital account and current account convertibility as well.  Please be informed that interest rates, bond yields have a very important role to play in determining the value of a currency.

If a currency is free-floating, its exchange rate is allowed to vary against that of other currencies and is determined by the market forces of supply and demand (which is what is sustainable in my opinion).  A movable or adjustable peg system is a system of fixed exchange rates, but with a provision to devalue the currency.  For example, between 1994 and 2005, the Chinese renminbi was pegged to the United States dollar at renminbi 8.2768 to $1.  China was not the only country to do this, from the end of World War II until 1967, Western European countries all maintained fixed exchange rates with the US dollar based on the Bretton Woods system.

The China is able to control remnibi internally through open market operations, i.e the Govt would buy dollar from the currency market if it wants devalue remnibi and sell the dollar if it wants the remnibi to appreciate.  This is an internal issue and the WTO has no direct control over open market operations to my knowledge. 

Even India resorts to buying and selling of dollar through the RBI in order to avoid the Rupee from appreciating.  This is much politically motivated, we can have a separate thread to discuss its wide implications.

As in how can they value and devalue their currency just by buying/selling dollars. I am sure there is lot more factors into it like Balance of Payments, etc

Indeed, a country can very much manipulate the value of its currency by buying and selling dollars in the open market, but it is not as easy as said, this is just a stop gap arrangement.  In the long term, the value of a currency is purely dependent on the demand and supply mechanism which in turn is largely dependent on the Balance of Payments.  For example, if a country has strong export growth year on year, the aggregate demand for that country's currency grows in the international market, as a result the currency appreciates and if the vice versa happens, currency depreciates.

Because if that is the case, why does India and other 3rd world countries not go for a pegged system..?

I have clearly said that a pegged system is indeed not sustainable at all, unless and until the economy happens to be export driven like that of China, or if the currency is backed by a cartel of nations like that of the Euro.

A pegged currency makes the system more vulnerable to a Currency Crises, it's consequences are disastrous and unexplainable.  Such crises may result in hyperinflation or extreme deflation.  Therefore, for a domestic demand driven economy like that of India or any 3rd world country for that matter, implementing a pegged system is without a doubt "Suicidal".

China on the other hand has a very strong hold on exports, Chinese products have become household for the West, with such strong export growth and BOP, Current account & Capital account surplus, China is able to afford a pegged system.

Chanakya's Chant by Ashwin Sanghi

Chanakya's Chant is possibly India’s answer to Dan Brown.. :-) Ashwin Sanghi’s “Chanakya's Chant” is as engaging and intriguing as Kalki’s “Ponniyin Selvan”, I am drawing a comparison only for the reason that both being novels with historic reference.  The author’s uncanny ability to make every line exciting as well as enlightening, make us contemplate if authors like Chetan Bhagat are much overrated!! 

The book runs two stories in parallel, one in 340 BC where Chanakya, Chandragupta and how the two of them due to their efforts managed to unify most of India under one king.  Two, story from modern Indian politics that of Pandit Gangasagar Mishra and his protege Chandini Gupta.  The narrative keeps alternating between Chanakya’s efforts to make Chandragupta the emperor of India and Pandit Mishra’s efforts to make Chandini the Prime Minister of India..  The author switches between the past and the present with ease and fluidity, both the stories mesh together effortlessly.

Well, I am not quite sure how much liberty the author has taken with respect to history, on the face of it looks like history has not been mangled with, barring quite a few sub-plots and sub-stories that are too farfetched to be true.  Nonetheless the book makes an excellent screenplay for an action paced thriller, came to know that UTV had already acquired the movie rights for this book.

Chankya's Chant is an eminently readable novel.  Happy reading..

Bottom line – War is Politics with Blood, Politics is war without blood..  Power has always come at a price and the price as Chanakya points out is not just one’s emotions but one’s conscience as well. 

Investments in Purti Power & Sugar legitimate indeed..!!

 

I was baffled by the media reports that alleged 14 shell companies with fake addresses and directors having invested crores of rupees in Purti Power & Sugar ltd in which Nitin Gadkari used to be the chairman besides holding a minority stake (he resigned as the chairman after becoming BJP president).  He was accused of channelizing black money through ‘shell’ companies which amounts to money laundering.  Being a keen observer of politics and corporate scams, I decided to spend some time to understand the money laundering allegation against Nitin Gadkari and investments in the Purti group.  Ultimately I found that media has been misquoting facts and blowing issues out of proportion.  The allegations were NOT based on researched facts or investigation.  The media seems more interested in sensationalizing which only demonstrates their desperation to stay relevant in today’s 24*7 media.  Read on..

The first and the foremost allegation against Nitin Gadkari is the controversial investment of 47.34 cr in the Purti group by 14 ‘shell’ companies that have fake addresses, directors and are ownerless.  A closer look at the Balance Sheet of Purti Power and Sugar Ltd will reveal that the investment of 47.34 cr was made in 2002 and not recently as claimed by the media.  The 47.34 cr which is a little over 85% of the total share capital in Purti which is 55 cr, was made between 2002 and 2006 by a well known Nagpur based business group (The Mehta Group that manages an asset base of over 2000 cr) through 12 of its legitimate companies with real operations and NOT ‘shell’ companies as claimed.  It is worth mentioning that the IT department had conducted a probe in Purti way back in 2006 and has accepted that the 47.34 cr investment made by the Mehtas to be legitimate.            

If the 55 cr investment in Purti is lawful at the time the investment between 2002 and 2006, how come it is claimed to be illegitimate after 2010? 

A comprehensive look into the issue reveals that Mehta group, the genuine investors of Purti have transferred their shares from the 12 companies that made the original investment to 14 of its own ‘shell companies’ in the year 2010.  Please note that the Mehta group has taken ownership of these 14 shell companies and these are NOT ownerless companies as claimed.  Had only the media gone back in time to track the original source of the 47.34 cr in Purti, it would have realized that the investment is indeed genuine and not bogus.  This very fact demolishes the media’s pitch that investment in Gadkari associated Purti are made by ownerless and fake entities.  If the Mehta group decides to transfer 85% of shares in Purti to 14 of its own shell companies, the original investment of 47.34 cr made until 2006 DOES NOT become illicit overnight..!! 

Coming to the 14 shell companies, it is to be noted that these 14 shell companies were not created overnight to transfer the shares, as a matter of fact these 14 companies were owned by the Mehtas ever since 2003-04 and have even been pledged as collateral with nationalized banks as a substitute to Mr. Manish Mehta of the Mehta group.  That being the case, I do not understand on what grounds the media claims that these 14 companies are bogus and ownerless. 

Next question, why did the Mehtas transfer their shareholding in Purti to shell companies?  Read on.. 

Purti has been primarily operating in the backward areas an, as a result it had accumulated losses to the tune of 64 cr by the end of 2009.  Following which the loans sanctioned to Purti were categorized as NPA as per banking norms.  The RBI guidelines stipulate that if one loan becomes bad, all the loans given to the promoter group companies have to be categorized as NPA.  The Mehtas who manage business worth 2000 cr did not want their reputation to go for a toss just because Purti has become “sick”, therefore Manish Mehta effected a pretentious separation of his group from Purti by transferring his share holding to the ‘shell’ companies and pledged the shell companies with the banks as security for further loan.  Now this is a secretarial issue and cannot be considered as illegal or even immoral.  Though the above said restructuring in Purti might bind the Mehtas “morally”, Nitin Gadkari has absolutely nothing to be blamed of, neither moral nor legal.

Three facts are incontestable.  One, the investment of 47.34 crore by the Mehtas through 12 of their functioning companies have been accepted by the IT department as legitimate after thorough investigation.  Two, only the legitimate investment was transferred from 12 functioning companies to 14 shell companies (it is as simple as transfer of money from one pocket to another).  Three, the Mehtas are the true owners of the 14 shell companies which have been accepted by the Banks as collateral on behalf of Manish Mehta, which disproves the allegation that the shell companies are fake and ownerless.

Based on facts, any right minded individual will arrive to the logical conclusion that Nitin Gadkari is neither criminally nor morally culpable for investments in Purti.  Had only our media been a little more diligent and investigated the matter with patience, truth would not have been fabricated as it has been; nonetheless enough damage has already been done to malign the BJP and its national president which will ultimately help the Congress to counterattack the BJP when the issue of corruption is raised.  It is worth to point out that the total shareholding of Nitin Gadkari in Purti is less than a ‘lakh of rupees’.       

Let me confess, I am not a fan of Nitin Gadkari or his style of functioning, in my opinion he has a long way to go to even come close to tall leaders like Atal ji / Advani ji who have dedicated their lives in growing the party from day one and has been successful in making the BJP a viable alternative for the Congress.  However Gadkari‘s hands are clean with respect to investments in the Purti group, therefore there is no need for him to resign as the national president of the BJP just because certain sections of the media have made mindless contentions.  

Note: All the facts mentioned above are based on findings by Shri. Gurumurthy that is available in the public domain.  

Jai Hind

A commentary on Union Budget 2012-13

Let me confess, I am not all the excited to write about Budget 2012-13, I am genuinely disappointed as a taxpaying citizen of this country, and I couldn't find a better way to express my disappointments but to write a blog and share my perspective.   Let’s look at the pre budget scenario before actually analyzing the important aspects of this budget, we will in particular discuss in detail the opportunities missed by the Government to set the growth trajectory on track.

These are no normal times to have a normal ‘status quo’ budget, in the last decade, India was considered a ‘low-cost high-growth’ economy and the present Government has been extremely successful in transforming it to a ‘high-cost low-growth’ economy.  For seven successive quarters, which aggregates to 21 months, India's has recorded a steady decline in GDP, from 9.4% in Jan-Mar 2010, to 6.1% in Oct-Dec 2011, and the worst is yet to come, going by the current trend, I expect India to register a sub 7% GDP growth in 2011-12.  Cost of subsidies is set to cross 2.5 lakh crore, borrowings are expected to hit the roof at 5 lakh crore, and fiscal deficit will surpass 5.6% of GDP.  While fiscal deficit of over 5% is tolerable (given the fact that we don’t have a choice) if the economy grows at over 9% and domestic savings rate at 35% of the GDP, alas, both seem a distant dream in the current scenario.

While the Government argues that the reasons for the slowdown are exogenous and driven by global factors, truth is that the crisis indeed is a ‘self made disaster’.  The Govt states that the reason for the worrisome fiscal situation is on account of the economic stimulus announced in 2008, but the fact of the matter is, it is the political stimulus (read sops to woo voters) that accounts for the major chunk of Govt borrowings. 

Now coming to Mr. Pranab Mukherjee, I have great respect for this man, no one can level any personal allegations against him, all leaders across parties have great respect and faith in him, well is that good enough qualification to be the finance minister of a dynamic economy like that of India? Read on. 

Pranab Mukherjee is better known as the troubleshooter for Congress than as the finance minister of India, he is the fire fighter for every ally and crises in the UPA.  He is the Chairman for largest number of EGoMs (Empowered group of Ministers), he is often reckoned by the party high command to solve political differences with its allies and the opposition, well he also ‘happens’ to be the finance minister. 

A complex economy like India which is need of a full time finance minster, ironically has the busiest politician of the UPA for the post.  Every minute and hour he spends on political schema, has an adverse bearing on the economy.  There is always an ongoing clash of interest between Pranab Mukherjee the FM and Pranab Mukherjee the politician, what can Pranabda do? How does he set his priorities?  FM Mukherjee is aware of the fact that there is a pressing need to curb subsidies, but the politician in him doesn't allow him to act in that interest.  Very unfortunate, isn't it.

High cost of money..

High interest rates restrain investment activities in the Economy, but to bring down the interest rates, the Govt has to reduce its borrowings.  The startling fact is, when the UPA came to power, the Govt's borrowings stood at Rs. 200 crore a day, the figure currently stands at a whopping 2,500 crore a day!!  This is freakin alarming and the situation demands bold measures to curb revenue spending, austerity measures which are quite easy to preach are seldom practiced.  The UPA regime hiked the interest rates by 5.25% in less than 18 months, which business can handle doubling of interest rates coupled with slowing growth? 

This budget offered Pranab Mukherjee a wonderful opportunity to leverage the crises and present an agenda for good economics by way of cutting exemptions to corporate sector, to initiate phased withdrawal of subsidies and to raise new stream of revenue.  But what we got from him was quite the opposite; the Finance Minister has indeed missed yet another opportunity to set the trajectory for growth, but what more can we expect from Pranab Mukherjee the cut throat politician?

The NDA Govt had earlier enacted the "The Fiscal Responsibility and Budget Management (FRBM) Act" in order to check the raise in Fiscal deficit, as a result the Fiscal deficit declined to a low of 2.5% of GDP in 2007-08 of which only 41.4% was revenue deficit.  The very next year the fiscal deficit was allowed to go up to 6% of GDP and revenue deficit from 1.1% to 4.5% of GDP.  In percentage terms, the share of revenue deficit in the overall fiscal deficit increased from 41.4% to an alarming 75.2%, it further rose to 80.7% in 2009-10. 

Fiscal deficit can arise either on account of Capital expenditure or Revenue expenditure.  Revenue expenditure in principle is considered to be unproductive in nature, it primarily comprise of consumption expenditure of the economy.  The so-called stimulus package announced by the Govt in the wake of 2008-09 crises, largely accounted for consumption expenditure of the economy which simply cannot be rolled back unlike a Capex focused stimulus package which could be rolled back once the economy is out of crises.  This has also eroded the credibility and moral authority of the Govt to advise the State Govt's to check their respective fiscal deficits. 

The ever-increasing deficit, on the absence of solid policy measures to remove supply side bottlenecks, has only resulted in sky rocketing inflation, especially on essentials, which has forced the RBI to raise interest rates and squeeze liquidity, thereby money becoming an unaffordable commodity for the private sector, and as a result, all planned investments were stalled, so were creation of new jobs.

Hike in Service Tax and Central Excise..

We saw how fiscal deficit and reckless Govt borrowings have fueled inflation.  For nearly three years our economy has been battling inflation and slow growth, high prices of essential commodities have continuously eroded the purchasing power of an average Indian consumer, high inflation and high rates of interest have been the primary cause for decrease in consumption and private investment.  Any reasonable common man would expect the Govt to announce stringent measures to curb inflation in the Budget speech, but look at what the Govt did to address issues pertaining to inflation and growth? It imposed a mighty 20% hike in excise and service tax on goods & services, from 10% to 12%, which will further induce inflationary pressure and thump consumption in the economy which is already battling a sub 7% GDP growth.. Poor economics? Read on.  

In an attempt to pacify the taxpayer, Govt has announced Direct Tax benefits for those who earn and are in a position to pay taxes to the tune of Rs. 4,500 crore, cheap applause..? And on the other hand levies Indirect Tax across board to the tune of Rs. 45,000 crore, which will directly impact every segment of the society, including the poorest of the poor.  You might argue that raising tax revenue is inevitable to bridge the gap between Govt Revenue and Expenditure, now that the taxpayer has done his job by agreeing to pay higher taxes, has the Govt reciprocated by curbing its spending on borrowed money?  The answer is NO, the economic survey states that in 2011-12, the Govt borrowed Rs. 1,397 crore every day; in 2012-13 the Govt will be borrowing Rs. 1,560 crore each day.  Interest payments which accounts for the largest portion in Govt’s revenue expenditure, will shoot to Rs. 3.19 lakh crore from Rs. 2.75 lakh crore!!  The Union Budget 2012-13 can be an ideal case study for “poor politics & poor economics”..

Taxing Derivatives...

We saw how the Govt has completely screwed the country's fiscal situation, now that calls for innovative ways & means to raise Govt revenue and cut unwarranted spending to check the burgeoning fiscal deficit, isn’t it.  The Finance Minister is expected to look at new sources of revenue to fix the plug rather simply tampering with the existing tax rates, like it did with Excise and Service tax. 

After the introduction of service tax by the NDA, there were hardly any innovative measure to raise revenue, tampering with existing rates of service tax, central excise will only increase the inflationary pressure which simply does not solve any purpose.  There is one such area which has huge potential, but seemed to have completely missed the FM’s radar, intentionally or unintentionally is a question which I am not equipped to answer.

While there is Securities Transaction Tax (STT) on all stocks bought and sold by retail investors irrespective of whether they makes profit of loss, why isn't the Govt taxing transactions pertaining to speculative Derivatives traded on Stock, Forex and Commodities market?  The total derivative turnover in stock markets is Rs. 1,92,48,200 crore, in forex markets its Rs. 3,46,00,000 crore, and in commodity markets, it's Rs. 1,37,00,000 crore.  The sum total of the derivatives traded is Rs. 6,75,48,200 crore..!!!    

Tax of 10 paise per Rs. 100 derivative will yield the Govt over Rs. 70,000 crore!!  It doesn't stop here, it is these feckless derivative transactions that distort the value of Rupee more than the actual transactions, and it is derivatives which cause huge swings in commodity prices, the resultant of which is skyrocketing inflation which drags the economy to the vicious cycle of high interest rates, low investment and poor job creation.  Therefore taxing derivative transactions will not only be resourceful in generating additional revenue for the Govt but will also check reckless speculation by traders who trade in derivatives.  I am cent percent sure that a tax of 10 paise on Rs. 100 derivative will not burn the hands of genuine users of Derivatives who use the instrument as a tool to hedge, but this will certainly work against the speculators who make money day in and day out trading derivatives. 

If only our finance minister been a little more imaginative and announced Derivatives tax in his budget speech, it would have opened up additional stream of revenue to the tune of Rs. 70,000 - 80,000 crore, which would have been instrumental in curbing the fiscal deficit, but our beloved Pranabda has again failed to act in the interest of the economy, yet another opportunity missed..?  This is a move which no ally would dare to contest on the floor of the house, Mamata inclusive.

On the whole, the finance minister and the Govt have collectively failed to capitalize a wonderful opportunity, both to raise new stream of revenue as well as to curb discretionary Govt spending on borrowed money.  On the contrary, it has taxed consumption by hiking the indirect taxes, which will invariably kill growth and fuel inflation.  If I were to sum up the Union Budget 2012-13, it is an “Opportunity Lost” by the finance minister to have set the growth trajectory back on track.  Is anyone listening..?

Jai Hind

"FDI in retail" - a disaster in making?

The principal argument for 'FDI in retail' is that the deep pocket and know-how of the multinational supermarket chains (read Walmart) to establish supply chain will make rural India and farmers prosperous. One needn’t be a connoisseur to discard this argument to dustbins.  This only showcases the 'Impotence' of the Govt, to be relying upon Walmarts and Carrefours to develop our agricultural infrastructure.. SHAME!! After 65 odd years of independence, do we really need MNC's to install cold storage facilities for us..?  Cold storage chain is neither a proprietary technology nor rocket science.  Is it not sheer sheepishness..?  Read on.

Let us not favor our country’s food security to be outsourced to foreign giants who are nothing but crony capitalists struggling with a slowing economy, with huge investable capital which is otherwise non-deployable.  I am not saying they are wrong, as they protect their interest, shouldn’t we be protecting ours?  They can operate for loss and can afford a gestation period of even 10 years or more before they break-even, now that is a good enough period to ‘wipe off’ the competition by eliminating all the marginal players.  And the so called “organized retail” players will be bought off, if not washed off.

I would wish to remind what Pepsi and Coke did to our domestic beverage industry.  All the local bottle manufacturing companies were acquired by these giants, empty bottle supplies were refused to the local players, the soda bottles in circulation were bought and crushed, fridges were given free of cost to all shops and forced not to stock any local brands, a few best selling brands like gold spot, thumbs up were acquired and killed despite huge popularity and demand.  Is this is what you call as “market expertise”..? my foot, isn’t this bloody unethical crony capitalism?  Pepsi and Coke broke even after I don’t know how many years, may be it took them decades, can our players afford that..?  Take it from me, the same will happen to Indian retail & food chain if the Walmarts, Sears and Carrefours are let in. 

Yet another huge threat, the market will be flooded with cheap Chinese products as the FDI clause allows them to source 30% from anywhere in the world and need not necessarily be sourced locally, there will be no mechanism to track how much is being imported, I wouldn’t be surprised even if 70% is sourced from China, that will be a huge blow to our already struggling domestic SME’s.  The need of the hour is reforms in manufacturing sector to nurture local Entrepreneurship and SME’s, if not nurture, at least don’t kill them for heaven sake.  Again you might argue why can’t we compete with the multinational giants, remember, you must first ‘live’ in order to compete.

Many argue the point that since we have already allowed big local players like Reliance, TATA and Birla, why should we really oppose foreign players.  Read on.

The homegrown supermarket chains does not control the food distribution chain unlike the foreign giants who propose & intend to.  Moreover, Domestic retailers source domestically whereas international retailers operate on the principle of buying internationally at the cheapest cost (read china).

Traditionally self-employment has been the largest source of bread earning in this country.  Agriculture and retail are the largest job providers in India especially, rural India, has the UPA Govt proposed any credible plan for alternate source of employment for the millions self employed in Retail Industry..? Has the UPA Govt initiated manufacturing sector reforms to make sure that we remain competitive vis-à-vis China (so that the Multinational retailers may source domestically)..? once all this is said and done, we may accept 100% FDI in retail, why just 51%.

Now let us consider the economic consequences.  In India, agriculture has been operating as a perfectly competitive market.  In economics, perfect competition implies a market where there are innumerable number of buyers and sellers.  In a perfectly competitive market like that of agriculture, everyone is a price taker and no one is a price maker, which essentially means that the market decides the price of the goods produced and not any individual buyer or seller.  Say if the multinationals are allowed to take stock of our agricultural sourcing and food chain, farmers will be forced to sell their entire proceeds to the cartel formed by a handful of foreign retailers, eventually farmers will be forced to cultivate what the MNC's want them to.

After installing their godowns and cold chains, they will have absolute control over agricultural procurement & marketing, and they will no more be price takers but 'price makers'.  In a nutshell, the perfectly competitive agricultural economy will be disrupted to become an oligopolistic market, where the cartel becomes the price maker and consumers will be price takers (similar to oil marketing companies, I am quoting this example since there are a handful of companies selling oil, whereas there are large number of consumers).  The entire management of the food economy will be in the hands of a few wealthy retailers like Walmart, Sears, Carrefour.  In a country like India where we have marginal farmers and population exceeding a billion, (which is ever growing), we simply cannot afford our food economy to be managed by multinational retailers who are only concerned about 'private profits'.

What we brand as ‘unorganized retail’ contributes a mighty 40% to the services GDP which is 60% of the total GDP.  These people are community entrepreneurs who make their livelihood without any dependence / help / support from the Govt, not even Bank credit and yet contribute 40% to the services GDP!! Is it not criminal to brand them as “unorganized”. .?  I am sorry, I don’t buy that..  I know I would be alone on this, what can I expect from a society where even the word ‘Local’ is synonymous to ‘Cheap’!!

Jai hind.

Election Day

It wasn’t a usual morning, it was the Election Day in my state (Tamil Nadu), I consider it as one of the most important days in my personal calendar, of course, after all it is not every day that you get to change Governments, isn’t it.

My brother woke me at around 7 30 in the morning, our plan was to enter the polling booth as early as possible, primarily for two reasons, one, the Q would really get long as it gets late, two, it is the month of April, the Sun comes to duty as early as 9 in the morning.

I brushed my teeth and was going through The New Indian Express, the only paper that I trust. I read the express not just for news but for its views and distinguished columns in the editorial which echo’s honest opinions. I enjoyed every sip of my morning Tea, prepared with mashed ginger, fresh leaves of thulasi and cardamom, yes, I prefer making my own tea. I have always believed that I craft a unique blend which is not so easy to replicate. A cup of Tea prepared even in the finest restaurant, fails to impress me.

Are you ready? I am leaving in 5 mins, get ready if you wish to join me, warned my brother from the other end of the house, fine, I shall get ready in 10 mins, I retorted.

Mom was busy cooking, so myself and bro started off to exercise our fundamental / constitutional right. We chose to walk as we weren’t sure if we could park our vehicle near the polling booth, moreover, a walk was an obvious choice since it was so pleasant in the morning, coupled with the fact that the polling booth was pretty close from where we put up.

It was quite a shocker when I saw a long Q in the booth, we never expected such a monstrous Q as the Booth was supposed to open only by 8 and we were there by 8 15, though I was happy for the fact that people consider voting a serious business. We got to see quite a few familiar faces, shared pleasantries.

Not knowing how to kill time while in Q, my eyes spotted a beautiful girl :), she was in a parallel Q, must be around 20, she was wearing a half white salwar, her hair was wet, she must have taken head bath, she looked really fresh, her round face was so fresh so clean, I wish I too had taken bath :P.

The scene out there was so poetic and beautiful, as the Sun was yet to kick off. I could feel the morning breeze, her hair was flowing in the air like waves in the deep blue sea, she had to set them right with her fingers every now and then. Those little unconscious deeds of girls always fascinate me, it is a pleasure to watch those cute, semiconscious natural gestures of a pretty women, of course without being noticed, there is no point if the girl gets conscious, in that case you only make them uncomfortable. Unfortunately her Q happened to move fast and soon she disappeared :(.

I started observing people in the booth (its one amongst my long list of hobbies), as it helps me to come up with better write ups. There were a lot of senior citizens around, one amongst them was constantly cribbing that there was no separate Q for senior citizens, another one who stood before me responded that there is no separate Q as such. He turned back to me and said “boy, I am 90 yrs old and I don’t feel the need for a separate Q, I am hale and healthy, I could even run at this age”. I smiled at him in sheer admiration, he too smiled.

He was a tall gentleman, didn’t talk much unlike other oldies, who were either cursing the system or cribbing about the atrocities of Gen X. He was quite fair with wrinkles all around his face, he is indeed 90 yrs old. He was patiently waiting for his turn, calm and composed, I could notice him carrying 2 voter id’s and booth slips with him, must be his wife’s, I thought, but he was all alone, might be his wife would join him in the Q, I thought so.

The Q was moving slow, but steady. Me and my bro were indulged in miscellaneous discussions like the political scene in TN, whether or not the ruling DMK has any chance of coming back to power, the opposition and its alliance, fate of independent candidates, 49 O etc. The old gentleman in front of us was a silent spectator but made a few remarks here and there.

Finally, as we entered the Voting ballot, I noticed that along with the Voter id and booth slip, the old man was carrying his wife’s death certificate as well, I was puzzled. He turned to the Polling officer, handed his wife’s booth slip and said, "Sir, my wife is dead and here is her death certificate, somehow her name appears in the voters list, strike her name off and make sure that her Vote isn't misused”.

I stood amazed by the act of this old gentleman, it was my turn to cast my Vote. I am sure this would send the right message to people who consider election day as just another holiday.

Jai Hind

PM's meet with Editors - An ultimate embarrassment to the Nation

Prime Minister Manmohan Singh, in his interview with television editors, has clarified his stand on many important issues.

As any responsible citizen of this country, I too was anxious so as to what our PM has to say on the series of scams which have been making headlines.  I was happy for the fact that our PM has finally decided to break his silence once for all, but after following his interview (line by line), I wish, he remained silent.  Read on.

A quite a few questions were raised regarding the allocation of the 2G spectrum, well, quite expected, as it happens to be the biggest scam in the history of independent India.  The PM was asked “why Raja was appointed as the Telecom Minister for the 2'nd consecutive term, despite the fact that the PM himself had warned Raja in November 2007 to consider auction of the 2G spectrum, for which he didn't bother to respect”.  Extremely valid question indeed, but the PM's response was outlandish.

His response goes like this "I would like to mention that we are a coalition government.  In a coalition government, you can suggest your preferences but you have to go by what the leader of that particular coalition party ultimately insists.  And Mr. Raja was the choice of the DMK party.  I did not feel that I had the authority to object to Mr. Raja’s entry".  

The PM has made it explicit, that a coalition Govt had to run with compromises.  That essentially means, though the constitution of India says that it is the Prime Minister who decides on who gets into the Cabinet, in practice, it is the coalition party leaders who actually take the final call.  And the PM does not have the authority to intervene.  The PM has also said "Licenses was not a matter which got referred to me or to the Cabinet, that was the decision exclusively of the telecom minister Raja" and that, he absolutely had no say on that matter. WOW, I am impressed, Mr. PM.

The next question was "Would you concede the fact that there are a lot of corrupt people in your government and you are not able to act against and that led you to believe that enough is enough?"  Upon taking this question, the PM did not deny the existence of corrupt people in his government, rather he said "I think in a coalition government there is a coalition dharma and obliviously the things are not entirely the way I would like them to be" which means, the PM accepts the fact that there are a lot of corrupt, tainted people in his Govt, but he cannot do anything about it.  Well, Mr. PM, I thought that the Prime Minister of India is the Head of the Union (Federal) Government and the PM’s office holds the highest rank, thanks for having opened my eyes.  I think its high time we re-write our books on Indian Civics.

And here comes the best of it all, when asked about the revenue loss to the Govt on account of underpricing the 2G spectrum, the PM said "We subsidise the price of kerosene to an extent which is greater than many other subsidies, that imposes burden on our oil marketing companies, should we say then that because we give subsidy for kerosene sales under public distribution, that there is loss of revenue." WOW, WOW, WOW, Mr. PM, what an astounding comparison, I am dumbstruck, to be hearing those words from a Cambridge / Oxford educated, acclaimed Economist. 

Mr. Manmohan Singh, you have played a Karunanidhi by comparing the under pricing of 2G Spectrum with Govt subsidy on Fertilizer, Kerosene and Gas.  Now you are a perfect Congress politician Mr. PM.

He has categorically said that "there are serious corruption allegations, but I cannot do anything about it (as he feels he doesn’t have the authority to do so), but no matter what, I will continue as the Prime Minister.  This is the gist of the interview given by our honorable Prime Minister to the Television Editors.

Isn't it an ultimate embarrassment..??

Your thoughts and comments are invited.

Jai Hind.