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India’s Economic Growth Slows: Whys, Where-to and How-to questions

August 20, 2012 7 comments

The policy paralysis is symptomatic of a deeper mental paralysis in Indian polity. How can the system start thinking small again.

It is no longer clear who is more out of touch with the Indian Voter. |  Ajit Ninan on Aug 06, 2012, in The Times Of India Ahmedabad

It is no longer clear who is more out of touch with the Indian Voter. | Ajit Ninan on Aug 06, 2012, in The Times Of India Ahmedabad

Facts? Hard To Come By

If readers want biased reporting, are media-owners fools, to give them the ‘truth’?

Leftist readers want a leftist slant.

Now that the Left has been proved to be wrong the Right is always Right. So rightly, Right-Wing readers want ‘balanced’ coverage. Like many readers, media owners, producers and creators also have their own ‘agendas’.

Indian commentariat, within and outside India, like in global media, are afflicted by partisan logic and laziness.

Forget solutions.

Sensible analysis either by the Left or Right of the slowdown in the Indian economy has been hard to come by. Two timely analyses extracted here.

Growth in the developing world is currently running at just above 4%, about half the pace of the boom years from 2003 to 2007. But in all the ups and downs of the global economic cycle, India’s ranking among the world’s fastest growing economies has been remarkably stable since 1980. Of the 180 economies tracked by the IMF, India ranked 29th in terms of its average growth rate in the 1980s, 27th in the 1990s and 26th during the last decade.

Even during the strongest boom years from 2003 to 2007, India’s ranking was barely budged (at 24) because all emerging markets were surging, lifted by a tide of easy money. Now, as global growth slows, so does India’s, which is likely to grow at 6% this year. That would leave it right where it was in the global rankings, somewhere between 25 and 30. Just as the boom of the last decade did not deserve a Made in India label, at least so far neither does the present downturn.

India’s growth has followed a steady pattern for three decades. The economy tends to grow 1.5 to 2 percentage points faster than the global emerging market average, come what may.

via India’s breakout path: It needs to break global growth script, not slavishly follow it – Times Of India.

Here comes the nub.

With the Great Recession in full swing, across, US, EU, Japan, can the Indian economy be unaffected? Many have also rightly pointed out to a policy paralysis.

Will the Opposition collude, collaborate or confront?  |  Ajit Ninan cartoon on Aug 08 2012 from The Times Of India, Ahmedabad

Will the Opposition collude, collaborate or confront? | Ajit Ninan cartoon on Aug 08 2012 from The Times Of India, Ahmedabad

So, where is the problem?

If not a solution, the Left seems to have, for a change, at least got the diagnosis right.

But more than two years after 2ndlook pointed out the danger – and the solution.

Dark clouds are enveloping our economy threatening the livelihood of millions. The growth rate has dipped to the lowest in a decade. Inflation and price rise continues relentlessly. The index of industrial production, manufacturing in particular, has dipped to its lowest level in recent times and the Sensex has now registered a 24% fall from its highest level.

This has inevitably impacted on the growth of unemployment in the country. It’s now reported that at least 123 cotton and fibre textile mills in the organised sector have closed down resulting in the layoff of 44,681 workers. The Apparel Export Promotion Council estimates that over 45 lakh people have lost their jobs in the textile sector, the largest employer after agriculture in our country. About 65% of our textile exports are to the US and the European Union (EU). With both of them on the brink of a severe recession, the situation in India can only worsen.

Reflecting a typical ostrich mentality, the commerce ministry has announced several sops, estimated at over Rs. 1,200 crore, to promote India’s tumbling exports. While India’s exports grew by 21% in 2011-12, to touch $303.7 billion, they crashed to a mere 3.2% this year, despite the severe depreciation of the rupee. Depreciation would make our goods cheaper in foreign lands, which should normally increase their sales. This, however, is not happening because of the deepening global economic crisis and recession. Yet, UPA 2 has adopted a seven-point strategy to increase India’s exports, despite the recent sharp decline to $360 billion.

The world has seen a sharp deceleration in global trade from a 13.8% growth in 2010 to 5% in 2011 and the World Trade Organisation (WTO) forecasts a mere 3.7% in 2012. This can well lead to a slew of restrictive trade practices in many countries, in pursuit of protecting their economies, which will have an adverse impact on our exports. In this context, the Rs. 1,200 crore package to promote exports will end up helping exporters and won’t increase the volume of exports. The latter requires a growing demand for our products in foreign lands. This cannot be created by granting fiscal concessions at home. Further, export growth requires Indian manufacturing to face severe competition from countries like China and even Bangladesh (in apparel exports, which is our largest net export earner). These concessions, therefore, will only protect the profit margins of Indian exporters at the expense of a mounting fiscal deficit.

Rather than working towards reversing our economic slowdown, UPA 2 seems to be concentrating on the revival of larger profits to India Inc and international finance capital. This has found expression with the calls for GenNext reforms from the recent Congress Working Committee (CWC) meeting. The privatisation, with sizeable foreign financial participation, of pension funds is in the offing. Likewise, reforms seeking to increase foreign financial participation in the insurance sector and granting foreign banks the right to take over private Indian banks appear to be in the pipeline.

These reforms were on the agenda of the neo-liberal trajectory since 2004. However, they were prevented by the Left parties during UPA 1. This  resulted in the relative insulation of the Indian economy from the devastating impact of the global financial meltdown of 2008.  This shield, so to speak, is now sought to be ripped apart.

via It doesn’t add up – Hindustan Times.

So, is there a solution?

The  ‘Capitalist’ and the Leftist solutions outlined by the authors of the above two extracts (read complete post at source) miss out vital elements of Indian economic story.

For instance the corporate sector. Between Bombay High in 1975, when India’s liberalization made a cautious start, to now, in the middle of the Y2K generation.

Well represented by the Sensex. The 30-most actively traded stocks, with big market-capitalization, in leadership positions. Of these 30 companies, 13 companies were too small to count in 1975, or some did not even exist. Or from the Nifty-50, 25 companies did not exist or were too small to count. Some of the big groups then, like Alembic-Sarabhai, DCM, Khataus, Mafatlals, Modis, Ruias, Singhanias, Walchand are tottering with token presence – or do not even exist.

Do these behemoth give any returns?

While alive and growing, these behemoths take the most credit and capital. When down and dead they take down large amounts of capital again – from banks, share investors, tax-payer, etc.

If you look at Indian exports – SME sector is 35%-50% of exports, agriculture is 12%-20%, gem and jewellery sector is 12%-20% of exports, software is 15%-20% of exports; mining and minerals is bout 5%-10% of exports. There are cyclical variations in each segment, so these percentages cannot be simply added up. But the broad trend is that these segments, which are new or small in size, account for close to 90% of India’s exports. In turn they get less than 40% of credit from the banking industry.

In terms of employment, these sectors (including agriculture) employs (including self-employment) close to 98% of India’s working people.

So, in exports, employment, these sectors contribute the most – more than 90%. But in terms of capital allocation, these segments get less than 40%.

This is where the story gets more complex.

Powder keg India

India is sitting on boiler – waiting to blow up.

Naxalites are running amok with Big Industry wanting more and more land. Factory workers are getting mutinous – wanting the much promised employment. Agriculturalists are making lesser money – and all the post-Independence vitality of Indian agriculture is slipping. Rivers, lakes are drying up – or getting polluted, thanks to Big Industry.

(From left) RIL chairman Mukesh Ambani, former CEO of HUL M.S. Banga, Godrej & Boyce chairman Jamshyd Godrej, food processing secretary Ashok Sinha and agriculture secretary P. K. Basu in New Delhi on Friday.  |  Image courtesy - .telegraphindia.com; source - PTI

(From left) RIL chairman Mukesh Ambani, former CEO of HUL M.S. Banga, Godrej & Boyce chairman Jamshyd Godrej, food processing secretary Ashok Sinha and agriculture secretary P. K. Basu in New Delhi on Friday. | Image courtesy – .telegraphindia.com; source – PTI

And the Government keeps going back to ‘captains’ of industry. In 2010, soon after 2ndlook warned of this impending crisis, there was this very representative photograph. Mukesh Ambani, MS Banga, Jamshyd Godrej in a meeting with Central Government on how to improve agricultural productivity.

What would Ambani, Banga and Godrej tell the Government? Something that will benefit a small farmer with marginal holding of 5 acres?

Assuming no mal-intentions, there is the simple point of ignorance. Can Big Industry speak for small farmer? Why assume the opposite is true?

If the Government wants to help Big Business, will they call the small farmer?

Big is always Bad

Now our West-loving media, its West-loving readers, can only think of Big Projects, Big Ideas, Big Infrastructure.

Can they think of making 1 million night shelters in the next 24 months?

Can they think of setting up 1000 pedestrian mandis for hawkers? Can the National Highway System be put on hold – and instead can we redesign our roads to create 1 crore hawker spaces on roads?

Will the State set up 1 million waste collection units – separate for glass, metals, paper, plastics, and bio-waste.

In all these cases the State is needed because the State has become the owner of the land – and controller of land use.

Now these are very boring and unglamorous ideas. All these are also unlike to boost growth in the next 1-3 years. In fact they may damp consumption, reducing demand, and hence ‘growth’. For instance, if India were to recycle 500 gm of plastic per family each month, plastic consumption will reduce by 80% – my estimate.

But these measures will create a base for labour mobility on a scale not witnessed in India for the last 800 years at least. It will mean creation of more entrepreneurs than the rest of the world put together will create. From these crucibles of enterprise, we will see a new generation of entrepreneurs, who will rival the entrepreneurs of the Bombay High generation.

Govt. cant go for any big ticket liberalization that favours Big Industry. It has no stomach for non-conventional 'infrastructure' that will supercharge labour opportunity and productivity.  |  Ninan's World 19 Aug 2012, 1100 hrs IST; source & courtest - timesofindia.com

Govt. cant go for any big ticket liberalization that favours Big Industry. It has no stomach for non-conventional ‘infrastructure’ that will supercharge labour opportunity and productivity. | Ninan’s World 19 Aug 2012, 1100 hrs IST; source & courtest – timesofindia.com

Paralysed Polity

The polity is understandably nervous – and cannot take many more Big Industry reforms. At the same time, these small ideas have no technology zing, no spectacle. Maybe even dull. So, no one wants to even talk of these ideas. So, instead they are toying with confetti schemes. Throw 20-30 million mobile phones in public hands. Distribute cycles to the poor.

Even the dear reader and media consumers are understandably more fired up by Big Ideas – like satellites, rockets, Mars Mission, rather than night shelters.

Not irrelevant, but Indian Ayurveda expected a man to heal himself. All knowledge of herbs and medicines was pushed down to the lowest rung in the society. No nephrologists or medulla oblongata specialists. Or Messiahs and saviours and doctors.

Similarly if Indian society wants to change, we probably should be the change that we want to see!


Retail FDI – The Real Dangers

December 4, 2011 18 comments

With hands tied behind their backs, Indian retail is being asked to ‘compete’ with Big Retail. Like Subhiksha, Big Retail will fail – unless funded by RBI or US Fed.

Can an Indian bania fight against Ben Bernanke's printing press; churning out paper-dollars 24x7, for US corporations to buy the world.  |  Cartoonist - Clay Jones. Published 01/26/11 by the Fredericksburg Free-Lance Star (fredericksburg.com); source and courtesy - civilwar.org  |  Click for larger image.

Can an Indian bania fight against Ben Bernanke's printing press; churning out paper-dollars 24x7, for US corporations to buy the world. | Cartoonist - Clay Jones. Published 01/26/11 by the Fredericksburg Free-Lance Star (fredericksburg.com); source and courtesy - civilwar.org | Click for larger image.

Dominated by banias, small shopkeepers are notorious for cheating customers through adulteration and fiddled weighing scales. They are also notorious for evading sales tax and income tax. That’s why the bania is widely despised (although it is wrong to tarnish all with the same brush).

Yet we have the astonishing spectacle of several political parties and state governments supporting the crorepati bania against foreign retailers, whose alleged crime is that they will lower prices so drastically as to wipe out small shopkeepers. If indeed, foreign retailers will reduce prices dramatically–a highly exaggerated hope-this would be a fabulous blessing for the aam admi, struggling with inflation. So, politicians who oppose foreign retailers are promoting the aam bania against the aam aadmi. This is all phrased in socialist rhetoric, but amounts to backing rich traders against poor consumers. (via Swaminomics : SA Aiyar’s blog-The Times Of India).

Have no data – but will caricature

What data does Swaminathan A. Aiyer (SAA) have when he says ‘small shopkeepers are notorious for cheating customers’?

Swaminathan A. Aiyer (SAA) is actually attempting a simple colonial-socialistic demonization of the Indian entrepreneur. All but forgotten, SAA is trying to revive this propaganda image. The corner banias are usually more ethical than Big Corporations – especially looking at new, post-liberalized companies in media, power, finance, food, electronics, mining, .

Moreover, it is always easier to shift my business from an unethical bania than from the few monopolistic unethical companies in the new-era oligarchy.

Small business has disappeared from the economic landscape of the G20 countries - except India. How can the 'small' guy be allowed to survive?  |  Cartoonist - Terry Wise; source and courtesy - cartoonstock.com  |  Click for source image.

Small business has disappeared from the economic landscape of the G20 countries - except India. How can the 'small' guy be allowed to survive? | Cartoonist - Terry Wise; source and courtesy - cartoonstock.com | Click for source image.

Hoax Claims

The other claim that modern retail makes is lower prices for consumers.

But, all major existing retailers in India have not been able to lower prices to the consumers in any manner, whatsoever.

Why assume foreign companies can do it?

Foreign retail has not benefitted the consumer or the farmer in the West.

Why assume that this miracle will happen in India?

One thing that unites both the proponents of foreign investment in multi-brand retailing and their disparate opponents is the conviction that foreign capital will introduce a spectacular degree of efficiency in a largely chaotic sector. It is recognized, and has been recognized since the NDA was first excited by the idea, that bulk buying and a streamlined distribution channel will help lessen the huge ‘farm to fork’ differential. That a transformation of retail into a part of the modern, organized sector will have a multiplier effect is also not seriously disputed. (via Right & Wrong : Swapan Dasgupta’s blog-The Times Of India).

With their hands tied behind their backs, Indian retail is being asked to 'compete' with big retail. Like Subhiksha, Big Retail will fail - unless funded by RBI or US Fed.  |  Cartoonist - Clay Jones. Published by the Fredericksburg Free-Lance Star (fredericksburg.com); source and courtesy - civilwar.org  |  Click for source image.

With their hands tied behind their backs, Indian retail is being asked to 'compete' with big retail. Like Subhiksha, Big Retail will fail - unless funded by RBI or US Fed. | Cartoonist - Clay Jones. Published by the Fredericksburg Free-Lance Star (fredericksburg.com); source and courtesy - civilwar.org | Click for source image.

Foreign more problematic

Many commentators talk of how Indian business is afraid of competition. And wants protection.

The real story is that US corporations with access to endless dollars from the US Fed can easily kill Indian retailers.

And that is a real fear and a real problem.

Bad Idea

Giant Retail will wipe out 50 million entrepreneurs and convert them to obedient employees.

This basic change from an entrepreneurial India to employee-India is the dream that the Desert Bloc has – and with the help of our Desert Bloc polity, will attempt. The change from entrepreneur-to-employee is something that will help in the creation of Big Business and the Big State.

As it has happened in the West.

Worst Idea

As consumers we may get a few years of lower prices – financed by RBI /US Fed, but finally we will pay the price. We, the Indian farmers and the Indian consumers.

Make no mistake about that.

SEC to sue Goldman Sachs

April 20, 2010 1 comment

The gentle art of suing Big Guns

SEC’s decision to sue Goldman Sachs, brings to an end, a long drama.

In August and September of 2008, 2ndlook was calling for investigations into the collapse of Bear Sterns, Lehman, et al. When the Great Recession was not real – and only a fear. While Preet Bharara was busy building a flimsy case against Rajarathnam? When Bharara should have been investigating Hank Paulson, the Former Treasury Secretary, under whose watch many bankruptcies happened. Conveniently in favour of JP Morgan and Goldman Sachs. Even now, this investigation,

To say that it comes at an awfully convenient time for President Barack Obama’s Democrats is a colossal understatement.

With mid-term elections just a few months off and the U.S. Congress set to debate a massive financial regulatory reform package — one that Wall Street lobbyists and their pals in the Senate have been fighting every step of the way — the suit offers tailor-made reformist ammo for Obama & Co.

Birds of feather

Khuzami tells us that Goldman Sachs is cared. Tell that to the birds!

Khuzami tells us that Goldman Sachs is cared. Tell that to the birds!

By sending a notice to Goldman Sachs, in July 2009, SEC gave enough time to Goldman Sachs to enable them to prepare adequately for an extended court-room battle. Businessweek  writes about three issues,

Robert Khuzami, shortly after becoming the Securities and Exchange Commission’s enforcement chief last year, told Congress the agency must be willing to fight big cases to show it poses a “credible threat.”

Does Khuzami think that SEC scares Goldman Sachs? With the kind of money power that Goldman Sachs has, it can manage a battle with SEC for an entire generation. What SEC’s action will do is scare the likes of the co-accused in the Rajarathnam case. Extremely small fry. Even Rajarathnam was  not scared of SEC. Minions – that is who Khuzami is trying to scare.

European regulators are following the SEC’s case. Britain’s Financial Services Authority said today it will start a formal probe of Goldman Sachs’s London unit. BaFin, Germany’s financial-services regulator, is requesting information from the SEC about the case.

Big Business loves regulatory overload. It kills competition!

Big Business loves regulatory overload. It kills competition!

Win over voters. Avoid charges of collusion. Shake the money tree. Gordon Brown has a tough election to win. In the middle of the Great Recession, the German Government needs to show ‘resolve.’ In the meantime, AIG has also decided to try a shakedown.

The SEC’s Republican commissioners, Kathleen Casey and Troy Paredes, opposed the lawsuit against Goldman Sachs, which was approved in a 3-2 vote, two people with knowledge of the matter said yesterday.

Nobody’s ‘tellin’ but everybody knows. Big business and Big Government. That is the axis on which ‘progressive’ economies of the world are being built – and depend on. Or become a large public-sector enterprise – like Europe has become. This is the regulation gambit.

Government’s impose regulation to eliminate the small players – who cannot bear the regulatory overload and compliance costs. More regulation helps the big players – and big players have the financial and bureaucratic muscle to manage excess regulation.

The trouble with Hank

Was Hank Paulson making it easier for his ex-employer Goldman to buy up competitors? Was he helping out JP Morgan with WaMu and Bear Stearns? It was well-known that JPMorgan Chief, Jamie Dimon had long drooled over WaMu. While a lot of stressed organizations were getting support, Hank Paulson allowed Lehman to go under! JPMorgan was being blamed for Lehman collapse.

US bank JPMorgan Chase stands accused of precipitating the collapse of American investment bank Lehman Brothers by freezing Lehman assets days before it filed for bankruptcy protection, the Sunday Times reported.

After 60 Days

Was Paulson looking at his own future, while deciding on the future of Bear Stearns, Lehman Brothers, WaMu? How 60 days later, when he would need a new job! Was the collapse of Lehman, a deal for a job with Goldman – or was it JP Moran Chase? While a lot of people were getting support, Paulson allowed Lehman to go under!

I wonder why?

Transparency International does not call this corruption. But then, that is par for the course!

Been there and done that

In a democracy, people have choice!

In a democracy, people have choice!

This is very similar to Joseph Kennedy’s shorting the market before The Great Depression. It has always been a source of wonder to me how could Joseph Kennedy, a bootlegger and a friend of the mafiosi become SEC Chairman? And after that, could the Great Depression not follow?

It was always 2ndlook’s suspicion that Hank Paulson’s behaviour in the Lehman collapse is similar to Bootlegger Kennedy’s behaviour. And this now coming out all in the open!!

The biggest bankruptcy in history might have been avoided if Wall Street had been prevented from practicing one of its darkest arts.

As Lehman Brothers Holdings Inc struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of September 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30.

The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. A fail-to-deliver is a trade that doesn’t settle within three days.

“We had another word for this in Brooklyn,” said Harvey Pitt, a former SEC chairman. “The word was ‘fraud.’” (via Naked short sales hint fraud in bringing down Lehman).

Back then in 2008, first, the world was hit by Big Oil at US$150 per barrel. As though that  was not enough, came the Big Banks! After Big Oil and Big Banks, we will have the pleasure of getting the The Big Lie!

Goebbels is alive, well and kicking. All of us.

The Supply of Justice – Indira Rajaraman

The Great Brown Indian State has become a land grabber

The Great Brown Indian State has become a land grabber

The replacement of indigenous systems of justice by the colonial British system of jurisprudence radically reshaped the structure of property and other rights in the country. The implications of this implant in the legal landscape continue to be explored in a large literature by historians and economists.Painstaking surveys of the topography of the land were a necessary underpinning of the new legal system. The initial cadastral surveys performed more than one hundred years ago remain the basis for land rights to this very day. The new legal structure spawned a class of Indian lawyers who functioned as its gatekeepers for a bewildered population, and earned fabulous wealth by so doing. Ironically, some members of this class, Motilal Nehru prominent among them, ploughed their wealth into the movement for the eviction of the colonial government, the very means of their enrichment. (via Indira Rajaraman: The Supply of Justice).

The indigenous system

Going by official accounts and history, India did not have any system of justice before the Colonial Raj. The modern Indian State has eagerly embraced the Desert Bloc system of justice, law and legality. Indian people and Indic systems have been neglected and excluded by the Indian State. The Indian State is becoming a captive of Big Business and the Big State – and to keep Indians quiet, it is throwing crumbs and bones (like NREGA) at us.

It is good that parts of the ‘establishment’ do remember that there existed an indigenous system of justice, law and legality – which pre-dated the colonial system. It is a radically different system.

The Great Indian Land Grab continues

The Indian State must this temptation!

The Indian State must resist this temptation!

The Indian peasant was the first and the only peasant in the world to own his property – till ‘Desert Bloc’ rulers started a 800 year trend of ‘landgrab’. Yes. India does need to re-visit ‘general governance’! We need traditional governance – and not the ‘modern’ colonial baggage, that India has not discarded. We need to give back the lands that were grabbed from the poor Indian peasant and the poor Indian tribal.

And it would serve India very well.

Is India becoming an oligarchy

August 16, 2009 5 comments

How Big Business and Big Government combine against the aam aadmi, the common man.

Organized crime

Organized crime

analysing a set of figures: the number of billionaires per trillion dollars of GDP for the major countries of the world. Heading the list is Russia with 87 billionaires for its $1.3 trillion of GDP. Coming second is India which has 55 billionaires for the $1.1 trillion of GDP that it generates. Why should this be worrying at all? After all, we did have a booming economy in the last few years. But some perspective would help to see this in the global context. Brazil, which is often cited as an example of very high income inequality, has only 18 billionaires despite a greater GDP than India, while Germany, boasting three times India’s GDP and a per capita income that is 40 times India’s, has just about the same number of billionaires.

For Rajan, who headed a committee on financial sector reforms in India, the numbers are alarming: “Too many people have gotten too rich based on their proximity to the government. If Russia is an oligarchy, how long can we resist calling India one?” It is his contention that reforms have created new sources of rents for the establishment, specially from the allocation of scarce national resources. This means that barring a few exceptions most of India’s billionaires have been created through sweet deals in land, mining, coal, oil and gas. (via Latha Jishnu: It’s a stink and a powerful one).

With concentration in power comes lack of responsiveness! |  Image Source & courtesy - Times Of India, cartoon by Ajit Ninan on 27 Dec 2009  |  Click for image.

With concentration in power comes lack of responsiveness! | Image Source & courtesy – Times Of India, cartoon by Ajit Ninan on 27 Dec 2009 | Click for image.

Concentration Of Power

How does one measure concentration of power.

Today the most popular method is the Fortune /Forbes /Businessweek  /FT 500 listing of Top corporates. These listings demonstrate that half the world’s economic output is controlled by about 25,000 individuals. Add another 25,000 politicians and bureaucrats. We have about 50,000 people managing the lives of 5 billion people.

Read this with the faceless corporate entity aspect, hiding behind legal facades, banks of call centers and telephone operators, off-shore locations – and the opacity becomes more worrisome.

What is happening in India

Out of the 30 current Sensex stocks, which make up the Indian Benchmark Index, 15 started off as SME (small and medium enterprises) 25-50 years ago. These organizations today are lobbying (successfully) to ensure that other SMEs do not challenge and compete with these large corporations. Indian policy makers, apparently, cannot learn from successes.

Democracy is a tool that finally lays blame for the crimes of the polity at the feet of the victim | Ajit Ninan cartoon | 2009 Apr 28 The Times Of India Bangalore | Click for image.

Democracy is a tool that finally lays blame for the crimes of the polity at the feet of the victim | Ajit Ninan cartoon | 2009 Apr 28 The Times Of India Bangalore | Click for image.

And what you think is a right move …

On the other hand, limited liability companies have created a huge debt mountains. What about expanding liability, instead of limited liability. While LLCs can have limited outward liability, they can create unlimited inward liabilities – in the way of debt, bonds, debentures, notes, paper, et al.

These two elements, limited liability and a separate legal entity, have made these Frankensteins different from any previous association of businessmen. The legal structure of corporations allow actual owners to hide behind a legal façade, without liability. These corporations have access to large amounts of fiat currency. Old debts are repaid by taking new debts. Competition is killed by raising entry barriers – which is again done by accessing huge amounts of debt. Some of this borrowings are irredeemable – and called equity.

Limited liability of the shareholders has meant that various stakeholders usually have little or no recourse – when things don’t pan out. Some stakeholders (usually shareholders and management) have access only to an upside, other stake holders, actually, finally take the risk. Such companies resist any attempt at accountability.

It is this ability to evade ethical practices and issues that differentiates these corporations from other business enterprises. From the massacre of millions of Indians during the 1857 War (by the East India Company), the many regime changes that corporations have pushed, the record of these organizations has been far from average.

`A collusive polity, allied with State-funded media and academia, combine against the common man, the aam aadmi.  |  Cartoon by Ajit Ninan; source - Times of India; on 10 Apr 2009  |  Click for image.

A collusive polity, allied with State-funded media and academia, combine against the common man, the aam aadmi. | Cartoon by Ajit Ninan; source – Times of India; on 10 Apr 2009 | Click for image.

You surely know this …

A favorite scam in the Indian mobile phone industry is to activate services that the customer has NOT asked for – and start charging him for it. It then becomes the customer’s responsibility to discontinue these services. If the customer does not pay the bill, his name gets reported to CIBIL, a credit bureau – which will make it difficult for the customer to access other credit services in future.

If he pays the bill , the telecom has succeeded in the scam. The effort required to discontinue these services, in many cases, is seemingly higher than the charge for these services – about Rs.20-30. (40-50 cents per month). The scam becomes outrageous when you multiply this amount with the number of subscribers – at last count nearly 40 crores (400 million).

Stop this swill

Stop this swill

The Mobile Recharge Scam

The same scam makes an appearance in mobile recharges. In most circles, especially Mumbai, customers have no way of knowing how and where their money has gone. Hiding behind walls of call centres and IVR machines, telecom companies in India are working hard at keeping customers in the dark.

In the mobile recharge system, an additional victim is the retailer. 2%-4% of pre-paid recharges never reach the consumer. The retailer refunds the money to the customer. In many cases, the reimbursement from the telecom company never reaches the retailer. What is the retailer commission for these recharge services. 2.5%-4%. What are the number of recharges which don’t reach the customer – 2%-4%.

It so turns out that the retailer ends up subsidizing the mobile phone companies by providing these services to the telecom customer. A similar story is playing out in credit card businesses, banking and unsecured loans.

Big Business and Big Government

They are both on the same side. Fighting the two Goliath is equally impossible for Desi Ram or Indy Joe. The outrage against these scams is building up – and will damage the faith that the Indian has in Indian business.

A word of advice

They are working hard to lose the trust that the average Indian has for Indian corporates. Stop all these wasteful CSR swill and propaganda – and just get your members to work their businesses cleanly. That itself will be a big enough CSR for Indian industry.

I doubt if India and Indians need or expect more from businesses – BIG or small.

The largest employer in India is the SME sector

And the BJP does not talk about the SME at all. Just like the Congress is not bothered about them at all. Save the big industry. There is space for big industry and India needs big industry too. The big moneybags call the shots, in both the Congress and the BJP. So, any belief that any one is any different is all wrong. They are more or less of the same agenda.

Shallow thinking

Both have the same limitation in the thinking – set by the external agenda and vocabulary. The difference is language. Congress swears by India (a Latin name of Bharat) and BJP swears by Hindustan and Hindutva (a Levantine name for Bharat). Both miss out on the Bharati nature of people.

No talk of Third currency

Neither (the Congress or the BJP) has the imagination or the strategic depth to think out of the Western box. They are all trying out the same tired Western cliches of IMF and World Bank reform – which is going nowhere. It is the IMF and World Bank which keep the Third World poor and backward.

Sad.


 

Unwholesome regulations on food

Experts are, therefore, advising caution on importing US regulations wholesale. American systems warrant a closer look not merely because the FDA is set to open an open office in this country but because an agricultural partnership launched during the Bush regime is seeking to replicate American policies here through different forums. One such is the Indo-US Knowledge Initiative on Agriculture (KIA), which has just completed its first three-year phase. Kavitha Kuruganti, convener of the Coalition for a GM-Free India, finds that the KIA is focused not so much on technology transfer as on changes in India’s regulatory regime With US multinationals such as Monsanto and Archer Daniels Midland Co on the KIA board, it is only to be expected that the companies will “drive as many changes as possible to suit their business interests”, she claims.

There is a strong body of opinion which says the KIA should be put under parliamentary scrutiny so that a proper assessment can be made of its contribution to Indian agriculture, specially to the small farmer. But this is an issue that could easily turn into an ideological debate and deflect attention from the key concerns on regulation.

One worrying issue is whether revolving doors are opening up here, too. Making a presentation at a recent Delhi briefing of the International Service for the Acquisition of Agri-biotech Applications (ISAAA) along with its founder Clive James, was C D Mayee, one of India’s top agriculture scientists. Mayee is a director of the ISAAA, which describes itself as a not-for-profit organisation that “delivers the benefits of agricultural biotechnology to resource-poor farmers in developing countries.” However, among the 21 donors to ISAAA are a clutch of biotech seed companies which are seeking to expand their markets. These include Monsanto and Indian companies which come to the GEAC for approvals. Mayee is also co-chair of the regulatory body. Not a few believe there is a patent conflict of interest here. (via Latha Jishnu: Unwholesome regulations on food).

Red flag

Latha Jishnu makes some very valid points – and flags issues that should concern all of us. A number of these issues will fly low, below the radar – and a combination of an outdated bureaucracy plus Big Business lobbying will see most of the agenda finally seeing the light of day!

Media, commentators, academia, analysts are busy with political parties and personalities. The shaping of the national agenda, is ignored – and left to chance and random outcomes.

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