Thursday, December 25, 2008

Did you say anti-incumbency?

What is touted as the wisdom of the age can often turn out to be a myth at best; and self delusional analysis at best. One such 'carved in stone' wisdom is about the behaviour of the voter during elections. Virtually every political pundit in India has been ramming home the message that anti-incumbency is the single biggest factor behind electoral outcomes. There are many highly respected analysts who contend that about 80% of the governments in India are voted out because of anti-incumbency. I wondered about the so called power of anti-incumbency when Digvijay Singh won a second consecutive term way back in 1998. And of course, the communists in West Bengal had made a mockery of anti-incumbency as a factor; they have been ruling the state continuously for more than 30 years. But it is the latest round of assembly elections that makes me think that anti-incumbency is a grossly over rated factor. Out of the five states that went to polls, three saw incumbent governments winning thumping majorities.

Virtually all media and political pundits said the following things in the run up to the election: Sheila Dixit will be turfed out by voters angry with inflation, demolitions and terror; that Raman Singh in Chhattisgarh and Shivraj Singh Chauhan in Madhya Pradesh will lose badly and the Congress will storm back to power. We all know exactly the opposite has happened. Even in Rajasthan, the Congress failed to win a simple majority despite many RSS and BJP worthies working directly against Vasundhara Raje Scindia. And please remember, the BJP in Rajasthan won 78 out of the 183 seats it contested. Add the BJP rebels who won and the percentage of contested seats won by both the BJP and Congress is the same-about 48%. It is only in Mizoram that the Congress has stormed back to power on an anti-incumbency wave.

So where is this anti-incumbency wave and sentiment that routinely throws out about 80% of governments? Look at the last assembly elections in Assam; the Congress won despite the so called anti-incumbency. Look at Maharashtra; the same Congress-NCP post poll combination came back to power despite the best efforts of the BJP-Shiv Sena alliance. Look at Orissa. Naveen Patnaik stormed back to power in what could be a pro-incumbency verdict. Look at Karnataka. The BJP was an alliance partner in the previous government. Yet, it suffered no-anti-incumbency when it won a majority in the last assembly elections. The last time we saw a tidal wave of anti-incumbency in a major state was in 2003 when incumbent Congress governments in Rajasthan, Chhattisgarh and Madhya Pradesh lost badly. You could say Lalu Yadav and Rabri were victims of anti-incumbency during the last assembly elections. But that was after together lording it over Bihar for 16 long years! Unlike other pundits, I really can''t lay claim to any powerful new insights. But one thing I can say for sure is: please let us stop this humbug about the power of anti-incumbency and start looking at a possible new trend that could be called pro-incumbency!


Thursday, December 11, 2008

In Defence of Capitalism

Many of you might think I have gone bonkers for defending Capitalism at a time when financial cataclysm is creating mayhem across the world. After all, America symbolised Capitalism and it does appear as if Uncle Sam is being destroyed by Capitalism. You could say that it is de facto 'nationalisation' – the ultimate symbol of socialism – that is saving America from financial destruction and ruin. There is no doubt that without the Federal Reserve and the Treasury Department – both arms of the US government – the American economy would have collapsed by now. The titans of Capitalism – General Motors, Ford, AIG, Citi... – have gone to the American government with a begging bowl, pleading to be saved from the very beasts of Capitalism that they used to flaunt so proudly till recently. For all practical purposes, America has turned decisively socialist. Similar things are happening in Europe, Japan and other so called citadels of Capitalism. With all this as the factual backdrop, how can I claim that Capitalism is still the best option for economic growth, poverty reduction and overall prosperity? How can I make such a seemingly foolhardy statement when even drum beaters of Capitalism like Alan Greenspan are suffering from a spasmodic bout of Mea Culpa?

The answer is simple. In the rush to denounce 'Capitalism' and its wild excesses that have created this crisis, there is fundamental confusion over all important terms like Capitalism, Market, State and Regulation. What we have seen in America over the last two decades or so is not Capitalism in the classical sense; you could call it Crony Capitalism or 'Financialism'. American capitalism was triumphant when General Motors, General Electric, General Mills, to name just a few, were the standard bearers. America manufactured the best products, provided the best services and hence ruled the world economy. But then, it turned into 'financialism' where Wall Street rocket scientists kept creating bubbles and hoodwinking the world.

They were joined in the farce by credit rating agencies. And they deliberately fostered a lie that ''markets'' are always perfect and that the State and Regulation are relics of an old era. The problem was that vast swathes of the world bought this hideous lie. Regulation in America had become a joke over the last two decades, with the State and regulators brazenly siding with the fat cats. If regulation is absent or biased, then Capitalism loses its core essence. Imagine a game of cricket between India and Australia where Andrew Symonds is the Umpire. Something similar happened in America. And we are all paying the price. But please, do not denounce Capitalism and the market as the twin evils. They are far from perfect; but they still deliver the best results and will continue to deliver the best results as long as the players in the game of Capitalism are supervised by an unbiased referee who blows the whistle when there is a foul. What happened in America was a football match without a referee. Capitalism, like Cricket and Football, is a beautiful and sublime game. Do you blame football if the referee turns out to be blind and prejudiced? Will you blame Capitalism?


Thursday, November 27, 2008

India Inc. badly needs a Ganguly

For cricket fans celebrating India's triumph over Australia, the last ten years have been truly memorable ones. Ten years ago, Indian cricket was almost down for the count. Match fixing allegations were destroying the faith of fans. India travelled to Australia and was humiliated 3-0 in the test series. Back at home in early 2000, it lost badly to South Africa. Crisis was an understatement and disaster had become the ruling word. Even the great Sachin Tendulkar appeared dejected and gave up the captaincy. That was when Saurav Chandidas Ganguly took over as the captain of the Indian cricket team. Even die hard fans were not very optimistic; sure Ganguly was the God of the offside, but the Indian team had degenerated into a bunch of hopeless losers. And arguably the best team ever led by Steve Waugh was coming to India to conquer the 'final frontier'. That was the series when India discovered what a gutsy and determined leader Ganguly could be. That was also the series (Who can forget the knock of 281 by V.V.S. Laxman?) when the Indian team started believing in itself. That was also when India started playing as a 'team'. Even the most cynical Indian will salute Ganguly not just for his leadership skills, but also for the manner in which he transformed India from a bunch of whiners and losers to a confident, in your face and aggressive team that was ready to take on the world.

Fans will also know that the rise and rise of the Indian cricket team coincides with the rise and rise of India. For much of 1990s, analysts wrote off Indian companies. For most of 1990s, India Inc. went through a painful and wrenching phase of restructuring and transition. But as the 21st century dawned, a series of entrepreneurs started successfully taking on the world and global competition and winning quite a few battles; just as the Indian cricket team did under Ganguly. The dream run accelerated with Indian companies taking over foreign ones in rapid succession. There were occasional hiccups no doubt as some Indian companies stumbled; just as the Indian cricket team stumbled now and then. But there was little doubt that both the Indian cricket team and India Inc. had emerged as potential world beaters.

In Nagpur, the Indian cricket team continued the journey towards becoming world champions. But the same can no longer be said of India Inc. In the last few months, the global financial meltdown has hurt the Indian economy very badly. The bad news has gone way beyond Dalal Street to shop floors and boardrooms and investments are being frozen & plants are being run for just a few days a week. Despite a falling Rupee, Indian exports are down and exporters have started shedding jobs by the thousands. Both the Prime Minister Manmohan Singh and Finance Minister P. Chidambaram offer platitudes that no one is buying anymore. Without a shadow of doubt, the Indian economy and India Inc. are facing a full blown crisis that could well destroy not just the growth story, but also millions of Indian dreams. What India Inc. needs badly at the moment is a leader like Saurav Ganguly who can transform threats into winning opportunities. Anyone for a new kind of ''Dada''-giri?


Thursday, November 13, 2008

This is Called Collusion, Period

It was quite an interesting sight: the flamboyant and now a tad corpulent Vijay Mallya hugging the reticent and a tad hesitant Naresh Goyal even as camera bulbs kept flashing. In an astounding accomplishment, bitter rivals Jet Airways and Kingfisher Airlines had formed a strategic alliance. And for a while, it appeared as if the alliance had all the blessings of the Union Minister for Civil Aviation Praful Patel. Both gentlemen called it the need of the hour and together raised a chorus to get more benefits and doles from the State because the aviation sector is bleeding. Both blamed rising fuel costs as the principal factor behind the huge losses being generated by commercial carriers in the country.

But the fact of the matter is very simple: the two have willingly and openly formed a cartel with the tacit blessing of the government. It is now difficult to fly Kingfisher or Jet from Delhi to Mumbai without paying at least Rs.7,000 for a one way fare. I suspect that if airlines like GO, Spicejet and Indigo are compelled to fade from the scene, a one way ticket between Delhi and Bombay will cross Rs.10,000. Any which way that you look at this, the consumer will be the big loser and the notion of 'competition' will become a joke in this sector. On top of that, it would be a travesty if Jet and Kingfisher are bailed out by the government at the expense of the consumer and the tax payer. By 2006, when Mallya and Goyal were locked in mortal combat to become the aviation King of the country, both the airlines were aggressively gunning for market share. To be bigger and bigger seemed to be an obsession with both.

Please remember; by this time, the whole world knew that oil prices are rising and virtually any analyst worth her salt was forecasting higher oil and fuel prices. And yet, Naresh Goyal ended up taking over Air Sahara and Vijay Mallya effectively killed the middle class Indian dream of flying by taking over Air Deccan. Since they claim to be very successful entrepreneurs, surely they were aware of the risks they were taking in buying off low cost carriers at a time when rising oil prices were leading to questions on their viability? Surely both knew that bad times are coming, even as they splurged company money on new routes, more pilots, more crew and more of everything? They erred and as entrepreneurs, they must pay a price. After all, competition means that you lose in business if you make the wrong decisions. A bail out to both the airlines by the government will be a travesty. If at all the government does provide a bail out, it should be after the two sacrifice a bit of their equity stake in the companies.

The tragedy is, in sector after sector in India, companies are merrily forming cartels and taking the consumer for a ride. In every case, the government makes some polite and threatening noises about cartels and promptly goes back to sleep. If Indian consumers are to ever get what is their due, regulation in India will need to be made far more effective. And, the State cannot afford to hand pick personal favourites in the corporate sector. That is the worst form of crony capitalism. Surely Dr. Manmohan Singh is aware of that?


Thursday, October 16, 2008

Well, is India really all that bad?

Television debates in these turbulent times have left me completely shocked and bewildered as journalists, intellectuals and activists have fallen over backwards to condemn the Indian state, society and civilisation as fascist and intolerant. The mood of the moment seems to be: India is failing as a modern nation state and a secular democracy. The litany seems to be: there is no justice in India. Period. No justice. The most dangerous thing is that many of us are swallowing this drivel without even questioning the insidious propaganda. Has nothing positive happened that can give some hope for the future?

India has seen many riots before 2002 when Muslims and Sikhs were massacred, often with active police help. Delhi in 1984, Meerut and Bhagalpur in 1989 and Bombay in 1992-93 come to mind immediately. Justice was surely denied to the victims. And what about Gujarat in 2002 and its aftermath? The Best Bakery case was transferred out of Gujarat and the accused criminals were convicted, despite Zaheera Sheikh – the prime witness – turning hostile. This happened largely due to a proactive media and social activists. How many riot cases of the past can you think of where the accused have actually been convicted? Take another example of Gujarat. A decorated and high profile IPS officer D. G. Vanzara is behind bars for the alleged false encounter case of Sohrabuddin. That was again thanks mainly to media and activists. Take the case of Syed Geelani. Despite the best efforts of Delhi police, Geelani was released by the courts. Take the case of the horrific killing of Graham Staines and his two children in Orissa in 1999. The courts have sentenced the prime accused Dara Singh to life.

Go back to the Priyadarshani Mattoo case where the prime accused was the son of a top IPS officer. Think for a while about the brutal murder of Jessica Lal, where the prime accused was the son of a top Congress leader. You must surely still remember the murder of Nitish Katara, where the prime accused was the son of an alleged don and top politician of Western UP. In each case, the accused have been convicted, despite valid allegations from the media and activists that the prosecuting authorities were out to protect the accused. Surely nobody believes that brothers Sushil and Gopal Ansal were directly and personally responsible for the Uphaar Cinema tragedy? Yet, they have been convicted and the Supreme Court has even cancelled their bail. The super rich Sanjeev Nanda has been convicted in the notorious BMW case and strictures have been passed against lawyers.

You might say that justice has been obtained in these cases because the victims belonged to middle class urban families and they had access to the media and activists. Those who believe in ‘all is bad with India’ think that the poor and the marginalised never get justice. But what about Bhaiyyalal Bhootmange, a Dalit of Vidarbha whose family members were brutally killed by an upper caste mob in 2006? In September 2008, a court gave the death sentence to six of the accused.

Sure, there is much that is rotten in India and the system. But lets also not forget these ‘positives’. Think, read and enjoy this Double Issue!


Thursday, October 2, 2008

Is Mamata really the only spoilsport?

“If I believe that we were doing something wrong, then I will be the first one to pull out… You put a gun to my head and pull the trigger or take the gun away, I won’t move my head.”

That was Ratan Tata in 2006, daring the ‘motivated’ opponents of the Nano project to do their worst, and worse. Now you can blame Mamata Banerjee of many things; but even her most trenchant critic won’t accuse her of riding a horse towards Bombay House (the headquarters of the Tata Group) and pointing a Smith & Wesson at Ratan Tata. Then why is the Tata Group behaving so petulantly (unfortunately, blindly supported by most of the media) and threatening to pull out? If Tata Motors has not done “something wrong” ('Wrong' could be legal, ethical or moral), why has the company filed a petition in the Calcutta High Court requesting for a restraint on the State Information Commission from releasing details about the Nano car project? That’s because the more you learn about the deal between Tata Motors and the WB government, the more you wonder if J.R.D Tata would have ever pushed for such a deal.

Lest you bracket us as ‘professional protestors’, let me tell you that this magazine declared the Nano as the genuine Bharat Ratna. We still think the Nano is a paradigm changing at ‘low cost mobility’. Our problem is with how the ‘low cost’ is being achieved. The devil, as always, lies in the details.

The cash starved WB government has given a Rs.200 crore loan to Tata Motors at – yes – at 1% interest. The first instalment will be repaid in the 21st year of the project. Does a group that paid Rs 35,000 crore or so to acquire the British steel company Corus need a Rs.200 crore loan at 1% interest? Forget that. By the time the first instalment is due, Tata Motors would have earned close to Rs.2,000 crore in interest income by investing that money in a fixed deposit.

Tata Motors will pay a lease of Rs.1 crore per year on 647 odd acres of land for the first 30 years of the 90 year old lease. That is less than Rs.1,300 per acre in commercial land, less than 50 kilometres from Kolkata. Even poor middle class souls like you and me pay a lease of Rs.1,80,000 per year for a 1,000 square feet house far from the heart of the city.

The Nano project will get power at Rs.3 per KwH; the current rate in Bengal is Rs.4.15. If rates go up by more than 25 paise per Kwh in five years, the government will refund Tata Motors. You and me are already paying close to Rs.6 per unit for electricity. For every Nano sold in Bengal, the state will de facto refund the VAT and sales tax collected on each sale of Nano.

There is far, far more and we don’t even know the details of what Tata Motors has prevented us from knowing by going to the courts. I can’t but help wonder about two things. How much of the ‘low cost’ is because of media hyped innovations and how much because of the deal? Then again, who is putting a gun to whose head?


Thursday, September 18, 2008

Hysteria Over Nukes and Nano

Drama, hysteria and hype have become the staple diet in India when it comes to contentious issues. So carried are we by propaganda that mere controversies become life and death issues for the nation. Two such controversies have hogged the headlines persistently for more than a year and reveal the absurd lengths to which analysts, pundits and the media can go to put forth their point of view. One is the Indo-US Nuclear Deal and the other is the Nano project of the Tata group.

If you go by media reports, the very future of India’s energy security will be jeopardised forever if the nuclear deal doesn’t go through. There are dire warnings that Indian homes, offices and factories will remain dark and desolate without nuclear power. Similarly, if you go by media reports, a catastrophe worse than the famine of 1943 will strike Bengal if Ratan Tata gets fed up and shifts the Nano project to another one of the many states that are laying down the red carpet for him. In some media outlets, you will read alarming stories of how the plug will be pulled on Rs.800 billion worth of planned investments in Bengal if the Nano project is shifted from Singur.

It is ironical; but in both the cases, the media has officially branded as anti-national villains two sets of people and parties, both of whom predominantly belong to Bengal. In the case of the nuclear deal, the Left has been excoriated as a spoilsport that doesn’t want India to become prosperous. In the Singur case, it is Mamta Bannerjee who has been cast as a stubborn naysayer who doesn’t want Bengal to become prosperous.

Even those who make such doomsday predictions and projections privately admit that their forecasts are grossly exaggerated. Take energy security. Sure nuclear energy will be a big plus, once it is fully operational around 2020 if the deal goes through now. If basic reforms in the sector are not implemented now, power cuts will anyway cripple India long before nuclear power arrives. And who says that the deal can never ever be revived if it fails this time? Nobody seems to be talking about that. Then again, it will be good for Bengal if the Nano project is kick started at Singur. But will its relocation forever destroy Bengal as an investment destination? If the state, like India, can provide the right environment, the right infrastructure and a lucrative market, investors – both domestic and international automatically flow. And one nuclear deal and one Nano project will not permanently change that equation.

I recall two such examples of ‘life or death’ scenarios projected over controversies. The first one was when pro-American pundits insisted that India must send troops to Iraq to help Uncle Sam in 2003. There were forecasts that India will forever lose a chance to emerge as a Big Boy if the opportunity was lost. Mercifully for India, the Vajpayee government did not send any troops. Then there was the hysteria over the Enron project where pundits – like the nuclear deal – condemned India to darkness if the controversial deal was not allowed to go through. The Enron deal was allowed. And we all know what happened to India, the power sector and Enron after that!


Thursday, September 4, 2008

If numbers could win elections…

If winning elections was all about number crunching, the UPA government should have a cakewalk when Lok Sabha polls are organised in a few months time. Here is how the numbers stack up. The Sixth Pay Commission has delivered a bonanza to about six million employees (Voters) and their families. Very soon, close to 15 million state government employees will get the same bonanza. That adds up to more than 20 million ‘happy’ voting families. Assuming each family has at least two voters, Congress spin masters can conjure up scintillating visions of 40 million votes falling into their laps.

That’s just the beginning of the march towards statistical bliss. The ‘never before’ farm loan waiver bonanza is worth a staggering Rs.70,000 crore (Rs.700 billion) and it ‘statistically’ promises relief to about 50 million farmers and their families who can now stop committing suicide and start thinking of what to wear when they and their family members line up at polling booths. That works out to another magical 100 plus million votes tumbling into the outstretched ‘hand’ of the Congress.

Wait. There is a lot more. The mother of all doles – the NREGA – has been unleashed in all districts of India with a ‘statistical’ promise of providing 100 days of ‘paid’ work to all poor people in each district. This masterstroke of political posturing should persuade another 50 million starving Indians and their families to start making a beeline for polling booths come elections. For ecstatic Congressmen, that should translate into another 100 million plus votes in the bag. Then there are old allies like Lalu Yadav and new allies like Mulayam Yadav who promise to deliver their own ‘statistical’ magic. By stubbornly insisting that SIMI should not be banned and that its India loving cadres not be harassed, the Congress and the UPA spin masters can conjure up visions of yet another statistical harvest of about 70 million votes.

Lo and behold! The Congress and the UPA is poised to pull off a ‘statistical’ coup and get 300 million votes during the next Lok Sabha elections. So why is there a sinking feeling that these statistical probabilities will remain a dream for the Congress? For the simple reason that voters are tired of posturing without any substance and promises without any delivery. Most of the 20 million odd government employees will ensure that debt riddled farmers and poverty ridden Indians do not get the money and relief meant for them. And do you think the ‘babus’ will vote en masse for the Congress?

Just one example will show how this regime is all about posturing. The non-officer ranks of Indian Armed Forces wanted a ‘military’ pay of Rs.3,000 per month. They were given Rs.2,000 instead. The additional Rs.1,000 would have cost just Rs.1,000 crore more a year-a mere drop in the ocean of largesse. But then, since the Jawans cannot form unions, pressure groups and threaten the state, why care about them?


Friday, August 22, 2008

Have Hurriyat manage the Amarnath Yatra

For years, the signs of outward peace lulled policy wonks into thinking that the ‘Kashmir’ problem was de facto solved. That sense of complacency has been shattered in the last two months because of the raging fires triggered by the Amarnath Yatra controversy. For hardliners in the valley, the controversy is all about an attempt to erase the Kashmiri identity. For people protesting in Jammu, it is all about the State bowing down to a bunch of hardliners in the valley. This lethal divide is a result of decades of shortsighted policies and hypocrisy.

India has always professed to practice secularism. But the fact is that it has always pandered to religious fundamentalists; usually for political reasons. B.R Ambedkar failed miserably in efforts to conjure up a Uniform Civil Code for India. Since then, the State has continued to surrender. The nadir of this surrender and retreat policy was reached during the eighties. The Supreme Court delivered a verdict in 1986 that granted alimony to divorced Muslim women. Rajiv Gandhi was universally admired as the new hope of a new, younger and more progressive India. And yet, the Indian Parliament passed an Act that negated the SC verdict. Hindu hardliners were up in arms at this ‘appeasement’ and they too were ‘appeased’ by the government opening the locks of the Ayodhya shrine. India continues to pay a heavy price for those actions.

In 1990, the daughter of the then Union Home Minister was abducted by militants in Kashmir. The government tamely surrendered. In 1999, Pakistani terrorists hijacked an Indian Airlines flight from Kathmandu to Delhi. The government tamely surrendered. These were occasions of big surrender. The smaller ones are too numerous to recount. One recent example will suffice. Raj Thackeray and his followers continue to ‘terrorise’ north Indians with impunity. The government meekly looks on. What this does is send a powerful message – both to agitators and terrorists – that the government will surrender to hardliners; especially when they are noisy and violent enough.

The Amarnath Yatra controversy shows ominous signs of becoming yet another ‘cause’ like the Ayodhya issue. You already have ‘Hindutva’ activists spraying propaganda about how the Indian government appeases Muslims and contemptuously treats ‘Hindu’ sentiments. You already have preposterous claims being made in Kashmir that the land transfer to the Amarnath Trust is a move to settle ‘Indians’ in the valley, a la Israelis settling in Gaza.

Her husband Rajiv Gandhi lost a historic opportunity in 1986 to ‘fix’ the Hindu-Muslim problem (and let''s not delude ourselves by claiming that there is no problem). Sonia Gandhi again has a historic opportunity. Why not have temporary shelters for Hindu pilgrims in the valley and let the separatist organization Hurriyat take charge of those shelters?