Air conditioning India is a bigger issue than global warming

Heat stress is 20 times more likely to kill an Indian than a citizen of the US. This is due to the availability of stress-reducing (not to mention comfort-inducing) technologies such as air-conditioning.

In considering potential approaches to (the likelihood of ) global warming, what should someone concerned with the fate of poor Indians be asking? Create conditions where air-conditioning is widely available, or crimp power availability in the belief that you are preventing heat from getting worse than it is.

A look at this draft paper shows that fatal heat stress begins at ambient temperatures as low as 32 degrees C. Most of India experiences these temperatures for at least 6 months a year. From this perspective, one needs to examine two alternative scenarios:

Scenario ONE

We refuse to be party to climate change talks, and purposively make power availability a national agenda. Air-conditioning, vaccine refrigeration and food preservation become ubiquitous, and save millions of lives a year. In the process, the over 100 million children who (don't) study without electricity in their homes also get an opportunity to do so. As a result, we possibly contribute to global warming, which possibly leads to our need to adapt to changes in the temperature of the earth 90 years down the line.

Scenario TWO

We send ministerial parties and scores of tax-paid hangers-on to deliberations in the world's exotic conference locations. We sign documents agreeing to decelerate energy use; then, we all spend more tax-payers' money on policing each others' contribution to this grand altruistic cause of slowing global warming. The globe, meanwhile, cools or heats depending on cosmic radiation, solar activity and perhaps man-made carbon emissions. And, while we are being 'responsible' global citizens, Indians still continue to die of heat stress at a rate that is 20 times as high as Americans, children's vaccinations don't work because the cold chain snapped, and fruit and vegetable rots while (the same unvaccinated) children suffer from malnutrition.

Tough choices!

http://www.isid.ac.in/~pu/conference/dec_10_conf/Papers/RobinBurgess.pdf

The Yin and Yang of interest rates

The Indian government has managed the inflation numbers, if not inflation. This should make it somewhat easier for the RBI to take a pause in interest rate hikes. Markets are keenly watching for signals from our central bank as it goes public with its credit policy today. Out in the daily business of buying and selling bonds, RBI has been busy providing support to bond prices, by buying them up, and keeping bond yields down - the benchmark 10-year yield is being capped at 8.1%. This is the yin, or the soft, approach to banking.


From the point of view of banks, though, there is another dynamic they have to deal with, which is the depositor. Businesses are clealy hugry for cash, and credit is growing at 23% per annum. However, depositors are signalling that bank deposits are not attractive at current rates, and the deposit growth in banks is trending at less than 15%. This is a huge gap, and it cannot be made up by equity capital alone - banks will have to raise deposit rates; and then, to retain their margins, they will have to raise loan rates. This the hard, yang reality of banking in a nation where inflation is running high.

Irrespective of whether, and when, RBI raises rates, India will have to move up the interest rate curve as long as inflation is not contained. A pause in interest rate hikes by the RBi may take some pressure off banking stocks, but this should be seen as an opportunity to exit the sector before a new slide sets in.

Rajeev Chandrashekhar's business ethics

From: Amit Saigal

Date: 10 December 2010 12:51

Subject: Open Letter to Rajeev Chandreshekhar



I sent the following message out to 5000 members of the Rock Street Journal Group on facebook this morning:



Dear Mr. Chandrasekhar,

Opened the papers this morning and read about your "Open Letter to Rattan Tata", and was highly amused. One good "public" turn deserves another, so here is my "open" letter to you, you dishonest fuck.

I hope you remember floating an "internet" company during the dotcom boom of the late nineties. It was called OYEINDIA.com

Even had very nice T-shirts and everything, and lots of nice people working for it, some of whom are still friends. No doubt, you thought you you were going to make a quick few million and cash in on the internet boom. Oyeindia co-sponsored Great Indian Rock Festival in 2001 for 16 lacs. And promptly bounced cheques, and then gave me an awesome runaround for two years.

Sir, not having shagged a family member of the BPL group to inherit any business, and having worked very very hard to create Rock Street Journal, Great Indian Rock etc. This was a huge sum of money for me. Can you possibly have the decency to pay up? with interest please?

I had totally forgotten about your insignificant life, till I saw in the papers today that you are now some BJP bigwig (obviously all your business ventures have gone down the tube (BPL? anyone?), and you have found a political party to suit your personality it seems).

So please look into your murky past, before you level innuendo against someone like Rattan Tata. You dont even aspire to be in the same league as the digested meal that comes out of Rattan Tatas bottom every morning.

cheers!

amit Saigal

The Luddites will starve you

This morning, the Financial Express ran a multi-page special on "The Agri Quagmire", examining the decline of agriculture.

MS Swaminathan wrote " About the controversy concerning moratorium on the release of Bt brinjal, the present system of Genetic Engineering Approval Committee (GEAC) headed by an additional secretary, would not work. In future, we have to have recourse of biotechnology for increasing yield."

Parsing what he said, decisions on technology should not be presided over by a bureaucrat. Let alone a pseudo-politician, like Jairam Ramesh, whose 'decision' to suspend approval for Bt brinjal was a wet thumb held up to see which way the political wind was blowing.

In the same feature, YK Alagh, also an agricultural expert, wrote, "The growth rate of grains is around 2%, but non-grain crops are definitely growing faster, led by a very rapid recovery in cotton, which has been the great success story of the recent period."

The success story of cotton is, of course, the success story of Bt cotton, despite the strenuous (not to mention shrill and strident) protestations of the Luddite Lady Vandana Shiva that Bt cotton would ruin farmers. My friend Barun Mitra did us all proud by awarding her the Bullshit Award. The liberal chatterati who feel good reading about evil corporations were taken in by her. Luckily, the impecunious farmer wasn't, and today 80% of Indian cotton is grown from Bt seed.

The 'Lower Freeze'

The Nifty and Sensex have been flirting - with the 6,000 and 20,000 levels respectively.

Over the last 3 sessions, they have gradually melted away from these benchmark numbers; at these levels, Indian stocks are close to their all-time levels, so reluctance to scale new heights is understandable. The more note-worthy dynamic is the schism between leading stocks which make up the Index, and the broader universe: on the Bombay Stock Exchange yesterday, declines beat advances 2037 to 881, a factor of more than 2 is to 1. And, if my early-morning count is right, the number of stocks hitting the lower circuit-breaker was 256. This is an extremely large number.

When a stock hits a lower circuit, it makes for an interesting statistic; more importantly, it signals a certain desperation for the seller, one which gets frustrated by the unwillingness of any buyer to pick up the stock at that price. When the stock goes into lower freeze for several days, investors are unable to find an exit for several days at an end.

A recent exhibit in this category is Money Matters, the 'consultancy' firm, for want of a better word, which was at the heart of the bribes-for-loans scam. Since the scam burst on Nov 22nd, the share has hit lower freeze every single trading day, taking the price from Rs. 694 to Rs. 241 yesterday. The number of shares being traded has been negligible: yesterday, for example, only 227 shares were transacted. Compare this to the 242 thousand shares transacted when interest in the share had peaked.

A share which joined the 'lower freeze' club yesterday was U-Flex, the packaging giant promoted by Ashok Chaturvedi, who has often been in the news, not always for the most edifying reasons. From July through November, shares of U-flex and other manufacturers of polyester (PET) packaging film had surged impressively as international shortages of PET had allowed prices to rise in a fashion that was punishing to end-users. This was clearly a phenomenon that had to end, and share prices peaked on October 25. Yesterday's 20% drop for U-Flex, however, came on the news that Ashok Chaturvedi has been sentenced to 4 years in jail, along with the IAS officer Neera Yadav, who had headed NOIDA at a time when initial land allotments were being made there; allegedly, Ashok Chaturvedi had a good side business going, helping Ms. Yadav fiddle these allotments for some pocket money. Allegations had been wide-spread at the time, yet they didn't prevent Ms. Yadav becoming Chief Secretary of U.P. Now she seems headed for the lock-up, too.


These are only 2 case studies, out of 250 + stocks, but I wonder whether there is a broader pattern here and investors are sniffing out companies where things are not quite above-board. If markets can punish fraudulent promoters, justice (though partial) will be a lot more rapid than through our creaking legal system.

FX swings

As a result of my interest in bullion prices, I have carefully tracked movements in the Euro/USD rate for the last 3 years, as it is widely held to bear a correlation to gold prices. The weaker the dollar, it is generally believed, the stronger is gold.

While this has often been the case, such easy correlations are far from water-tight:
1. In November and December of 2009, the Euro strengthened marginally, but gold shot up by almost 15%.

2. From April to July of this year, 2010, gold and dollar behaved as though the textbooks had to be re-written, and gold moved in opposition to the Euro -
2.1 as the Euro weakened sharply, from 1.35 to 1.20, gold went up, from 1150 to 1250.
2.2 as the Euro reversed, back up to 1.32, gold dropped  by almost 100 dollars an ounce.

Aside from the gold-dollar link, the other major development of this year has been the increase in FX volatility. From November 2009 to June of 2010, the dollar had a clear downward trend, from 1.50 to 1.20. And though the line was not smooth, corrections in the curve never exceeded 4%.  Since then, though, the Euro-USD graph has not been able to make up its mind - Greek  debt crisis, and the dollar zooms; QE 2, and the dollar swoons. Irish bailout, and the Euro slumps again.

Between June 2010 and early December, there have been four shifts in the Euro-dollar trend line:
June to August   1.20 to 1.325
August to Sep   1.325 to 1.26
Sep to Nov        1.26 to 1.42
Nov                   1.42 to 1.30
And the latest move, in the first few days of December - 1.30 to 1.36

This volatility is pretty wild - it seems as if the markets cannot make up their mind which loser to bet against.

There seems to be only one clear winner: gold, which takes me back to where I began. Since August 2010, gold has risen 250 dollas an ounce. Gains in silver have been even more impressive.

Beware wild mood swings

The sentiment in financial markets is becoming quite bi-polar: last week we were all despairing because of the bribes-for-loans scam and the likelihood of penalties for telecom companies; this week, the bounceback has been sharp - especially yesterday - as investors celebrate good numbers for India's GDP and the HSBC manufacturing survey.




While savvy traders can make money from these swings, long-term investors need to be somewhat more detached, at best taking some profits during sharp profits, and adding well-understood scrips during falls.



From this longer-term view, it is probably relevant to note that the Nifty is up about 14% this fiscal, and sharp moves have been fairly short-lived. Economic growth has been strong, certainly much stronger than I would have predicted, but we are faced with huge constraints in physical infrastructure, as well as in the government's deficit, and the export deficit. Inflation continues to worry the RBI, and Deputy Governor Subir Gokarn was quoted this morning as saying that it is becoming structural. His institution is thus having to find a balance between providing liquidity and anchoring inflation expectations. The bias is clearly towards harder interest rates, and yesterday the 10-year bond yield closed at 8.11%, near its highest since September 2008. This is having its impact on loans for housing; with low, 'teaser' rates disappearing from the scenario, and a hardening of the Prime Lending rate by HDFC, the interest rate spectrum for housing is edging up.



On a purely technical basis, with the recovery in the indian economy well into its second 12-month period, standard comparisons that we equity analysts perform are going to be dealing with the 'base effect': coming off a low, Year-on-Year (YoY) comparisons make sales and profits look very good, but once growth has stabilised, these figures are less dramatic. The car sales for November are a case in point: after stagnating between 2008 and 2009, the growth in car sales in 2010 has been stellar thus so far; in November, though, some of the drama seems to be fading.



The Indian economy is doing well, but this is not the time for wild exuberance.

Clothes-on Line

Clothes-on-line


Linking those who can’t afford clothes with those who can.

What we’re doing…

This year, Clothes-on-line is teaming up with Manthan, a community based organisation

working in 30 villages around the Sambhar Salt Lake in Rajasthan. Building on the

informal efforts of preceding years, this year, Clothes-on-line will assist 350

families in hamlets around the Lake. These families belong to nomadic communities that

are socially and economically isolated. Most of them live in temporary shelters and have

neither land nor resources to build homes.

Their living conditions make children and elders particularly vulnerable, especially in

winter, when night temperatures often drop to freezing point.

And here’s what we want to do:

Clothes-on-line will provide quilts and

warm clothes to the elders and children

in these 350 families, in the quantities

indicated below

Razais (quilts): 600

Baby clothes (0-3):35 Girls, 49 Boys

Jackets/Sweaters for children (4-10):

87 Girls, 68 boys

Jackets/sweaters for children (11-14):

23 girls, 31 boys

Shawls & sweaters for young women

(15-20): 117

Jackets/sweaters for young men(15-20): 25

Shawls/light blankets for:108 women 126 men

Shawls/coats for men: 126

We can’t do this alone

we welcome Contributions in kind:

• Old cotton saris, dupattas, curtains, bedspreads, bedsheets, table cloths, material

that we will convert into quilt covers.

• Warm clothes in good condition: jackets, coats, sweaters

• Woolen shawls/light blankets for the elderly men and women

Monetary contributions for:

• New Quilts @ Rs325

• Filling for Quilt Covers made from Donated Materials @ Rs 150

• Baby clothes @ Rs 100 a set

• Jackets/Sweaters for young people @Rs 150

• Shawls/light blankets for adults @ Rs 150

• Cheques payable to “Foundation for Rural Recovery and Development”.

• Please do not forget to send your name, contact details and PAN number along with

your cheques.

• Please mail/courier your cheques/drop off material at:
FORRAD, Second Floor,124 – A/6
Katwaria Sarai, New Delhi - 110 016

• Call us between 10 am and 5:30 pm

Monday – Friday at 26852476

or email us at mail@forrad.org and we will

organize for the materials to be picked up.

• All monetary contributions are exempt from

Income Tax under Section 80G (5) (vi) of the

Income Tax Act

Clothes-on-line is a FORRAD initiative. A nonprofit

organisation based in Delhi, FORRAD has

been working in the field of rural development

for the past 30 years.

Protecting tigers in the 'tame'

At the St. Petersburg 'Summit' on the tiger, more of the same. Except, they now want to protect the tigers owned by private individuals. You can't make this up!
http://www.nytimes.com/2010/11/24/opinion/24wed4.html?nl=todaysheadlines&emc=a211

Currency war get Real

Brazil in ‘currency war’ alert


By Jonathan Wheatley in São Paulo and Peter Garnham in London

Published: September 27 2010 16:30



An “international currency war” has broken out, according to Guido Mantega, Brazil’s finance minister, as governments around the globe compete to lower their exchange rates to boost competitiveness.

Mr Mantega’s comments in São Paulo on Monday follow a series of recent interventions by central banks, in Japan, South Korea and Taiwan in an effort to make their currencies cheaper. China, an export powerhouse, has continued to suppress the value of the renminbi, in spite of pressure from the US to allow it to rise, while officials from countries ranging from Singapore to Colombia have issued warnings over the strength of their currencies

“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness,” Mr Mantega said. By publicly asserting the existence of a “currency war”, Mr Mantega has admitted what many policymakers have been saying in private: a rising number of countries see a weaker exchange rate as a way to lift their economies.


A weaker exchange rate makes a country’s exports cheaper, potentially boosting a key source of growth for economies battling to find growth as they emerge from the global downturn.

The proliferation of countries trying to manage their exchange rates down is also making it difficult to co-ordinate the issue in global economic forums.

South Korea, the host of the upcoming G20 meeting in November, is reluctant to highlight the issue on the gathering’s agenda, also partly out of fear of offending China, its neighbour and main trading partner.

The US dollar has fallen by about 25 per cent against the Brazilian real since the beginning of last year, making the real one of the strongest performing currencies in the world, according to Bloomberg.

In spite of Mr Mantega’s recent aggressive public statements, however, Brazil has so far held back from taking any action other than intervening in the local currency spot market.

The central bank bought as much as $1bn a day for much of the past two weeks – about 10 times its daily average in recent months – but this was largely to absorb money entering the country to take part in last week’s $67bn share issue by Petrobras, the national oil company.

“There’s a real gap between the rhetoric and the action,” said Tony Volpon, head of emerging market research for the Americas at Nomura Securities in New York.

Copyright The Financial Times Limited 2010. You may share using our article tools.

RBI to hold down interest rate on small savings.

Newspapers reported yesterday that Indian bankers are putting up a "stiff resistance" to RBI's plan to free the interest rate on savings bank accounts.

Thanks to a cosy arrangement, sponsored by the RBI, bankers are getting handsomely paid by bank account holders to keep their money for them. The current interest rate paid on savings bank accounts is 3.5%, while inflation currently runs at anywhere between 8% &10%.

The spread bankers earn from lending this money to business, home-buyers or car-purchasers is scandalous.

Obviously, bankers would like to protect this low-cost source of funds. Responding to bankers' pleas that it is "premature to deregulate the savings bank rate", the RBI has said that a working group would be set up to look into the matter of deregulation.

Kick the can down the road, and the small depositor up the ass.

European debt, currencies and gold

Blogging on ftalphaville, El-Erian echoes my take on currency intervention and gold, against the backdrop of debt concerns:

Guest post: El-Erian on an interesting week ahead

Posted by Guest writer on Sep 19 10:37.

Mohamed El-Erian, chief executive and co-chief investment officer at PIMCO, argues that this week will show Europe’s debt crisis and the global configuration of currencies returning to the fore.

________

This coming week will be an interesting one. I am not just thinking of Tuesday’s FOMC meeting in Washington that will shed light on whether the Federal Reserve revises down its economic growth projections (it should and, I suspect, will) and expands non-conventional policies (it will, but probably not at this meeting).

I am also thinking of two other issues which were left to simmer quietly over the last few months when most of the focus was on America’s “recovery summer” — or, to be more exact, the lack thereof.

The first pertains to Europe. Solvency concerns are again on the rise there.

Last week’s catalyst was Ireland where banking issues are a serious worry. But the underlying problems are deeper and more complex.

Market measures of risk for peripheral European countries (Greece, Ireland, Portugal and Spain) are at or near danger levels… despite exceptional support from the ECB, EU and IMF, and despite the implementation of adjustment measures on the part of some.

The failure to reduce risk spreads means that the public sector bailout is not working. Rather than provide assurances of better times ahead and, thus, encourage new investments, ECB/EU/IMF support funding is being used by existing investors to exit their exposures to the most vulnerable peripheral European countries.

This situation cannot be sustained forever. It undermines any chance that the most vulnerable countries (e.g., Greece) have of limiting the collapse in their GDP and maintaining social cohesion; it contaminates the balance sheet of the ECB; it exposes the revolving nature of IMF resources to considerable risk; and it raises the risk of renewed contagion.

The second issue is even more complex. It pertains to the global configuration of currencies.

Last week, Japan intervened massively to stop its currency from appreciating. It did so in a unilateral fashion and, immediately, faced criticisms from Europe and the US.

Meanwhile, in a sharply-worded testimony to Congress, Treasury Secretary Geithner provided lots of data to those that feel that the US should have already labeled China a currency manipulator. And while China has recently accelerated the rate of its managed appreciation — 1% in the last week compared to just 1.6% since the country declared great “flexibility” back in June — this is proving insufficient to counter growing currency tensions.

These latest foreign exchange developments bring to the fore an inconvenient reality. While not all industrial countries wish to make it explicit, they are happy (indeed eager) to see their currencies depreciate. They see this as helping them address the extremely difficult challenges associated with a protracted period of low growth, high unemployment, and limited policy effectiveness.

The list of industrial countries wishing to depreciate their currencies is not matched by a list of emerging economies happy to let their currencies appreciate significantly. As a result, foreign exchange tensions are mounting, and the price of gold has been driven to a new record level.

This week will shed light on whether policymakers can do anything to deal with these two issues. If they continue to stumble and hesitate, what has been simmering may well come to a full boil in the next few months.

________

Competitive Devaluation and gold

On Sep 15th., shortly after a new government was installed, Japan began buying yen massively, to protect its exporters against the unremitting strengthening of the yen. This was the first time in 6 years that the BOJ has intervened. From media accounts, it would appear that the intervention was unilateral.


“The bottom line is that it was very silly thing for Japan to do. It almost gives everyone else the right to intervene unilaterally and trigger a competitive devaluation process,” said Noriko Hama, of Japan’s Doshisha University (quoted in FT of 16th Sep.)

When I began buying gold in September of 2007, exactly 3 years ago, it was in anticipation of just such a development. There were two stages to this thought:

1. That there would be a severe financial crisis in the US, the inevitable result of too much credit, too cheap, and for far too long.

2. In trying to effect a recovery, national economic administrations would try to:

i. Create even more liquidity.

ii Export their way out of trouble. In order to this, we would see competitive devaluation of currencies.

Step 1, of course, happened a long time ago. Step 2.i, has been under way for two years now, and has restored the pre-crash situation in financial markets - high correlation between all asset classes: since June this year, equities, commodities and US Treasuries have been buoyant. Not to mention real estate in India.

Step 2.ii has been building up for a while, with the US trying to shout China into allowing the yuan to appreciate. While making the occasional token gesture on this front, China has gradually stopped using its export surplus to buy Treasury bonds - which could have driven the dollar up further. Instead, it began buying Japanese bonds. Of course, this drove the yen up, to a level which made Japanese exporters a worried lot.

But this week, dollar buying by Japan has put a whole new spin on export competitiveness. Wilful currency depreciation has begun. In itself, it is both dangerous and unpredictable, as national politics can lead to strange dynamics.

Large investors (call them speculators if you wish), can react by taking bets on government moves, which will amplify such moves. The other likely development is that many will decide that such unpredictability makes currency investments hazardous, and precious metals a lot less hazardous. This is a development which could put a strong trend line under gold and silver.

Corruption has social acceptance

This is what the recently retired CVC has to say about corruption in India:

(The full txt is here:http://www.livemint.com/2010/09/06234313/Corruption-has-social-acceptan.html

Two things bother me greatly. One is the social attitude towards corruption. In India, the most unfortunate part is that the society is no longer seriously concerned about corruption and there is social acceptance. When we were growing up I remember if somebody was corrupt, they were generally looked down upon. There was at least some social stigma attached to it. That is gone. So there is greater social acceptance. This is a kind of paradox. On one side, civil society has become more active in exposing corruption; people are filing PILs (public interest litigations) and various other ways of highlighting corruption, trying to do something about it. On the other hand, in society, there is a general acceptance of corruption. If somebody has a lot of money, he is respectable. Nobody questions by what means he has got the money. Second, the final punishment is becoming increasingly difficult. I am not saying that everything is right with CBI, but there are times they are blamed for things for which they are not responsible.

Look at an average case in the special judge’s court, which is the first court where a chargesheet of CBI is filed—(it) is taking 10 years. We got a survey done for a small pocket of CBI in one of their zones; only 4% people out of all those who were finally convicted actually went to jail. On some ground or the other they went in appeal. One appeal after another, on one ground after another. Same is happening with the departmental proceedings… they take years and hardly any punishment is given. Let me make it more mathematical for you. There would be 20% people in India even today who would be honest, regardless of the temptations, because this is how they are. They have a conscience, they would not be corrupt. There would be around 30% who would be utterly corrupt. But the rest are the people who are on the borderline.

Cops or Robbers

Delhi Traffic Police are on Facebook (as DTP).

They use the site to deliver updates on the traffic situation across the city. The most substantial traffic on the site comes from citizens' photographs of errant drivers - crashing red lights, using tinted glasses, or parked in No Parking zones.

If you upload such a photograph on to the site, DTP will issue a challan based on the evidence. A good idea, except that - as DTP point out - today, Rs. 100 is not much of a deterrent to doing exactly as you please. Higher fines had been set a couple of years ago, but the High Court knocked them down. Someone had told them that breaking the law should be cheaper than watching a movie.

I used the site to report a Hit and Run to which I was witness. In the real world, I had picked the victim off the road, and brought him to the pavement, got him water, and called 100. A patrol car arrived, and ferried him to the Trauma Center at Safdarjung Hospital; mercifully, he was not too badly hurt. On Facebook, though, my report was not acknowledged. The next morning, I posted the details again, asking to be told whether the driver had been arrested. Again, no response.

A few days later, I posted a photograph of a car parked under a No Parking sign. Boom! Within a couple of hours, there was an acknowledgement.

So, obviously, the Facebook system works. Why not for the Hit and Run? One of the bystanders at the incident said, "Police ki acchi kamaai ho jaigi - driver ko pakkad lengey - rupai mal lengey" (Pay day for the cops - they'll catch the driver and get some cash of him). If they have to be responsive to my complaint, they will have to officially prosecute the driver, rather than doing a quid pro quo with him.

Is it any consolation that he didn't get off scot free?  Not sure - by giving the cops the driver's number, I seem to have helped them make some illegal gratification.

Liberalism under threat

Ram Guha delivered the Tarkunde Memorial Lecture at IIC yesterday. He said Indian liberalism was under threat from the RIght, the Left, and the Center!

From the Right, while competitive fundamentalism characterises most religions in India today, the Hindutva Right is most threatening because of the relative size of adherents of the Hindu faith.

From the Left, the Maoist threat, while over-stated by simplistic statistics such as "220 districts are Maoist-threatened", is highly noxious, and we must never forget that these are violent, totalitarian people.

(At the launch of Sudeep Chakraverti's book, Red Sun, Dilip Simeon had made the same point - and he spoke from the experience of having joined the first wave of Naxalites, in the late 60s. He said that a conversation such as the one we were having about Maoists would not be possible in Maoist territory)

Ram Guha recalled a visit to Dantewada, along with BG Verghese, who was also in the audience, when a villager told him, the Maoists do not have the guts to come into our village without arms.

In the Center, as defined by mainstream political parties, undemocratic, family enterprises.

In Indian politics today, he said, people go either with the Right, because of paranoia or fear; with the Center, because of weariness (there is no alternative) or opportunism; or with the Left, because of upper-middle class guilt
and foolishness.

True liberals must work outside the party system, expecially in the current system.

Stopping Vedanta doesn't serve the tribal poor

http://www.business-standard.com/india/news/b-g-verghese-stop-vedanta-stop-india/406911/

Value, not Volume

Don't ever let anybody deter you from buying a share because its trading volume is restricted. Think only of under-lying value.

When I first bought into FDC, a small pharmaceutical company, at Rs. 30-odd, trading was a few thousand shares a day. Today, it traded over 2 million shares on NSE alone, closing at Rs.112.

Equity analysts tend to be full of bull

http://av.r.ftdata.co.uk/files/2010/08/20100517-overoptimistic.jpg

Chief Ministers and the PDS

http://timesofindia.indiatimes.com/india/Gegong-Apang-arrested-in-PDS-scam-case/articleshow/6425976.cms

The fate of whistle blowers

A comment on an Indian Express site:
http://expressbuzz.com/cities/chennai/tn-whistleblower-found-dead/199577.html
RTI activists are being killed all over India. All RTI activists needs to be careful as the criminals will resort to killing. Some form of anonimity needs to be adopted to protect by these RTI activists as governments are not bothered or police is of little help.This year so far some nine whistleblowers were killed . Maharashtra tops the list with four killings. Other murdered RTI activists are Amit Jethwa in Ahmedabad in July 2010. Datta Patil of Kolhapur in Maharashtra was killed on May 31, 2010, Vitthal Gite of Beed district, Maharashtra, was killed on April 21, 2010. Sola Ranga Rao of Krishna District, Andhra Pradesh, was killed on April 11,2010. Arun Sawant of Badlapur, Maharashtra, was killed on February 26, 2010. Shashidhar Mishra of Begusarai, Bihar, was killed on February 14, 2010. Vishram Laxman Dodiya of Ahmedabad, Gujarat, was killed on February 11, 2010. Satish Shetty of Pune, Maharashtra, was killed on January 13,2010.


By bharatian

Tech fixes don't fix corruption

My piece for Yahoo India, that goes up  today:

No Silver Bullets



“People starving and thirsting, grain elevators are bursting.

Oh you know it costs more to store the food than it does to give it away.”

Legendary songster Bob Dylan sang these words in 'Slow Train Coming', in 1979. Over a quarter of a century later, in 2006, Indian economist Arvind Virmani concluded pretty much the same thing in a paper he wrote for the Planning Commission*.


Though not quite as lyrical as Dylan's words, Dr. Virmani's several pages of facts, figures, and analysis allow one conclusion to ring out clearly – our current food and fertiliser subsidies are doing a horrible job of serving the poor. If we wound up these two subsidies, and gave the same amount of money away every year, it would be enough, not just to tackle their hunger, but to lift all the poor in the country above the poverty line. If we added to this governmental expenditure on welfare programs under the heads, 'Rural Development', 'Welfare of SC, ST and OBCs', and 'Social Security and Welfare', there would be as much money all over again; perhaps, Dr. Virmani suggested, this could be used to pay for the government's administration costs and system leakages.


Subsidies and welfare programs alone cost us twice as much money as required to eliminate poverty completely. And then there's NREGA. Yet, poverty persists: in writing the conclusions above, Virmani estimated that 30% of Indians lived below the poverty line. Every year, we spend twice as much money as should be required to keep all of India's poor out of poverty. Yet less than 1% actually cross this 'rekha' every year, whether through welfare measures, employment or other means of material advance. Clearly, Rajiv Gandhi was being hugely charitable to the Indian government when he famously said that 15% of the money meant for the poor reached them.


Now that the Indian government's fiscal deficit has become a matter of concern, one of the expenditure heads that is being questioned is the food subsidy. To better target the recipients of subsidised grain, government agencies have been talking about introducing smart cards, which would carry coded information about the card-holder of the card and his entitlement of subsidised grain, sugar, kerosene and other essential items. This technological fix, it is hoped, will reduce the leakage from the system.


Madhya Pradesh had run a pilot project based on a smart card concept in 2009, but found it unsuccessful. Press reports suggest that shopkeepers were reluctant to use the machines provided. Now the state intends to achieve similar objectives by linking the Unique Identification project to food coupons. This poor UID project – even before it has been birthed, it is being loaded with all manner of expectations. According to Wikipedia**, it is believed it will help address everything from rigged elections to “widespread embezzlement that affects subsidies and poverty alleviation programs such as NREGA.” Not to mention, illegal immigration and terrorist threats.

Wow, I'll have 1200 million of those please!
 
Hey, but wasn't the Right To Information Act supposed to solve the problems of embezzlement and corruption? That was UPA Mark I. The UID is UPA Mark II – new, improved, and tech-savvy.


Forget it. Technology is no cure for corruption. The Indian Railways has been there, done that. The computerised railway ticketing system was supposed to eliminate touts and black-marketing in railway travel. When seats are aplenty, the system is a treat. But at the first hint of a rush, seats disappear. During the holiday season, tat-kal tickets disappear before the first home-user can log in. But, contact a reservations clerk at the originating station, and the same ticket is produced, for a service premium over and above the 'tatkal' premium.


Technology, in other words, can be fixed. And will be, in an environment where the stakes are high, the ethical milieu supports it, and the guilty are never brought to book. Leakages are a political and cultural phenomenon, not a technological one.


In his paper, Dr. Virmani mentioned that he had proposed a smart card to streamline the PDS in 2001. At the time of his writing, no state government had taken it up, “as it had the potential of dramatically reducing leakages and administrative costs”. The under-stated implication is clear – state governments didn't want to reduce leakages and administrative costs.

You're welcome to believe that the nature of our governance has drastically changed since then. I don't.


*http://planningcommission.nic.in/reports/wrkpapers/wk_pov106.pdf


**http://en.wikipedia.org/wiki/Unique_Identification_Authority_of_India

Tops Priority for Obama

A key clarity in defining strategy is that you need to focus. Strategy is as much about what you DON"T do, as about what you do.

Somebody needs to tell that to Obama:

President Obama hard at work on his real top prioroty. 

Kudos to CBS News, of all places. They noticed that President Obama has a tendency to say everything is a top priority. And we meaneverything.

Perhaps that’s why he’s flailing and failing. No focus.

ECONOMIC RECOVERY: “Our top priority is to recover and rebuild from a recession that has touched the lives of nearly every American.” (6-15-10) Address to the Nation

JOB CREATION: “Creating jobs in the United States and ensuring a return to sustainable economic growth is the top priority for my Administration.” (3-11-10)

FREE TRADE AGREEMENTS: “…that’s something that’s going to be a top priority.” (4/27/10)

ENERGY SECURITY: “And that’s why my energy security plan has been one of the top priorities of my Administration since the day I took office.” (4/28/10)

EDUCATION REFORM: “To train our workers for the jobs of tomorrow, we’ve made education reform a top priority in this Administration.” (2/24/10)

STUDENT LOAN REFORM: “This is something that I’ve made a top priority.” (2/1/10)

EXPORTS BY SMALL BUSINESSES: “This is going to be a top priority.” (12/3/09)

HEALTH ASSISTANCE TO 9/11 FIRST RESPONDERS: “I’m not just talking the talk, we’ve been budgeting this as a top priority for this Administration.” (2/3/10)

END HOMELESSNESS AMONG VETERANS: “I’ve also directed (Veterans Affairs) Secretary Shinseki to focus on a top priority: reducing homeless among veterans.” (8/17/09)

HURRICANE PREPAREDNESS: “Our top priority is ensuring the public safety. That means appropriate sheltering in place or if necessary, getting as many people as possible out of harm’s way prior to landfall.” (5/29/09)

H1N1 FLU VACCINATIONS: “And throughout this process, my top priority has been the health and the safety of the American people.” (5/1/09)

SUPPORT FOR MILITARY FAMILIES: “These military families are heroes too. And they are a top priority of Michelle and me. And they will always have our support.” (5/30/09)

STRENTHENING TIES WITH CANADA AND MEXICO: “We’re going to make this a top priority…” (10/16/09)

CONSUMER PROTECTION: “During these challenging times, the needs of American consumers are a top priority of my Administration.” (2/11/09)

ENVIRONMENTAL PROTECTION: “So this is going to be a top priority generally improving our environmental quality.” (11/5/09)

Fact is, President Obama, if everything is a top priority, nothing is a top priority.

Perhaps you should follow one of the rare pieces of advice given by the IHTM Editor’s illustrious farmer father — “Pick one thing and do it well.”

One thing other than socializing the American economy, that is.

Source: CBS News

     

Inflation easing?

Our economics leaders keep saying inflation will fade after the monsoons. As if our price levels depend on agriculture! Only 15% of our current index is accounted for by food articles, and this will probably get revised downwards in August. Another 11.5% is accounted for food products (processed foods) but agri materials don't account for the majority of input costs here - thinking packing materials, fuel and electricity, freight, and distribution margins. Manufacturing margins have got squeezed, and firms are llooking to up prices wherever they can, so we could see these prices go up.

As to prices elsewhere in the manufacturing sector, overall numbers for Indian companies show the same tendency to margins being squeezed, so there is an upward bias in prices.

One interesting little sidelight I found when digging into data - official data  for vanaspati prices, which are the single largest sub-component of edible oils, show the level to have been stagnant for much of this year. This doesn't figure - palm oil is the single largest ingredient, and prices are up from Rs. 363 per 10 kg in April to Rs. 422 yesterday.

Aam Aadmi

Proud nations take pride in their citizens. In most international airports, deplaning nationals are directed to the first bank of immigration counters.

At Delhi's new Terminal 3, first priority goes to those passengers, presumably aged or physically challenged, requiring 'Special Handling'. Next up, First and Business Class Passengers -  fair enough, top dollar should get its recompense. Then, Foreign Nationals, followed by PIOs/OCIs (Persons of Indian Origin/Overseas Citizens of India).

 The 'aam aadmi', or Mango Man, comes last.

English and the MNCs

On Friday, I was talking with a group of young people about their job aspirations. The topic of English came up - how it becomes a differentiator in interviews. The personal interview was fine, one said, but the telephone round - very difficult. A couple of minutes later, he said - These MNCs, they should not have been allowed to come in.

"Ignore them, then" I said, "apply to the Indian companies".

"But they don't give a good package."

RBI Gov seeks supremacy

D Subbarao's speech in Hyderabad yesterday needs to be viewed against the proposal to set up the Financial Stability and Development Council (FSDC). Particularly since he didn't refer to the proposed regulator even once during his speech. What he did say, though, is that Central Banks are best positioned to ensure financial stability, and could fulfil their functions more effectively if they become the systemic regulator.

Talking about the feasibility of inflation targeting, Gov. Subbarao also referred to two impediments imposed by the government: administered interest rates, and large government borrowings.

Interestingly, just a few hours later, the Finance Minister found it necessary to praise the Governor in Parliament, "The Reserve Bank is managing in such a way that one does not elbow out the other (government borrowings and company investments)*. And that is a very skilful exercise I must appreciate the role that the RBI Governor has played in the last year - there was no mismatch in the market and there was no crowding out in the market."

Clearly the Governor is feeling miffed, the FM needs him; hence this public stroking.

However, inflation, which is the real issue, won't disappear with the FM's sweet words

Kawaria syndrome

The water-carriers, aka Kawarias, are becoming a menace. For the last 5 days, traffic along the 'Highway' from Delhi to Hardwar has been all but blocked.

This has meant, for example that the  many factories in Ghaziabad - a major industrial suburb of Delhi - have had to shut down depsatches; storing 5 days worth of inventory in the factory is not very conducive to managing your finances, leave alone your retail sales.

Now the blighters are chugging along the section of the Outer Ring Road, outside my home, with Bollywood 'religious' song blaring from speakers.

The lumpenisation of religion would not have gotten so far without the connivance of the politcal establishment - the freedom to pursue your beliefs must not be at the expense of the freedom of movement of those who pay taxes to use roads, drive cars, live in homes, or run factories along arterial roads.

Social Security Insecure

This year, US Social Security will pay out more than it takes in by way of taxes.
"The future's uncertain, and the End is always near" Doors