Desicritics Author: Wondering Man

Multiple Entrance Examinations Work As "Entry Barriers"

Wondering Man — Wed, 4 Apr 2007 04:12:45 EDT

It appears that our Honorable HRD Ministry and its even more Honorable Minister Mr. Arjun Singh are hell bent on providing justice to the real needy, poor and socio-economically marginalized sections of the society. However because all his noteworthy efforts towards OBC reservation have come to a temporary halt due to the unfavorable Supreme Court verdict passed recently, as responsible citizens we must help our Ministry to find alternate means to achieving its broader goals.

Here is a suggestion that the Ministry should look at to keep itself busy, one which should receive no confrontation from most of the students or guardians, or the broad society in general.

The daughter of one of my colleagues is in the final year of +2 this year. The board exams now being over, what awaits her now is a run of competitive exams like IIT-JEE, AIEEE, various state level JEEs, few private engineering and medical college exams, the AIIMS test, ISI ... the list can be indeed long.

The picture is no different after graduation when most young students aspire for an MBA degree. There are CAT, JMET, XAT, MAT ... no difference here either - the list is equally long.

If one wants to apply for even a few of them, it may cost one tens of thousands of rupees in terms of application fees alone. Add to that the process of application and lack of infrastructure in rural areas, one immediately understands how difficult it is for good rural students to compete with their urban counterparts. For MBA admission, there are interviews again.

Irrespective of the justifications on costs incurred by respective institutes and specific knowledge/aptitude they seek from their entrant students, when one examines how a student from rural or semi-urban place faces the economic and other burdens, one can easily concur that these separate multiple exams are nothing but an effective "entry barriers" that favor students from metros and relatively well-off families.

We know that people in Mumbai or in any major metros won't like distant relatives from rural places to come and stay with them for a few nights - because space is too precious. As most of these exams have centers in major metros/state capitals, any student from smaller towns or villages needs to take on the additional burden of travel - which adds to physical exhaustion along with the economic costs. Many even may not have relatives at these exam centers, and as most of them can't afford hotel-stay multiple times; they therefore may have to directly come to the exam centers without even having the opportunity to arrive fresh for the exams. The urban students at least don't face these additional traumas.

Irrespective of the USPs these exams offer (or as claimed by the organizers), one simply can't ignore the basic obvious monetary benefits they accrue to the different institutes. The costs are multiple for the end-consumer, the stress is multiplied to students and guardians and in the name of uniqueness, this has indeed been taken too far stressing all students in general and, particularly, economically marginalized students from remote areas.

In the name of freedom and competition, many of us mostly forget the basic infrastructure, policies, systems that the U.S. offers through standardization. Irrespective of boards or school, there is one SAT, one GRE, one GMAT. And true, in case a good student accidentally badly performs in any of these critical exams, s/he can take that again without even losing a year.

We saw some developments on this front from government in regulating and controlling number of exams - limiting to two or three for MBAs couple of years back. The proposal eventually had a natural death as there was opposition from vested bodies. One isn't ruling out possibilities of genuine oppositions; however with adequate representatives from these various institutes in an apex body like the formal Educational Testing Service (ETS) or its present form the GMAC (Graduate Management Admission Council) adopted through ACT Inc. and Pearson Vue, most of the genuine grievances against retaining only one admission test in India should get addressed.

Otherwise it's a criminal offence we are practicing by stressing all students and guardians unnecessarily, and putting an enormous economic and physical burden to students who come from rural backgrounds, who are the worst sufferers.

A true reservation was to be meant for them - wasn't it? Well, till our government works out the basis for controversial reservation, one can always expect a speedy action from our Honorable Minister and his Ministry so that these types of effective "entry barriers" that act against these bright rural students from economically poorer families are removed.

Indian First, Tamilians Second

Wondering Man — Sun, 1 Apr 2007 00:28:04 EDT

While reading reports of a recent round of four Indian fishermen being killed by the Sri Lankan forces (or at the hands of LTTE), I found that many of them state that those who lost their lives were 'Tamil fishermen'. Those reports that focused on the 'Tamil Fishermen' angle went on to explain how the ruling Tamil Nadu Government and DMK supremo, Muthavel Karunanidhi is putting necessary pressure on the Indian government to view the matter as seriously as it demands; or that the opposition is demanding similar actions citing failure of state government.

Politics has come to such a level in India that one is aghast to see that the number of MPs DMK provides to ruling Indian coalition government is the gauge of the amount of pressure that may be effective to stir our central government.

How sad! Irrespective of the number of MPs or the communities of the people concerned, the Indian government should always take up matters such as this with the utmost concern.

We Indians must see them as Indians first, Tamil or other identities next. And all of India demands that the Indian government do the needful because of such loss of Indian lives at others' hands can't be tolerated and must be stopped - whatever be the situation.

We in India don't learn. Take, for example a similar incident, though different in many aspects, of the British troops taken as hostages by the Iranian forces along the Shatt-al-Arab, where clarity on whose territory the incident happened is murkier due to historical reasons, claims and counter-claims. However, it must be noted that none of those captured were physically harmed and one can be reasonably certain that they would be freed without any physical harm sooner or later, once the egos of the two states get amply sated.

For India, this is not the first. A series of such reports hit us from Tamil Nadu alone in last couple of months. Before that there were reports of such killings of Indian nationals in the hands of Bangladesh Rifles (BDR), or others.

We in India should not at all have a posture of threatening our neighbors; rather we should seek the status of healthy neighborhood status for mutual benefits and developments. However what can't be ignored is India seldom gets that respect from its neighboring states that India deserves. The failure of it needs to be squarely shared by our own government.

We demand an absolute stop of such incidents, and a thorough accountability for this mishap that killed another four in its latest round to be established and the guilty punished - be through diplomatic means or others. They are Indians after all, and today if we don't stand united, when would we? If need be, the matter needs to be raised in UN to embarrass the guilty. Truly, this extreme possibility needs to be reserved.

We fully understand and empathize with the government of Sri Lanka and its people and broadly with all peace loving people in their effort to take on terrorism. However poor Indian fishermen can not be used as pawns in their battles.

We also demand that the Indian government and the Sri Lankan government, after bringing the guilty to book, adequately compensate those fishermen who lost their near-and-dear and earning members. And if the situation remains that fluid in the territorial waters between India and Sri Lanka in that area in the near future, the government should immediately advise fishermen not to venture out into the sea. And as that means they would lose their livelihood for those few days, the cost of that should be borne by respective governments again by paying them upfront compensations for those many days or months.

We hope we act as a nation, and stop politicians' efforts to play politics over caste, state of origin or language or by the number of MPs they offer for the central government to stay in power. One billion Indians stand firm in their commitment to Tamil fishermen today. Hope our government also does that.

Perception of 'Police' in India

Wondering Man — Sat, 17 Mar 2007 17:39:57 EDT

One wonders if a market survey were ever carried with the Indian population at large, what perception would emerge of the state-machinery called 'Police'.

One won't be surprised, if the closest single word matches with immortal Gabbar.

In any civilized society, citizens mostly would either feel more secure, or indifferent, when they meet various police personnel on duty (please don't consider exceptional police presence to tackle terrorism concerns).

In India, many liberal Indian mothers use the term police, when kids don't sleep in time, or engage in usual childish pranks replacing Gabbar that mothers in Ramgarh used in Sholay. One wonders what plants this negative stereotype in the psyche of mothers (the proposed survey can find this too), as this fear psychosis, implanted in kids at an early age, may not give a healthy impression for the kids later, and thereby for broader society.

'India poised' would love to see a day when state police in India would take various mushrooming and established news media, including the Internet to court for defamation charges for their sensational reports that tarnish their generic image, like police killing innocents, raping women, killing kids, as it's been reported lately at Nandigram.

The accusation of police taking bribes in India is almost universal. Mostly police deny such allegations, and then the media reports fade away.

One may think it's one or two exceptions, or rotten fruits; those involved may not be a truly representative sample.

In Nandigram, news reports claimed 5000 strong policemen went there on the fateful day. That's a very small sample size indeed!

One may mistakenly wonder, wasn't there a single good fruit within that small sample size to speak the truth, even now.

The West Bengal Police in 'Incredible India' can otherwise boast to have probably 1st real life perfection of any sampling exercise with 5000 samples, other alternative being worse. These many samples, selected from a population of state police for Nandigram, had apparently no sampling error, if 'Gabbar' indeed is the closest match of police perception in India.

Marketing information companies like ACNielsen, and others have some serious competition coming their way.

Cementing India with Cement Prices - The Cement Cartel At Work

Wondering Man — Thu, 15 Mar 2007 00:03:51 EDT

The issue of government intervention on cement prices is generating some heat, if mainstream media is to be followed. And why not? It deserves to, when the Government starts dictating prices without looking at input costs, demand-supply balances, etc. Moreover when market forces should ideally be dictating prices, why should the government intervene? The government should be concerned about governance and not about cement prices, however our government seems to be as confused as many of us are on what it's job should be. So they don't mind tinkering with cement prices today, oil prices tomorrow, TV content the next day, and so on and so forth.

We have been used to that. We are just left wondering what the government is incapable of doing, other than governance. Probably government can kill government and hang government for that killing and still we would be left with the same old government that's as good as we ever had.

However that's another matter altogether.

We have been talking about cement prices and the mainstream media's outcry about government intervention in determining them. No doubt a noteworthy attempt by the media, in its bold move of taking on the power of 'almighty government' and denouncing wrongful government intervention to protect free market economy.

This needs to be applauded. Yes, I would have felt the same had I not had the opportunity to look a little deeper. When one looks into it, one is forced to say that editorials or anchors of business channels cursing government on controlling cement prices are doing an excellent job in what they usually do, by scratching the surface; and they are again showing their incompetence (the other alternative being an even more dangerous one, and that is mainstream media selling out) were they to probe deeper.

While stating the aforementioned opinion, I can cite two instances of media coverage. In one case, a famous TV anchor from a business channel grills the Indian commerce minister on the correctness of the government intervention where Mr. Kamal Nath, the Commerce Minister was finally forced to hang up the telephone abruptly in what seemed like utter frustration when the anchor failed to appreciate his logic.

In the second case, I would like to analyze what India's largest-selling English daily (globally too) said in its editorial on 13th March, and then explain why they both did an excellent job on the surface, but made the usual goof-up when probed deeper. Needless to say, the stand of the government is even more inane than the media.

Let's explain the background: The principal party of the ruling coalition lost two election verdicts days before the Union Budget, most concluding that the cause was inflation. The assembly election in UP is also coming up. So the Government needed to act, and one way of doing that was by imposing lower duties for cement priced lower; and higher duties for cement priced higher; and thereby forcing the industry to lower the prices. When industry refused, the government, as usual suggested even harder 'punitive' measures, like banning exports.

The TV anchor asked valid questions on 'profit' and the Commerce Minister responded with 'profiteering' motive and thereby the minister justified Government actions. The anchor went on to extend that logic by saying, government threats of curbing exports of cement may sound a death knell for the cement industry, as it did for the Indian sugar industry a few months back, to which the commerce minister feigned ignorance. And the fight went on for some time to prove who is smarter, who is wiser, and who is more right.

As it was broadcast over a private business news channel, and all in that category have claimed to be second to none on any issues; they finally projected themselves to be the winner, fighting against government whims in protecting a sector for their legitimate rights.

It was a good show, no doubt. My congratulations to the TV anchor and the show for taking up the bold step of grilling Government officials, whom we mostly see as 'Mai Baap' in most public gatherings and show-business. But at the same time I felt let down by the lack of research (or call it homework) the TV channel did before accusing a government minister with the severe charges of killing another sector with similar actions, and thereby 'glorifying' that posture.

My insight into the sector can perhaps be explained by an experience I had when I used to interact with senior executives from most large Indian cement majors in one of my earlier corporate roles in business development. But before that, let's take the analogy with sugar sector - did Government policies 'temporarily' kill it, or global melt down in sugar prices did the trick? Well, one may argue the causality may not be simple one-to-one; but a basic research since the commodity boom-and-bust of early 2006 would show that many in commodity cycle are yet to recover their prices globally from the glut in excess supply, speculations going wrong, etc. Sugar has been one of the hardest hit agro-commodities globally.

One news item from Zimbabwe cited (15th Feb, 2007) (1) 'Sugar prices are still well below the cost of production' . An Indian editorial (2) stated on 7th March : 'It's been a bloodbath in stock exchanges round the world in the last few days. But wheat, corn, sugar and soya have little to do with US Fed, the yen or the Nikkei. So why have your commodity chips plummeted as well? The same source on 23rd January reported (3), citing J M Morgan Stanley research, 'Global prices have fallen (for sugar), and at current prices the economics of exports, though feasible, are not attractive'.

A look at the sugar price chart at the New York Board of Trade (NYBOT) shows (4) prices to have nearly halved in the last one year. And we know what even a 10-20% fall in prices can do for the commodity sector, which is a high volume, low margin area traditionally.

So, the channel was clearly wrong in blaming Government policies in killing the sugar sector. But then why did they do that? Let's look at the possible answers:

1. They are acting on behalf of sugar manufacturers (and thereby for cement manufacturers as well), who believe that although export isn't the prime remedy; when domestic supply is reduced by export opportunity; one may be able to get more prices in the domestic market than exports fetch. Is that equivalent to manipulation as thereby it takes the domestic consumer for a ride, because domestic volume is anyway much higher than possible exports? I am not sure that I can pass such a judgement. As a researcher, I would rather look at the iterative possibilities. So this possibility says our media (well, let me not generalize, that channel) has sold itself out, more so when many investors, watching that channel may be stuck with sugar stocks bought by their so-called 'experts'' recommendations at their peaks one year back.

2. The channel didn't do their homework, and it was a slip. Well, are they capable of doing their homework, and is it a genuine slip? This is hard to believe when it took merely ten minutes to do the homework with Internet (for me, and for any one with basic knowledge of commodity markets), and the channel with their infrastructure and role, should have known the reasons better. This, if true, states media firms need to do better homework before alleging a minister that his government killed a sector; and probably we see such 'slips' on most media/business coverage.

3. They are incompetent, have a 'blinkers on' attitude, and believe to see things as black and white rather than gray. They want to have their cake and eat it too! Blame it on government when things go wrong, praise the industry when things go right. Well, this can't help here; but this possibility bodes better than the first possibility. They are not SOLD yet, they are merely incompetent!

Now let's look at what our editor had to say, that too in India's (and the world's too) largest selling English daily. A more balanced view; I agree. The editorial talked about the Competition Commission, the role of the regulator, etc. However, it also said that because the market is apparently fragmented (and still prices being same everywhere, which it noted); there may not be a 'cartel', the ultimate decision of which would be taken by the Competition Commission later. Well, Dear Editor, we have perfect competition in our political system; probably more fragmented than the cement manufacturers' have. But don't you see they all are forming a cartel when it comes to 'corruption'; and money? So if competing political parties can unite on making money wrongfully; can't commercial enterprises do that? I dare not state possibility of such an evil nexus amongst mainstream media firms, lest my editor here allows me that liberty.

I agree I am changing the tone. Look at another statistic in that editorial ('Lump It') that stated Cement Manufacturers' were running at 100+% capacity, no stocks, with 115-126 MTPA domestic demand in the last two comparative fiscals. Now take a look at what the industry body (Cement Manufacturers' Association, CMA) says (5): installed capacity is 171 MT, exports being at most at 10 MT as per IBEF (6). So now it becomes less in that editorial so that they can charge by under-supply; a 'lobby' can also influence India's largest media house to distort facts on such a major figure like that of an industry capacity, demand, exports - there is a large mismatch, that too in infrastructural cement, when the website of that lobby states a different and much higher figure.

Slip? Incompetence? Sold out? God help us!

Now let me state my experience when I used to interact with few professional CEOs/senior executives of cement firms, including owner-managers. In one such meeting, as we were exchanging pleasantries; we asked how the industry was doing. This was back in 2003-04.

Those were the days when prices ruled from Rs. 100-150/bag across India, compared to present day prices of Rs. 200/bag or more, if I remember right. The gentle, taciturn, experienced CEO enlightened me on the forthcoming Competition Bill (where there exists scope of imprisonment for unfair play), how CMA and its regional bodies so far had been trying to have a production-cap so that prices can be hiked, thereby profitability can be increased in an industry with over-capacity. But the problem was one member would break that cap, expecting that small increase in supply won't harm prices and would get unnoticed; which effectively does affect as everyone starts noticing that 'small' oversupply in a controlled-market, and everyone starts following suit by noticing this 'cartel' malfunctioning. So it's same as in OPEC cartel...and that gentleman was one office bearer in CMA; so one can be sure he was speaking as an 'insider' who knows.

When we further asked what changes the Competition Bill is likely to make from earlier Monopolies Act in near future, he stated that the act can be made to wait another few months to a year. Parliament did pass that legislation, and it was waiting for President's signature to be enacted as a law. The lobby could make that signature process wait for another six months to one year. I was surprised, and stupidly asked how. The gentleman smiled at my naivete, and indicated in a soft voice that the lobby has strong influence to do so.

A lobby that can make a legislation wait for that long to get a routine signature from our President to be enacted as a law! (Note: here what I made out of the 'hint' is the 'delay' in moving the file from legislation to enactment from President's office. Personally I, and most of our generation, have a lot of respect for our President, and that's expressed in my blog as well). And what are we talking about here in reducing prices within days when there's an election round the corner? The Government needed to act, fast.

Any insider knows these to be facts, and I believe so should our senior professionals from business journalism (that's what journalism is all about, otherwise as someone told me once, I can also 'pretend' to be a journalist from my desktop, armchair in an AC room). Because it was not 'classified' information; when I came to know that; many could and many did, starting from consumers to cement industry professionals to market analysts and experts, and Competition Commission and relevant government officials. But when everyone with some influence profits from the knowledge at the cost of the common consumer with words of 'free market economy', why make it an 'open secret'?

So how can we 'Cement India' so that all of us benefit through something which is more right than what's been reported so far on government actions? Government bloody well knew about the alleged cement cartel, but when some bureaucrats in Government gain by ignoring the cartel, and then faces politician-ministers' flak for losing elections, they suddenly wake up for long-term profiteering at the cost of short-term wrongful actions. Because the government knows that they can still do something which may be wrong in black and white on the face of it, but let all the politicians and bureaucrats and industry-players still have their cake and eat it too over the longer term, once the election season is over.

Remember sometime back I wrote 'Re-engineering, not reform is what is badly needed in India'. With that re-engineering in place, government may not have to take such a step while facing an election. Our politicians would like CBI, regulators to be incompetent because it suits them in the long run; and one can't expect that they would be efficient when Government happens to be on the right foot, and inefficient when the government happens to be in the wrong, which by the way is the business-as-usual in India.

And when our mainstream media reports on this, they should report on the issue with right facts and analysis on the totality of the issue, and not by scratching the surface which they usually do. Things make better sense to media-consumers than to the common man, as it answers more questions fundamentally than leaving one with more unanswered questions with wrongful facts and analysis.

Quick references:

1. 'Zimbabweans brace themselves for drastic maize meal increases', 15th Feb, 2007

2. 'Why wheat turns to dust when shares crumble', 7th March, 2007,

3. 'Sugar cos may see margin pressure' 23rd January, 2007 and it went on to add: 'In its report on the sector, JM Morgan Stanley has said the ability of producers to export the surplus remains uncertain as low global prices make exports unattractive and catalysts for higher global prices are not obvious"

4. TFC Commodity Charts, Sugar #11 (SB, NYBOT) as on 14th March, 2007, shows prices of sugar to have tumbled from nearly 19 in March-April' 06 to the level of 9-11 since October'06. And it states on latest chart 'Conventional Interpretation: Price is below the moving average so the trend is down'. May be right or may be wrong, but that's what it states.

5. CMAIndia, Highlights of Indian Cement Industry (as on 31st March, 2006),

6. Cement data from IBEF,

The Need For Having A Government

Wondering Man — Tue, 13 Mar 2007 02:49:18 EDT

This article is in continuation of my previous article 'Billionaire India: Worse off Than Sub-Saharan Africa?' Well, while writing that article, I didn't think that it would be a series; but the responses demanded that I deserve a chance to defend what I said, and that too with evidenceS and not with perceptions. True, I could have posted another feedback on that article; but it already was heavy with meaningful long content.

Let's first agree on what the job of media and socio-economic research should be. They should report facts, and wherever they see something going wrong; alert all citizens about the potential dangers that may strike us ahead. Now researchers aren't astrologers, they can't predict future. So they either raise genuine alarms or false alarms. Most felt that my article was an unnecessary false alarm. No problem with that as long as we use healthy debate to express our views with evidences, and not with perceptions.

And let me also state that I would be the happiest Indian if my alarm turns out to be a false alarm. However, I would still prefer to raise an alarm because the facts and evidences, latest as these are, point to such a situation and the situation is indeed a grave, dangerous one. This alarm is something similar to the one of global warming, on which there were divisive opinions till a decade back. On certain grave situations, it's better to play safe and still be wrong than to be certain and pay a very hefty price in case, in remote case the concerns become true for future days.

Take another example on potential U.S. attack on Iran. Though both the U.S. government (and its ally, Britain) has time and again assured their own citizens that they don't have any plan to attack Iran; most sensible media talk about the possibility of another such disaster in case of an attack; and generate public opinion against one such attack. History is rich with facts that governments anywhere don't learn from its mistakes; and a hypothetical diplomatic solution over Iran impasse in future can't be taken against those opinions, which are up against arms against a military solution in Iran.

Rather a diplomatic solution would be their victory as they generate grim scenario that a military attack may lead to a worse than present Iraq status-quo.

So it's better to be careful and concerned than to be certain and sure. So either my article is a false alarm when there's no alarm, or there already are remote chances of fire bells ringing loud and clear, however we knowingly or unknowingly love to ignore those fire bells.

The earlier article necessarily asked three broad questions, and asked whether present policies do tackle those challenges right:

1. Acquiring land for industrialization where there can be another model where land-owners get life long rents (a sort of fixed + variable model because the land-owners are risk-averse) against selling off their lands. So land-owners maintain ownership, are financially secured (whereas upfront large money against land may not last forever because most farmers aren't equipped to manage a portfolio of investment) and industrialization also takes place. One may cry foul that then cost of industrialization goes up, whereas my limited research indicates there is no evidence to suggest that.

2. The second question that earlier article asked was how healthy and sustainable this so called 'competition' between states of Indian economy is in attracting investments. One state promises 'tax-free' zone whereas the other offers free land, the third may say that they would offer subsidized mining rights and the fourth would say they would build roads to power infrastructure to ports for that specific project. Note that the last one is indeed good because so long government didn't build roads and power infrastructure for its citizens, but now to attract investment it does so. However the question is: should we encourage selective development when an industry house demands so; or should we develop infrastructure first and then let industrialization prosper. The fine line of difference here is in one case government has its say, whereas in the second industry (and the billionaires behind that industry) has its say.

For example, Government of West Bengal gave the Singur land to the Tatas virtually free of cost to counter the excise benefit the project would have got in Uttaranchal. That means, Government, which is the custodian of common wealth, can give that to any as it feels free. Here again I am not passing any judgment on the correctness of this model; I am merely questioning the sustainability of this model, and how far can it get and where would it end.

To cite more examples, there are reports that Indian IT giants bargain from states for lands at lower than market values to set-up their offices. One may argue that the jobs they generate pay for it better in the long run. I agree with them; however my counter-argument is even without those sops, they would still need land, and that too in India itself; because of other competitive advantages India offers (low-cost employees and huge supply). So states can well stay away from offering those sops, and get little richer at the cost of the companies; and not the other way round.

There exists ample research here to suggest that in spite of higher than usual taxation compared to competing economies, investors flock to China and India because of the other competitive advantages these two nations offer. And when industry associations claim about 40% overall tax rate being higher in India, no research states how many don't pay any taxes or get subsidies in the beginning itself.

This is similar to the concept that I termed 'race to the bottom' within Indian states. The race to the bottom is a well-researched area in global economics where exporting economies deliberately try to keep their currencies low (thereby they indulge in the race to the bottom, which is evident now from China and Japan; and when large developed and developing giants indulge in that practice; think about the power that poor Bangladesh or Kenya in gaining export competitiveness. So for every winner in this race to the bottom, there would be many more losers; and the real winner is the country who is importing against credit money because finally he pays less for his imports, and thereby contains inflation.).

In the Indian scenario, our present policy asks Assam to compete with Gujarat. Well, here again one may indulge into post-mortem research and blame Assamese for their backwardness relative to the prosperity of Gujaratis; or one can get into ex-ante research and ask what can be done so that both complement each other's growth rather than they eat into each other's growth. The pie must be increased, and I admit that every unit of money if hypothetically taken away from the rich would result in few paisas in the hands of the poor. So that's a 'lose-lose' proposition. However that does not mean that Indian states indulge into a similar race to the bottom where, like Kenya or Bangladesh, Assam or Bihar has no chance of competing with a Gujarat or a Maharashtra.

One may very well stop there and state, well, let that be. Because remember that in the competitive basket, Mumbai competes with Hong Kong, Shanghai, Singapore and those places are developing fast. So Mumbai can't be burdened with underdeveloped Assam or Bihar (or even take West Bengal, I get a feeling that I am shying away from it) when the comparative race is tough with Mumbai's counter-parts.

I lived in Mumbai, and then I used to curse policy-makers in Delhi for collecting most taxes from Mumbai but investing that in infrastructure of Delhi; whereas 'Mumbaikars' lived with pathetic infrastructure.

So what I have been hinting at that obvious fact - that no easy solution exists; but that does not mean this race to the bottom is the best solution. Can we legitimately blame Assam or some other state tomorrow if many from there believe they have not benefited by being part of this vast nation, rather they have been forced to compete unevenly? Remember, that from such feelings take root of separatist movements and terrorism.

And I believe in the long run such a scenario doesn't augur well for Mumbai as well. Size can be advantage when the size does not engage in an unhealthy, unsustainable competition within parts of that size itself to benefit the very few billionaires, rather than benefiting the overall size.

3. My third question was: whether what was true for Europe and America in the beginning of the industrial revolution can be true for India in the 21st century? Few feedbacks also pointed to that; however what we must not forget is the size of the population. Europe and America, with their huge size of economies cater to a population of 300 million each; India caters to a population of 1.1 billion and organized employment is hardly 10% of the size of the overall labor market. So market forces would look at the marginal return of money from so-called 'consumerism' point; and one rupee at the hand of lower-middle class would generate more consumerism than one rupee at the hand of the poor (who would spend that one rupee on much more basic food that is not the product of any firm). So by following that 'low hanging fruit' model, India can sustain and develop a large market, hypothetically to the size of the U.S. or Europe with 300 million middle-class Indians without much purchasing power to the poor.

There was not much feedback on the first two as I read and understood the valued opinions; and I sincerely believe that when the question is pointed and clear (that's what I have attempted here); most may agree to the challenges ahead and address their opinions specific to the issues.

To further strengthen my argument, let's take a look at another important parameter. And that is (revenue earned by government / billionaires' wealth). One may well ask what senses are to be made of such a ratio. It just shows relative power of government in forming neutral policies to benefit its majority, rather than succumbing to a few in determining the 'right' set of policies. Government generates resources through taxes to fulfill the need of governance, and to provide basic amenities to citizens. When government is able to generate enough resources, it can rely on its neutral policies and invest in right infrastructures that suit the needs of majority of its citizens. And needless to say, developing economies like India need more common resources as infrastructure here is virtually incomparable to that of developed world.

The figures are ballpark figures, and may not be accurate to their decimals; however they can be broadly OK for our discussions.

Global tax revenue/global billionaires' wealth = nearly 3

U.S. tax revenue/billionaires' wealth in the U.S. = nearly 2

Japan tax revenue/billionaires' wealth in Japan = around 10

Tax revenue of our Indian Government / Indian billionaires' wealth (excluding the like of L N Mittal, as I did last time also) = 0.43

Does it say anything? I am not sure, but it says India is different. It truly is 'Incredible India', and I am not aware of any similar economy having such a pathetic ratio. The tax earned by the Government of 1.1 billion people is less than half of some 35 odd-billionaires' wealth.

What does it mean? I said I am not sure, but I try to imagine a small country of 30 million people for simplicity that makes sense for our discussions. This country needs a lot of money to invest in lot many areas, and have an annual budget of $2 billion, average per capita income being same as India at $700. And in same country, there lives a billionaire with wealth of $5 billion. As expected and familiar as we are with these incidents around us, the government takes up a lot of ambitious projects as well as wants to run existing ones better with its bureaucracy and inefficiency; but are constrained by capital everywhere. And the billionaire chips in - and says 'you allow me to manage your healthcare for little money', 'you allow me to manage primary education for little money', 'you allow me to manage your defense for little money' and the Government, without any option by its lack of resources is forced to give in.

Well, I hope all these are FALSE alarms. I still have no problem with such a potential scenario have we all had a Social Security from our Government. Unfortunately, none worthwhile exists in India. And under such a reality, I am CONCERNED.

Because I fail to understand why we at all need a government under such a scenario? Because money ultimately speaks, and when money at the hand of a mere 30-40 billionaires is much more than the resources that a government can collectively generate from 1.1 billion people and for 1.1 billion people; that government is forced to toe the line that further strengthens those hands that money power dictates.

Let it indeed be a FALSE ALARM, so that such a genuine alarm never strikes India.

Billionaire India: Worse Off Than Sub-Saharan Africa?

Wondering Man — Fri, 9 Mar 2007 09:21:27 EST

Well, India indeed happens to be a fascinating nation - the more one sees it, the more one gets mesmerized by its sheer diversity. And many of us, Indians who see India closely, wonder about the true identity of this country in the global landscape of nation-states.

For a long time, India took the center stage in something called 'Non-aligned Movement' (NAM) with many other 3rd world countries from Asia and Africa. I am not sure what has happened to NAM, because I haven't seen NAM in global media for quite some time, and the word 'alignment' also needed redefinition after the collapse of erstwhile Soviet Union. Those were the days of 'Nehruvian Socialism', 'Hindu-growth rates' and falsified idealism.

In mid-70s, there was 'Garibi hatao' (Abolish Poverty), and in 2004 it was 'Aam Aadmi' (the Common Man) campaign that the Congress, the party behind the present ruling coalition government, had in election campaigns. The result of the former, if it can be concluded after almost three decades, is for any to see when 70% of Indians live below $2 a day and more than 30% below a dollar a day.

And incredible India has again shown incredible results with the present 'Aam Aadmi' government, as India continues shining in the global billionaires list published by Forbes recently.

Japan, with its size of nominal economy more than five times that of Indian GDP, and population of less than 1/8th, has 24 billionaires (combined net wealth $64 billion) whereas India has 36 billionaires (combined net wealth of $191 billion).

Let's look at what Forbes list of billionaires means for India through some simple measures and ratios:

Billionaires' wealth in India as a % of GDP = 25% (excluding L N Mittal, this would still be closed to 22-23%); and probably the highest in the world.

Billionaires wealth in the world as a % of global GDP = 6-7%

Billionaires wealth in Japan as a % of Japan's GDP = 5%

Billionaires wealth in the U.S. as a % of U.S. GDP = around 12-13%

India's share in global GDP = 2%

Indian billionaires share in combined billionaires (globally) net wealth = 6%

India's population share globally = 17%

Per capita income in India (nominal) = $700

Per capita income (global, nominal again) = $7000

India happens to be the fourth largest (nominal) economy in Asia, and in terms of per capita income (GNI), India ranks poorer than Sub-Saharan Africa. A flow of reports lately have shown that on most of the parameters of Human Development Index, India ranks at the lowest rungs of the ladder, and much worse than nations from Sub-Saharan Africa.

So without much research, one may not be that off-the-mark in stating that the 8-10% growth that India has seen in last four years has been able to increase exponentially the net-wealth of the rich rather than the common man. Their wealth may be growing by more than 30-50% (or even higher), whereas majority of these (1.1 billion people minus this few billionaires and few more millionaires) struggle to survive.

And one wonders on the composition of our society when our GDP reaches couple of trillion dollars (nominal) over next few years with billionaires wealth hitting even higher percentage as evident from last few years.

How high can that eventually get? When can we say enough is enough?

Nothing wrong in it when one gives up the hypocrisy and says India offers the best opportunity to grow wealth fastest for the people who already have wealth. Capitalism, business, investment demands that as we understand with our common sense.

Contrary to that, our Finance Minister and our Prime Minister forces 'Aam Aadmi' Indians in the so-called 'race to the bottom' where states indulge in an endless race of tax concessions, sops to even subsidizing land. Race to the bottom have been played before globally, and proved to benefit the rich at the cost of the poor.

Our Prime Minister argues, even in today's paper, for giving even more incentives to the SEZs, as if existing rate of wealth creation isn't adequate from above facts, and he fears capital would fly elsewhere. So each nation does that, each state does it and then each nation, each state and each district sells out to the rich and the famous and don't collect enough money to invest in health, education, infrastructure.

One may be tempted to ask our Havard-educated Finance Minister and our Oxford-Cambridge-educated Prime Minister that at which point they believe that doling out more incentives to the billionaires should end - be it in the central policies or in state policies. And they should answer who bears the costs for those incentives (add with that Government inefficiencies).

Take the stock-market casino where capital gains is tax-free for long-term capital gains (and how most FIIs and so-called rich do 'manipulate' it as insiders would know); take the Singur project where the state subsidizes land acquisition for a private project with citizen's money, that too without transparency; take in our various national and state-level industrial policies which clearly show the rich always indulge in hard-negotiations with our Government to make investments by getting concessions to subsidies to run their business.

Sorry, Dr. Prime Minister, 'inclusive growth' with these policies would remain another slogan, and wishful thinking of your policy-makers. 21st century policy-making need not be copycats of earlier models and look for the panacea called 'growth' ignoring the effects of growth on society.

On the other hand, globally if there is one thing that's in excess supply it is easy money and liquidity (capital). We have seen 'yen-carry' trade in Japan, and after a small blip, the practice is likely to continue. So one can (and many did) borrow yen, as an example, invest in land in India and make billions - and Government facilitates that land-acquisition by not even paying a market price to our Indian farmers, rather forcing them to sell.

If there is anything in short-supply, it's the natural resources; and mostly land. The world knows that well, and importance of land can't be overstated for the 2nd most populous country with less than 2% of world's land. Let Government privatize its PSUs, nothing wrong in that (rather better) but don't force - I repeat don't force - someone to sell his/her own land, that too at a dictated price.

Our 'Aam Aadmi' government has produced a few more billionaires in our real estate firms at the cost of millions of farmers. Farming land can be taken for industrialization just like a building owner collects rents for his buildings. And there's been a report of a successful model like this working near Pune where land-owners become leasers and thereby partners than are forced to sell-out their lands against 'credit' money.

What's more worrying is the fact that politicians, policy-makers, mass-media all needing money again continues to ignore these glaring facts of imbalances, and play the beats that our rich loves to hear. Rapid growth anywhere leads to imbalances (Gini-coefficient, a measure of equitable growth, is more in socialist China than in Capitalist US, showing more inequality in China). Acknowledging the fact, China lately has embarked into massive equitable-program to sustain social harmony. And the world takes China seriously because it so far did what it promised; unlike Indian Government (where growth is again more external-driven, and despite our policies).

The danger India has is that its vast majority of undernourished, underfed, undereducated, underprivileged people can very well be forgotten. We know the size of any large market with Europe and the US, where 300 million people with some buying power means huge markets. Marketers, with policy-makers aid, would address these 300 million Indians than care about another 800 million Indians. And from these 300 million Indians itself, one can make enough money for enough years so that the urge to expand the market in a country like India may not be there.

It's the same 'low hanging fruit' concept that market forces have traditionally shown, and expected to show. True, eventually few from those underprivileged sections would also come to be defined as 'low hanging fruits' in marketers' eyes; but that would be a very slow natural process for a country like India.

Indian rich and middle-class comprises that low-hanging fruits; whereas rural India, tribal India, poor India lives truly in inaccessible India in its remote corners.

Incredible India already presents Manhattan to Somalia in its commercial capital Mumbai alone; one can only imagine what Incredible India would offer to its own two-classes of citizens when India indeed becomes a global 'hypothetical' superpower following same set of policies.

One can sincerely be optimistic that India won't ban its 2nd class-citizens to live in that 'hypothetical' Superpower India, because in the end, someone needs to be fooled continuously so that they vote, keep faith in democracy, and help the rich grow even richer at the cost of the poverty of the vast majority of Indians.

Pillars Of Democracy In Conflict

Wondering Man — Tue, 27 Feb 2007 16:19:27 EST

It's interesting and alarming to see a trend of growing conflicts developing between two primary pillars of democracy in two of the largest democracies of the world.

In the U.S., the Military Commissions Act 2006, that restricts the habeas corpus, the fundamental right of any human being in any civilized society, to ask for judiciary intervention when unlawfully detained by any nation state.

So suspected terrorists, foreigners for the U.S., held in already defamed camps outside the U.S. territory, but under U.S. supervision like in the Guantanamo Bay, can't appeal to any judiciary anywhere in the world as long as they are detained there. President George W. Bush, facing the flak of US Supreme Court when it rejected the Bush administration's argument denying basic human rights to these prisoners earlier, signed this controversial Military Commissions Act 2006 which has stripped the authority of Federal Judges in challenging military detention of foreigners in Guantanamo Bay.

Lately there's been a growing concern in various parts of the world on the modalities on how these prisoners are captured and brought in these detention camps. In a landmark ruling within the European Union, in Milan, Italy, 26 CIA agents have been indicted in abducting a Muslim terrorism suspect, the radical Egyptian cleric, Hassan Mustafa Osama Nasr out of Italy, as per an order on 16th February. And later on Italian Prime Minister Romano Prodi resigned on 21st February after losing confidence vote, due to foreign policy again.

The scene is not much different in the largest democracy of the world, in India where routine frequent conflicts between judiciary and the Parliament that enacts laws are coming out in open lately. Judiciary in India, while implementing the laws enacted by Parliament itself feels that lawmakers expect double standard in implementation of laws that they themselves enact, whereas the Parliament, the law making body of India feels that the Judiciary is increasingly crossing its limits and thereby stepping on the shoes of the Parliament.

The latest glaring example of this is caste based reservation in India, which most political parties in India favour because Indian voters don't cast their votes but vote their castes. Laws in few states now reserve more than 50 percent of seats for certain castes when there are other fundamental rights in Constitution that clearly state every citizen to get equal opportunity. Parliament was so long having it easy by amending a particular section of the Constitution, and now the Indian Supreme Court has stated that they would review that as well.

These cases in two of the largest democracies, one the superpower of the world and another an emerging economy with a billion plus diversified citizen base, point to the challenges faced by the nations in coping up with changing times, and still be able to protect the fundamental rights of the citizens within the democratic setup. The lawmakers in the U.S., facing unprecedented terrorism risks from various corners of the world, want to have extreme measures to protect U.S. civilians, and thereby find themselves in conflict within its own democratic institutions by violating fundamental human rights of others.

They simply ignore the drivers of the terrorism and charge suspected terrorists, and thereby continue harassing, torturing, killing terrorists and suspected terrorists without much effort to kill terrorism. And therefore the risk perception and threat that the U.S. interests continue to receive from terrorism remains, without showing any sign of subsiding in the near future. And no potential sustainable solution emerges, even in the longer term within present policy framework, which aims at killing terrorism by applying terror tactics.

Facing lopsided economic growth, Indian parliamentarians didn't learn from their policy mistakes of over half-a-century, and continue the same policies that have been there to its marginalized backward people from certain castes as if they found a panacea in reservations. And rather than learning and revisiting the policies, they find easy solutions in changing the Constitution by taking away the rights from others and reserving that to the marginalized ones, when they could have increased the size of the cake for those marginalized ones thro’ socio-economic developments..

One isn't sure whether these conflicts are more of aberrations and therefore needs to be ignored, or they increasingly become the norm than exceptions. The trend of these conflicts has been on the rise lately, and may point to the second alternative although policymakers, from the US to India, who have an aversion to change, would love to see this issue as a non issue.

Interesting thing to note here is that the Constitution and thereby the pillars of democracy in most nation states were designed when these nations were sort of "closed systems" in the form of unconnected floating isolated islands in the world. With globalization, technology, economic and market forces integration, the world has become more of a village and the nation states no longer remain as isolated floating islands in the sea. They all are rather interconnected, impact of one is felt elsewhere in another part, market forces have grown stronger than the whims of the lawmakers (and its institutions) and market forces are almost the same at all corners; whereas lawmakers could resort to different laws for different people at different corners of the world. Human rights globally should not mean two different things to two different democratic institutions; neither should equal opportunity be misinterpreted differently at different locations.

Lawmakers, shortsighted as they are, have the mentality of having the cake and eating it too. The Bush administration, to safeguard the interests of the U.S. citizens, felt compromising on human rights on others to be legitimate, US Supreme Court said no, and then came the Military Commissions Act 2006. In India, parliamentarians felt backward castes deserve better social esteem and economic opportunities, failed in creating those since long, and thereby legalized robbing those economic opportunities from other economically weaker sections with which Indian Supreme Court was not comfortable at. Judiciary, though not directly accountable to the citizens, performs more of a neutral responsibility as a critical pillar of democracy by applying any law uniformly irrespective of the background of the person.

These growing conflicts, if proven true in coming days between the lawmakers and the law implementers within democratic structures, from developing world to the superpower, don't bode well for the end customers, the citizens, of these democratic institutes. Conflicts like these rather point out that sweeping changes in the form of structural reforms are needed in many of the democratic societies as well to keep up with the sweeping changes.

Funding For Policy-Research - A Budget Wish

Wondering Man — Wed, 21 Feb 2007 15:58:15 EST

Continued from Policy-Research in India - The Need.

And during this research only, I realized that it's difficult because we don't have any definition in the first place of what is meant by 'An Internet User'. Unlike a phone subscriber or a mobile-subscriber, how do we define an Internet user? In the US (in China too, and true for most sensible countries) policy-makers have in the first place defined what an 'Internet User' means (based on minimum age, frequency of usage or last usage) years back. I haven't yet come across anything like that in India until then from Indian policy-makers, although one Indian research body has attempted that definition in its last report. So effectively it means we can publish anything without much of evidence and sources or even by stating that as primary data as long as we remain in that range, and finally define an Internet user as we individually like.

Imagine with that level of policy-making, we want to be a key-player in global knowledge economy. God help us.

Or take the SEZs for example, of which we are more familiar. I am not aware of much debates, awareness, and evidences with alternatives presented, before the policy was out for implementation. No problem so far, but after some 67 SEZ licenses were given, another 80 in spite of receiving in-principle approval out of 267 notified ones, suddenly the Government realizes something wrong in it and now plans to revisit rest by putting a hold on the balance 200 proposals. May I ask the Government and policy-makers what was wrong with the 68th and thereafter proposals? It simply looks like those parties who got a license simply benefited from bad immatured policy making. What if acquisition gets costlier and more bureaucratic from this 'review', and good proposals waiting to take off suffered due to this kind of bad policy-making? If one needs to revisit, revisit all quickly; otherwise don't revisit any.

One can't have discriminating policies for early gatecrashers and a different one for those who take time to study, understand and then decide. The controversy surrounding these SEZs point out not at the failures of the proposal and the private parties, but at Government's immaturity in thinking through them before implementing the policies.

And as expected a review has been called, no heads roll within Government machinery to share the accountability. Even in case there was policy-making, whatever pre-matured that was, failure needs to be squarely taken up by so-called policy-makers, who continue to take one after another such whimsical policies. Land acquisition act of 1894 can't be suited for SEZs for 21st century, and policy-makers should know that too well.

As academicians, we don't like to publish papers only for citations. We believe as researchers, we can get involved - please note involved and not comment - in policy making from inception to implementation stages, more so when we see these glaring failures in policy making day after day in our capital resource-deficit country, and when time is critical. Getting it right the first time is important, and that too as fast as we can.

True, it's easy to criticize and difficult to be involved and deliver. I know very few academicians to be involved in policymaking, more as exception than as norm. Are we, as academicians, taking up the initiatives to get involved? True, may be not; but I can't desist sharing one of my personal experience here, may be as an exception or may be as the norm.

Almost nine months back, following the incidents prevalent that time from Kalinganagar (where thirteen tribals were killed in Police firing in their protest against land acquisition for a Tata Steel project) or Gangavaram Village in Visakhpatnam over building of Gangavaram port where again there was casualty or even the famously infamous 'Narmada Bachao Andolan' (Save the Narmada), and many other similar ones over mining rights in light of global commodity boom, I came out with an academic publication where I argued that these incidents point the growing need to have involvement of Government, mining firms, local bodies and even NGOs for smoother implementation of these sensitive projects through a work-breakdown structure. Long-term economic benefit of any such project is expected to be positive, there should be proper means of sharing that output with the stakeholders so that all parties eventually win.

I thought of sending that paper then to corporate houses who were facing time and cost overruns due to project delays from these causes, and also to a few Governments; because it was designed to be public-private partnership till land-acquisition. But then better senses prevailed, and I conveniently forgot about that academic work; until recently there were more deaths reported from Nandigram, and violence from other similar land acquisition projects.

A deep sense of guilt flooded me - why didn't I make any effort to take my research seriously. At no stage I claim here that it was of great quality, true there may be many more similar academic works suggesting better solutions to this problem; but the point I have been trying to make is they all were big waste in building a better India. Bitten by that conscience bug, I one day visit our PMO's web site and put a message asking for policy-level research on land acquisition for industrial developments.

That was almost one month back. And till date, I received no response - not even a formal acknowledgement has come.

There are many projects we can take up as researchers to contribute in our policymaking at different levels. However those need funds, whatever small that be. And the matter of fact is, we mostly have none. One can get peanuts after lot of bureaucratic hurdles, but by then one loses his/her energy to pursue that research.

And then in global forums we see researchers from MIT or Harvard presenting their primary research based findings on India. It's true but sad that they have the funds, and they feel investing that fund on primary research towards better policymaking is justified even though they happen to be in the US; we in India lack a fraction of those funds to carry our own research.

Not for publications alone, but to help by providing right inputs to policymaking.

No one puts forward these wishes of researchers to our Finance Minister before any budget. We have funds for hard infrastructure, we have funds for soft infrastructure; true they need much more. However please allocate a fraction of that on policy-research so that we get best returns on the other two.

And hope our Finance Minister listens.

Policy-Research in India - The Need

Wondering Man — Wed, 21 Feb 2007 15:32:58 EST

Many in India don't believe, or even want to take notice of the data provided by multilateral institutes like the World Bank, the IMF and similar ones. I won't deny that I too had a degree of suspicion while looking at the data presented by these bodies not too long ago, more so at their prescriptive remedies that were packaged with those data. But that was before I entered academics from a research mindset.

And then I found that other than those, we don't have many quality primary researches undertaken in India from policy-perspectives without the much-needed aid from those multilateral institutes or their country-level counterparts like the IDFC, the DFID etc.

The background gets important as many debated from local media on 'India Poised' to the other opposite end that looked at the immaturity of India as a superpower in global media. In one case, we presented perception as evidence. And in the other case, the global media - as they are used to - cited evidence rightfully or wrongfully, from global researches of credibility.

And the obvious question comes, why don't we Indians argue, as Argumentative Indians suggest of our characteristics, with evidence as evidence and not as perception as evidence. We need to pay better attention at the sources of the evidence and their credibility and methodology. If we did that, we aren't likely to engage ourselves in much of the wasteful arguments on wishful thinking to hypes, and thereby can get into implementation of our policies, which matter more.

Facts, figures, statistics, sources with debates and the counter-arguments backed by evidence again are a basic prerequisite for any policy-making. During policy-making only, we take our status quo starting with where we stand, decide our destination from possible alternatives and reason why we need to be there, and also decide which path to take to reach that destination from medium-term to long-term perspectives. It's in this stage that policy makers debate on how that destination and path suits us best by analyzing the interests of all involved stakeholders.

The evidence and debate comprises facts, figures, hypothesis, and sources of those facts in the footnotes with the references on how one deduced those conclusions. Any sensible man would feel sorry at the plight of 1.1 billion Indians if our campaigns, and even policies are based on wishful thinking of media and politicians like that of 'Make 2007 the year of India' (what was wrong with 2006, 2005, 2008, what is wrong with rest of the world in 2007?), or the 'Cradle Campaign' as announced lately as a remedy to feticide of female child as soon as another horrific (but expected) story breaks out. Then there was the infamously famous campaign of 'Garibi Hatao' (Abolish Poverty) by former Prime Minister Indira Gandhi.

And rest of the world, more so developed world, don't pay much heed to these 'wishful thinkings', and these wishful thinkings didn't deliver much, expectedly. We know what happened to 'Garibi Hatao' even after almost three decades. Shouldn't we ask questions, and look for evidences when faced with such policies and campaigns? Isn't that what we should be learning (and teaching) as the first year students in any colleges - as against any self-concluding hypothesis in social sciences.

Many of us may recall seeing the evidences 'produced' by last US Secretary of State Colin Powell on the floors of the United Nations back in 2002, broadcast live in global media to build global opinion in his case for invading Iraq, which looked so real as if we could feel the Weapons of Mass Destruction (WMDs) lying in Iraq. And while many were convinced by those evidences of WMDs, they conveniently forgot to ask those fundamental questions - 'Hey, what are your sources? Where are the footnotes? What's the credibility of the sources?'

And the world, more so people from Iraq, continues to pay dearly for not asking those questions. Expectedly, these are debated in the U.S., because that country, seldom failed in policy-making; and this failure (a deliberate ploy as per many conspiracy theories) is therefore widely debated, and scrutinized.

American people not only have been holding Bush-administration responsible for that intelligence-failure, but also have squarely put that responsibility on the failure of Media. Media too got carried away by that hi-tech presentation, and therefore forgot to ask those elementary questions.

Coming back to India, we seldom see debate and arguments with evidences at the policy-making stages. Those policies, from time to time, originate from the tables of some bureaucrats or from the minds of some ministers like words from the Bible. We know the quality of debate that takes place in our parliament, and we also know the qualification of our parliamentarians in meaningfully contributing to such debates.

We, in popular media and in our day-to-day life do a lot of (wasteful) debate on those without evidence, may be because the policies themselves didn't have any evidence in the beginning. These were and are mostly ad hoc measures - be it our independence or economic reforms (were we prepared and therefore planned how to prevent the expected riots that followed our independence? No. Did we plan how to proceed in following market reforms like China did? No. And probably these two are the two biggest events of free India).

Irrespective of the fact that policy-research has remained a neglected field, and whatever policy-research is carried out remains in the wrong hands mostly; there's no denying of its importance; more so in transient economies where India stands now. India, to really come out from her various hurdles and thereby to take a better place in competitive global economy, badly needs better policymaking.

Policymaking comes under institutional infrastructure, and plays as important and complimentary a role in economic development as other two categories of infrastructure do, i.e. the hard infrastructure (roads, ports, power) and soft infrastructure (education, healthcare). If we had the right policymaking environment, we would not have had the inhuman daily traffic problem in Mumbai or the power shortage in Maharashtra now, or in some other state at some other time. With wrong policy making, our policy makers allot more than thirty times on university education than on primary education on per capita basis.

Does India need a graduate Indian thirty times more than a literate Indian? Policy-making, even at its rudimentary senses for a country of 35% or more illiterates shouldn't say so.

And even when they do invest so much on university education, then why not invest on a few of them for policy making as well. We haven't seen our bureaucrats and ministers ever attend a seminar as audience rather than as speakers as if by virtue of some gift, they possess the answers to all the problems. It's indeed unfortunate that a country that claims to be building her case to be the hub of the knowledge-economy, policy research remains to be seen as words from certain sacrosanct sources.

Let me cite my evidences with more examples.

In December 2006, to pursue my academic research, I was searching for some data on the Internet usage in India. My limited research yielded me following confusing figures with their local and global sources:

� CIA World fact Book - 60 million (2005)
� Internet World Stats (Dec'06) - 40 million
� IAMAI-IMRB (Sept 2006): 37m ever users and 25m active users
� IOAI-Cross-Tab: 25 million (around middle of 2006)
� eStatsIndia: 30.5 million by 06-end.
� European Travel Commission (eTForecasts, September 2004): 37.0 million.
� PricewaterhouseCoopers (July 2004): 30.0 million
� eMarketer (April 2005): 21.3 million
� Economist Intelligence Unit (EIU, February 2005): 15.7 million
� TRAI (Indian Govt.) figure on subscriber base (June'05) = 5.9 million (subscriber, and not user here)

So, as any person, forget about a researcher, I was confused (in spite of having worked with leading e-commerce companies for five years). Two of the most respected here, the EIU and the CIA World Factbook defined the range, and rest all were somewhere in-between, true the time period was different. And anybody could have played with any figures. So when we read in media that 'Internet usage has grown by 60%', one must be careful to note on what base (earlier research); otherwise it doesn't make any sense.

And imagine when someone would like to make some policy-making to make Internet penetration more widespread based on the above set of data. We simply don't know where we stand exactly, and unless we know our exact position; how do we set our destination?

Help! How Do I Read Global Financial Markets? Part 2

Wondering Man — Mon, 19 Feb 2007 02:39:52 EST

[Part 1 left off at trying to understand the balance sheet of the global financial markets and asked, "But where does one start, how to start, and what are the assets and what are the liabilities?"]

Central Bankers follow a different accounting system than what the corporate world follows - a future liability is taken at its present value and not at its future value. So debts pile up, and eventually more debt is created to service existing debts. Money supply expands exponentially in an expanding universe. And the first trillion of money supply in dollars happened only in 1970s in the US, and now that's close to $12 trillion, and as exponential theory suggests, money supply needs to grow exponentially even to just support the self-fulfilling policies of present day economies of pumping in more money as long as the forests of the world can produce that paper.

When that fails, we have thought about that in the form of e-currency. Overall cumulative US debt - government, corporate, retail combined - is more than $50 trillion, more than the size of the global economy in nominal terms. (Can't help but suggest a very good but long narrative article in this context titled "I Want The Earth Plus 5%", which many may know of.) Compare that with the US economy of $12 trillion, tax revenue of closed to $2 trillion but running on deficit, retail savings negative to 1% of GDP, US stocks valuation at around $17 trillion, with possibilities of more Social Security spending in coming days as baby-boomers start retiring (impact of which would be more than the expenditure on the Iraq war).

So how and when does one pay back? Conventional wisdom suggests payback is not possible.

Increasingly one gets lost between theories and conspiracy theories and doomsayers' theories. The US Dollar needs to fall, and billions of dollars have been put in different instruments anticipating the Dollar's unprecedented but long overdue fall, members of which include legendary figures like Warren Buffet. Gold would hit three digit figures (in US $/t oz) and then no amount of paper money would be able to buy physical gold because in the end paper is paper and gold is gold, believe the gold-bugs. Fiat money, as it is now, is nothing more than a promise of the Central Bankers (and whether US Fed qualifies as a central banker is again questioned by leaders of conspiracy theories, with evidence). True these theories were there back in the past, and they would be there in the future. True, their voices are getting louder by the day, but how loud is loud is again the same question that leads to another on how much money supply is indeed a 'hell' lot of money supply to destabilize global economy, and bring income divergence to its maximum practical possible limit.

And with nation states, things only get more complex. Most data come from US as that's the data-driven economy. We have inflation data (different types again, and doomsayers' don't believe official data as that don't include 'stealth inflation' as 'they' claim real inflation to be closed to 15%), we have employment data, we have trade deficit data, we have consumer expenses data...oh yeah...lately their anti-terrorist squads are getting our bank statement data (may not be released publicly) as well as I understand from some media reports, more so for any people who visit the US.

Even with so much money in global financial systems, closed to half the people in this world haven't managed to earn two dollars a day. So labor still remains cheap, supply of goods have catapulted - thanks to China and other emerging export-driven economies. Developed countries, though they are getting their goods cheaper by the day even with increased money supply, may face problems with employment (so far so good here as employment remains in pink of its health in most developed economies, many don't understand how, and lately unemployment figures in US is creeping higher, touching 4.6%) and cry for 'localization and protectionisms' against 'globalization'. Services sector constitute more than 80% of US economy - God only knows what services the Americans consume that make size of their services economy more than 16 times the size of services economy of China, when China has more than four times population. So a child-birth in US costs 64 times more, a hair-cut, a visit to a nightclub or costs of education in US is 60 times costlier than in China when goods are getting almost uniformly priced all over the world.

Doesn't make much sense, does it?

So how do we read the balance sheet of global financial system with such imbalances glaring out? Management gurus advise us 'visit the market whenever in doubt'. One of my friends, who traveled all over the world frequently, came out with another hypothesis. He said that he found visiting and communicating with different stakeholders in any nightclubs of any country provided him with an inner insight of that country's economy (shoddier the joint is, better that is with insights of legal administrations). No denying him by any who have ever been to any nightclub...but that only explains that country's economic and social health. What about global financial system assuming we had one single Central Banker in this world and all other Central Bankers of the nation-states as different divisions of that Central Banker? Is the health of that single global Central Banker is of any concern or is it in its pink of health? Which divisions are causes of concern and which divisions are pulling it up?

I don't know. It's all so confusing that the analogy probably speaks of the ignorance only. However, there is a concern lately all over the world on complex financial instruments (derivatives, and derivatives of derivates and thereof), very high open interests, hedge funds and their risk appetites; however no one seems to know when enough is enough.

Many who continue to live in this complex firing line of interlinked global financial world lately know what it means to be there. You never know what's going to strike you next - it's a situation like present day Iraq where one may be a casualty from Shia Militia, Sunni insurgency, Al Qaeda terrorism, US allied forces bombings, Iran-backed or Syria-supported insurgency, or even a victim of your own Government killing you because Government didn't know what it was doing and who you are. Before you come to know what did hurt you and why, you may well be dead in your positions. One participant living on high-risk-high-return instruments in global financial markets, bearing this risk daily apparently stated "I wish I could have taken up a less stressful job, something like that of a bomb-diffuser."

True for traders who live in the floor and by the floor. What about the majority of us who at most take a cursory glance at global financial markets, or at the indices of our own nations? Are we risk free? Indeed?

It doesn't at all look like we know what happens in any major economic depressions. The stakes here involve us all. Policy-makers take us to war promising that's good for us; we believe them and pay dearly. Policy-makers of nation-states run a competition of money-supply promising that's again good for our local economies in comparative and competitive global world, we believe them (we don't have a choice, have we?).

It's never prudent to hide the skeletons in apparent good times (what we are having now, globally for some time) so that they finally emerge one after the other when bad times strike us. The global economy seems to be heating up all over with alarming signs of imbalances with real money (goods and services) flowing from poor nations to rich nations against credit money. We don't know whom to believe - the official versions or the conspiracy theories who now claim that there doesn't exist an iota of chance of Governments, in most major economies, paying back its debt. We know Governments lie, not always but it's hard to find a single Government anywhere in this world who didn't lie to its people knowingly. And money that makes this world go round in this fiat fractional banking system, is based on a promise of the Government. What's the likelihood that Government won't fail in this promise as well (remember 1971 when Gold Window was closed, against another global promise made in 1945 in Bretton Woods)?

Bernanke has attempted some plain speaking in the US congress, unlike his predecessor, the legendary Greenspan, who was not understood by most. We hope someone attempts doing that to global citizens before the inflated bubble in which many of us are having our joyride from unprecedented highs without our parachutes on, bursts up in the sky.