Monday, December 31, 2012

Some reflection & 2013

It is time to look back the year coming to end. It has been a great year for me both personally and professionally. Personally many new changes have happened. Professionally many new learning, experience what not all went well beyond by simple expectations. 

Personal:  The very special thing is that I got married after long (deliberate) delay but it was matter of simple decision with confidence.

Professional: Published interesting articles which I wanted to write for years. Here are those pieces for record- 123,4 and 5

Hope you also had good time in this year 2012.

Thank you all for staying with Hayek Order blog without which this cannot continue for long. 
Time brings us all kind of happiness

May the almighty help you and your family to find the New Year a REALLY peaceful and prosperous

Wish you and your family a very Happy New Year 2013

Sunday, December 23, 2012

A new idea of mindset change

"...the possibility of an Indian education system that could one day be decolonised.

...need to examine how to decolonise politics and governance especially in Delhi that to this day remains the last outpost of the British imperial system of governance.

India remains colonial not just in the way it is governed but in its mindset. So in the engagement with modern ideas and modern technology what younger Indians are losing very quickly is their sense of being Indian. One of the things that depresses me most on my travels in our fair and wondrous land is the number of young Indians who speak no Indian language well and speak English so badly that it is sometimes hard to make out whether they are speaking English at all. This has not happened in countries that are proud of their identity. China’s communist rulers may have obliterated their traditional architecture and crafts but the Chinese continue to speak, read and write Chinese. In India, books in Indian languages sell in such small numbers that the publishing industry survives on books written in English. Do we need more proof of India still being colonised in its essence?

Only a new dream will restore in India a sense of who she once was and what she would like to be again one day. As things stand all we do is pay lip service to our ‘ancient civilisation’ while watching it slowly disappear under the onslaught of modern ideas and modern technology. It is hard to think of a time when we needed a new dream more than we do now. It has to be a dream that is bigger than just a new economic vision but the glorification of prosperity instead of poverty is not a bad foundation for a new dream."

Read the full article here.

Tuesday, December 18, 2012

Organised crime by The State

Often I find myself rarely agreeing with eminent educationist and Prof Krishna Kumar. But in the present case I have not option except to agree with him for what he has said very profoundly in this article:
  • Neither the United Nations convention on child rights nor the National Commission for the Protection of Child Rights (NCPCR) can rescue him in that moment. In any case, the state cannot be of much help, for it is the state under whose authority and supervision the two adults beating him mercilessly have been selected and appointed to serve as teachers.
  • …It hardly matters whether they are serving in a government or a private school, for both kinds of schools draw the legitimacy of their access to the child’s mind and body from the powers entrusted to the state…

Feted globally…

Just taking the main quote portions only from this interesting piece for the benefits of readers:
  • In a confidential memorandum in December 1991, Lawrence Summers, World Bank Chief Economist, urged his colleagues: “‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs (Less Developed Countries)? I can think of three reasons.”
  • Mr Summers elaborates: “The measurement of the costs of health-impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health-impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that”.
  • Second, he says, “The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I’ve always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste”. Put simply, he regrets it is not economically possible to transfer waste and pollution wholesale to the developing world.
  • Finally, he asserts, “The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under-5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable”.

Monday, December 17, 2012

Tragic paradox

There is something very terribly wrong with this interviewer's mind. The interviewer statement like the below one is highly debatable given the double game played by authors like Mr Ramachandra Guha. My problem with the statement is the word "liberal". In my view it does not suit Mr Guha enough to put it straightforwardly. I do follow his works in social and economic issues in India:

  • "Meet Ramachandra Guha, one of the few intellectuals in India, who is a liberal in the classic sense of the term." 

Nonetheless, for the below statement he has to be congratulated for his boldness:

  • Rahul Gandhi is completely mediocre… He has no original ideas, no heart for sustained and hard work. He should find another profession,” 
It is really worth to read the full interview here.

Saturday, December 15, 2012

15-volume series on the history of Indian business

Gurcharan Das talks about a 15-volume series being published by Penguin on the history of Indian business

In this interview with Mint Mr Das says:

  • I raise a question on the notion of property. What was it? In many countries the king owned everything. But in India, the Arthashastra says very clearly to the king, “You don’t own the kingdom. You have a bhaga and it’s shath-bhaga (one sixth).” In other words, that is the moral, the right tax rate, for a kingdom. And so, whenever kingdoms had higher tax rates, such as in the Mughal empire, when the tax rates went up to 40% and 50%... they collapsed. That’s a lesson that India pretty much forgot for 40-50 years. Our tax rates during Indira Gandhi’s time had gone to 97.5%

Freak truths

This needs to be noted!!

Prof Indiresan says:
  • The fact is that it was Muslims who caused the initial provocation. There can be different shades of opinion on who first initiates riots and the response from the other side. The media treatment of such sensitive issues is also open to debate. But the biggest problem is our tardy and ineffective judiciary. If culprits are punished promptly, there would be little reason for Muslims to get irate; then there would be no retaliation too. It is also a fact that over two hundred persons have been convicted about Godhra, whereas not one person has been punished for the Congress-sponsored anti-Sikh riots in 1984.

Friday, December 14, 2012

P T Bauer vs Nehru

"P.T. Bauer (London School of Economics) demurred. For all else, planning had become an article of faith."

A bit more to muse through from the above piece by Prof Varshney:

  • Central planning, clearly, did not achieve that goal. In the three decades of rigid planning, India’s economic growth rate was abysmally low — and its poverty rate remained unchanged. Should Nehru, then, be castigated for India’s economic failures until the onset of the 1980s? Could India have adopted a post-1991 style economic policy framework in 1950?
  • These questions require nuanced reasoning. We need to ask whether economists and intellectuals, not simply Nehru, trusted markets in the 1950s. What ideas were available to economic policy makers at that time?

Saturday, December 8, 2012

Midnight’s children or reform babies

Manish has a very genuine assessment about the lively impact of foreign direct investment in retail sector in India. Most people who take interest in FDI in retail debate misses the below points which are extremely important at this juncture in Indian economy.
  •  We know that kirana (unorganised retail) shop owners are a much smaller population than exploited kirana workers. We know that unorganised retail is the biggest user of child labour. We know the tragic costs of informal employment (no PF, no ESI, no appointment letters and no minimum wages). We know that 100% of net job growth since 1991 has been in informal jobs; the slavery of the 21st century. We know that kids don’t view employment as a lifetime contract (mai-baap) but a taxicab relationship that is intense, intimate and short. We know that 10 lakh kids will be joining the labour force every month for the next 20 years. We also know that a sales job is the most blue-collar white-collar job. The notion that agricultural jobs or manufacturing jobs pay more, provide higher job satisfaction or offer better physical environments is not a myth; it is a lie. I am not sure where the romanticism of shop floor or fields comes from but our economy is driven by domestic consumption—strength as the global crisis enters its sixth year—and that means sales and customer service will be the biggest job creator in the next two decades. So, there is nothing horrible about “India becoming a nation of sales boys and girls”. This will be a less poor India.

Tuesday, December 4, 2012

Fervent intentions

"Ambedkar tested every big and small, old and new religion available to Indians, trawled the texts and tenets of Hindus, Buddhists, Muslims, Sikhs, and Christians, and indeed made himself an entire career as a scholar of comparative religions alongside his enormously busy public life as a mass leader, a politician, and an intellectual. He was far more systematic than Gandhi as a self-taught student of different religions in India, far more thorough than Nehru as an amateur historian of India, far more imaginative and conflicted than the talented Tagores in his attempt to identify or construct an acceptable past for the emerging nation. Even as he stood every received theory about the origins and evolution of the caste system on its head, he declared his fervent intention to "annihilate" caste. It is no wonder that Ambedkar remains the least understood of the great moderns that India produced, and who produced India." More here.


Here is my latest piece in the Pragati. This time I have a new role in the Pragati. I would be writing a dedicated column in the magazine mainly focusing issues related to public policy in India. The below para is the concluding one:

  • If anything, the time has come to understand the real or the main activities of some of the liberal think tanks and civil society organisations in the country and try to see whether these institutions exists just for the sake of receiving money from abroad, or whether their work really helps in strengthening the fundamental values of liberty among people. The basic liberal values are rule of law, individual rights, private property rights and economic freedom. These values are embedded in the Indian society historically. At present, it seems that the institutions which are supposed to work for these values have actually turned a blind eye to them. This has to change before the entire movement results in new order of chaos in the society.

Saturday, December 1, 2012

"liberals have historically been on the back foot"

A bit from Lounge's interview with Ramachandra Guha;

Am I right to think that liberals have historically been on the back foot when responding to the kind of extremism that, for example, has come into focus recently with the death of Bal Thackeray?
It was hard for liberals to stand up against the Shiv Sainiks when the Congress and the NCP (Nationalist Congress Party) indulged Thackeray so shamelessly. These parties, in power, failed to uphold the Constitution, encouraging goons to beat up anyone who criticized them in print or in person. Within these constraints, some Mumbai writers and intellectuals have yet bravely stood up against intolerance and bigotry and for basic liberal and democratic values. Among them was the late and still much-mourned bilingual writer, poet and film-maker Dilip Chitre.
Thackeray was a particular phenomenon, though. He controlled an entire city. So you might have quasi-fascism in one city, or as it happens, quasi-fascism in one state, but India as a whole is still a place where it’s largely possible to speak your mind without fear of that sort of reprisal. It’s like this: The media gives space to extreme voices—the electronic media more so than print, and perhaps, although it’s not easy to say, social media even more than electronic. My sense is that the majority of Indians are scrabbling in the midst of this for some middle ground.
What are some of the books, or who are some of the writers, you’d recommend as a starting list for the inquiring Indian liberal?
Some of the books I would recommend for the inquiring Indian democrat (who could as easily be a conservative or socialist as a liberal) are André Béteille’s Chronicles of Our Time, Sunil Khilnani’s The Idea of India, Niraja Gopal Jayal’s Citizenship in India: A History (which will be out next year), M. N. Srinivas’ Collected Essays, and (for a wider, comparative perspective on the challenges to democracy from left-wing and right-wing extremism) François Furet’s The Passing of an Illusion. The inquiring Indian democrat should also look out, if he or she does not do so already, for the columns of Ashok V. Desai (inThe Telegraph), Swaminathan S. Anklesaria Aiyar (in The Times of India), P. Sainath (in The Hindu), T. N. Ninan (in the Business Standard), Pratap Bhanu Mehta (in The Indian Express), and Mukul Kesavan (wherever they are published).

Convey casualness

Tuesday, November 27, 2012

"The source of confusion here is that there was a Good Hayek and a Bad Hayek"

Prof Solo has very interesting book review article in NTR on Professor F A Hayek: A bit from it:

  • "The source of confusion here is that there was a Good Hayek and a Bad Hayek. The Good Hayek was a serious scholar who was particularly interested in the role of knowledge in the economy (and in the rest of society). Since knowledge—about technological possibilities, about citizens’ preferences, about the interconnections of these, about still more—is inevitably and thoroughly decentralized, the centralization of decisions is bound to generate errors and then fail to correct them. The consequences for society can be calamitous, as the history of central planning confirms. That is where markets come in. All economists know that a system of competitive markets is a remarkably efficient way to aggregate all that knowledge while preserving decentralization.
  • But the Good Hayek also knew that unrestricted laissez-faire is unworkable. It has serious defects: successful actors reach for monopoly power, and some of them succeed in grasping it; better-informed actors can exploit the relatively ignorant, creating an inefficiency in the process; the resulting distribution of income may be grossly unequal and widely perceived as intolerably unfair; industrial market economies have been vulnerable to excessively long episodes of unemployment and underutilized capacity, not accidentally but intrinsically; environmental damage is encouraged as a way of reducing private costs—the list is long. Half of Angus Burgin’s book is about the Good Hayek’s attempts to formulate and to propagate a modified version of laissez-faire that would work better and meet his standards for a liberal society. (Hayek and his friends were never able to settle on a name for this kind of society: “liberal” in the European tradition was associated with bad old Manchester liberalism, and neither “neo-liberal” nor “libertarian” seemed to be satisfactory.)"

Random reading

Sunday, November 18, 2012

Of that food kill Bill

Friend Vipin and Atanu Dey has very interesting article in the Pragati magazine. His way looking at the various issues which is being debated in India on Food Security Bill is very relevant. Below are the concluding paras:

  • Some say that the PDS works in Chattisgarh and in Tamil Nadu. Such statements must be looked upon with caution. What they really mean is that wastage in these states is less than that in other parts of India; failure becomes a benchmark for success. The real judge – and indeed the only economic judge – is how the PDS fares compared to alternate methods of delivering food, namely the market mechanism. History has it that no other mechanism of employing scarce resources holds a candle to market mechanism when it comes to the question of efficiency. The inevitable conclusion is that even in Chattisgarh and Tamil Nadu people would be made better off if the PDS were shut down and citizens provided with food coupons instead.
  • Three months after the UPA government, tabled the Food Security Bill in the parliament a group of thirty-six Indian economists (from MIT, Harvard, Delhi School of Economics, JNU, et al.) wrote an open letter to the Prime Minister (The Hindu, 12 March 2012) greeting the bill as an “important step towards the elimination of hunger and under-nutrition in India” and asking for a few modifications. One is reminded of the years of Nehruvian planning when the great debates were about “how government ought to plan” not “whether government ought to plan”; and nearly all Indian economists toed the government line. Back then B R Shenoy penned the only note of dissent to the Nehru-Mahalanobis second five year plan. India needs the likes of Dr Shenoy today.

Friday, November 16, 2012

Media folly of all kinds

Prof Kishwar has done a great job in profoundly analyzing the facts about Gujarat's Chief Minister Modi's recent speech in the State of Himachal Pradesh. It is worth to ponder over the below paras.

  • "If Modi’s concern for reducing women’s drudgery is genuine, if he has actually delivered piped gas to seven lakh rural households and intends to cover all the rest, if every household in rural Gujarat is getting round the clock power supply, his frivolous remark against Sunanda Tharoor is not enough to damn him for being anti-women. Mere lip sympathy for women won’t do. I prefer politicians who care for women’s well-being in concrete ways.
  • No politician dare marginalise the life concerns of the mass of our women as systematically as large sections of our media do, with their disproportionate attention to glamour dolls, film stars and the doings of the fashionable elite. It is easier to call monstrous politicians to account than media monsters."

Meaning that 'public policy'

Prof Ila has a very interesting piece on the ultimate impact and true use of Aadhaar in India. Read NIPFP study finds large returns from Aadhaar project

The FTI Team has also announced huge prize for public policy competition

Back to Marx and banking in 21st century. Read "Marx would have been proud of bankers".

Thursday, November 15, 2012

Of that "New Liberal Centre"

Here are some interesting readings. Though, a new set of debate is seems to be underway, yet, from Ramchandra Guha.

By the way, do not forget to read the comments on the first two pieces by Guha. It is very entertaining.

Friday, November 9, 2012

True to M K Gandhi

"India’s history books in the past sixty years have been written by Marxists, and Gandhi’s views have been distorted to fit in with the Marxist agenda. These books suppress Gandhi’s views on Marxism and socialism and instead present a sanitized version of history with Gandhi merely as a hero to be worshiped before invoking the doctrine of socialism. Instead of deifying Gandhi as a Mahatma and blindly worshiping him, Indians would do well to objectively examine his works and understand his political views." More here.

Wednesday, November 7, 2012

Capitalism = Insights

From A N Shroff memorial lecture delivered by Arun Maira on 9th October, 2012.

"Revisiting the role of India’s Planning Commission

When I joined the Planning Commission as a Member in 2009, one of the tasks the Prime Minister assigned to me was to determine what role the Planning Commission should play in 21st century India. I asked Montek Ahluwalia, the Deputy Chairman of the Planning Commission to give me a list of 20 persons to whom I should ask this question. He gave me a list of 20 respected citizens of the country. Some of them had worked in Government in very senior positions, in the Reserve Bank, in Parliament, some even in the Planning Commission in the past. And several others were respected industrialists of the country.

I asked each of these 20 leaders the following questions:
  • Is the Planning Commission playing a useful role for the country?
  • If not, is there another role that the Planning Commission could play in India’s progress?

The answer to the first question was unanimous. The Planning Commission was no longer making a significant contribution to the progress of the country. The country had changed. It was more decentralized politically and administratively. The private sector was playing an increasingly large role. The Indian economy was more connected with the international economy. For all these reasons, five year plans and budgets made by some experts in Delhi, which had then to be implemented by people all over the country, was an outmoded idea. 

However everyone, including the industrialists, said that the dynamic nature of changes in India and outside required a strategic group that, like a radar, could sense the forces that were causing change to happen and that could provide governments in the center and in the states, and private industry too, with insights into the forces shaping the future.

A More than Perfect Storm

I will now give you a picture of the forces shaping our future. I will also explain their effects on institutions of democracy, capitalism and government. I will use two images for you to visualize these forces and their implications. One, an image of a storm. The other, an image of a globe in stress.

First the image of the storm. Many of you may recollect the ‘Perfect Storm’ that Sebastian Junger described in his book. Not two, but three storm systems converged in the North Atlantic. This was unprecedented. No ship had been designed for such conditions. And no captain had the skills to steer a ship in such a ‘perfect’ storm.

As the 21st century unfolds, there are four strong winds blowing across the world and converging to create a more than perfect storm which is challenging captains of business and government institutions that are not designed for these conditions.

Free Markets and Capitalism
The first strong wind is the idea of free markets and capitalism. This is not a new idea. Often attributed to Adam Smith, it has been around for at least 200 years."

Friday, November 2, 2012

Back to Normal!!

Friends thanks for bearing with me! I got married on 18th of last month. Hence, no post for long period. Not many things happening in India in terms of new good economic policy making. Anti-corruption movement wallas taking up self-stage for granted partly believing that the voters are their side or for that matter the funding parties.

Though, there were many interesting readings in the past two weeks. Here some of them.

IAC should go beyond corruption by Prof P V Indiresan

Thursday, October 11, 2012

"public sector as untouchable holy cows"

Professor Raghuraman Rajan says:

"State ownership in many areas no longer serves the public interest, and the only reason it continues is because it serves the many vested interests that benefit from the status quo – the public sector workers who have cushy undemanding safe jobs, the unions who enjoy the power, the occasional corrupt executive who rakes in bribes, and the minister who enjoys the patronage." Full speech is here.

Sunday, October 7, 2012

Some links

Last two days, I participated in the first Regional Conference on "Reforms for Citizen Centric Governance" held in Hyderabad. There are many new innovations taking place at State level in terms of improving the services delivery. 

Interesting readings:

Fasten your seatbelts by Nitin Pai

What Reform, Mr PM? by S Gurumurthy

Tuesday, October 2, 2012

MGR's Mango Man!

Indian economist MGR has written a wonderful piece. It is always interesting to ponder on the following paragraphs:
  • …the aam aadmi is not just the mango man who sells the delicious fruit but someone special that every political party in the country is concerned about and seeks to represent. I had to also mention that, ironically, while all political parties seek to represent him and profess to bleed for him, no one actually cares for him. Although most often he himself does not know that he is the centre of their universe and is a subject of representation, he is too confused to know what he really wants. Perhaps, he would like to be left alone, but every political party knows what is good for him and he has no business to seek anything else.
  • I am yet to find a politician who would want to raise more money from taxes. It is also hard to find a politician who would want to reduce expenditures. While in our private lives we all would like to save huge sums to bequeath wealth to our progeny, we do not care if the government borrows large amounts of money year after year and leaves a huge debt burden to the future generation. We do not realise that today’s borrowing is tomorrow’s taxes. Perhaps, most Indians do not know that every Indian today carries a debt burden of R46,000, which will have to be paid back by way of higher taxes in the next few years.
  • The only way to shore it up is to undertake reforms that will bring in more foreign investment. In addition, in the case of retail trade, lack of competition has led the neighbourhood shopkeeper charging at least what is printed as MRP, which, unfortunately, has no relationship with the cost of production. The only way to minimise exploitation is to increase competition. 
  • There is no alternative for the country but to reform, and reform can be painful. The past sins of controls will catch up to increase the travails of the aam aadmi. We still have a number of prices determined by government fiat and, as and when they are decontrolled, the prices will rise to haunt him. If you don’t allow the markets to determine the prices, you will create more problems. 

Wednesday, September 26, 2012

Shibboleths of Indian economic orthodoxy

This article gives a very good case study for how to do a make over.

Very interesting comment from new chief economic adviser. 

He says I'm not going to give any number because I don't think it's an useful exercise...While I was the IMF's chief economist, the one thing that we were always wrong on is projection of growth."

Monday, September 24, 2012

Line of trucks

As Gurucharan Das writes in India Grows At Night:

Rajaji (C Rajagopalachari)…was the first to describe Nehru’s socialist economy as a ‘licence-permit-quota raj’ in the late 1950s. When a reporter suggested that corruption had increased because Indians, not the British, were ruling, Rajaji had quickly retorted that corruption was less a matter of culture and more about economic incentives. Socialist controls sent out the wrong signals to human beings on how to behave. Yes, culture mattered but culture would quickly change if the incentives changed.”

Bloomed vs Doomed

Shankar Aiyar rightly asks a serious of questions which needs to be pondered:

  • There was, however, no explanation on why the economy was in a crisis. The Prime Minister says an “unsustainable increase in government expenditure vis-a-vis government income” would lead to “steep rise in prices and loss of confidence in our economy” as indeed had happened in 1991. The question is did this happen overnight? How did we get here? And who let this happen? Was the writing on the wall in Greek? 
Razeen Sally on Asianeconomies and its need for “Limited government—a strong but small state that performs its core functions well—and free markets at home and free trade abroad: These are the ingredients for a new Asian century.”

Thursday, September 20, 2012

Vivekananda, Bose and New Centre

Half a century after the Chicago lecture, Rajaji said in simple words, “Swami Vivekananda saved Hinduism and saved India. But for him we would have lost our religion and would not have gained our freedom. We therefore owe everything to Swami Vivekananda. May his faith, his courage and his wisdom ever inspire us so that we may keep safe the treasure we have received from him!” More here.

The biggest cover-up about Subhas Chandra Bose

Really good news about the News pokers.

Very interesting new initiative and I am very much looking forward its way of functioning on its affairs. 

Too childish

In India, the quality of polity is such that most of the corruption crusaders wants to have "a foolish project almost certain to perpetuate corruption and the regime of corrupft rulers.

The accusation of the finest hour

Why "The CPM that had to eat crow." and the "...shady figures in his own party who cut unsavoury deals ostensibly to fill the coffers of the Congress. This could then be the advent of Manmohan Singh's finest hour in office."

Indian economist C Rangarajan says "..certain amount of economic literacy that is also required. Even those who oppose certain decisions, if they come to power will also realise that these decisions are unavoidable." 

"Every single piece of economic reform introduced in India has been stoutly opposed by the Left, from the introduction of computers by Rajiv Gandhi to the removal of quantitative restriction on imports and India joining the WTO, and everything else in-between: delicensing, loosening of forex controls, lowering of import duties and income-tax rates, opening up to foreign direct and portfolio investment....These critics have been proved wrong every single time. The Indian economy has thrived. Instead of being colonised further, India has shaken off aid dependence and is a major exporter of direct investment abroad." More here.

Sunday, September 16, 2012

Thankless Polity

Indian economists especially the one who is leaning towards Congress by default don't tell us their heartless-gut-feelings. However, here is one such good belief:

From Professor Arvind Panagariya interview:
  • … even the minority governments of IK Gujral and HD Deve Gowda were much better than the UPA. So this whole idea that coalition doesn’t let you do reforms is an eyewash. The larger problem is sitting within the Congress party. A lot of the Congress men don’t want reforms. Congress leadership today is extremely sceptical of reforms. And of course their coalition is extremely mismanaged.
  • …even the BJP did not do the nation a service by forcing Sonia Gandhi to appoint Manmohan Singh as the PM.                                              

Excerpts from Gurcharan Das’s latest book titled IndiaGrows at Night: A Liberal Case for Strong State.
  • Merchants and bazaars, however, emerged even earlier as centres of exchange in the towns of the Indus Valley (3300–1500 BCE) or even in the Neolithic age, soon after Indians first engaged in agriculture and there was a surplus. As Jean-Jacques Rousseau has taught us, inequality also had its origins with the birth of agriculture because with it was born private property.
Tavleen Singh point out that the:
  • "..truth about the incalculable losses made in our socialist decades by a public sector that almost never made a profit."

Saturday, September 15, 2012

Money beast!!

Over the period April 2006 -June 2010, currency has shown a yearly growth rate of 17 per cent. It is estimated that for 2009-10, the RBI incurred an annual cost of Rs 2,800 crore to just print the currency notes. More here.

Thursday, September 13, 2012

‘Fifth Nation syndrome’

The title of this post is taken from Dr A.P.J Abdul Kalam's recent speech. Taking cue from his wise words friend Arvind really goes further digging the Indian economic history and gives many interesting narratives on why we need to go back to our own way of practicing free gold market system for transactions in the society. A bit from his piece in DNA:

  • In response, the Swaraj Party demanded that a sound monetary system be put in place and its member Jamnadas Mehta articulated the party’s position on the gold market, “We shall insist in the select committee that an automatic system shall be provided for the expansion and contraction of currency following a free inflow and outflow of gold in a free gold market.” Similar demands have sprung up in the West only in recent times after the occurrence of economic crises in the US and Europe.
  • Jamnadas Mehta also rejected the claim that the bank’s board would be elected by an “independent” body of shareholders and stated, “We say that as the executive of the bank owe their existence to the government, they will simply carry out the government mandate in the running of the bank; the directors will have no control whatever.” In the past few decades, his prediction has come true not only in India, but also in other countries where central banks are supposed to act independent of the government.
Here is a very timely analysis by PB Mehta about political economy of India:

  • The most criminal example of government mendacity has been its talk on the banking system. During the financial crisis, we patted ourselves on the back for having a prudent approach to banking. Guess what? The government told you lie after lie as the banking system became the main conduit through which crony capitalism flourished. Banks were running Ponzi schemes, giving out loans when there was no rational basis, failing to do due diligence if the borrower was too big to fail, shutting out small and medium enterprises and letting a handful of big players mop up credit at will. Of course, no government will talk the economy down. But no one is being held accountable for the major catastrophe in the making. Banks were put in this position in part because of a prior failure to bring in reforms. Now that they are in bad shape, their fragility is being used as an argument to not diligently clean up the system.
More interesting part is the following lines:

  • The central driver of good economics is recognising the problem. Despite the slowdown, government will continue to produce lawyer-like alibis: the whole world is slowing down, the global conditions are adverse, five-and-a-half per cent is not bad. These arguments are patent nonsense.