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. 

Sunday, September 9, 2012

Obsession of polity fraud

Professor Indiresan wrote this a decade ago but true to this day:
  • Our present-day leaders no longer encourage sincere effort the way Gandhi did. They take their cue from Nehru about whom it was said that nothing grows under a banyan tree. Nehru stood tall mainly by making everyone around him small. Present-day leaders have become a caricature of Nehru: they surround themselves with pygmies only. They clip the wings of any that show promise to rise to great heights.
An earnest and sincere engagement with Ambedkar means we rethink the way our society is organised.

Inheritance of frightening

"..millions of young Indians who have risen in recent years and are now part of the confused, upwardly mobile, post-reform internet generation, the question has a new urgency..."

“If Indian education and scholarship continue along their current trajectory,” writes Sheldon Pollock, the brilliant professor of Sanskrit at Columbia University, “the number of citizens capable of reading and understanding the texts and documents of the classical era will very soon approach a statistical zero. India is about to become the only major world culture whose literary patrimony, and indeed history, are in the hands of scholars outside the country.” Das's full article is here.

Friday, September 7, 2012

Stunning self-correction

Sentence to ponder over (Fixerpreneurship by Shekhar Gupta):

  • If you draw a simple chart of the large companies that have lost the most value on the stock markets over the past three years, you’d notice that almost all of these were doing business on the same cusp of politics, finance and natural resources. To that extent, you have to admit that the market has been the first to sense the rot and has applied a stunning self-correction, severely punishing those responsible for it. Many of those who called themselves masters of the universe until just the other day, flaunting Bentleys, private jets, yachts, Swiss chalets and more, are now hiding from their bankers and shareholders and blaming the “system”. Obviously, there can be no sympathy for them or for their bankers. The small shareholder is always the victim of hype. So the markets, at least, have responded to this multi-layered crisis of governance.
Prof Ajay has very interesting post here discussing about the Indian capitalism and its wings of fire.

Sadanand Dhume point out that unlike India "Japan, South Korea and Singapore didn't start seriously expanding their social welfare programs before they were well into middle-income status—at which point growth had begun addressing the major woes."

Tuesday, September 4, 2012

Don't Miss it!

Old time of Bombay Plan and its impact today. It is important to ponder over the below statement:

  • To some extent, the kind of corruption that is agitating India today was built into the Bombay Plan as it detailed the facilitating role of the government and the public sector in promoting private enterprise. As such, this must be reformulated.

Here is very interesting perspective by Dr Ashok V Desai on the current debate on coal scandal which hunts the ruling UPA government.
  • Everything worked fine for the next 14 years. Then the government was briefly subverted by liberals who believed that the wholesale nationalizations had been a mistake and that competition amongst privately owned businesses was best. Led by P.V. Narasimha Rao, they wrought a revolution in industrial policy. The Coal Nationalization Act was amended in 1993 allowing allocation of blocks to private enterprises for captive exploitation.

Saturday, September 1, 2012

Of that ruining tales of Indian growth story

Some links:

Shankkar Aiyar quotes while analyzing the current political economy of India:

Voltaire said, “We never live; we are always in the expectation of living.”

Mark Twain said “invest in land as they don’t make it anymore”.

Free marketeers turn Marxists- At least, I am not surprised to see these free marketeers turning to Marxists. 

Very interesting thoughts on health economics. "Master the gold standard of strength training first.".

Valuing economic freedom

Here is a good piece by a close friend of mine. The title of his article is "Valuing and Preserving Our Political Freedom". His conclusion is more apt.
  • The only way to preserve our political independence is to stand for economic reforms and basic civil liberties. Let us not squander away this historic opportunity and become political slaves of another power. Let us now strive for economic freedom to preserve our political freedom.