For decentralization to work, dispersion of power is MUST!

The interesting new book "In Service of Republic The Art and Science of Economic Policy" has been receiving wide discourse in public among different stakeholders. Its not surprising to see some are not able to understand the core issues highlighted in the book due do their own egos!

Here are some review and excerpts published by different platforms:

Taking Governance Decentralisation Seriously

“The organic development of the economic system, with freedom in the hands of each individual, works better than instructions from the top.”

Interview with Vijay Kelkar & Ajay Shah: ‘The middle-income trap can happen here’

India’s leaders must choose a few things to do, do them well, and only then move on to other things, Kelkar and Shah say

this readable collection of essays should be in the hands of as many lay people as students of economics and public policy.

Vijay Kelkar suggests single GST rate of 10 % as the ideal reform of the indirect tax structure

Of Mao, Modi and law of unintended consequences

The “cost to society for every rupee of public funding is around 3” compared to 1.5-2 in developed economies.

Good reading

"This still leaves unanswered the question we raised earlier: how does this help the BJP reach out to the ideologically uncommitted voters it needs to win close to 200 seats? The prevailing wisdom seems to be that Modi’s stewardship of Gujarat has been so efficient, particularly in terms of economic development, that Indians committed to economic modernity — shareholders looking for a return on their investment, corporate houses frustrated by red tape, young people looking for jobs, farmers hungry for irrigation and electricity, the urban middle classes thwarted by bureaucratic irrationality and corruption, ordinary citizens maddened by absent infrastructure — will vote for a Modi-led BJP because their first priority is ‘governance’, not an unfortunate spasm of violence that happened more than a decade ago." More here

A large section of the Indian middle class, though living in the country, is in a state of mental exile.

While we were silent

Its time to get out!

Minister for Civil aviation says, very rightly so:

• "Not just the civil aviation sector, the entire service sector is a burden on the government. There are too many constraints and the attitude of government employees is depleting the sector. The catchword is customers should be king, but in this sector, government servants are king. You cannot sack anybody and it's difficult to discipline the staff."
• "We have planned to appoint an ombudsman to address grievances. But I can't say when it will happen. In the government, never ask when,"

Of that slow move

"Policy masquerading as good politics (subsidies, legislated rights, poetry without plumbing) got this government bad economics (high inflation, low growth, weak currency). But jobs represent a unique intersection. Formal sector employment changes individual self-esteem, healthcare, education and nutritional outcomes in a way that no subsidy can. An additional upside is the dua (or blessings) of the individual and her family."

Food and BUREAUCRATS

"...a government survey shows that close to 99 percent of Indians say they are getting two square meals a day. This could also beg the question – is there a need for a universal food security legislation, as the UPA seems so keen on legislating?" More here.

Mostly, the laws, rules, regulations etc. enacted by the elected governments makes near perfect sense but lacks in commonsense. You can't ask the dead animal to walk into your door step to serve you for your own sake. I mean read this article by Yamini.

Crack-up GOLD

Protect our gold from the beast!!

"Those who control the economy describe gold as a “dead investment”, oppose its import, and talk of putting the “gold to work”.

Significantly, the proposals of Raghuram Rajan, the government’s chief economic adviser, favor foreign bankers who seek to hoard gold to protect themselves from a major economic collapse. Raghuram Rajan was formerly with the International Monetary Fund and is currently affiliated with the secretive BDT Capital based in Chicago. He also works for the University of Chicago whose endowment fund operates like a hedge fund with a portion of its investments tied to gold. Yet, Raghuram Rajan opposes the ownership of gold by Indians who want to protect themselves from the impending economic downturn."

Read the full article here.

Making capitalism work

"What we are witnessing, globally as well as in India, is the end-game for fiat currencies (for the scholarly-oriented, the present conditions could be best summarised as the “Crack-Up Boom,” as defined by Ludwig von Mises, an economist from the liberal, laissez faire-oriented Austrian School of Economics.). From now on, all Keynesian stimulus policies would actually go on to worsen the imbalances rather than revive growth." More here.

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.

"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.

Some links

"We are working with 19th century file-based procedures which require every individual to pronounce sequentially on a file. All of that becomes open to questioning—Under Secretary wrote this, why did the Deputy Secretary write that, etc—and it is absolutely impossible to fix responsibility in the system."

"Good education can be imparted only by good teachers, whatever their caste may be. RTE will not work, so long as it prevents the most knowledgeable teachers from being recruited."

"Communism swept a large part of the globe to abolish feudalism in the name of freedom. According to The Black Book of Communism authored by many European academics, edited by Stéphane Courtois, the excesses under Communist regimes have taken 94 million lives. Democracy is a great liberating step from other forms of subjugation like dictatorships,"

Really interesting reading

A policy that cannot be policed by Bibek Debroy. 
An industrialist ponder All that happened over the course of a frenetic weekend!

Shopping in the villages by close relative of late Indian economist V K R V Rao.

A hurdle race for dalits too

Here is my piece in the August of Pragati-The Indian National Interest Review. Some excerpt:

• The Quick Results of 4th All India Census of MSMEs 2006-07, released in 2009, provides the most recent available data for MSMEs. According to this, the total MSME units are 261.02 lakhs comprising 15.53 lakh registered units (5.9 percent) and 245.49 lakh unregistered units (94.1 percent). Out of this, dalits (SCs) account for a total of 20.58 lakhs comprising 1.20 lakhs registered units (5.7 percent) and 19.38 lakhs unregistered units (94.3 percent). Similarly, MSMEs owned by STs account for a total of 8.29 lakhs comprising 0.47 lakhs registered units (5.7 percent) and 7.82 lakhs unregistered units (94.3 percent). Together, SCs and STs own a total of 28.87 lakhs MSME units (11.06 percent) (registered: 1.67 lakh and unregistered: 27.20 lakh).
• Out of the total units, only 70 percent are estimated to be working and others are either closed or not identifiable. It clearly seems that the prevailing rules and procedures are so hostile to any entrepreneurial activity as witness 90 percent of MSMEs remains unregistered.
• The Economic Census for 2005 (latest available) throws up some more interesting facts that seem to belie the economic backwardness of certain communities. For example, OBCs (Other Backward Classes) have a 27 percent quota in government jobs and educational institutions, yet they own 15.92 million units (out of a total of 41.82 million). The SCs with 15 percent reservation in government jobs and colleges, own 3.69 million units and STs run 1.52 million units. Out of a total of 6.08 million establishments in the farming sector, the share of OBCs was 2.81 million (46.24 percent), SCs was 0.61 million (10.08 percent) and STs was 0.38 million (6.32 percent). More than 93 percent of these units owned by OBCs, SCs and STs were in rural areas.
• Two vital issues emerge out of these statistics relating to dalits MSMEs. One, majority of MSMEs are unregistered. Two, more importantly most of the dalits owned MSMEs are in rural area. Therefore, the government decision to reserve MSME units for procurement has no relevance and thus decision taken clearly shows a political motive.

Poverty-wallas, toilet-wallas to LPG cylinder-wallas

Prof Bibek Debory writes quite interestingly on LPGGasnomics in India:


"But not long ago, every time we ran out of a cylinder, there would be a problem. We were told there was a norm of no refills for 21 days, which works out to something like 17 cylinders a year.

I understand this quantitative cap no longer exists. However, it is some kind of norm to indicate how many subsidised cylinders you should be entitled to every year, and there is also a proposal floating around that each household should get no more than five subsidised cylinders a year.

If you now milk data on that portal, there should be a tear in every eye. In the year ended May 31, 2012, these are the kinds of numbers we have: Naveen Jindal (369), Hamid Ansari (171), Preneet Kaur (161), Vijay Bahuguna (83), Rajnath Singh (80), M S Gill (79), Maneka Gandhi (63), Suresh Kalmadi (63), Mulayam Singh Yadav (58), Ram Vilas Paswan (49), Sharad Yadav (49), Ashok Gehlot (45), Lalu Prasad Yadav (43), A Raja (47), Sharad Pawar (31) and Jaipal Reddy (26).

You can mess around with the portal for other nuggets. Why did A Raja need LPG cylinders if he was in jail? Is the late Prime Minister Chandra Shekhar dead or alive? How come he still receives 48 cylinders? Isn't there a norm that there can be only one connection per household?
How did Salman Khurshid get two connections and consume 62 cylinders? Isn't there a norm that the same individual cannot get two connections under two names? How did Mayawati get two connections and consume 91 cylinders? Naveen Jindal at the head of the league is symptomatic."


More you can track your own house and your enemies house how many cylinder they get in a year from the website http://111.118.215.211/


After committing significant reporting error on Indian economist Montek, the Tehelka apologises now!! What is the use?


"An earlier version of this story stated, incorrectly, that Pavan Ahluwalia worked for Price Waterhouse Coopers, in London, and that he was appointed by them to work on a project to privatize the Delhi Jal Board. Mr. Ahluwalia has never worked for Price Waterhouse or lived in London. He worked as a consultant to the Government of Delhi on a project to undertake institutional reform of the Delhi Jal Board, and was not involved in any discussions or decisions to related to its proposed privatization. The story also quoted Arvind Kejriwal as saying that the Delhi Jal Board project was initiated by the Department of Economic Affairs, when Mr. Montek Ahluwalia was Secretary (Economic Affairs). Online records of the correspondence between the World Bank, the Government of the National Capital Territory of Delhi (GNCTD), and the DEA, however, show that Mr. Ahluwalia was not involved in initiating this project, which was put forward by the Chief Secretary of the GNCTD The DEA was simply playing its nodal role, as the agency responsible for forwarding state requests for World Bank assistance, and this involvement was at the level of Additional Secretary V Govindrajan.


Tehelka regrets these errors, which have unfortunately been carried in the print edition. We apologise to Mr. Ahluwalia for the inconvenience this has caused. The error will be corrected in the next print edition as well. http://www.delhijalboard.nic.in/djbdocs/reform_project/docs/docs/doc_project_prep_docs/pdf/correspondence/27_04_1998.pdf" 

Pragati@60

The March Issue of Pragati is out. It has turned 60th Issue this month. It has many interesting articles dealing with national security issues, financial crisis and governance, food (un)security in India, Aryan cult theory, (re)looting under NREGA etc.

Here is a PDF version of March Issue.

A liberal vision for India

Here is our latest piece titled "A liberal vision for India" published in the February Issue of Pragati. See page number 18-20.

The goodness of RTI Act

Do Government School Teachers in Tamil Nadu educate their own children in Government schools or Private Schools?

Great Chidambaram wisdom!!

So, here goes exact lines from the Hon Home Minister, then was out of power both in the ministerial and parliament,

This article was published in August 18, 2002 in the Indian Express. Don't look at P.Chidambaram, now with the backdrop of scams and all other odd news, I read his columns three years ago when it was published in Book form. A View from the Outside: Why Good Economics Works for Everyone. It is must read one!!

The article I refer here is in page number 277-280.

Last three paragraphs from his hot article titled "Laughing All the way to the vote bank".

"What we need is a comprehensive law to regulate political parties. Just as we have Companies Act to regulate the affairs of companies, we must have a law that will lay down detailed rules to govern the functioning of political parties.

The Income Tax Act must visit political parties with the same consequences for breach as it does in the case of companies and individuals. We also need a body like the Company Law Board to oversee the functioning of political parties and resolve internal disputes.

Just as corporate governance has become a big issue, governance of political parties must also be raised as an important issue. Because, if we have poor governance in our political parties and if they do not observe any principles or ethics, the governance of the country will also descend to more abysmal levels." (p.280)

Failure is again a thing

Dr. Atanu Dey argues in his Indian Express article that "The failure of the Indian education system must count as the Indian government’s greatest failure. Over 90 per cent of students drop out of school by the 12th grade; only 6 per cent go on to tertiary education, to cite just one dismal statistic. We have to understand that the failure is primarily due to flawed policies that the government has consistently imposed on the education sector. Aakash, like its predecessor, the “$10 laptop”, is just another distraction — but a very costly distraction."

Lose your job and beg at my feat!

Learn how to destroy the jobs created by people themselves through Central Government schemes like NREGA which is fully funded by tax payer’s money.

The STATE is drinking POWER like a fish in the deep sea

Actor Imran Khan says:

"Sometimes, inadvertently, our personal freedoms are curtailed. It's not only our right, but also our duty, to stand up and save it sometimes, in a democracy." 

What stops?

What stops to simply argue for private property right is not clear. Unlike in the past, many left-wing supports now understand the need for private property right but they refuse to defend property right. This is simply a bizarre.