Potential indicators of risk in a growing economy

As a rule, it is best to steer clear of labels and standard definitions. Labels tend to be simplistic and usually reveal their users’ ideological underpinnings. So it’s interesting that terms such as oligarchy and plutocrats are being bandied about increasingly in the Indian context — not by the usual suspects, the Left and their fellow-travellers, but by mainstream economists and institutions such as the Asian Development Bank. Is India turning into an even more oligarchic society than it always has been? Quite a few analysts believe this is so. Let’s listen first to the Prime Minister’s own adviser Raghuram Rajan who, not too long ago, was the IMF’s chief economist.. At the Founders Day celebrations of the Bombay Chamber of Commerce, Rajan said something interesting. In his view India is at the crossroads: “With the right policies and some luck, we will become a middle-income constitutional democracy in my lifetime. But inaction coupled with bad luck could make us an unequal oligarchy or worse, perhaps far sooner than we think.” His unease stems from analysing a set of figures: the number of billionaires per trillion dollars of GDP for the major countries of the world. Heading the list is Russia with 87 billionaires for its $1.3 trillion of GDP. Coming second is India which has 55 billionaires for the $1.1 trillion of GDP that it generates. Why should this be worrying at all? After all, we did have a booming economy in the last few years. But some perspective would help to see this in the global context. Brazil, which is often cited as an example of very high income inequality, has only 18 billionaires despite a greater GDP than India, while Germany, boasting three times India’s GDP and a per capita income that is 40 times India’s, has just about the same number of billionaires.

For Rajan, who headed a committee on financial sector reforms in India, the numbers are alarming: “Too many people have gotten too rich based on their proximity to the government. If Russia is an oligarchy, how long can we resist calling India one?” It is his contention that reforms have created new sources of rents for the establishment, specially from the allocation of scarce national resources. This means that barring a few exceptions most of India’s billionaires have been created through sweet deals in land, mining, coal, oil and gas. Now turn to another report released a few months ago. India 2039 – An affluent society in one generation warns that the creation of oligarchies is a common trap that developing countries fall into and one that prevents them from realising their full potential. The report was prepared by Emerging Markets Forum, an American non-profit, for the Asian Development Bank. Its overarching message is grim. “While the expansion of corporate wealth was part of the pro-business policies that helped support growth, there is now a growing risk that parts of the corporate sector will wield excessive influence over the state.” There is a chance that the report will be taken more seriously since it comes from the ADB — as far removed as one can get from the familiar rants of left-wing politicians, liberal journalists or bleeding heart non-government organisations. Indeed, there is ample evidence of the excessive influence of the corporate sector over the state in the still unravelling drama over Reliance Industries’ (RIL) KG Basin gas price scandal. Playing a key role in this controversy is the Ministry of Petroleum and Natural Gas led by its minister Murli Deora and other state actors like the Director General of Hydrocarbons (DGH). What is clear is that critical public institutions have been subverted to serve powerful corporate interests at a great cost to the nation. The tragedy is that revelations have not been the result of any crusading efforts by the media or by public servants keen to expose wrongdoing. Instead, much of the expose is based on the dirt that has been dug up by Reliance Natural Resources Limited (RNRL), the company that was hurt by the proximity of RIL to the establishment. Would any of this have come to light if the Ambani brothers had not split and the younger sibling was not at the receiving end of the policy machinations that appear to benefit the elder? The answer is not. The most damning of the charges relate to the steep escalation in the capital expenditure shown by RIL to develop its DC 6 field. From a capex of Rs 12,000 crore to produce 40 mmscmd of gas in 2004, the figure shot up to Rs 45,000 crore in 2006 for doubling the production. It is possible that the figures are justified. But the point is that the government chose to ignore the warning of its own economic advisory committee to approve the expenditure without any validation.. It turns out that the DGH VK Sibal who came out roaring like a lion last week to defend his approval of the costs had not done his due diligence. The independent expert and the international consultancy which he cited as independent authorities who vetted the costs have been exposed as individuals and entities closely linked to RIL. But the most shocking of disclosures has come from another government body, the CAG, which Sibal claimed had audited RIL’s accounts. The CAG says it has not even been able to access RIL’s data so far despite asking for it for a year and a half! That’s not the worst of the RIL imbroglio. The country’s top law officials, the Attorney General and the Solicitor General have openly criticised Deora’s ministry for having hobbled the public NTPC from pursuing its legal battle against RIL.

In the long history of scams in independent India, rarely has one ministry and its affiliates been so deeply enmeshed in decisions and policies that have so blatantly gone against national interest. Yet, the government has chosen to gloss over these false and untenable claims. All that it requires for oligarchies to become more powerful is the silence of society, specially that of the business community. And the ADB report has a special warning for them. “The private sector must recognize that many current practices that allow a few powerful business houses to thrive are ultimately against the long-term interests of the business community as a whole. Not only is the current model not sustainable, it is potentially disastrous, as it could bring into disrepute the entire system and launch a popular backlash that will be difficult to contain,” it says. So what’s in store for a country like India whose state organs are weak and are easily compromised by powerful and unethical business interests? There is a clear risk that India will evolve into oligarchic capitalism in which “the market and political power of major corporations will become a drag on long-term growth and a source of distortion in policy design”. The silence of those who matter is truly deafening in this case.

Carnatic Music Concert

A group of senior afficionados of Carnatic music who I met on one of my trips to Madras mentioned to me that in the 1950s, at the Kapaleeshwara temple festival, when Lord Muruga was being taken out on a procession, TN Rajarathnam the king of Nagaswara, played a five hour long Shanmukhapriya alapana. It was of such high bhavaa or emotion that they are sure Rajarathnam had a vision of Lord Muruga himself. Reminiscing this itself brought tears to their eyes even after several decades. This is pristine emotion without words.
Many of us have who have grown up in India would have been exposed to some form of music or the other. And for many, classical music be it Carnatic or Hindustani, would have been perceived as something esoteric that could not be appreciated unless you had some formal training or some other form of exposure.
Carnatic music has evolved over the centuries as a combination of art , mathematics, and last but not the least bhakti or bhava; and scope to improvise on either aspect, or all of them, was left to the artist. This form is as much a science, as it is considered an art. Ofcourse most of the practitioners of this form would not know the underlying scientific principles.
Patterns of frequency (Swara) are the basis for the structure of an underlying tune, which is called the "raaga". Structure of the ragaa system has evolved and has been recorded as texts. The system of classifying the ragaas into the melakarta scheme is brilliant. The derivation of the ragaa and its basic pattern based on the katpayadi computation is another example of the brilliant pedagogy of carnatic music.

Rendering a ragaa alone evokes particular emotion. This is also enhanced by the artist's flair and choice of the permutations of the swaras.
Lyrics add to enhance a particular emotion of the ragaa, and also emphasise the particular emotion that the writer of the song had in mind when he scored it.
Lyrics focus is primarily on a particular Lord. Sometimes they also focus on a particular temple or kshetra. They are descriptive or are suppliant/fervent prayers to the Lord to grant boons, or explaining the dharma of life, or are a combination of them. Majesty of construction of the verses is so vivid when we take a look into the lyrics of the Trinity. Thiagaraja, Syama Sastry and Muthuswami Dikshitar were geniuses who composed songs on their respective ishta devatas. Each song is an outpouring of a varied emotion, and therefore was composed in a particular ragaa that suited the emotion, and the talaa or beat that would enhance that emotion.
Some of the songs are authoritative stamps of specific emotions and seem to suggest the siding with a particular devata. For example, a Bhairavi, or an Anandabhairavi is usually associated with a Godess simply because of the Amba Kamakshi or O Jagadamba, while Shanmukhapriya is usually associated with Lord Muruga.

The ragaa bhava and the bhava of the lyrics are the fulcrum of a concert and the vocalist or instrumentalist should always remind himself/herself of this and must strive to bring it out to the best of his/her ability. The rendering of a song can also be enhanced with specific additional bhavaa of the artist. As examples, M Balamuralikrishna is remembered for Nagumomu, Semmangudi Srinivasa Iyer for Amba Kamakshi, and Lalgudi Jayaraman's technical brilliance on the violin - it is said Lalgudi's violin speaks the verses with bhavaa or emotion; I have heard recordings, and it is definitely true.

Bhavaa is the heart of the concert, and if this is lacking, the concert is a mere pattern of noise, that may be pleasant to the ear, but lacks in the "something" we look for.

While at Tiruvannamalai

August 2007.
Priya and I left Kanchipuram after the bhikshavandanam, for Tiruvannamalai. It had rained very heavily in the past few weeks, and many roads were damaged or were full of potholes. We had just crossed Vandavasi, and suddenly realized that there was no road ahead. A small culvert that existsed had caved in, and thus the road had a pretty big gap.
We waited alongside for a while wondering what to do; were also thinking of turning back and get to Tiruvannamalai via Tindivanam, which meant we had to drive back past Kanchi. At that time, a bus passed us, and the driver nonchalantly turned left, off the road, drove into the field and then got back on to the other side of the crevice of the road. Wow, that was really something. If I had to reach Tiruvannamalai, I too had to do the same. And that's exactly what I did. The car skid on the wet clay on the field, and got to the other side of the crevice; just that our hearts skipped a few beats. Fortunately the car did not get stuck!!
The roads thereafter were better, though they were narrow. We reached Tiruvannamalai after passing Polur. I had booked a room at Ramanasramam. We settled down, and after dinner at the Ashram, I decided to do the Girivalam.
All through the 14 kilometers around the Arunachala Hill, it either rained ahead of me, or was raining behind me. I was walking on wet roads, and at many places wading through the rain water flowing on the roads. But it never rained on me. I was amazed!!
Priya, who was in the room at the Ashram, was extremely worried as I didnt carry an umbrella with me. She just hoped I took shelter at one of the temples along the walkway as it was pouring cats and dogs. When I returned after the girivalam, in the usual 3.5 hours time, she was stunned to see me, more so because I was bone dry. This was a miracle.
Each one of us who visit Tiruvannamalai have atleast one experience. Some are able to take cognizance of it, while some do not.
In my case, this was the best experience.

Marathon weekend

A marathon weekend I should say the last one was.
My parents possess a Sri Rama Pattabhisheka Thanjavur painting that was my great grand father's (Late Sri Natesha Iyer). This picture that is more 85 years old, has passed 2 generations, and needed some immediate renovation and had to be framed once again. What adds to its glory is that Sri Chandrashekarendra Saraswathi Swamigal (the then Peetadhipathi of the Kanchi Kamakoti Shankara Matam) while camping at Kattumannarkoil in the mid 1940s, had this picture along with His pooja.
After many attempts we found an artiste (Jyothi) in Bangalore who said she would be able to take it up.
While we were pretty skeptical initially, Jyothi did a fabulous job, and we even got it framed at her studio.
Having completed this project, my mother wanted a Sundarakanda parayanam to be conducted for this picture.
It was decided as 16 August. We started at 7AM. It ended at almost 2PM. This was a non-stop reading of each and every sloka of Sundarakanda as in Valimki Ramayana.
I feel we did well, and are all extremely satisfied.
A couple days before this was Gokulaashtami, and we recited the entire Narayaneeyam (1000 odd slokas). This was for a new Thanjavur painting of Navaneetha Krishnan that Appa/Amma gifted Priya and me for our 10th wedding anniversary that falls in October. This picture is another gem.
We started the parayanam at 7PM on 13 August. By about 9PM we were reciting the part that describes Lord Krishna's birth. We stopped briefly here, performed the Krishna Pooja (it being Gokulashtami), and resumed the recitation. We completed this at 3AM the next morning.
Another satisfying exercise I should say.
All I can say is Lord Rama, Lord Anjaneya and Lord Krishna were with us all through and helped us complete these marathon recitations.

Omampuliyur - Guru Sthalam

Situated on the northern bank of the river Kollidam, and about 7 kilometers from Kattumannar Koil is this small village/hamlet.
The main temple is of Lord Shiva, but is known as a Guru sthalam.
Guru Dakshinamurthi teaches the "pranava" manthra to the Godess Parvathi (who is known as Pushpalathambika), and hence at this temple, takesa position in the main mantapam between Shiva and Parvathi. Rishi Vyaghra paada has worshipped the Shiva linga here. And hence the Lord is worshipped as "Pranavavyagrapureeshwarar".
This temple also has the shrines of Godesses Saraswathi, and Gajalakshmi.
Lord Nataraja, who usually is ensrhined in the main mantapam or hall is outside (in the position where Lord Dakshinamurthi usually is) as His position is occupied by Lord Dakshinamurthi.
Archana and abhisheka sevas performed here are unique in the sense that after the same is performed to Lord Shiva, the same is then performed to lord Dakshinamurthi, and only then to Godess Parvathi.
It is said that this temple is a parihara kshetra for those born under the star Revathy; a peeda parihara kshetram infact.

Sri Lanka - after the LTTE

Early last week, it was all over the news channel that the final resistance of the LTTE was broken. Gory pictures of the LTTE leader V Prabhakaran shot at on his forehead was telecast.

Lots of questions arise in the mind of people: Was this the only alternative available for the Sri Lankan government? Were human rights abused greatly? Why wasn’t even a single LTTE commando captured alive (none swallowed the cyanide capsule that they wear around their neck)? Will this mean the Tamils minority in the island have a good future to look forward to?

This strife assumed demonic proportions post a period when the Sinhala majority and Buddhist forces alienated the Tamil minority in the 1960s and 1970s reducing the lives of the minority to the status of refugees. What started off as a small agitation became a violent and emotional movement that the LTTE spearheaded and continued for more than 3 decades.

The Sri Lankan government has in the past negotiated with the LTTE officials, and has on several occasions proposed devolution and sharing of power, in a bid to bring back normalcy to this ethnic strife. Unfortunately all the past attempts failed, and this has only intensified the war. This makes one wonder if the LTTE was at all interested in a settlement.

Caught in the crossfire between the Sri Lankan army and the LTTE commandos were millions of innocent citizens in the island. To add to this severe hardship, the common man has often been suspected by both the government and the Tigers as being informers of the other group. In a bid to speed up the annihilation of the Tigers, orders to eliminate the commoners would have been given. This was despite calls from abroad for a truce; and to slow down, and be careful.

Emboldened by the support from China and Russia, the SL government has also rejected attempts by the UN Human rights convention to institute an inquiry into legitimate war crimes.

Rehabilitation is going to be a long painful and costly exercise. It has to be fiscally long term and sustainable. It also calls for emotional support to ensure a proper integration of the Tamil people into mainstream SL.

Employment Guarantee Schemes - India

After hectic confabulations and negotiations within the UPA, we are all happy that Manomohan's team is in place, and is also raring to go. The only eyesore I will say is that Manmohan and Sonia have given in to Karuna's tantrums to accomodate his family members. This was definitely not easy to digest; followed immediately by the elevation of Stalin at Madras (Chennai) as the Deputy Chief Minister.
One of the schemes that was claimed a success in the previous regime, on which the Congress apparently rode to power, is the NREGS (National Rural EMployment Guarantee Scheme). This scheme provided for a minimum of 100 days wages to citizens in rural India for works that were taken up and completed.
This should be given a good thrust and the government should ensure this reaches all corners of the country in the next five years. In those areas where this has already begun, there should be continuity.
While this addresses the rural needs of the population, I see a pressing need to evolve such imaginative schemes even in the cities of India.
Let me cite an example or two:
1. Traffic management in the cities
All the cities in India have experienced an explosion of vehicles (specially four wheelers) on the roads. This exponential growth has not been supported by sufficient infrastructure facilities. Further this growth has also not been supported sufficiently by training vehicle owners, and users on road behaviour and discipline.
Why cant this be an initiative or responsibility of individual MPs to manage (1) road behaviour training, (2) manage and channelize the traffic in cities specially during peak hours, (3) manage traffic specific communication for the benefit of the citizens?
2. Maintenance of lakes and parks in cities
There are several lakes and parks in cities whose maintenance needs to be overseen and monitored on a daily basis to ensure cleanliness, and to prevent misuse.
In both the examples, the youth in the cities who are unemployed, are the intended beneficiaries of this scheme. An accepted recruitment drive (similar to the NREGS), or a specifically tailored recruitment for this scheme may be employed to get the youth on board. This should be followed a basic training as per the needs of the task at hand.
It will be best not to have long hours of work. Better still to have a shift system. Work output must be measured. The measuring criteria must be defined clearly, and made known. Wage payment should be on a weekly basis.
This should be funded by both the MP and the local MLA. The state can bear upto 40% of the funding, while the centre can provide 60% of the funding.
I sincerely hope the youth in the administration - both those in power, and those in government services sit down together, and evolve an implementable process that benefits the country. I have no doubts on their ability to conceive such programs. Implementation though will be a challenge.

Goods & Service Tax (GST)

GST (Goods & Service Tax): the single tax replacing a plethora of indirect taxes

The Government of India has promised to introduce a national Goods and Service Tax (GST) from 1st April 2010. This is as per the budget speech by the then Union Finance Minister P Chidambaram, in 2006.

Indian consumers and corporate houses pay a lot of taxes when they manufacture/buy/sell goods, and when they consume or offer services - Sales Tax, VAT, Excise/CENVAT, Service Tax and so on.

Taxes have been collected by both the Central as well as the State governments for many decades now. CENVAT and Service Tax have always been collected by the Central Government, while all taxes on sale of goods (such as VAT and CST) have been collected by the state governments. CST follows the “origin” concept; this means for a sale transaction, the state that levies and collects the tax is that from where the goods originated. In the case of a sale transaction where the origin and destination of goods is within one state, VAT is levied. The tax is also collected by the same state.

What will GST do? Will it be yet another tax ?
Does it mean these sets of taxes are replaced with GST?
The answer is Yes; GST is proposed to replace all the existing taxes on goods and services – CST, VAT, and CENVAT & Service Tax.

Is it so simple? Can it be achieved with a single stroke of legislation? The answer to it is No.

Very simply put, GST will greatly reduce the financial autonomy of state governments, and will make them extremely dependent on grants from the central government. As an example, states such as Maharashtra estimate tax collection to the extent of 40,000 crores of rupees annually from state level taxes.

State governments value this autonomy very dearly. They will therefore oppose this legislation vehemently unless they are (1) convinced that they are also allowed to levy GST on certain goods like petroleum products, tobacco products and alcohol, or (2) are allowed to levy VAT/CST in addition to GST, or (3) are supremely convinced of the model of funds sharing that the central government proposes, or (4) some combination that allows them to maintain their autonomy in terms of collection, rather than depend entirely on the government of India.

GST should ideally be administered by one authority. Since this tax is uniformly levied all over the country, the authority responsible for the tax administration should be under the central government. As a result, allowing states to collect GST on specific goods, or categories of goods and/or services will be very difficult to administer. For the corporate it will also be extremely painful as a compliance task.

Introducing GST, and allowing the VAT/CST to remain will infact be nothing magnificent in terms of unification of taxes. CENVAT and Service Tax will be merged; nothing more. Further, this will mean reporting to more than one tax authority for all those who have to file the returns for these taxes, and ofcourse for end consumer, there is only more tax to be paid for the commodity.

There are several administrative issues that will have to be ironed out by the government before GST is introduced.
- Definition of taxable goods and services
- A suitable, uniform tax rate
- Zero rated goods and services
- Tax Jurisdictions
- Apportioning of taxes between the centre and states
- Shift from origin based to destination based
- Handling concessions or tax exemptions bsed on region and/or industry

Now that the UPA is back in power, Prime Minister Manmohan Singh, and his new Finance Minister will want to take forward this unfinished task that began with the Raja Chelliah reforms in the early 1990s.

2009

The run up to this election has been an eye opener (not that the elections in the past have’nt!! this is still fresh in my memory).
- The media - their role, prejudices, opinion polls, short sightedness, selective telecasts & judgments and condescension in their talk shows
- The political parties - their ill conceived, unintelligent and abysmal manifestos, shameless and opportunistic alignments & realignments - both pre-poll & post-poll
- The illustrious/infamous candidates - their individual manifestos, their crass, hysterical & screeching campaign speeches, & last but not the least the assets they have accumulated as politicians (wonder if their earning ability has infact helped the Finance Minister take credit for the GDP score!!)
- The common man - unable to understand who he needs to vote for, nevertheless casts his vote as it is his fundamental right.

In this election nearly 10,000 crores rupees have been spent by the candidates alone. Additionally the state incurs expenses to the tune of 300 crores of rupees as well - booths, duty officers and their travels, security etc.

Elections, the freedom to choose our representatives, we all know, are the spine of a democracy. And those elected as "representatives" of the people, are ones who ideally should govern the country, ensuring safety, security and stability.

The reality unfortunately, is far from ideal. The least priority of the representatives is governance - they unfortunately spend time trying to survive; most often it is their ability to hang on to power we citizens are witness to.

Sadder is the fact that those who can govern, face such a stiff entry barrier (read money power) that they dare not think of it even in their dreams. A candidate, if he has to make himself known in the constituency he stands for, will need to travel across geography of approximately 300 Sq kilometers at least twice. Arrangements for the campaigns, arrangements at the venue of election meetings, remuneration for his team, boarding and lodging, and travel, are the costs a candidate will incur. Thus to run a modest campaign, the candidate should be able to bear an expenditure of close to a few tens of lakhs of rupees. But it turns out that this is not sufficient. This is why we do not often get to vote for representatives of our choice, but are forced to choose from what is made available.

As political observer and commentator Cho Ramaswamy says, the choice is most often between the lesser of the evils. What a pity!!