Wallowing in Nostalgia

This blogger has reached a stage in life where he often turns nostalgic. Ahhh - the good old days ... Sigh ...

Today it was nostalgia in ads. All from about 40 years ago. Colour television had not yet come to India (it came with the Asian Games of 1982). Black & White TVs were few and far between and it was perfectly OK to go to your neighbour's house to watch TV because they had a set and you didn't. Of course, there was only one channel - Doordarshan, the state TV. 

Ads were primarily through cinema. Before the movie started, there would be a series of ads shown in full colour. Those days, you eagerly looked forward to the ads as much as you looked forward to the movie itself And then when TV came, these ads morphed to TV, but the largest reach was through cinemas for a long time. Of all the ads, there were  3 or 4  that almost everybody knew by heart. We could hum along, skip along to each of them.

First Gold Spot. When Coca Coal exited India in 1977, a local entrepreneur quickly cashed in with equivalents - Thums Up (Coke), Limca ( a lemon drink) and Gold Spot (Fanta). The Gold Spot ad was a classic - Indians with a taste for Bollywood might recognise a young Javed Jaffrey. Gold Spot, alas, disappeared when Coca Cola reentered India in the late 1990s.

                                                                                      

My second classic of course has to be Liril, by Unilever.  It completely took India by storm sending the soap skyrocketing as the largest selling soap in India. The ad was so successful that the model Karen Lunel  was paid by Unilever never to appear in any other ad ever again. She will forever be the Liril girl. Liril is still going strong in India - it was , and  has always been, an "India soap". Unilever , despite being global never sold Liril in any other country, but in India it was a mega hit.

My personal favourite of them all is  Close Up also from the Unilever stable. The wonderful Close Up jingle; I can still remember the words and hummed along when I listened to the song today. Alas, the ad has been lost to history. I can't find it on You Tube at all. When Close Up was launched with this ad, it caught on to become one of India's best selling toothpastes. Today, Unilever has withdrawn from toothpastes in most countries, but in India, Close Up is still a star. The ad seems to have been lost, but the song on which it is based is very much there - Walter Navarro's lovely classic. Listen to the song and those of you old enough to remember that ad, imagine it before your eyes. Even better that way.

Why is it that my vision is a tad blurred today !

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The Indian parliament is a waste of time

In democracies, the will of the people is supposed to be supreme. The forum for expression of the will of the people is the parliament. All laws and policies are enacted by the parliament and you need a majority of the elected representatives to pass any bill. Issues are debated and a majority vote determines the outcome. So goes the theory. Ha Ha .

India's parliament has become a joke. It has descended into a complete farce, where regular business is impossible to conduct because every party disrupts roceedings by protesting and shouting. Witness the current session of the Lok Sabha. The TDP is protesting against non grant of special status for their state. The AIADMK is protesting against the non formation of the Cauvery Board. The Congress, Trinamool, et al are protesting against the PNB scam. The Shiv Sena , which is actually a part of the government is agitating for, of all things,  inclusion of Marathi as a "classical language" . Each one has disrupted the Lok Sabha such that it has been stalled every day with nothing being discussed or transacted. This has been the way for at least 10 years now, but it has worsened over the last two years with not even one day of sane, sensible proceedings. Every party is guilty of this appalling behaviour. The ruling BJP did exactly the same thing when they were in opposition.

The trigger for this post is the Finance Bill. In India, economic policy is often manifested in the form of the annual Finance Bill (Budget, as it is called in common parlance). This is supposed to be debated and then passed in Parliament by a certain date, else the government will be shut down (similar to the position in the US).

But how do you discuss and pass anything when all the worthies are shouting and agitating. In true Ramamritham fashion, we have invented a process called the "guillotine". When the deadline for passing the Finance Bill comes, it is just "passed" with no discussion or debate. Not even a minute of debate and discussion has happened on major fiscal, monetary and economic legislation. Its just considered adopted by parliament !! What a joke.

The passing of the Finance Bill is one of the most important, if not THE most important job of parliament every year.  Yet for many years now, there has been no debate and it just gets guillotined as a matter of routine. Begs the question, why do we need a parliament at all ? Have elections every five years and instead of actual representatives, put a wax dummy coloured with the party colours in a seat in a room. Each party represented in the parliament simply indicates which way it decides to vote . That can be tallied by a computer (actually even an abacus will do).  Much simpler. In any case, every member of parliament votes according to a party whip. Nobody even reads the damned bill. If you are an opposition party, vote against any bill saying it is the greatest blot on humankind. If you are in the government vote for saying that it is the long awaited final avatar of Lord Vishnu. So why bother with a parliament at all ?

Let this be the first instance where "artificial intelligence" replaces human beings entirely. Replacing our esteemed members of parliament is a simple task as they perform no function at all bar shouting . We don't even need artificial intelligence. Wax dummies are enough to be a major improvement - at least they will be silent.  

If that is considered way too extreme, then perhaps taping the mouths, tying the hands and gluing the seat of the pants (dhothi) to the chair can be resorted to.  For abundant caution, you can also shackle their legs. That would be an improvement over the current situation.

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Send them back

This blogger knows a thing or two about procuring visas , having had to endure this torture hundreds of times for nearly 30 years now. Indians, as is generally well known, are not welcome anywhere. The visa regimes of every country is designed to make it as difficult as possible for an Indian to visit. Note - the word is "visit" and not "stay".

You sign all sorts of declarations and produce all sorts of proofs before you will even be considered for a visa. You have to produce a ton of documents (my favourite is the Australian visa for which I once had to produce 723 pages). You have to make all sorts of declarations (my favourite is a US declaration that says you have not kidnapped somebody below 18 years of age - there is no requirement to declare that you have not kidnapped somebody above 18 years of age). You solemnly swear to everything under the sun in the fine print.  My favourite is the UK requirement in the past (thankfully no longer there)  that if you are a lady going to get married to somebody in the UK, you swear that you are a virgin, which will subsequently be tested by somebody inserting her hand in to test whether your hymen is intact (I am not kidding). After all this you are subjected to the ignominy of a visa interview where you stand in a long and winding queue outside the embassy starting from 4.00 AM in the morning, then wind your way inside a virtual jail till you come into a prison like counter where you face a visa officer. He or she can , and does, reject your visa application simply because he/she/it does not like the look of your face . Period. That's it. No chance of even appealing.

All this is a long and elaborate preamble to illustrate how the very same countries completely flip 180 degrees if you are an economic offender who has fled your country.  You are now welcomed with open arms. Suddenly human rights of the alleged offender take precedence over everything else.  The very same United Kingdom of Great Britain and Northern Ireland (of the virginity test fame) will shield the alleged economic offender until its very last breath and allow him to stay indefinitely in the country. 

There is a long and illustrious list of alleged crooks who have fled India - Lalit Modi, Vijay Mallya, Jatin Mehta, Nirav Modi, Mehul Choksi et al. If you are interested, the exact number of such luminaries is 184. The modus operandi is usually the same. As soon as the heat starts to be felt and you feel that you are likely to get caught, flee the country. And then claim that you are being harassed , fear for your life, etc etc and stay put. Uncle Sam, Old Blighty and all the rest will freely protect you.

Sure, this lot has obtained permanent residency in these countries sometime in the past. So ? You  sign all the honest to god statements that you have to do for a mere visa to visit. Probably you swear to a few more things before you get permanent residency. This is not citizenship; just permanent residency. You still remain an Indian citizen , bound by the laws of India. If you have then violated them, why isn't permanent residency revoked ?

I can understand protecting those undergoing political persecution, those who are fleeing from war, and those who might be killed if returned. But these are economic offenders. If they are returned to India, they will be put through due legal process in a court of law. The Indian justice system may not be perfect, but it isn't arbitrary and without merit. Even with the greatest of ingenuity, the argument cannot be made that India is a lawless country. So what is the logic in not sending them straight back.

The long list of luminaries referred to earlier are Indian citizens. They are subject to the laws of India. The government of India has revoked their passports. Any foreign government, in whose jurisdiction they are staying,  are hypocrites in not returning them to India forthwith. 

I am not welcome to even transit through Heathrow, let alone visit the UK (the same visa process applies even if you are transiting and not entering the country). Mr Vijay Mallya is free to stay for as long as he wishes to and will be protected by Her Majesty. Shame on you, and every other country harbouring these 184 worthies.

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Wooing HQ2 ? Yuk !

If you are an American, here's a a nice issue to distract you from your fixation about you know who and direct your attention to a different issue you can get all worked up about.

Witness each city falling over each other and doing the most stupid of things to land HQ2. Tucson Arizona, where one of the readers of this blog lives ,  uprooted a 21ft cactus and tried to deliver it to HQ1. The mayor of Kansas City actually bought one thousand items from the company in HQ1 and wrote a review of each one of them. Mayors of cities are looking silly in videos that they have made asking Alexa where HQ2 is going to come up and Alexa answering of course, the city they are mayors of. Shall I go on ?

If you are wondering what all this hullaballoo is  about, this is all to do with attracting Amazon's second head office. Amazon is based in Seattle (this is HQ1). They want to create a HQ2 somewhere else. And why are cities willing to stand in a line and kiss Bezos' ass (cue the nod to the awful American version of the Queen's English !). Because he is promising to invest $5 bn and create 50,000 jobs. How did they come to this magic figure of investment ? Because he says the average salary of the jobs created would be $100,000. 

The antics of Tucson and Kansas City are harmless on their own. HQ2 won't come there anyway. The real danger is the big cities offering tax breaks to Amazon. Without a doubt this will happen.

This is a terrible idea. Cities and states that do sweetheart deals to tempt businesses into moving are doing an appalling act of profligacy.  This is worse than a bribe.  Think about it - this is a perfect way of taking money from the poor (remember indirect taxes are not progressive and a fair amount of the state revenues in the US come from indirect taxes) and giving it to somebody who does not deserve or need the money. One city does this , and the next city will do the same for another company.  And before you say Bingo, everybody has been given a dole.

The right way to attract companies is to do the boring things - create infrastructure, make a talent pool available by vigorous education and training, attract outsiders by making it a great place to come and live, have a favourable business atmosphere in the form of ease of doing business and reasonable tax rates.  That is when companies will come and stay on. That's why New York in Finance and the West Coast Cities in technology are what they are.  Not because they gave tax breaks.

If you are an American, you should vigorously protest against your city doing a sweetheart deal with Amazon.  

For Indians, who can look at all this with an amused smile; we have of course been long guilty of doing such deals with companies. But I want you to get agitated in a different angle. The capital of the IT industry in the country did all the right things 30 years back - great place to live in, pleasant weather, abundance of talent, a cosmopolitan place for people to come, etc etc. It did not give a tax break. And yet every IT company worth it's salt came.

And then this city let it all go to seed and become the appalling wreck of a city that it is today.  This is the best way to drive every company out. No member of the Homo Sapiens species will ever come to this place again. Instead the entire population has mutated into Pithecanthropus Erectus, which being extinct, is delighted to be able to come back into existence even if condemned to living in a hellhole ! How does this blogger know of such a mutation ? Because he has mutated himself !

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Ramamritham falls in love

Who is the person I hate the most ? No; not that one, whom I frankly don't care about . He is half the planet away and troubling other folks; not me. My visceral hate is reserved for somebody much closer home. The "dotard" called Ramamritham. Allow me an unhinged rant please; I badly need it !

You see, the problem is that Ramamritham has fallen head over heels in insane love. We all know how crazy he is even when supposedly normal. Now that his brain circuits have been singed with love, he has become a monster. The delectable damsel who has swept this idiot off his rockers is called Aadhaar.

For the benefit of the one American reader who claims to be ignorant about India (no; not the lady - she is an expert !), Aadhaar is the national ID that every resident of India is supposed to get.

The government introduced Aadhaar some 5 years ago ostensibly as a way to identify individuals to whom subsidies could be paid directly and thereby minimise leakages.  The government gave pious assurances (including to the Supreme Court) that Aadhaar was not compulsory or mandatory and it would never make it so.

I think the government framed this with good intentions, but had not factored that the old toothless fart, Ramamritham, would fall in love with this.  They say love makes you irrational, and if anybody needed any further proof of this, look at what this apology to the human race is doing.

He first made Aadhaar mandatory for buying gas cylinders. Then he made it mandatory to operate any bank account. Then he made it mandatory to file a  tax return.  But where he has gone completely bonkers is that he has now made it mandatory for a mobile connection !! And where it truly descends into madness is that its not just an Aadhaar number that this clown wants. He wants a fingerprint match for every mobile owner !! No; I am not joking. He wants to fingerprint you before you have a mobile phone.

Consider the logistics. There are 1.2 billion people in India. Perhaps some 800 million own a mobile phone. And we being the argumentative Indians we are,  don't possess just one connection . Almost everybody has two SIM cards. And this is what Ramamritham wants us to do.

1. Go physically to a store of the mobile company (they usually have one store for a million users)

2. Stand in a queue ; you can imagine the length of the queue yourself

3. Give your mobile number and Aadhaar number to whoever is behind the counter

4. You will get a one time password on your phone

5. Give this number to the flunkey

6. He will enter some 10 fields into a computer system that has been ordained by Ramamritham.

7. You then place your thumb on a fingerprint reader

8. If it goes through (and that's a big IF - see below), then the flunkey does some more fiddling with the system

9. You then place your thumb a second time (Ramamritham wants to make absolutely sure)

10. If it again goes through, then say four different prayers and then go home

11. You'll get a SMS saying that your request has been registered and that you will get a confirmation in 24/48 hours

12. If you get a SMS after 24/48 hours, you should follow the instructions there and type Y or N or don't do anything

13. If you fail in any of these steps, go to Step 1

Note : The big IF arises because , this being India, any sensible store has bought a cheap Chinese fingerprint reader and it is impregnated with the smudges of the half a million people who have tried to bestow their affections on it.  Therefore your fingerprint is rarely read on the first attempt. If you fail in three attempts, your Aadhaar gets locked and if you want to unlock it then you have to undergo some contortions not dissimilar to what a certain Mr Scaramucci suggested a Mr Bannon was in the habit of doing.

800 million Indians have to do this twice ( not just once, for you see everyone has two SIM cards). If you are stretcher bound, you still have to do this. Nobody else can do it for you because you have to press your damn thumb on that damn machine in the store. If you don't do this by February, be prepared to just not have a mobile phone. Cost estimates for the whole nation to cater to Ramamritham's love affair have been pegged at Rs 1000 crores.

I have lived in the most obsessed country in the world which wants to control every single bit of information you have access to - China. This is the country that has blocked Twitter, Facebook, YouTube, WhatsApp, ............ This is the country that employs a million people to read every tweet and delete those that it doesn't like. Even in that country, buying a SIM card was as simple as going to a corner shop and just buying it. No paper, no forms, no crap. It takes all of 2 minutes. And I am now supposed to be living in a liberal democracy called India. And I have to do all of what I have outlined in this post, simply to have the privilege of talking to a friend.

Unfortunately this is not the worst of it. The other day, I had to receive a payment from some company. They demanded my Aadhaar. Very soon, if I have to pee, I am sure I will have to validate my Aadhaar.

Readers are invited to design the most creative torture that can be inflicted on Ramamritham. And to the good American referred to earlier in the post. Let's do an exchange. I'll gladly take your dear leader in exchange for Ramamritham !!

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Letting go

When your child is born, it is probably the greatest moment of your life. It's your child. It is the creation of you and your partner. It's a new life created out of the blue. And only because of you.

You then slog your butt off to raise the child. You shower it with love and affection. In the first years of the child's life, you don't have a single night's sound sleep. You worry about your child every minute. You take joy in every smile and gurgle. You get terrified if the child were to as much sneeze.

As the child grows up, you continue to sweat over it. You work hard to earn money to provide for the child. You are willing to sacrifice anything to ensure a top quality education. You try and impart your values. You even discipline the child when she does something wrong. You have every possible aspiration for the child - she will be famous, she will be wealthy, she will excel; above all she will be happy. You even transfer your own aspirations, which you were not able to achieve, on to her.

All too soon, the child grows up. She is now a teenager. She has her own wishes. She does not want to ask your permission for everything. She perhaps listens to music that you cannot even understand how it could be called such. She wants to stay out late. You want to impose your will on her, because in your eyes, she's still the baby and you want to protect her. She rebels. You argue. 

And then, in the blink of an eye, she is an adult. She leaves home; first to study somewhere else and then to work and be independent. You have a lump in the throat. 

What do you do as a parent ? You have to let go.

What if she wants to marry somebody from a different world and the polar opposite of what you determine to be a "good man". You have to let her go and warmly and enthusiastically embrace both of them.

What if she takes up a profession (maybe singing in a night club). It's against all your values. But you have to let her go. Wish her every success.

What if she takes up something unpleasant. Like, say, smoking. You can certainly give her a hug and say quietly that this isn't good for her health. But is she going to listen ? No way. You have to let her be.  Yes, you can worry inside your heart. But that's all you should do.

You came from a very middle class family where you lived frugally and never bought anything for yourself. She decides to blow her first salary on 25 designer dresses. She flaunts bling. Yes, the neckline is too low. Do you chide her ? Of course not. You let her be.

The worst thing you can ever ever do, is to bitch about her to all and sundry and say what a disappointment she has turned out to be.  You will gain absolutely nothing from it. You will only demean yourself in the eyes of everybody else. And she is not going to be one inch different.

For you see, its her life. The values you tried to drill into her are all very much there. She just sees life very differently from you. That doesn't mean she doesn't love you. It doesn't mean that she is "bad". She is just she. The angel she always was, is, and will be. Let her be.

I know its not easy. But its a mark of your greatness, if you can let her go. It does not negate the immense effort and everything you have done for her.

Mr Murthy; I am talking to you.

For those readers who are not following Indian business news every day, this post was prompted by this news.

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Job losses in India too ?

My good friend who goes by the moniker of Vaingluory, at least on my travel blog, messaged me drawing attention to this story .  The opinion piece from a headhunter is titled 'Expect 100,000 to 200,000 Jobs to be Lost Every Year For The Next Three Years' .

There is a lot of hyperbole in this - I don't think India is going to lose jobs at that rate. Certainly not from the IT industry . But there is an undercurrent of truth , and there is a chill wind coming.

In the last 10-15 years, India, especially in the IT and BPO sectors has seen a pace of job creation that has been unmatched in its history. The impact this has had on people's lives is very visible in India's cities. In any other country, these job numbers would have been a spectacular miracle that would have transformed the country. India has a huge population and hence this is only a small wave in the ocean.

The young have come to believe that this scorching pace is the natural order of things and that anybody can get a job for the asking. Of course, this can't last for ever. The IT industry has matured and the rate of job growth has slowed down. That is only to be expected.  The days of "Tresspassers will be recruited" are long gone ! Companies are not recruiting in the same numbers. They are asking some underperformers to leave. Some have to cut their costs and so some layoffs have happened too. I do not see any evidence that there is going to be a large shrinkage of jobs ; there will be a much slower rate of growth and there will be some layoffs. But the overall numbers is not going to shrink in a short span of time.

But some global trends are inevitable and they will have a big impact. The most important of them is automation. This is an inexorable trend and will affect all industries including IT. This is going to be the single largest impact on jobs. It's a global problem without any easy answers.

The second problem in India, is agriculture. Agriculture has always been the sponge - the vast majority of the Indian population is employed (more accurately underemployed) here.  This sector is increasingly becoming financially strained, for reasons that are peculiar to India . Small land holdings, a major water crisis, inability to make significant profits, and the extent of risks for which there are no commensurate rewards. All these make agriculture likely to shed jobs on a scale that will be gargantuan. This has profound consequences for India. Manufacturing or services simply cannot absorb this load and even if they could, there is a massive skill gap for agricultural workers to migrate to other sectors.

India has one big advantage - an already strong services sector which will keep growing. This has the capacity to absorb skilled manpower. Touch any area and India has actually a huge potential for job creation. Judges, policemen, health care workers, retail industry workers, logistics industry workers, even professions like carpenters, plumbers, electricians - everywhere we have a shortage of qualified people even today.  Jobs will keep getting created in each of these trades. Many of them will be self employed . Many of them  may be in the government ; for example if we have to have a policemen to population ratio that is even remotely comparable to other countries, we will need to add millions of policemen. Ditto judges. Ditto nurses. 

The issue is skills. India has a young population that is extremely keen on education and willing to work hard. It lacks a real effective skill building initiative. The National Skills Development Corporation, if it really does its job, can transform India.

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The land of the dinosaurs

The dinosaurs missed a trick when the comet (asteroid ?) hit the Yucatan peninsula 65 million years ago. They should have taken refuge in India. They wouldn't have gone extinct. India is veritably the land of the dinosaurs.

Well, at least corporate India is. In India, no company ever dies. It is extremely difficult to shut a company down in this country. They will live on for ever. Take the case of Andrew Yule.

If you had lived in British India and looked for a job, the bonanza would have been a job in Andrew Yule. It was one of the largest conglomerates of that time with businesses in jute, cotton, coal, tea, engineering, electrical, power, chemicals, insurance, railways, shipping, paper and printing, in addition to being a zamindar (land owner). The company was founded by, yes, a Mr Andrew Yule in 1863. He and his family ran it until India's independence in 1947.  The Indian government took majority control in 1948 under circumstances not very clear - perhaps it was socialism, perhaps the family decided to leave. It became a government majority owned company and then under the wave of socialism that Mrs Gandhi championed, the government took it over entirely.

It today is a pale shadow of its British India days. It currently does some engineering business and also owns some tea gardens. Long ago it became "sick" - Indian euphemism for bankrupt. Dinosaurs which fall sick come under the umbrella of the Bureau of Industrial and Financial Restructuring (BIFR), which is Ramamritham's idea of socialist utopia. Today , it has a turnover of Rs 400 crores ($ 70 m) and is still lumbering along. This year it managed to turn a small profit and declared its first dividend in 21 years.

Companies like this abound . Many have been taken over by the government under the misguided view that nothing should ever be closed down. The taxpayer funds this indulgence. The accumulated losses of such dinosaurs is Rs 60,000 crores ($10 bn). Veritable luminaries adorn this list. Air India is of course, numero uno, but there are other stars like Hindustan Photo Films (which still makes  the old film rolls), ITI (which presumably turns out analog telephone exchanges) and HMT (which makes mechanical watches). I have little doubt that there is also a company existing which makes music cassette tapes, or the telex machine, or something like that.

India is a culture that believes in the cycle of birth, death and rebirth. Regeneration is intrinsic to the belief of the Hindu faith. And yet, when it comes to companies, we do not accept the same philosophy. Maybe the companies are not Hindu !

And yes, in case you wondered, the East India Company is very much alive. In a nice twist of fate, it is now majority owned by a Mr Sanjiv Mehta !

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How does an American pronounce Pallagoundenpalayam ?

The most unlikely of bedfellows can come together in the business world. Consider this rather unusual "marriage".

The bride is the city of Detroit. We shouldn't be uncharitable to a bride, but the immediate words that come to mind when you mention Detroit are decay, dilapidated, joblessness,  decline, etc etc. Can any good news come out of Detroit these days ?

The groom is Sakthi Group. Sakthi who ? - even my Indian readers are entitled to ask. It's an unknown, small conglomerate from the South of India. They were essentially a sugar company, but have dipped their fingers into a bewildering array of businesses. They are still small by global standards - some $2 bn in size. One of their businesses is Automotive Components - a business in which Indian companies have excelled and are starting to lead the world. 

Sakthi announced a $ 31 m investment in a manufacturing facility in Detroit to make aluminium castings. GM and Ford are big customers for them and their logic for this investment is being close to customers.  Of course they have milked the incentives and subsidies - some $4 m.  But Sakthi has played the PR angle perfectly. The castings will substitute imports from China. The facility will create 650 jobs over 2 years. They have committed to hire at least 2 ex felons a month ( both a brilliant and a movingly human move). And the site they are developing is a historic school, now closed and left in ruins. Can there be a better feel good story ?

The sight of Michigan Governor Rick Snyder, waving a casting, as he welcomed Sakthi makes interesting viewing. And the Sakthi's chairman calling the marriage a Catholic marriage (meaning,  for the long term), is equally interesting Whether Sakthi will succeed in the most challenging location of all in the US remains to be seen. But you have to give it full marks for daring and boldness. It may fall flat on its face. But it will still have been an interesting experiment.

Meanwhile the American employees have to learn to pronounce Mukasi Pallagoundenpalayam ! That's where Sakthi's auto component headquarters is located in India. Even my good friend Sriram is going to struggle with that !

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The tortoise may overtake the hare

Sometime in 2015, or more likely 2016, or maybe 2017, India will overtake China as the fastest growing large economy in the world.  It could potentially be a historic moment, for India and the world. The opportunity is India's to grasp, or equally likely, drop.

China's economy is slowing. Its GDP growth for 2014 (announced in an incredible 19 days after the year end) was 7.4 %. For the first time in 30 years, its GDP growth is below its own target of 7.5%. China's statistics are to be taken with a pinch of salt. Apart from the gargantuan task of measuring GDP for such a large country and number of people, its numbers are also, let us say, "approved" by the Communist Party. It was very likely that in the heady days, for a long period, China actually under reported its GDP. Growth was at such a frenetic pace that the Party was doing all it can to dampen the numbers. Now, its quite likely that the announced 7.4% is probably a tad overreported.  China's is a huge economy. Growing at that breakneck speed is no longer possible. The economy is slowing. Make no mistake; the growth rate , for its size, is still stunning, but the inevitable slowdown is starting. China is starting to slowly transform into a more mature economy.

Enter India. Its financial year ends in March and for 2014-15 and for the first three quarters it grew by 5.3%. That is still a full 2% below China's. But the trajectory is upwards. The World Bank last week estimated that India's growth rate would overtake China's in 2017. Goldamn Sachs estimates that it will happen in 2016. The IMF has just announced that it expects that to happen in 2015 itself. It is estimating India will grow by 6.5% and China by 6.3 %. We shall see.

Maybe, just maybe,  India's time in the sun is about to come. It has a strong government which is betting on development as the plank for reelection. It has a young and large work force. It is a slow elephant prone to many stumbles and disappointments in the past and could flatter to deceive again. But something tells me that this time India may actually do well. If there is a sustained period for say 10 years, when India is the fastest growing large economy, it will have profound consequences both for the country and for the world. 

For Indians, it may be the chance, finally, to start winning on "Garibi Hatao" (eliminate poverty).  For the world, somebody must take China's place in leading global growth. India is the natural, and preferred choice. Geopolitically, a rising India will also contribute to a multipolar world and manage the "risks" of the China ascendancy. Just as China's rise from the 1990s transformed the world, the same could happen all over again with India.

Wishful thinking ?? Maybe. But for reasons this blogger cannot explain, this time, it looks different. Its India's turn to "win the World Cup". It's cricketing fortunes may be on the wane but its economic fortunes couldn't be better.  The first step will be on February 28th when the first real budget of the BJP government is presented. If its a cracker, then that might be the start of India's ascent.

It may be the best time to be an Indian.

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Make in India

India is an outlier in terms of economic development. Traditional economic theory suggests that in the beginning all economies are dominated by agriculture. As the economy develops, manufacturing becomes the predominant sector. Further up in the stage of development comes services. The linear development is the model for all countries, including China. The one exception is India.

India has never been a manufacturing economy and has leapfrogged to becoming a service economy. A full 55% of India's economy is the service sector. This is all fine, but for one problem. Where are the jobs for the teeming millions of Indians going to come from ? You need a big manufacturing base to absorb the youth coming into the job market every year. India has to create 12 m new jobs every year. Hence the Make in India need.

India actually has a huge competitive advantage now - it is actually cheaper as a manufacturing destination than China. China has become expensive, but retains its predominant position simply because there is no real alternative at that scale. Countries like Vietnam or Bangladesh are small. The only big competitor is India. 

Achieving real manufacturing scale and , thereby jobs, will need concerted action over 20 years. Mere slogans will, of course, achieve nothing. This has to be backed up by proper policy action.

What is needed to be done ?  Quite a lot actually, but let us begin with three things that do not need to be done

- Tax incentives to manufacturing. This is the soft option, but must not be done. Neither is it necessary nor is it equitable to do so.

- Lowering interest rates. All the pressure on the RBI governor is self serving bullshit. No serious company makes investment decisions based on short term interest rate

- Diluting labour laws. Actually this is hardly needed. Labour laws, other than when factories are closed, are actually sensible, fair and progressive in India today. It is better than, say, in France. We should not dilute labour laws and allow the Rambo manufacturing that  happened in China.

The key elements that need to be tackled are

- Amending the Land Acquisition Act. The last Act completely swung the other way and as it stands now it is almost impossible to acquire land to set up a factory. The government, realising this, is acting through an ordinance

- Infrastructure - Ports, Roads, Railways and Power. This will take time, but must be done largely by the government, although partnership with the private sector will also be key.

- Single window clearance from the government. All clearances within 3 months for setting up a factory.  Doesn't matter if a mistake or two is made.

- Remove all caps on foreign investment in manufacturing. Who cares where the money is coming from as long as jobs are created. 

- Rein in Ramamritham. If possible chop him into bits and throw him into the sea. You just have to drive through Sriperumbudur, on the outskirts of Madras to see the havoc Income Tax Ramamritham has caused. Shut factories - Nokia, Foxconn ...... Any industrialist who now starts a factory without a cast iron defence against Ramamritham is an idiot.

- Enforce contacts and the rule of law speedily. Perhaps even a separate judicial process for business matters. One of the sad facts in India is that despite the rule of law, contracts, especially with the government, are practically unenforceable.

- Make India, one India. Each state competes with others to create bottlenecks and roadblocks, because of the preponderance of local Ramamrithams. National laws, such as the GST are an imperative. The Centre cannot dictate this, but should simply go ahead with the willing states and leave the outliers either to join the bandwagon or suffer.

- Stay the course. Create the framework and then don't change it for a decade at least. Let a thousand flowers bloom !

None of this is even politically contentious in a major way. Start and build  momentum. Investments will come. Money will be found. A juggernaut, once started, cannot be stopped - there is already the example of the IT industry.

Motor ahead, India.

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India's most admired company

Which is India's most admired company ?  The results of Fortune's 2014 survey released recently, reveals a surprising name at the top. It is ITC.

For those unfamiliar with Indian business, ITC is primarily a cigarette company. In the good old days, it stood for Imperial Tobacco Company. Today it runs its cigarette business quietly. It has diversified into a conglomerate - Hotels and Consumer Goods being the most visible elements of its business. It does a lot of good work, especially in the agricultural sector. Its work with farmers in various parts of the country is legendary. Its has a great management team and wonderful strengths. It has been there for decades and has been a proven success over a long period of time. Growth in revenues and market capitalisation over the years has been outstanding. Yet, and yet, there must be some feeling of unease of it being the most admired company. It sells cigarettes and still makes most of its money from cigarettes.

Is that right ? ITC deserves the award on most counts - growth, profitability, value creation, quality of management, social work, etc etc. But it fails a fundamental litmus test. A cigarette maker cannot be the most admired company, in this blogger's humble view, no matter what.

The results also show where the priorities and values of business people are. The ranking is based on a survey of essentially business people. I am sure it was a very scientifically done survey and a number of parameters were covered. But the corporate world does not get it, when it comes to how the rest of the world sees everything. Do this survey amongst non business folks and it is highly unlikely that ITC would come out as the most admired company. If the corporate world continues to run by its own set of values, and is not sensitive to the outside world, it can only lead to general perception that companies are exclusively concerned with money and are of dubious morals.

This blogger does not smoke, but is actually a defender of the choice of adults to do so or not. I have no problem with ITC selling cigarettes and making lots of money from it. It serves a consumer need and as long as consenting adults choose to smoke out of their own free will, I have no problems with it. There are lots of addictions in the world which are harmful to health and it is not anybody's business to be preventing others from doing what they might themselves not choose to do. So ITC's success in the cigarette business is something I won't object to, and even applaud. But that doesn't make it a fit candidate for the most admired company in the land.

ITC has been hovering in the top five of this list for many a year. But even Yogi Deveshwar, the outstanding Chairman of ITC, I suspect, would rather wish it was not at the top.

Incidentally there isn't an IT company in the top five. The top five has four companies that have each been around for nearly hundred years  - ITC itself, Larsen & Toubro, Hindustan Unilever and State Bank of India. Only Maruti Suzuki is a relative youngster at 40 years old !! Isn't that interesting ?

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Narendra Modi and Ramamritham

This blog steers clear of political issues (or at least tries to), and therefore it would not be appropriate to comment for or against the incoming government in India. However this blogger is a world leading authority on Ramamritham and therefore considers it fair to warn the incoming Prime Minister on the tactics and mechanism of dealing with this specimen.

The incoming Prime Minister of India is reputed to favour high quality bureaucrats, give them political cover and a free hand and then hold them accountable for delivery. That is classic good management,  but he has thus far only dealt with the admirable Gujjubhai Shah. The situation is far more nuanced when it comes to Ramamritham, especially the variety that is found in the Central government.

Firstly the Ramamritham in the Centre has, for the last five years, forgotten what it means to take a decision. Terrified by sundry agencies like the Auditor General, the CBI, the Press, etc, he has not taken a single decision in the last 3 years. To get him to change will be difficult.

Secondly, Ramamritham has found unimaginable joy in terrorism. In the past  he revelled only in saying No. Now he has discovered the joy of positively going after everybody. The incoming Prime Minister has himself referred to the tax terrorism he has unleashed. Once a terrorist has tasted blood, it is difficult to wean him away from this.

Thirdly the number of Ramamrithams has exploded. Because we have had gargantuan ministries, Ramamritham has been delightfully cloning himself. And he will defend his turf like a cornered animal.  I believe the incoming Prime Minister wants to rationalise and reduce the number of ministries. That will be tough to do.

Fourthly the Prime Minister has reportedly asked for presentations from every Ramamritham in town. This is downright dangerous. Each character will spin yarns so convoluted that even the most intelligent of men will be ensnared in them. He will convince any listener that Section, 5 subsection 7.3 (iv) of an obscure Act is the most important life and death situation facing the country. He is capable of fantastic gobbledygook.

Fifthly, he will try his best to house train you in as quick a time as possible. Look at what happened to the savvy, experienced Pranab Mukherjee. It was Ramamritham who had brainwashed him into unleashing tax terrorism.  Your first sign that he is trying to get you house trained will be in giving you 24 forms to sign because some formality of your becoming a Prime Minister has to be completed.

Therefore, my dear Prime Minister, you have only a very short window of time to act. First, summarily sack half the Ramamrithams. Abolish , in the stroke of a pen, wholesale departments - like Dept of Youth Affairs, Hindi Implementation, etc etc. Don't merge them - the only way to treat gangrene is to amputate.

Secondly terrorise Ramamritham. Tell him that if he terrorises anybody, you will emasculate him and transfer him as special ambassador to Bophuthatswana. The only fear Ramamritham has is to be removed from the corridors of power.

Thirdly do not ask Ramamritham about anything. Just tell him. Better still order him. And threaten him with  dire consequences as suggested above. Tell him that you will defend him against the CBI, the Press, the CAG, etc, but if one citizen complains against him, you will roast him alive.

Finally hold him accountable. He is the slipperiest eel on earth and has spent a lifetime avoiding any responsibility. Tell him if he screws up even the tiniest objective, you will withdraw his pension, force him to accept a Somalian as his son in law and get the US government to cancel his US visa so that he can't go see his grand children. The pettier his action, that more rigorous the retribution.

It has often been said that the recent election saw a triumph of hope, of aspirations, etc etc. I heartily agree. For me, it is not a hope that the GDP will grow, or everybody will become richer, or we will be more powerful on the world stage. All that will happen in spite of the government. The biggest hope for me is that you will castrate Ramamritham. If you do that, I am prepared to vote for you again and again, even if you have not succeeded in doing anything else.

PS: For newcomers to the blog, let me explain this character called Ramamritham. He is a fictional petty, narrow minded, obstructionist, pedantic, useless government official. He is purely fictional and any resemblance to anybody dead or alive is purely accidental.

PPS : This blogger has just finished the first draft of his tax return and you can perhaps understand the trigger for this rant.

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How to make a mess of things

Elections have been over in Bangalore for a couple of weeks now and its a long wait for the results due in mid May. As is the wont in India, all government work comes to a standstill when elections are announced as the result of a "model election code" which is supposed to ensure that incumbents don't benefit by doing populist stuff just before elections. Indian love doing nothing and so all this freeze in activity is considered a good thing.

Consequently, when elections are over , it is also the time to do unpopular things.  By the time the next elections come, its all forgotten. In keeping with this tradition, the Karnataka government has been busy raising tariffs , leading to howls of protests. Vatal Nagaraj, a local character known for innovative protests  has remained true to form yesterday.

I want to pick on one such move - raising the toll on the road to airport as a perfect example of everything that is wrong in India about how we go after things.

First the facts. Bangalore airport is some 50 kms out of the city. There is a highway that connects the city to the airport. They have recently upgraded it with flyovers , avoiding all signals , etc etc and it is now a super smooth ride to the airport. All very good. Now comes the question of who will pay for all this and how.

The obvious solution is a toll. That's what the authorities have done. The problem is that in one full sweep , they have implemented a toll of Rs 115 (US $ 2) overnight.

Let's start with the amount itself. It is one of the largest (probably THE largest) single toll anywhere in the country. By Indian standards it is an astronomical toll. Still, that is probably the revenues required to offset the cost of building the roads and flyovers. But as with everything in India, there is little transparency. Nobody has bothered to lay down the facts of the costs and the economics clearly - if they had done it , many would probably consider the toll justified. As it stands, the sniff of somebody profiteering is very high.

Secondly, it would have been far better to prepare the public. Instead on one midnight it was just enforced. People catching the early morning flights suddenly found a demand for Rs 115. It is inevitable that there would be anger.

Everybody and anybody is protesting, irrespective of the logic.

The most galling protest comes from the cab drivers ferrying people to the airport. Their grouse is that it will eat into profits. Complete rubbish. It is the passenger that pays the toll. No cabbie returns from the airport empty.  Its a ridiculous protest.

The next constituency that is protesting is the lot going to the airport. The rich and pampered 0.001% who travel by air. They don't want to pay Rs 100 for the super smooth road to the airport to catch a flight that will cost Rs 5000. This is the same lot who were moaning about poor infrastructure and roads to the airport. Their solution is to abolish the toll and let the cost be borne by the government (read the poor non airport user). Fantastic.

The next lot who are protesting are the opposition politicians. I am not sure what they are seeking to gain from this - the rich using the airport road is a miniscule constituency and why defend them ?? On the contrary I would have expected them to protest saying the toll should be doubled.

The next step is very predictable. A few toll booths will be vandalised. Some old foggy with nothing better to do will launch a public interest litigation in the courts. Thee wise courts will immediately issue a stay on the toll and take the next 74.63 years to issue a ruling. Meanwhile the idiot who invested in the road will go bankrupt.

And then we wonder why infrastructure is so poor in India.

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Yell SCAM at 115 decibels

Something as obscure as fixing the price of natural gas for drillers can become a hot and loaded debate in India - proof that doing anything, anything at all,  in this country has become so difficult . This is a slightly old story, but draws some important lessons.

Firstly the story itself. In March the government raised ( or tried to raise) the price of natural gas it pays to domestic drillers from $ 4.20 per BTU (British Thermal Unit - what a curious measure) to $ 8. India imports gas currently at some $12 , so on the face of this this does not seem too controversial. Yet a huge hullabaloo erupted with big charges of corruption and how the government was selling out to the Ambanis. The then Delhi Chief Minister, Arvind Kejriwal even filed a , constitutionally questionable, police complaint of fraud. The word "scam"; so fondly used by Indians was merrily bandied about. Consequently the policy has been put on hold  - another favourite Indian trait. We love to get stay orders - never mind that the stay can go on indefinitely and can cause more harm that the act attempted.

The purpose of this post is not to argue whether a fraud was committed or not - The Economist, which is as neutral as you can get in such matters has written an article saying that it is unlikely that any major wrong has been committed.  Instead , this muse is about some lessons that this affair shows

Firstly, political leaders have become completely irresponsible and can basically say anything and charge anybody with anything, without fear of censure. It is one thing to debate a policy matter and have a different view. It is yet another thing to fling wild allegations, file a FIR with the police, accuse anybody of anything and get lots of high decibel airtime in India's breathlessly loud TV channels.

The second lesson is that India has come to such a sorry state that shout scam and everybody will believe it  no matter what the facts are. In fact, who cares about the facts, if you will pardon the pun. The more outrageous the scam allegation is, the more believable it is. Corruption has become so entrenched in public life that nobody believes that there is no scam in anything !  In reality, this is not true. "Scams" are still the exception. Much of government actually functions reasonably well. We exaggerate corruption wildly. Sure there is a lot of it and some of it is quite outrageous. But , it has been my pet theory, that we are all individually far more corrupt than the government collectively is.

Thirdly, governments should simply stay away from price fixation or valuation of any sort. Whether they are straightforward or corrupt is immaterial ; they will only be seen as dirty. At best they will be incompetent. At worst, they will be stinkingly corrupt. It would be a master stroke for the new incoming leader of India to simply abolish price fixation with the stroke of a pen. Where there are large markets, preferably international (like the price of natural gas), simply let the market decide. Where there are no reference prices, run an auction.

But the most important lesson of all is for Reliance. This was a case probably where Reliance didn't do much wrong and has actually suffered significantly (read the Economist article). And yet it would be a difficult task to find a single Indian who believes Reliance is clean. What an image to build for a company, and for a family. This image has been built over time for the following reasons

- The father built the company by taking every advantage of the license raj and manipulating government policies in the past. There is little doubt the he took business-politics nexus to great heights

- The company is secretive, aggressive and has a reputation of dirty tricks. Nobody, be it customer, supplier, and probably even employee, likes the company.

- The Chairman builds a 27 floor most expensive house in the world right in the middle of Mumbai when the majority of the population in the city  lives in appalling housing or none at all

- Making money is the sole obsession of the company and the family - they do very little else for the community unlike other entrenched business families like the Tatas and the Birlas

Little wonder that when somebody shouts scam at Reliance it is instantly believed, whatever may be the facts. In the long run, with a reputation like this, the company will not survive. The elder and the younger Ambani may wish to ponder over this fact - they have made enough money and one more rupee , or one trillion more rupees will not make the slightest difference. Instead they may like to spend the rest of their lives rebuilding their, and their company's, tattered reputation.  When you are dead and gone, your greatest legacy is not your wealth, but your reputation.

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How to sell all this to the electorate

Maybe I should amend the title to "Can all this be sold to the electorate" ?  Well, I am not sure whether this can or cannot be sold (admittedly a difficult task), but I strongly believe it SHOULD be. In a democracy, we elect the form of government we want. However imperfect, it is better , in the long run, than any other alternative. But a sensible democracy is only possible when presented with a choice of ideas - not a choice of personalities as Indian democracy tends to be.

Despite the Indian electorate being enamoured of freebies, open to bribery, largely illiterate, etc etc, it is not dumb. It is actually a highly intelligent electorate which maximises personal benefit ( why not ) and decides on the choices presented. It is the fault of the political class that they have not presented a different nature of choice.

I believe, its a complete misnomer that subsidies and freebies win elections. They do not. Consider the Congress party's last 5 years. Two major doles - the Rural Employment Guarantee and the Food Security Act are nothing but giveaways; totaling in excess of Rs 50,000 crores. Has it given them any electoral advantage ? None.  What about the state of Tamil Nadu - where parties competed with each other to dole out mixies and grinders. The DMK, which started this and faithfully implemented the promise, was thrown out at the last election. The Samajwadi party , which doled out free laptops in UP, is facing a fair defeat in this polls.  Many parties have written off loans, given free power to farmers etc etc - that hasn't always won them elections.

The Indian electorate has changed. Good governance wins elections now. The examples of Gujarat, Madhya Pradesh, Bihar and Orissa, and to a certain extent Assam are showing us the way forward. Spread across the political spectrum , they are indicative of a trend. Development and economics works and it can win elections. After all, the current frontrunner is running precisely on this plank.

The challenge for the political class is to explain economics in a simple way to the electorate. Almost nobody has cracked this (anywhere in the world). But that doesn't mean we should not try. Present the Indian budget in an even simpler form than what I outlined a few posts back. And then engage in a national debate  as to what the priorities should be. An honest, non corrupt leader, meaningfully engaging this issue will resonate with the voters. Indians understand debt and the need to live within our means very well - it is in our culture. Engage in a debate with them on priorities. I am willing to bet that a consensus amongst a vast majority will be reached, which would be sensible economically.

There are however some pre requistes for a politician engaging in an economic debate

• He or she must be completely non corrupt personally. At the moment only Manmohan Singh, Mamta Banerjee,  and perhaps Narendra Modi qualify.
• He or she must be completely free of crony capitalism (both the gentlemen stand accused of this)
• He or she must have credibility (Manmohan Singh's has gone and the lady does her best to undermine her's) .

Such a leader must present the case for reform  to the Indian electorate.  It may not win him the election, but I strongly feel it won't lose him one. Building up some steam and buy in, makes the job of implementing them easier later on. Once the track record has been established, it will guarantee him future victories in elections far better than any populist measures will.

So here is a suggestion to the combatants in the elections

• Choose a personally non corrupt leader (most major parties have such individuals)
• Outline the boundaries of the economic plan. Of course, this is only aspect of a manifesto - others including social, political, cultural, and other issues are equally important
• Once in power, implement rigorously with zero tolerance for crony capitalism. State funding of elections, will help in this.
• When the time comes five years hence for re election, I submit you would win easily.

An alternate route to winning this election, I suggest,  will doom you to defeat in the next one. So what, you might ask ? After all five years of power and moneys are pretty good . Yes, maybe. But politicians will quickly discover that short term gains are not that attractive to them any more. They all aspire for a place in history.  That is certainly true of those who want to become the Prime Minister. A place in history comes with  the nation doing extraordinarily well - not by thuggery or maximising personal wealth.

With this post, I rest my case on the economic manifesto for India.

We enter a crucial next month when we as a nation will make a choice.  May we have the strength to chose wisely, and carefully. And May the Force be with the new leader, whoever that may be, and his government, to serve India well. May we be judged in times to come, as a generation which turned the corner for India. 

Amen.

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Get the poor to subsidise the poor

I am not sure what the Tamil Nadu government is. A bootlegger ? A bottomless pit ? A great implementer ? A humane  carer of the unfortunate ? A bunch of eunuchs in the court of a megalomaniac ? All of the above ? Read on.

I was tempted to take a one post detour from the economic manifesto for the country as a whole, to shine a spotlight on Tamil Nadu. This was prompted by a comment from myfloatingthoughts asking for an opinion on the freebies and other doles that bedevil this state. When I examined the financial situation of Tamil Nadu, it is a complex nuanced position. A mixture of the good, the bad and the awful. Judge for yourself.

                                                                                                      Rs Crores

REVENUES

State sales taxes                                                                                33,970

Profits and taxes from liquor sales                                                      23,400

State's share of central taxes                                                             14,520

Property Taxes                                                                                    8,338

Others                                                                                               21,549

Total Revenues                                         1,01,777

EXPENDITURE

Interest                                                                                              10,196

Freebies  (the awful kind like mixers, grinders)                                      8,350  

Pensions                                                                                            13,680

Unproductive expenditure                                                             32,226

Education                                                                                          16,293

Agriculture                                                                                           6,346

Health                                                                                                 5,365

Power                                                                                                 4,368

Urban Development                                                                            4,148

Other Revenue productive expenditure                                              10,108

Other Capital productive expenditure                                                 28,362

Productive expenditure                                                                 79,032

Grants to local bodies and Panchayats                                          9,233

Total Expenditure                                     1,20,491

Note : Classifications of" "unproductive" and "productive" are my own    

One thing immediately stands out from the revenues - the Tamil Nadu government is essentially a liquor company. It has commandeered a monopoly of the liquor distribution in the state. Liquor consumption is booming in Tamil Nadu, aggressively driven by TASMAC - so much so that the per capita liquor consumption in the state is the highest in the country. If you have seen a TASMAC outlet anywhere in the state, you would know it is one of the dingiest and most depressing of all places. Only the poor frequent TASMAC. If ever there was a case of the state robbing the poor ..........

The thing that stands out on the expenditure side is that pensions are a bigger problem than freebies. The freebie nonsense is a relatively small amount and can be turned off, for many of the freebies like mixers and grinders (the largest one is laptops)  are one time affairs. The real problem is pensions, to the 7 lakh retired employees of the state. It is a sobering thought that 1% of the population of the state (and relatively well to do at that) corners 14% of the state revenues. Wonderful.

The better side of the story is that a considerable portion of the expenditure actually goes to productive uses. The state has always been a leader in education. Its health sector is also one of the better managed ones in the country. Its roads are good. It has faced a chronic shortage of power and has stepped up investment in this sector by a huge amount. Irrespective of which political party is ruling, productive expenditure has always been high. Yes, a significant portion of this expenditure is siphoned away by the political operators - for this is one of the most corrupt states in the country. Yet, a fair amount does actually get spent. So the situation is not that bad.

There are no elections to the state due for a couple of years. When the state elections come, the chief issues , economically speaking,  for the state are

• Is it ethically right for the state to remain financially afloat purely by getting the poor to be fully drunk.
• What to do about pensions
• How can we get a greater proportion of well meaning productive expenditure to be actually spent instead of being siphoned away

I am willing to bet not one of these will be debated election time.              

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The virus of corruption

In the previous posts developing the economic manifesto, we had parked the issue of corruption to be discussed separately. We now address the tackling of corruption, arguably one of India's biggest problems and one which is indisputably linked with any economic road map.

My first submission is that corruption can never be totally eliminated - for it stems from one of the basic human  vices - greed. We can, and should, control it as much as possible. But elimination is impossible.  Nowhere on earth has corruption been made extinct.

The battle against corruption needs to be tackled on three fronts

• Minimise the chances of corruption by removing the need for government clearances, permits, licenses, etc except for where this is absolutely necessary

• Transparency and oversight over commercial transactions involving the government

• A powerful and vigilant independent body that monitors, checks and prosecutes cases of corruption

The problem with the Anna Hazare movement is that it exclusively focused on the third element and completely bypassed the first two. The reason why his political successor, the AAP, will not succeed in tackiling corruption is that it too exclusively focuses on Item No 3 and actually seeks to increase the first problem.

The first front of the battle has to be to eliminate the need for licenses, permits, and various clearances, that have long outlived their utility and which are exclusively designed to breed corruption. Every commercial activity in India is subject to a plethora of rules, procedures and licenses, three fourths of which are not required and are primarily the source of petty corruption. These can be eliminated easily by

• Trawling through such laws and repealing them
• Consolidating all others and making them single window procedures
• Making them  transparent, online and therefore not subject to the whims and fancies of the babus

There are many examples of this being successfully done in India. In 1991, we took the bold step of abolishing Industrial licensing , a previously unthinkable step. P Chidambaram, then a young turk full of energy simply abolished the Controller of Exports and Imports in one stroke - one of the most corrupt bodies then ( famous quip of his when he met the worthy was,  "I can understand somewhat your trying to control imports, but why on earth are you controlling exports !") . It has been done and can be done now.  It doesn't need a financial emergency to goad action. I am not advocating the Wild West at all - clearances such as pollution, fire safety, etc are paramount. But do you have to have laws saying the font size in which the name board of your company has to be in and the  need for first having Kannada and then only English in the name board. Or the need to inform the local babu everytime you have to open the office on Kannada Rajyotsava day ?  You would be amazed how many such requirements exist.

The second, and most important battle is to govern the processes of economic transactions with the government.  These are primarily in the areas of price fixation for assets owned by the government - spectrum, coal, etc,  and the execution of government projects such as roads, public events like the Commonwealth Games, etc. This can be achieved by 

• Clear and transparent, published rules governing each type of such transactions
• Oversight by independent regulators (already happens today when such transactions come under the purview of SEBI or TRAI or RBI, etc). As a corollary, make all these regulators independent, starting with the RBI.
• Create an ombudsman body, staffed by eminent independent Indians, who will pre approve all transactions above a certain limit (very high limit obviously)
• Government to get out of price fixation for products (like electricity, gas, coal, etc ) everywhere and leave it to markets. If it wishes to intervene, these will be in the form of open market interventions, very similar to how the RBI acts today
• Pricing of natural resources is to be through an open transparent auction (like what happened for 3G telecom)

A leader who is personally non corrupt, powerful and is prepared to leave government decisions in the hands of professionals will ensure that this is effective. Something like this is what has happened in Gujarat and is the reason for the halo around that leader. Copy the model elsewhere, although that will take some doing with two of the three gargantuan megalomaniac ladies that dot our political landscape.

The third (and only the third) step is to create a powerful, anti corruption oversight body. In the absence of the first two steps, this will never be effective. But in conjunction with the first two, this can be a solid weapon. Enough has been said on this subject. Simply enact the Lokpal Bill.

Is all this simplisitic. Yes, it is. I had no desire to write a thesis, but I will be happy to get into a detailed discussion on any aspect with any reader.

There is a missing ingredient in all this. It is the moral fabric and value system of the citizens of India - a factor rightfully emphasised repeatedly by The Million Miler, one of the regular commenters.  Unfortunately this is India's greatest weakness. The moral fabric of the nation and its citizenry, I am deeply saddened to say,  has been completely torn apart. It pains me to say this, but we are a corrupt nation intrinsically. It is a rare Indian who is not corrupt at heart. He expects everybody else to be clean, but doesn't think a fraction of a second before bribing anybody to get his job done.  That is the reason why corruption will always be a significant element in Indian life. A messiah is needed who will lift us from the sad levels to which our values have degraded to. Until then, we cannot eliminate corruption. But we can try to contain it.

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