Happy New Year 2011 !!!

Year of RTI and RTI activists

2010 will be remembered as the Year of RTI. Thanks to the idealism of RTI activists who have taken on the corruption malaise in the Indian Polity. They have proved once again that Idealists too can win sometimes. It was heartwarming to see people like A. Raja, Karunanidhi, Kanimozhi and the entire congress party cornered by these "commoners who doesn't matter" in Indian Society.

India is a banana republic - Ratan Tata

What is a Banana Republic ?

According to wikipedia:

Banana republic is a term that refers to a politically unstable country dependent upon limited agriculture (e.g. bananas), and ruled by a small, self-elected, wealthy, and (but not necessarily) corrupt politico-economic clique.[1] The original concept of banana republic was a direct reference to a "servile dictatorship" that abetted (or supported for kickbacks) the exploitation of large-scale plantation agriculture, especially banana cultivation.[1] As a political science term banana republic is a descriptor first used by the American writer O. Henry in Cabbages and Kings (1904), a book of related short stories derived from his 1896–97 residence in Honduras, where he was hiding from the U.S. law for bank embezzlement in the U.S.[2]

We should all thank Ratan Tata for this insight on Indian Condition

Media has taken the CAG reports little too seriously

This is the statement by our Prime Minister Dr. Manmohan Singh. The CAG report has been used by the media as the Fodder to chewn on and none of the politicians could question the integrity of the source. That has been the issue for the Congress.

Another important point that has been mooted by the media. It was only the media that was interested in exposing the Scam and BJP was very relucntant in pursuing it vigourously in the early stages.

A Raja Resigns : Trial by Media

A. Raja had at last resigned from his post of Union Telecom Minister after severe pressure. A. Raja had been very arrogant dodging the media after the scam had broken about. It appeared that Raja thought that the media (and general public) are simply dogs barking at the sun. After all, he had seen many many politicians get away with the graft cases all the time. But the politicians had blinked this time. What changed?

The Media has made severe damage to the ultimate power seat (the Gandhis) for their silence. The Gandhis blinked once before also - in the Niyamgiri case. The Media industry will be seen in a different light from now on.

Will the Fourth Estate fight and win against the crony capitalism?

Indian Dreams and Chinese Reality

The Grandeur of CWG Opening made Indians thought that we are able to execite wpr;d class events. When Indian athletes won medals in CWG 2010, people thought that India has arrived as a Sports Giant. It includes me also.

But the bitter truth has hit us on the first day of the Asian Games 2010. The Grandeur of the Opening Ceremony painfully reminded us how mediocre was our ceremnony when compared to world standards.

The Reality of Indian Dreams rests in the Medal Count in China..

India's Greatest Threat - Populism vs Good Governance

I read an interesting and thought provoking article about Populism in TOI today. All the political parties in India have been engaging in the policy of giving freebies for votes under the guise of being Pro-Poor. This has grown to the extent that one has to wonder whether India has three different systems - Capitalism (for rich), Socialism (for middle class) and Communism (for the poor) all simultaneously existing together. How long will the party go on like this?

Not for indefinite period for sure.Mainly due to these policies, Many of the states of India are heavily in debt to the tune of laks of crores, not unlike the United States. As the US has come to realize, the laws of economics will one day catch up with these governments.

Solution to Currency War : Back to Gold Standard

World Bank President Robert Zoellick's Solution for Currency Wars seems to be back to Gold Standard.

Leading economies should consider adopting a modified global gold standard to guide currency rates, World Bank president Robert Zoellick said on Monday in a surprise proposal before a potentially acrimonious G20 summit. Writing in the Financial Times, Zoellick called for a "Bretton Woods II" system of floating currencies as a successor to the Bretton Woods fixed-exchange rate regime that broke down in the early 1970s.

The former US trade representative, who served in several Republican administrations, said such a move "is likely to need to involve the dollar, the euro, the yen, the pound and (a yuan) that moves towards internationalisation and then an open capital account. "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values," he added.

Those who are familiar with the Gold Standard are very much against it and say that this economically stagnating and suffocating system does not allow more wealth (progress) into the system as more money cannot come into the system. Critics also point to the growth of Gold Cartels who can easily manipulate the whole economic system and that Gold Standard was responsible for the first two world wars.

Are we jumping from frying pan to the fire?

The India growth story has been repeated by everyone. There are arguments as to whether India's GDP would grow at 8.5% or 9% or higher. Numbers are playing a key game. Therefore, it is interesting to note that the numbers for the standard of living in the country give a different picture altogether. While GDP has been growing, but then so has the population of the country. As a result, India's GDP per person, which is an indicator for the standard of living, actually ranks at amongst the lowest in the world.

Source : EquityMaster

Quantitative Easing, Currency Wars and its Global Impact

The US is initating a Global Currency War with its Quantitative Easing. The inflation that is supposed to happen in US due to Quantitative Easing is not happenning there but it is happening everywhere else. The FDI dollars are inflating the Stock and Commodity Prices stroking the inflation in India. Subba Rao, RBI Governer, says there is a hidden cost in maintaining the Dollar Rupee Exchange Rate.. Are Countries like India indirectly paying for the US excesses by trying to maintain the currency rates..


India and QE

India, like many other emerging economies, is finding it tough to cope with huge capital inflows as investors from the West seek higher returns in these markets, given their robust growth.

“The biggest problem thrown up by capital flows is currency appreciation, which erodes export competitiveness. Intervention in the forex market to prevent appreciation entails costs. If the resultant liquidity is left unsterilised , it fuels inflationary pressures. If the resultant liquidity is sterilised, it puts upward pressure on interest rates which, apart from hurting competitiveness, also encourages further flows,” Mr Rao said in his speech.

The Indian rupee has appreciated by nearly 6% since early September on the back of inflows of over $11 billion through the portfolio route alone. Central banks often manage huge capital inflows by buying dollars and infusing the local currency in order to protect their respective currency from steep appreciation. However, if inflows are too high, the central bank has to mop up the excess local currency by selling bonds or sterlising inflows. This puts upward pressure on interest rates. If inflows are not sterilised, there could be inflationary pressures . A few countries such as Thailand and Brazil have imposed controls on capital flows, but this has only stoked fears about more funds being diverted to Indian markets.

Subbarao said RBI has to manage the impossible trinity, which alludes to the fact that a central bank cannot manage its exchange rate, an open or liberal capital account and an independent monetary policy simultaneously.

An IMF analysis indicates that emerging Asian economies have done relatively well in sterilising the impact of reserves growth on their domestic financial systems, a Fitch Ratings report said. The report warns that there could be an adverse implication of the second round of quantitative easing, or QE2, on China and India.


China and Quantitative Easing

Dollar issuance by the United States is "out of control," leading to an inflation assault on China, the Chinese commerce minister said in comments reported on Tuesday.

Chen Deming, speaking at a trade fair in southern China, said that exporters had done a good job of preparing themselves for exchange rate changes as well as rising labor costs, but were suddenly confronted with new challenges.

"Because the United States' issuance of dollars is out of control and international commodity prices are continuing to rise, China is being attacked by imported inflation. The uncertainties of this are causing firms big problems," Chen was quoted as saying by the official Xinhua news agency.

Chinese officials have criticized U.S. monetary policy as being too loose before, but rarely in such explicit language.

Trade Wars will collapse World Economy - Jim Rogers

Investment icon Jim Rogers says the trade wars looming on the economic horizon could spell disaster for the global economy.

"The word is on a very dangerous precipice, and if we do continue with trade wars, that's going to be the end of the world economy … we’ve seen many countries putting on capital controls already," Rogers, chairman of Rogers Holdings, told CNBC.

"If we don't solve this problem, it's finished, it’s all over.”

A Chinese story - Behind the scenes

Benoit Mandelbrot - The non-economist

Benoit Mandelbrot was the first guy who told that the models of Wall Street, which are based on the assumption of Normal Distribution of returns, are fundamentally wrong and would one day lead of collapse. He is the archetypal Ayn Rand Hero. He has passed away on October 10, 2010. This is a tribute (link from wired)

Carry Trade and India's Dilemma

Times of India reports:

As Carry Trade (Foreign Direct Investments)  enter the markets, they are required to be converted into rupee to invest in India. The huge inflow of dollar makes US currency cheaper in the market, resulting in appreciation of rupee. But, in the process no extra rupee gets infused in the system. To avoid such appreciation of rupee, RBI buys the large forexes . But in this case, the rupee gets infused in system, leading to increase in liquidity. Increased liquidity leads to softening of interest rates, which, in turn, become inflationary.

The RBI may intervene in the foreign exchange market to stem the appreciation of rupee against dollar. But such an intervention will lead to infusion of liquidity in the system, forcing softening of interest rates, which will frustrate central bank's efforts to contain inflation. Annual inflation in September has inched up marginally to the uncomfortably high level of 8.63%.

RBI governor D Subbarao said on Friday said that the central bank will intervene if the inflows are lumpy and volatile. "We are watching the situation and our policy is clear. We will intervene if (FII) inflows are lumpy and volatile or they disrupt macro economic conditions.

Will India too impose controls on FDI like Brazil?

Indian SoftPower

The anticlimax of the Commonwealth Games 2010 : Indian Sportspeople  make India proud. But Indian sport bureaucrats are not even apologetic. Hats off to the Indian Sports team.

Wealth of the Nations

Despite all the bad economic news coming out of the developed world, the fact remains that they are way ahead of the emerging nations. The chart of the day shows the wealthiest nations in terms of a share in world wealth. As expected, the US and Western European nations lead the pack. However, the rate of growth in wealth is much higher in emerging nations, especially China. Ten years ago, the dragon nation was on the seventh place on the list. Today, it occupies the third spot. By 2015, it is expected to dislodge Japan at the second spot. India's wealth has also grown fast. It has tripled over the last decade and is expected to grow another 80% by 2015. But it still pales in comparison to the dragon nation. China is nearly five times as wealthy as India.

from : equitymaster

Peepli Live : Nuggets from Anusha Rizvi & Mahmood Farooqui

It was primarily the idea that there are policies for farmers who are dead, but there is nothing for those who are still alive. And that is a repeated sense in the film.

How many of our films show rural India and believe that India has a rural side. People just think about big cities -- Delhi, Mumbai, Bangalore. So have we come to a juncture where there will be one India for the rich and the other of the poor villagers? And we will have visas and passports for the villagers to go into the world of rich Indians?

India - 3rd most powerful country in the world

India has been named as the third most powerful country in the world. With 8% of global power in its hands, India stands 3rd after United States (22% of power) and China (12% of power). If the European Union is included as a block, then it would account for 16% of global power, making India the fourth most powerful nation in the world. The model used by the agency took into account GDP, defense spending, population and technology for each country to come up with its rankings.

Obamanomics and US – The Great Divide Within

The reforms of Obama is being heatedly debated in the United States between the two sects of American public. The first sect is Pro-Big-Business guys who feel that Obama hates Business, is driving US to State Capitalism and feel that he is an anti-colonialist like his father Obama Sr.

Taking a strong opposition to Obamanomics, Dinesh D’Souza in his Forbes Article, “Obama’s Problem with Business” articulates his scathing attack on Obama:

A good way to discern what motivates Obama is to ask a simple question: What is his dream? Is it the American dream? Is it Martin Luther King's dream? Or something else? It is certainly not the American dream as conceived by the founders. They believed the nation was a "new order for the ages." A half-century later Alexis de Tocqueville wrote of America as creating "a distinct species of mankind." This is known as American exceptionalism. But when asked at a 2009 press conference whether he believed in this ideal, Obama said no. America, he suggested, is no more unique or exceptional than Britain or Greece or any other country.

Perhaps Obama shares Martin Luther King's dream of a color-blind society. The President has benefited from that dream; he campaigned as a nonracial candidate, and many Americans voted for him because he represents the color-blind ideal. Even so, King's dream is not Obama's: The President never champions the idea of color-blindness or race-neutrality. The race issue simply isn't what drives Obama

What then is Obama's dream? We don't have to speculate because the President tells us himself in his autobiography, Dreams from My Father. According to Obama, his dream is his father's dream. Notice that his title is not Dreams of My Father but rather Dreams from My Father. Obama isn't writing about his father's dreams; he is writing about the dreams he received from his father.

From the anticolonial perspective, American imperialism is on a rampage. For a while, U.S. power was checked by the Soviet Union, but since the end of the Cold War America has been the sole superpower. Moreover, 9/11 provided the occasion for America to invade and occupy two countries, Iraq and Afghanistan, and also to seek political and economic domination in the same way the French and the British empires once did. So in the anticolonial view, America is now the rogue elephant that subjugates and tramples the people of the world.

It may seem incredible to suggest that the anticolonial ideology of Barack Obama Sr. is espoused by his son, the President of the United States. That is what I am saying. From a very young age and through his formative years Obama learned to see America as a force for global domination and destruction. He came to view America's military as an instrument of neocolonial occupation. He adopted his father's position that capitalism and free markets are code words for economic plunder. Obama grew to perceive the rich as an oppressive class, a kind of neocolonial power within America. In his worldview, profits are a measure of how effectively you have ripped off the rest of society, and America's power in the world is a measure of how selfishly it consumes the globe's resources and how ruthlessly it bullies and dominates the rest of the planet.

The other faction which support Obamanomics feel that Obama is trying to save the American Middle Class. For them, Obamanomics also means understanding that America has to now adjust to the new realities of globalization. Simon Tay, in his Forbes article titled “America’s Call to globalization” states that America needs to react proactively to Asia’s Rise and Obama himself represents the new economic realities in the globalized world.

He says ” For a long time, globalization has effectively meant "Americanization." This has meant that others in the world adjust to American mores and culture and that the dispersion of American brands across the world accompanies the spread of commercial interdependence. Americans had little to adjust to in globalization when it was the same as Americanization.

This, however, will change in the globalization that is coming in the wake of the crisis. This deeper globalization is coming back to America in hybrid forms that take in more influences from more sources, especially from a rising Asia. The new globalization is not as such Americanization but is something that could be called "Global-as-Asian." This would be more of a two-way street for people, trade, finance, influence, and ideas.”

Perhaps President Barack Obama can provide not just a political message but a personal example of Global-as-Asian. As a child, Obama followed his mother to live in Indonesia and, from 1967 to 1971, at the formative ages of six to ten, he attended the Besuki Elementary School in Jakarta before returning to Hawaii for school and going on to Columbia University and Harvard Law School.

The Besuki school did not espouse an extremist Muslim religion, as rumors falsely alleged when Obama was campaigning for office. The school had mixed races and religions, including Christians and international students. Given this and his own background, the young boy who is now president could fairly be said not to be a product of a typical American education but instead to have received a kind of international education.

America does need Asia. The rise of Asia can help drive the American recovery and growth if the economies remain linked and American companies can find ways to grow in Asia. But the American need for Asia cannot be politically supported if America comes out of the crisis severely weakened and with a loss of confidence. A weak and shaken America will be likely to see greater anti-Asian, protectionist sentiments, and against allowing more influence and investment to flow from the region into the United States.

On the other hand, if it can show signs of recovery and rebuilding after this crisis, then America can respond proactively to the rise of Asia and the new and deeper processes of globalization--Global-as-Asian.

Carry Trades - The Secret of Indian Stock Market's FDI

Interest Rates and Economic Stimulus

How did the US Banks so much during the financial crisis?

America Without a Middle Class - I

Elizabeth Warren : On the disappearing American Middle-Class

Can you imagine an America without a strong middle class? If you can, would it still be America as we know it?

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s. But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago -- for a house that was, on average, only ten percent bigger and 25 years older. They also had to pay twice as much to hang on to their health insurance.

To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases -- but it hasn't been enough to save them. Today's families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.

America today has plenty of rich and super-rich. But it has far more families who did all the right things, but who still have no real security. Going to college and finding a good job no longer guarantee economic safety. Paying for a child's education and setting aside enough for a decent retirement have become distant dreams. Tens of millions of once-secure middle class families now live paycheck to paycheck, watching as their debts pile up and worrying about whether a pink slip or a bad diagnosis will send them hurtling over an economic cliff.

America without a strong middle class? Unthinkable, but the once-solid foundation is shaking.

Asatyameva Jayete.

I came across the following Social Media Mail - MOHAN MARUTI--INDIA

A few days ago I was in a panel discussion on mergers and acquisitions in Frankfurt, Germany, organised by Euroforum and The Handelsblatt, one of the most prestigious newspapers in German-speaking Europe.

The other panellists were senior officials of two of the largest carmakers and two top insurance companies — all German multinationals operating in India.
The panel discussion was moderated by a professor from the esteemed European Business School. The hall had an audience that exceeded a hundred well-known European CEOs. I was the only Indian.

After the panel discussion, the floor was open for questions.That was when my “moment of truth” turned into an hour of shame, embarrassment — when the participants fired questions and made remarks on their experiences with the evil of corruption in India.

The awkwardness and humiliation I went through reminded of The Moment of Truth, the popular Anglo-American game. The more questions I answered truthfully, the more the questions got tougher. Tougher, here means more embarrassing.

European disquiet

Questions ranged from “Is your nation in a coma?”, the corruption in adminstration, even in judiciary, the possible impeachment of a judge, the 2G,teecom scam and to the moneyin billions, parked illegally in tax havens.
It is a fact that the problem of corruption in India has assumed enormous and embarrassing proportions in recent years, although it has been with us for decades. The questions and the debate that followed in the panel discussion was indicative of the European disquiet. At the end of the Q&A session, I surmised Europeans perceive India to be at one of those junctures where tripping over the precipice cannot be ruled out.
Let me substantiate this further with what the European media has to say in recent days.
In a popular prime-time television discussion in Germany, the panellist, a member of the German Parliament quoting a blog said: “If all the scams of the last five years are added up, they are likely to rival and exceed the British colonial loot of India of about a trillion dollars.”

Banana Republic

One German business daily which wrote an editorial on India said: “India is becoming a Banana Republic instead of being an economic superpower. To get the cut motion designated out, assurances are made to political allays. Special treatment is promised at the expense of the people. So, Ms Mayawati who is Chief Minister of the most densely inhabited state, is calmed when an intelligence agency probe is scrapped. The multi-million dollars fodder scam by another former chief minister wielding enormous power is put in cold storage. Prime Minister Manmohan Singh chairs over this kind of unparalleled loot.”
An article in a French newspaper titled “Playing the Game, Indian Style” wrote: “Investigations into the shadowy financial deals of the Indian cricket league have revealed a web of transactions across tax havens like Switzerland, the Virgin Islands, Mauritius and Cyprus.” In the same article, the name of one Hassan Ali of Pune is mentioned as operating with his wife a one-billion-dollar illegal Swiss account with “sanction of the Indian regime”.
A third story narrated in the damaging article is that of the former chief minister of Jharkhand, Madhu Koda, who was reported to have funds in various tax havens that were partly used to buy mines in Liberia. “Unfortunately, the Indian public do not know the status of that enquiry,” the article concluded.
“In the nastiest business scam in Indian records (Satyam) the government adroitly covered up the political aspects of the swindle — predominantly involving real estate,” wrote an Austrian newspaper. “If the Indian Prime Minister knows nothing about these scandals, he is ignorant of ground realities and does not deserve to be Prime Minister. If he does, is he a collaborator in crime?”
The Telegraph of the UK reported the 2G scam saying: “Naturally, India's elephantine legal system will ensure culpability, is delayed.”

Blinded by wealth

This seems true. In the European mind, caricature of a typical Indian encompasses qualities of falsification, telling lies, being fraudulent, dishonest, corrupt, arrogant, boastful, speaking loudly and bothering others in public places or, while travelling, swindling when the slightest of opportunity arises and spreading rumours about others. The list is truly incessant.
My(MOHAN'S) father, who is 81 years old, is utterly frustrated, shocked and disgruntled with whatever is happening and said in a recent discussion that our country's motto should truly be CHANGED TO

Asatyameva Jayete.

Europeans believe that Indian leaders in politics and business are so blissfully blinded by the new, sometimes ill-gotten, wealth and deceit that they are living in defiance, insolence and denial to comprehend that the day will come, sooner than later, when the have-nots would hit the streets.

In a way, it seems to have already started with the monstrous and grotesque acts of the Maoists. And, when that rot occurs, not one political turncoat will escape being lynched.

The drumbeats for these rebellions are going to get louder and louder as our leaders refuse to listen to the voices of the people. Eventually, it will lead to a revolution that will spill to streets across the whole of India, I fear.

Perhaps we are the architects of our own misfortune. It is our sab chalta hai (everything goes) attitude that has allowed people to mislead us with impunity.

No wonder Aesop said. “We hang the petty thieves and appoint the great ones to high office.”
(The author is former Europe Director, CII, and lives in Cologne, Germany. )

Transportation Innovation : Now in India

Last Month, I came across the MegaBus, Chinese Transportation Innovation. Now India seems to be not that far behind. Transportation Pods are being planned in Gurgaon, Delhi.

Haryana chief minister Bhupinder Singh Hooda has a high-tech solution that will address commuters' problems in one shot: Pod taxis. And he is serious about it.

As Gurgaon residents well know, the city roads are an optical illusion. The unbroken chain of craters and ditches that pass for roads have for long burned holes in the pockets and hearts of the residents.

But, if Hooda has his way, you could bypass the troublesome roads altogether. " Pod taxis seem to be the best way to take public transport through all the built up areas," Hooda told TOI in an exclusive interview. Clearly, the chief minister aims high.

The CM believes that these battery-operated, driverless vehicles that run on an elevated track, will begin to ply in the next few years and connect people point to point - what the government claims as "providing last mile connectivity".

Read more: Forget potholes, ride pod taxis in Gurgaon: Hooda - The Times of India http://timesofindia.indiatimes.com/city/gurgoan/Forget-potholes-ride-pod-taxis-in-Gurgaon-Hooda/articleshow/6550018.cms#ixzz0zZ9DIQxI

One in three Indians 'utterly corrupt': watchdog head

Almost one-third of Indians are "utterly corrupt" and half are "borderline", the outgoing head of the country's corruption watchdog has said, blaming increased wealth for much of the problem.

Pratyush Sinha, who retired as India's Central Vigilance Commissioner this week, said the worst part of his "thankless job" was observing how corruption had increased as people became more materialistic.

"When we were growing up I remember if somebody was corrupt, they were generally looked down upon," he said. "There was at least some social stigma attached to it. That is gone. So there is greater social acceptance."

Transparency International, the global anti-graft body, puts India 84th on its corruption perception index with a 3.4-point rating, out of a best possible score of 10.

New Zealand ranks first with 9.4 points and Somalia last on 1.1 points.

The campaign group has said that each year millions of poor Indian families have to bribe officials for access to basic public services.

Sinha told the Mint newspaper in an interview published on Tuesday that 20 percent of Indians were "honest, regardless of the temptations, because this is how they are. They have a conscience.

"There would be around 30 percent who would be utterly corrupt. But the rest are the people who are on the borderline," he said, adding that corruption was "palpable".

Sinha said that in modern India "if somebody has a lot of money, he is respectable. Nobody questions by what means he has got the money."

China has the world's biggest traffic jam

Whatever traffic hell you endured getting to work this morning is nothing compared to what’s happening in Beijing, where a mammoth traffic jam is entering its ninth day with no relief in sight.

Thousands of trucks have jammed National Expressway 110 since Aug. 14, creating a traffic jam stretching 100 kilometers. Authorities attribute the mess to highway construction exacerbated by accidents and breakdowns

Read More http://www.wired.com/autopia/2010/08/nine-day-traffic-jam-makes-your-commute-look-rosy/#ixzz0xWKVxqIn

Niyamgiri is saved for now?

Niyamgiri Hills, Orissa: The Vedanta mining project in Orissa has been struck down by the government. This after a committee said the company had violated forest and environment laws.

Forest clearance for the project in the Niyamgiri Hills has been cancelled and there shall be penal action against Vedanta for violating laws. A notice has also been issued to the company for its alumina refinery in Lanjigarh, for increasing "1 mn tonne capacity...to 6 mn tonnes illegally."

Environment Minister Jairam Ramesh said, "There has been a very serious violation of Environment Protection Act, Forest Conservation Act and the Forest Rights Act...there have been no emotions and no politics and no prejudice involved in this report

Click here for full report.
Read more at: http://www.ndtv.com/article/india/jairam-says-no-to-vedanta-mining-project-in-orissa-46736?cp

we are like this only

China - World's Second Largest Economy now

After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States.

Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter of 2010, slightly below China’s $1.33 trillion.

By the way, where is India?

Are American Small Investors shying away from Stock market?

Small Investors have played a large part in the American Stock Exchange unlike in the Indian Stock markets. Last week I read a article that few Small Indian Investors are also getting out of the markets by withdrawing from the Mutual Funds.

NYTimes is reporting that the phenomena is happening in America too, as more than 20 billion USD have been withdrawn from their Mutual Funds. It could be a long term drift in investment psychology and the attitudes Americans have about their money.. Are slowly large shifts happening?

Indian Gymnastics - from Wired.com

Infosys - A Chop Shop?

Infosys - A Chop Shop - Senator Schumer

Criticising companies outsourcing highly-paid American jobs, a US Senator has described Indian IT major Infosys as a "chop shop", a place where stolen cars are dismantled and parts sold separately.

The comments were made by Democrat Senator of New York Charles E Schumer during discussions on the Border Security Bill, a USD 600-million emergency package aimed at strengthening security along the porous Mexican border.

"The emergency border funds will be paid for by assessing fees on foreign companies known as chop shops that outsource good, high-paying American technology jobs to lower wage, temporary immigrant workers from other countries.

"These are companies such as Infosys," Schumer said on the Senate floor on Thursday.

My Comments:

Infosys and other Indian Software Company should try to do at least one or two products, to prove that they also have real capability in developing software. I am always surprised to see them keep on multiplying their revenues Year-over-year even when the Global Economy itself
is under performing, even without holding any IP and real competitive edge.

My thoughts is that they are leveraging the gap between the cost of essential life services in India vs the same in US (indirectly through the currency value difference between Indian Rupee and the US Dollar). But this Currency Value difference itself is the ugly offspring of US making its Paper currency the world's Currency (giving a monopoly player status for US). The US is now tasting its own medicine it had been administrating to the entire world.

What is happening is that non-tech, non-financial service providers (read as middle class people) value has eroded under globalization across the globe. This exploitation cannot go on forever and US non-tech, non-finance service providers are now fighting back. Their Indian Counterparts to would start fighting back soon.

Urbanization & Growth : India, China & Asia

Notes from Reuters Special on Urbanization - India & China Story

1. It happens every year. When monsoon rains lash Mumbai, the city turns into a cesspool, which along with its potholed roads and gridlocked traffic, mocks its ambition of becoming a global financial center. India has Asia's third-largest economy and the increasing global clout that goes with it. It is already home to a quarter of the world's 20 most densely populated cities.

2. Indian cities over the next two decades will also house 40 percent of the country's population and generate some 70 percent of new job opportunities, McKinsey Global Institute (MGI), the research arm of consultancy McKinsey, estimates in a report.

"Across all major quality-of-life indicators, India's cities fall well short of delivering even a basic standard of living for their residents," the report said. To cater to this growth, India needs to invest $1.2 trillion in capital expenditure, mainly infrastructure, over that period, an eight-fold increase of current spending levels, MGI said.

3. India will, over the next two decades, see an urban transformation the scale and speed of which has not happened anywhere except China, with many cities becoming larger than many countries, in terms of population size and GDP.

"It's going to be one of the most defining changes that we have yet to see," said Roopa Purushothaman at Everstone Investment Advisors.

Analysis :

Historically, India's politicians and policy-makers have focused on villages. Urbanization has largely been a result of existing cities expanding economically and demographically, rather than anything planned. This is reflected in Sonia Gandhi's approach, who has conceded that the price hike in petrol is to fund the social schemes (read village oriented). This would tantamount to penalize the urban population to help rural population.

Economic plan ensured jobs not heading to India, China: Obama

United States President Barack Obama has said that the new economic plan of his government focused on making the middle class more secure and the country more competitive so that the jobs and industries of the future were not outsourced to China and India.

From: Hindu

A Chinese Innovation - Metro -meets BUS meets TRAM

Finally Chinese have come of age and are now providing innovative solutions to world's problems.

Here is a Metro Meets BUS meets TRAM idea that might be implemented in Beijing Suburb this year. The concept is interesting where Countries like India can leverage on its new road infrastructure to create better Mass Transport Systems.

Deficit Rise foretalls World War III?

Above chart is US federal deficit / GDP ratio, 1900-2010. The two prior peaks (1919=17, 1943=28) coincided with WWI and WWII respectively. Currently we are at the 10.64; 3rd highest in the 110 year series, and not declining yet.

Does this forecast a world war III?

NRI remittances leading to boom in wealth in villages

source :
http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/NRI-remittances-leading-to-boom-in-wealth-in-villages/articleshow/6212272.cms



When Shreyas Vani, a resident of Karamsad in Gujarat’s Anand district, wants to loosen his tired muscles after a hard day’s work, he just ambles into a swanky parlour bang in the middle of the village.

“It is just one of many (luxuries of life). Young people in our village yearn for them and want them right here. Money is not a factor,” he says, as the latest model of iPod deliberately slips out of his jeans’ pocket.

Two thousand kilometers away in Punjab’s Jallandhar district, when potato seed farmer, Santokh Singh, wanted to buy a car, he hitched a cab ride to Chandigarh, only to drive back in a brand new Audi A4. He says his fellow farmers are not settling for anything less, so why should he. “Our village has narrow roads, but a broad vision for BMWs, Mercs and Audis,” Singh laughs.

Stories such as these redefine rural life as we perceive it. Some villages in India are ahead of the curve and when it comes to luxury, they offer an opportunity to brands, no less secondary to businesses in the metros. Here people want the best cars and branded diamond jewellery. They shop for foreign tours-for travelling as well as study, and use Wi-fi enabled laptops. Here, the raw scent of the farmlands get mixed with the fragrance of a Channel and Diesel.

The secret is quite an open one, whether the village be in Punjab, Gujarat or Kerala. Remittances from their NRI sons and daughters have led to an unprecedented boom in wealth. In Kerala, near Thiruvalla, lies the Kumbanad-Kozhencheri belt which has a whopping `5,400 crore parked in bank deposits! In Karamsad village, remittances have topped `1,500 crore in banks and post offices.

Take the example of Kerala. Real estate development, the most visible sign of recent prosperity that provided jobs to 25 lakh people in the state is also roaring in Kochi after being hit by the Gulf crisis earlier this year.

Hoardings at city junctions announce the arrival of new luxury apartments, the kinds which are usually found in posh localities of metro cities. Big builders already have more plans.

“A lot of investment had been planned there on the basis of projected demand linked to the expansion of the technology parks, and in homes,” says SN Raghuchandran Nair, president of the Confederation of Real Estate Developers. What has this done to villages? Well they look more like a wealthy suburb in a western country than an Indian village.

If this sounds unbelievable, wait till you hear about Asia’s richest village. With remittances of over `5,000 crore, people in Madhapar in Gujarat’s Kutch district, live life kingsize. Apart from cars like the Jaguar, or BMW 7-series, they are particularly enthused by the brand of cosmetics they use. Jadhavbhai Varsani, who runs a plush supermarket in the town, says that imported cosmetics, from L’Oreal to Dunhill and Diesel, sell like hot cakes.

Young people buy only top end brands as they are used to it from the trips abroad,” he says. As you enter his huge store, you can see cosmetics from Dove to Armani neatly arranged in long shelves. The supermarket itself looks straight out of a California suburb.

For many jewellery retailers, traditional hoardings and billboards are passe’ in Karamsad. “Today, we hire local models and organise events at marriage parties and business meetings to attract a large number of cash-rich youngsters for our latest jewellery design,” says Rupen Patel, a jeweler.

In Punjab, long among the more prosperous villages in the country, the image of turbaned kurta worn farmer driving a white Maruti car laden with his produce is like a yellowing photograph.

Now, there is big competition amongst companies with farmers opting for Mercs, BMW, Audi and other high-end SUVs, say car dealers in the region. Little wonder then that when Mercedes opened its first showroom in Jalandhar, it immediately saw customers who were from the farming community.

Years ago, these farmers used to buy tractors in groups extracting heavy discounts from the tractor makers or dealers. Now, they are doing the same with car dealers. Says Raghubir Singh, a member of the Jalandhar Potato Growers Association, “We have approached a big car maker, and they have told us we will get a good offer if we all book through the same dealer.”

The difference between the rich rural buyer and the consumers in the big cities is that while the rural rich are willing to pay upfront, the urban rich would take a loan and pay up in instalments.

“There is a tax issue as well, which the farmer doesn’t have to comply with. But more importanly, he has a higher disposable income and hence easy to do business with,” says a diamond jewellery company executive.

Even if living in untold riches, trust young adults in Gujarat to take to stock trading as a duck takes to water. In Ena village in South-Gujarat, which looks more like a glitzy township, most young people are dedicated investors in not just stocks but also complex financial instruments, including derivatives.

Many of them are regular visitors to the US, the UK and Australia, where their relatives have done well for themselves. If anywhere in India airline companies, tour operators and foreign study agents could do roaring business, it is here.

India is the biggest victim of financial crisis-induced poverty

India is the biggest victim of financial crisis-inducedpoverty, according to data obtained by TOI from the United Nations Department of Economic and Social Affairs' (UNDESA). Check out these figures.

The UNDESA data estimates that the number of India's poor was 33.6 million higher in 2009 than would have been the case if the growth rates of the years from 2004 to 2007 had been maintained. In 2009 alone, an estimated 13.6 million more people in India became poor or remained in poverty than would have been the case at 2008 growth rates.

In other words, while a dip from the 8.8% growth in GDP averaged from 2004-05 to 2006-07 to the 6.7% estimated for 2008-09 may be nothing like the recession faced by the West, its human consequences for India were probably worse. The 2.1% decline in India's GDP growth rate has effectively translated into a 2.8% increase in the incidence of poverty.

Link

India puts on hold first GM food crop : Just for Now

BBC reports : India has deferred the commercial cultivation of what would have been its first genetically modified (GM) vegetable crop due to safety concerns.

Environment Minister Jairam Ramesh said more studies were needed to ensure genetically modified aubergines were safe for consumers and the environment.

The GM vegetable has undergone field trials since 2008 and received approval from government scientists in 2009.

My Take : Wait for the next food crisis.. GM Foods would be making a backdoor entry using Disaster Capitalist Strategy

Church of England withdraws from Vedanta

BBC : The Church of England has said that it will withdraw investment from a firm involved in a controversial mining project in the Indian state of Orissa.

This validates the stand of the environmentalists stand on Orissa. But POSCO is said to have started their operations there already. What would happen to Niyamgiri now?

Courts apathetic to sacking under cover of globalisation: Supreme Court

The Brand value of Globalization is under a Recession now. The Indian Judiciary is now siding with the Labour these days.


The Supreme Court has expressed anguish at courts’ apathy to the plight of workers being retrenched in the guise of globalisation and economic liberalisation.

A Bench of Justices G.S. Singhvi and A.K. Ganguly, in different but concurring judgments, regretted that there was a visible shift in the courts’ approach to cases involving interpretation of social welfare legislation.

Justice Singhvi said: “The attractive mantras of globalisation and liberalisation are fast becoming the raison d’etre of the judicial process and an impression has been created that the constitutional courts are no longer sympathetic to the plight of industrial and unorganised workers.”

He said: “In a large number of cases like the present one, relief has been denied to the employees falling in the category of workmen, who are illegally retrenched by creating bylanes and sidelanes in the jurisprudence developed by this court in three decades. The stock plea raised by the public employer in such cases is that the initial employment/engagement of the workman-employee was contrary to some or the other statute or that reinstatement will put an unbearable burden on the financial health of the establishment.”

Harjinder Singh, appointed in the Punjab State Warehousing Corporation in March 1986, was dismissed in July 1988. Acting on a writ petition, the Punjab and Haryana High Court stayed the order and he continued in service. Finally in September 1992, the petition was dismissed as withdrawn.

In November 1992, another order was passed sacking 22 workers including the appellant. While the labour court directed their reinstatement with 50 per cent back wages, a single judge of the High Court, entertaining an appeal, ordered compensation of Rs. 87,582. The present appeal is directed against this judgment.

Justice Singhvi pointed out that “Courts have readily accepted such plea unmindful of the accountability of the wrongdoer and indirectly punished the tiny beneficiary of the wrong, ignoring the fact that he may have continued in the employment for years together and that micro wages earned by him may be the only source of his livelihood. It needs no emphasis that if a man is deprived of his livelihood, he is deprived of all his fundamental and constitutional rights and for him the goal of social and economic justice, equality of status of opportunity, the freedoms enshrined in the Constitution remain illusory.”

Statutory goal

In a separate judgment, Justice Ganguly said: “I am in clear agreement with Justice Singhvi that this court has a duty to interpret statutes with social welfare benefits in such a way as to further the statutory goal and not to frustrate it.”

He said: “In doing so, this court should make an effort to protect the rights of the weaker sections in view of the clear constitutional mandate. Social Justice, the very signature tune of our Constitution and being deeply embedded in our constitutional ethos, in a way is the arch of the Constitution which ensures rights of the common man to be interpreted in a meaningful way so that life can be lived with human dignity.”

He said: “I share the anxiety of Justice Singhvi about a disturbing contrary trend which is discernible in recent times and which is sought to be justified in the name of globalisation and liberalisation of economy. Any attempt to dilute the constitutional imperatives in order to promote the so-called trends of globalisation may result in precarious consequences. Reports of suicidal deaths of farmers in their thousands from all over the country, along with escalation of terrorism, throw a dangerous signal.”

Bullets trains for US

The Automobile Lobby is said to be behind the absence of state-of-the art trains in the US. With Oil Price Peaking, things seems to change. Could mass-adoption of Trains the next thing world over?

Wired:Believe it: Bullet trains are coming.

After decades of false starts, planners are finally beginning to make headway on what could become the largest, most complicated infrastructure project ever attempted in the US. The Obama administration got on board with an $8 billion infusion, and more cash is likely en route from Congress. It’s enough for Florida and Texas to dust off some previously abandoned plans and for urban clusters in the Northeast and Midwest to pursue some long-overdue upgrades. The nation’s test bed will almost certainly be California, which already has voter-approved funding and planning under way. But getting up to speed requires more than just seed money. For trains to beat planes and automobiles, the hardware needs to really fly. Officials are pushing to deploy state-of-the-art rail rockets. Next stop: the future.

Basu pushed land reforms but left Bengal as industrial wasteland

Economic Times about Jyoti Basu, who strode the nation’s political landscape like a colossus, passed away this afternoon at a Kolkata hospital. Basu, who missed being the prime minister in 1996 because of the CPM’s ideological rigidity, was in charge of West Bengal for a record 23 years and, in the process, became the longest-serving chief minister of any state.

Basu, who put the emphasis on the bread and butter goals of communism, leaves behind a mixed legacy — while he was credited with decentralisation of power and land reforms, the state became an industrial wasteland during his tenure. Along with his senior colleagues EMS Namboodiripad and H S Surjeet, he scripted his party’s political pragmatism in 1989 and later in 1996 by aiding the formation of two non-Congress coalitions at the Centre. Despite hailing from a party seeped in dogmatism, he was credited with running a coalition through consensus politics.

Basu, who became the unanimous choice of the United Front to lead the government at the Centre in 1996, was denied the opportunity by his own party’s central committee which rejected the proposal by three votes. Incidentally, it were Prakash Karat, Sitaram Yechury and S Ramachandran Pillai, who had mobilised support against the proposal in the central committee meeting. Basu, known for whiplash candour, told the media in December 1997 that the decision of the party was a “historic blunder”.

Aamir, 3 Idiots and Pursuit of Excellence

Film-making is very similar to entrepreneurship. The role of a film producer is analogous to that of a venture capitalist. Good producers, like smart venture capitalists, know that it's not just about writing a check and it's not just about big stars and quality music. In the same way, simply providing venture funding or throwing money at a start-up cannot ensure success, and it's not necessarily a great thing for entrepreneurs to have lots of work experience and domain expertise in their industry. The actors and the director, like entrepreneurs, work to bring the script and business plan to life. More than anything else, making a good film and building a business from scratch both require oodles of creativity.

Mr. Khan's recent cinema has sensitized millions of parents to let their children become what they want to, rather than forcing them to be doctors, lawyers or engineers. The subtext of why parents would wish so for their children is, however, missing from the narrative.

In a socialist India with strict government control over economic activity, those vocations were likely the only ones which came with a certain guarantee to a minimum standard of living. Since the liberalization of 1991 and the boost to economic freedom given by the BJP-NDA government from 1998-2004, career opportunities have expanded dramatically. Today, young Indians can be productively employed as radio jockeys, artists or sportspeople. Popular attitudes haven't caught up with the growth of opportunity and the majority of Indians continue to believe that what you study in college should dictate what you do in life. It is incomprehensible to the pre-1980s generation why someone might choose to study literature, or why an engineer might want to be a photographer. This stems from the perceived or real lack of economic opportunity in "unconventional" career choices, and the solution is economic liberalization.

Creating an environment that allows people to pursue excellence in a field of their choosing is what makes for a prosperous and happy society. The importance of effective policy design and implementation cannot be over-stated to achieve that end. In that context, last year's Right to Education bill was a major letdown. It does not allow individuals and communities to run schools as they would deem fit, favoring needless government control instead. It focuses on rationing existing supply instead of sowing the seed for capacity expansion.


My Take : Pursuing Excellence has been sure way of disaster for "Leaders" in my generation of Indians. Nothing has changed with Globalization in India means migrating to US, Europe or Singapore. Pursuing Excellence for the current teenage upper middle class Indians is a distant possibility (but more practicality) with private colleges commoditizating Engineering degrees.

Clusters. not cities, the strength of India

S Gurumurthy was ridiculed when he spoke about swadeshi in 1991. Ten years down the line many now accept that it is necessary to have someone with this viewpoint in a globalised India. In rediff, Gurumurthy talks about globalization :

Who is talking about globalisation today? Today, it’s just not environmentally, ecologically and culturally sustainable. I have always maintained that it was not economically sustainable, because it is contrary to the very meaning and definition of economics which is associated with frugality.

It is an executive class economics different from the economy class which brings out the difference between economics and excessiveness.

Moreover, globalisation disregards the existence of countries; they talk about a global society, global rule, global citizens, global villages, etc. It was an absolutely idealistic idiosyncrasy. That is gone.

Who is talking about the WTO? I told you long ago that the WTO will not last. If you create an artificial structure, it will not stand. People in different parts of the world have their own models of living; you cannot homogenise them, make them wear the same dress, eat the same food, or see the same cinema or have the same goals. This is what West-centric globalisation attempted, and got the first taste of it in the last four, five years.


S. Gurumurthy, the convener of the Swadeshi Jagran Manch also speaks about the Indian economy and the success stories that small industrial centers like Tirupur, Namakkal and Sivakasi have turned into.

You have been talking about the entrepreneurial successes of small places like Tirupur, Namakkal and Sivakasi. But what about the closure of several textile units in Tirupur? Or the adverse effect of the cut in excise duty on factory-built truck bodies on units in Namakkal?

As far as Namakkal is concerned, the body building units and large truck manufacturers need to work together. This is not what is happening.

In fact, if these small operators get some kind of affiliation or franchise rights, it will ensure better quality work and a more organized way of working. They will also get assured work.

We, thus, need to work out a Japanese model of outsourced work. For example, Ashok Leyland [ Get Quote ] can outsource its body building work from units in Namakkal.

How do you react to the lowering of excise duties on truck bodies?

There is some sense in this tax. Earlier, you paid tax only when the company built the body, not otherwise. This is a kind of evasion. So, by plugging this, the government has made escaping excise duty net difficult.

Are you happy with the way the government is taking care of the centres of excellence?

My complaint against the government has been that it is not aware of what is happening. Many people in the finance ministry do not know what people in Tirupur are doing.

The Swadeshi Jagran Manch, therefore, suggested that the government must announce an industrial cluster policy, which it has now done. They (the government) have chosen Tirupur as the knitwear industrial cluster, Coimbatore as the casting and pump set-making industrial cluster. Similarly, some 42 such clusters have been chosen in India. This is only because of the campaign started by the Swadeshi Jagran Manch.

We also fought for Sivakasi. If not for us, Sivakasi would have been destroyed completely. Who was destroying Sivakasi? Not the government, but non-governmental organizations. And the media.

And for each of these clusters, they have named a monitoring agency. For example, they have named the Tirupur Exporters Association as the monitoring agency in Tirupur because it is predominantly an export centre.

The government is allocating Rs 50 crore (Rs 500 million) for the development of these centres.

So, I would say, we are seeing a more focused policy from the government.

You said the finance ministry was not aware of what was happening in Tirupur when it was bringing in large amounts of money through exports...

Why do you blame the government alone? Was the media aware? What has the media done to Karur, Tirupur, Namakkal and Sivakasi?

Media and some NGOs have only tried to destroy these places by focusing on child labour. The media in this country can only ask questions.

The belief that the government must know everything is a socialist one. The market too must know everything; and local administration, businessmen, professionals and media are part of the market forces.

What do you attribute the success of such small places to?

Hard work.

The more deprived a place is, the more hard working its people are. Thanjavur district did not develop industrially because it is not a deprived place. Wherever you find water shortage, wherever there is no irrigated land, you find the people of that area very hard working. They take to industry, businesses and manufacturing.

Is deprivation the only reason for their hard work and success in their endeavours?

People of India have the capacity to do things. Each community has done something admirable. These are community-driven models.

I would say, IITs and IIMs (Indian Institutes of Technology and Indian Institutes of Management) are not the ones that generate centres of enterprise in India; it is the communities.

People who set up businesses are very ordinary people. Of 300 families which export knitwear from Tirupur, 90 per cent do not even know English.

For example, in Tirupur, people had some skills, which they needed to exploit. First, they were cotton cultivators. From cotton cultivating, they went to ginning, from ginning to spinning, from spinning to weaving, and from weaving to knitting. This is how the entire area moved ahead. They developed skills in stages.

What kind of help are these communities getting?

I don't think they are getting any help. They succeeded through their own hard work.

In fact, I don't want the government or media or NGOs to disturb them at all. The greatest disturbance comes from the NGOs and the media, and then from government officials.

Why did the Swadeshi Jagran Manch ask the government to have an industrial cluster policy? Will it not disturb them?

The government has recognised that the clusters do good work. Cluster policy recognises that there is an atmosphere for development and growth in clusters.

They wanted to create an artificial industrial centre near Madurai [ Images ] as a knitwear centre. There are only sheds available now! Nobody has made any knitwear there. Why? Because you cannot artificially construct business.

Businesses have to evolve with the skill and hard work of the people. So, repeating Tirupur near Madurai failed.

This is not the work of the market; this is the work of the community. Which place has the highest per capita income in India? Not Mumbai [ Images ], Delhi [ Images ], Chennai or Bangalore. It is Morvi in Gujarat, where they make Ajanta wall clocks!

Can anyone help evolve such skills in an area? If so, how?

I think it is only social capital which can do it. In my view, the community is the social capital in India. Take Tamil Nadu, for instance. The Naidus, the Kongu Goundars, the Nadars, and the Rajus took to commerce there. These communities developed financially, educationally and socially.

The Thevar community and Vanniyar community took to politics. They became government dependent in their mindset. If you become dependent on the government, your development will stagnate.

Community structure is, thus, the social capital through which the country can develop. It is being wasted in politics.

I also would say that the media has failed to highlight community success stories. The intellectuals and media have a responsibility in helping communities evolve. But they have failed in their duties.

What does the Swadeshi Jagran Manch plan to do in future?

We are not planning to do anything. We are studying; we are trying to understand the social and political situation in India.

This is our open air university. Once we empirically study and understand, we will begin forming opinions. We have no money or expertise. We only create awareness. We are generating the desire for self effort through awareness campaigns.

I feel traditional skills are suffering from lack of recognition by the establishment; be it the government, or the judicial system, or the media. They can't understand that Indians can function only in small collectivities, they cannot function as atomized individuals.

For example, in the West, there is social security which is an atomized plan. In India, it is the families that take care of social security.

But what policy do we have for the family? You are treating the Indian individual like a Western one and taxing him. Here, he is taking care of five to eight people. But policy makers, economists and media are completely ignorant of this fact. You need a very different approach to India.

Against the backdrop of globalisation, how difficult is it to talk to people about swadeshi?

India is one sixth of humanity. Opinion formation takes a long time here; particularly when you have Westernised people to run the country and make opinions.

Why did you think of swadeshi?

Globalisation and liberalization were the reasons. With socialism, we were committing one type of mistake. With globalisation, we were committing another.

The government's socialist policies have already stifled this country's enterprise. This also created very poor work culture.

The Western belief -- that the government will do nothing and the market will do everything -- is also wrong. In India, the delivery mechanism is not just the market; it is the family, it is the community, it is the state and the market.

The market is only one of the institutions of delivery and it is not the sole institution. This was the base of the Swadeshi Jagran Manch. And, now we are proving to be right.

Are you happy with what the finance minister has offered in his Budget?

See, there is nothing in the Budget for agriculture, especially when agricultural production has dropped by 15 to 16 per cent. This is a serious omission.

The Budget is made according to the opinion of the middle, upper-middle and educated classes. Budgets mainly look to satisfying them.

What kind of impact will the neglect of agriculture have on Indian economy?

If the bottom of the pyramid is not taken care of, it is going to have a long-term impact on the economy.

Besides ignoring agriculture, the Budget also doesn't talk about an agenda for the textile industry which is going to face international competition in 2005. It is also an omission.

What about competition from China?

India has inherent strengths. Unfortunately, it has not been properly augmented. You must know the basic strength of India doesn't lie in Mumbai, Delhi or Kolkata [ Images ].

India's strength is its industrial clusters.

India is already a global player. Doesn't China have poverty? But they are not talking about poverty. Here, you are talking all the time about India's poverty. Indians must understand India first. They must begin talking well of India.

It doesn't matter to me at all to hear that India's share of global trade is 0.75 per cent. Global trade is not the index of a country's development. So long as India can generate domestic demand, India can be a big player.

In fact, one sixth of humanity cannot depend on global trade. It has to be largely dependent on domestic trade. So we are applying norms applicable to small countries like Japan [ Images ], Korea, and Taiwan, to India. That is because you don't have originality. You set wrong benchmarks and suffer in comparison.

My Take: Unfortunately, the Industrial Clusters address the needs of lower-middle/lower class people only. The low wages and long work hours of Industrial Clusters cannot support and sustain middle class. The Government is underplaying the clusters segment completely due to this reason. How can we build a knowledge economy on the basis of these clusters.. like integrate the fashion industry with the knitwear industry and create a affordable fashion, a huge market across the globe would form the right answer.

Case for more states : New miracle economies: Bihar, poor states

SA Iyer of Swaminomics says:

ndia achieved record annual GDP growth, averaging 8.45%, in the five years, 2004-05 to 2008-09. But was this inclusive, and did it benefit the poor masses?

We have no data on poverty beyond 2004-05. But the CSO has current data on the economic growth of the states. Historically, the chronically poor states were Orissa plus the BIMARU quartet (Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh), of which three have been sub-divided. Have these eight poor states participated in India’s boom?

Yes, absolutely. Indeed, five of India’s eight ultra-poor states have become miracle economies, defined internationally as those with over 7% growth. The best news comes from Bihar, historically the biggest failure. From 2004-05 to2008-09, Bihar averaged 11.03% growth annually. It was virtually India’s fastest growing state, on par with Gujarat (11.05%). That represents a sensational turnaround. Nitish Kumar deserves an award for the most inclusive revolution of the decade.

Other poor states have done very well too. Uttrakhand (9.31%), Orissa (8.74%), Jharkhand (8.45%) and Chhattisgarh (7.35%), have all grown faster than the standard miracle benchmark of 7%.


India today has 28 states. Assuming 20% population growth since the last census, Uttar Pradesh has 198 million people, more than Brazil, Russia or Pakistan. Maharashtra has 106 million, West Bengal 96 million and Andhra Pradesh 90 million. All are much bigger than France or Britain. At the other end of the scale, Sikkim has just 0.6 million people, Mizoram 1.1 million and Arunachal Pradesh 1.3 million. Clearly, statehood has been determined by political expediency, not logic.

Is there an economic case for carving smaller states out of large ones? Some analysts say small states won’t be economically viable. Others believe small states will fare better, since ordinary people will have better access to power elites. Consider the record of three states carved out of larger ones in 2000 - Jharkhand, Chhattisgarh and Uttarakhand. Ignore data for the first few transitional years. Instead, focus on the average growth rate of gross state domestic product for the last five years, from 2004-05 to 2008-09.

Amazingly, all three new states have grown fabulously fast. Uttarakhand has averaged 9.31% growth annually, Jharkhand 8.45%, and Chattisgarh 7.35%. All three states belong to what was historically called the BIMARU zone, a slough of despond where humans and economies stagnated. Out of this stagnant pool have now emerged highly dynamic states.

I am supporter for smaller states, especially in South India/Tamil Nadu.