ONE DAY WITH MR. MINISTER

For long I have been thinking what these Ministers in Indian government. What do they do whole day and how they actually become ministers and so on. Actually this is not much different from bollywood star power where the son or daughter inherits the acting skills from their father or mother.  They may not know the ABC of acting but the producers are lined-up to for their debut. Politics is also similar, no need to quote examples. You all are very intelligent people.  

My Mr. Minister is a versatile MP who is quite dynamic and true politician by any nature and standards.    I called him and he invited me to his house as he was scheduled to travel and I would accompany him.

 

Bhejafry:         Good morning Mr. Minister and I am grateful to you for spending one day with me.

Minister:         Oh thanks to you Bheja Fry, I am sure we both will enjoy each others company. Would you like to have some breakfast ?

Bhejafry:          (I was hungry but resisted) No.. No.. thanks.. I had it before I started.

Minister:         Have it, it has come from the nearby hotel.  He sends me every morning. After all I am MP from this constituency. Out of love and affection he also sends me lunch and dinner.

Bhejafry:         (my mind was zoomed as I could understand his meaning of love – read threat) oh this is so nice of him Mr. Minister. So let’s start with some light conversation.  What prompted you to come in politics ?

Minister:         What prompted me, meaning ? No one whispered in my ear, so where is the question of prompting me. I am educated enough to understand the importance of being in politics. Like you have in industry PPP – Public Private Partnership, similarly we have PPP in Politics also – Power, Position and Paisa  ha..ha…ha…(laughed).

Bhejafry:          Oh so you came for Paisa or Power or Position.

Minister:         You are frying my bheja, Bhejafry. I came for all three. But most important is Paisa. You see, your breakfast, lunch and dinner comes automatically. After all I am MP from this constituency.

Bhejafry:          How much are you educated Mr. Minister? I mean your qualifications.

Minister:          I don’t know and I won’t reply.  Next Question.

Bhejafry:          Please Mr. Minister, it is an important question.

Minister:          What is the relation between becoming a Minister with education? If education was the criteria I would have become an IAS or Collector. Your question is invalid. Question does not arise. I can talk English, sign in English and Hindi. What more.

Bhejafry:          I can understand your problem Mr. Minister. How has been your journey in Politics?

Minister:          My journey has been full of struggle. No one supported me. I came as an independent candidate and then remained for a brief period in every party you name – Congress, BJP, BJD, Janta Dal, CPM, SP,  Kalu Ram, Samjhouta Party, almost all the parties. My experience is quite large.

Bhejafry:          But then why did you leave these parties.

Minister:          Are na..na..  (gets irritated) I did not leave, they asked me to leave. They all blamed that, though I was in their party but actually working for the opposition party. So I thought better join the opposition party.

Bhejafry:          This was really amazing.  Indeed your journey has been very tough. Ok what would you like to talk about the condition of Indian economy today? Who is responsible?

Minister:          (Replying promptly) People of India are responsible for this mess. See, they only voted for this party and now blaming.

Bhejafry:          Even you belong to the same party Mr. Minister. So you are responsible too.

Minister:          (gets angry) How am I responsible ? I am not. You are also talking like other senior members in the party. I am being looked in suspicion every moment. This party also feels that I am working for opposition party when I shout against petrol price hike, rising prices, inflation, GDP, employment, industrialization.

Bhejafry:          Oh that’s serious. What do you think about our country? Where is it progressing?

Minister:          No Where Bhejafry (satisfied feeling). Now don’t say I am responsible for this too. As such I am shifting my party before the coming elections. I am also dissatisfied, the way this party is working.

Bhejafry:          Mr. Minister, what vision you for atleast your constituency. What have you done for the people of your constituency ?

Minister:          What can I do Bhejafry? Rains and Pains, in this country, don’t come with invitation. I am also one of them, I mean a common man who is frustrated and harassed. Rather I need their help and support in winning the elections every time.

Bhejafry:          Mr. Minister just a couple of days back one of your prominent minister said the country is not progressing because `Rahul’ is not advising. What you have to say on this.

Minister:          I am very annoyed with Media. It has twisted the statement of the Hon’ble Minister. The gentleman who said meant `Rahul Mahajan’ and certainly not `Rahul Gandhi’.

Bhejafry:          What Rahul Mahajan? There is no comparison between Rahul Mahajan and Rahul Gandhi. What he meant was Rahul Gandhi only.

Minister:          I can’t and won’t comment. Anyways he has clarified and given a statement. Actually he had some personal problems which has been sorted now. No more confusions.

Bhejafry:          Mr. Minister, the country is passing through a bad patch. GDP, Investments, Industry, People etc. are not at all happy. Foreign countries do not want to invest in India any more. What you have to say on this?

Minister:          India is a democratic country and every one has a right to raise his voice. I have a solution; we should make all the Activists, who are working against Industries and government, Ministers of the very same portfolios.  Activists as Minister for Industry, Minister of Environment & Forest, Minister of Coal, Minister of Mines, Minister of Finance and also of Planning Commission. Let them run the country and we would sit on Dharna outside their houses or on Boat Club.

Bhejafry:          There is not much difference for them between `running a country’ and `ruining a country’.  For them GDP means `God Damn Protest’. But don’t you think, the government should look for the growth and give Industries their well deserved importance and respect. Rather than Ministers themselves talking like activists.

Minister:          I agree with you. But you know `vote bank’. People are our vote bank and if we annoy them they would not vote for us. No one wants to take that risk Bhejafry. They are more worried about coming elections rather then Indian Economy.

Bhejafry:          But industries do give you funds besides providing employment, infrastructure development, taxes, valuable products, global position to India etc.

Minister:          We do get funds from Industries but that is for some other purpose which I can’t disclose. And I am not sorry.  After all I am MP from this constituency. The problem is with the industries also. Why do they need land for everything? Why they need to expand and grow all the time? Can’t they sit quietly and remain in low key. They should become selfish and look for themselves rather then thinking about the Country, Economy, Growth, Development.  Bhejafry, we are there, 545 + 270 MPs of Lok Sabha and Rajya Sabha, and many more commissions, committees and EGoMs.

Bhejafry:          But still Mr. Minister, if the industries decide to close their troubled business, you will have serious problem.  Government does not generate employment and does not have cash to give salaries (Indian Airlines) how the government would provide needed products and services to the people. This is indeed a very sad position.

Minister:          What can I do Bhejafry? I am part of the government but not government. No one listens to me. (Feeling very sad) The files are written in high-flying English, which I cannot understand and I am there and required to just sign, which also I learned after doing 3 months crash course in New Delhi. These Govt. Secretaries tell me what to talk, how much to talk, when to talk and where to keep quite.

When ever I sign a file, I always have this feeling that I am signing my death warrant.

Bhejafry:          You should thank the bureaucrats for providing knowledge to the ministries or otherwise, we would have only primary schools Mr. Minister !!!!. Anyways, what is your take on helping the poor people in the country. What should be done?

Minister:          Poor people? Meaning people who are actually poor or declared poor under the various reservation policies and reports, particularly international reports? What exactly you mean by poor. I have my poor servant who has a colour television, his children go to convent school and he has a bike too.

Bhejafry:          Mr. Minister I am talking about real poor who live in rural areas and do not get enough food, shelter and are deprived of basic amenities.  Is your government doing anything for these poor people ?

Minister:          Oh these people. We believe in removing the cause from its roots. So to remove poverty we need to remove the poor and we are working since last 60 years in the same direction. We have recently formed a high-level committee to look into this matter from a fresh perspective. If they are find solutions, good, or we have secretaries committees and if they fail too, we have EGoMs.

Bhejafry:          I came to know that you traveled abroad six times in a year. Is that true?

Minister:          I don’t travel, Ministers of foreign countries invite me for discussions on various issues.

Bhejafry:          Mr. Minister I know how much you are educated and your vision and mission, why would one foreign minister like to discuss with you?

Minister:          You don’t know. The ministers on the other side are also like us. One time we call them and one time they call us. It is a mutual exchange program.

Bhejafry:          Ministers are representatives of public (MPs become Ministers) who are entrusted with faith that they would work towards development of the country and their welfare.  What is your opinion about this.

Minister:          See, a Minister is a quite stressed poor dissatisfied soul who is solely dependent on either his secretariat or people who voted for him. His soul looms between these two. Without the support of both he is nothing. So instead of thinking about anything else, country, people, development, growth, economy, GDP or national income; the Minister is more worried about his position.

Some think broke aloud with a thundering noise… I woke up from the sleep..   Down on the street people were fighting for water.  The fan was not working as there was no electricity. I realized, it was a dream.  I thanked god, to let it remain a dream, the reality is much more painful.

My Bheja was Fried.

Phir Na Kehna - Na Bole Tum, Na Maine Kutch Kaha

Mr. Minister atleast wake up now, even your friends have started talking openly about the pathetic economic condition of the country. I remember a TV serial coming on SAB TV where there is a character who keep saying "Mujhse Kisi Ne Kuch Kaha He Nahin". but here Mr. Ministers your every friend in the ministry is engaging with all press and media and admiting that country is in actually pathetic condition and in worse position are the people. It is a different matter that only few have the courage to say openly that 'you need coal to make power', or 'environment!!! is not right' or for that matter 'we have now woken to amend our own crafted policies that now do not match or satisfy our current ego oh oh sorry EGOM'. How pathetic.

What I dont understand is who is blaming who. What I understand is that there has been no decision in the last about 2-3 years which has not gone to Cabinet or GoMs or any other specially formed committee(s). Then why is it that now when the ship is sinking the rats are running away.  Common this is not right.

We the country people gave you all the confidence and votes to give us a peceful life but here look what you have done, you have converted our entire future into PIECES.

I also dont understand the role of the media who are busy in taking statements from industries rather than asking the ministers responsible for such situation. Oh I can understand, perhaps, you are in the 'NO GO' area.

People's Bheja have Fried,  "Phir Na Kehna - Na Bole Tum, Na Maine Kutch Kaha"

The Sobbing Operas of Industries in India

PR Ramesh story in Economic times, 'Govt has no business to be in Business',  may not be digested to many in political circles but ask any industrialist and he would agree with what Mr. Narendra Gujarat Modi has said. These industrialists have either run away from few chosen states or have become sick of waiting for permissions from the Govt. No one wants to go West Bengal, Karnataka, Orissa, Andhra Pradesh for that matter at any cost.

Ask TATA who had to take is auto like car from West Bengal to Gujarat. Or for that matter Reliance who had to sell vegetables any where but Uttar Pradesh. Look at Maruti who left Haryana for Gujarat again.

Worse, ask companies like POSCO  who is still struggling to understand what went wrong. On the other hand Vedanta's venture in lanjigarh stopped before it was to take off. Both have already spent together about 100,000 crore.

Like Gujarat, Bihar has become quite a significant destination for industries.  And why not, the boundaries of the State remained the same only the leadership changed or I should say retained.

Mr. Modi, the kind of open policies you have given in Gujarat is worth commendation.  Where newspapers are talking and taking bites of people about the GDP, inflation, agriculture and corruption; you are quietly working towards growth story of Gujarat. Mr. Nitish too is busy in his state and least bothered about what the country is upto.

Gentlemen, please give some sense to CMs who should know what industries mean to a State. No objective of any Plan can be achieved, whether 5 year of 20 year, if you annoy industries.

Bheja Fry is referring to a story today by Kaushik Datta on predictable GDP - 7%, again in Economic Times. Do we ever get the GDP figures State wise published in national dailies also highlighting the reasons why a particular state is doing good or bad ?  Why is it that few states remain always in limelight for wrong reasons ?

Mr. Naveen Patnaik must be tired of listening to Activists, NGOs, Industries, MOEF, Coal Ministry, Mine Ministry, Power Ministry, you name it and he will say yes.  My office has become worse than assembly.  Similars are the states like Uttar Pradesh, West Bengal or Karnataka, where no industry wants to give it a try.


When suddenly you see a government company like NALCO moving to set-up bauxite plant in Gujarat it gives you a surprise. NALCO which already has a plant in Orissa is moving from Orissa and setting up another plant in Gujarat ? Why ? I believe Orissa has abundance of bauxite and that also good quality and it would have been advisable for the company to put-up another plant in Orissa itself. Coal, power and water is also not the issue in Orissa, but then why NALCO decided to venture in Gujarat?

The answer remains in leadership.  On one hand where Orissa has become a heaven for NGOs and activists, the states like Gujarat or Bihar have become `friendly states' where no NGO or Activists would dare to venture.

Who lost ? Only the industries lost, development lost, people lost and more so the country lost the opportunity to provide resources to people.

Who gained ? No one actually, but if Bheja Fry is forced to say, then this brought a lot of content writing for media, so media gained, their TRP and circulation added and further some people became famous for all the wrong reasons.

Bheja Fry feels something should be done to bring sense to ailing states who are not only blocking the GDP of India but also killing opportunities for employment, development and India's growth story.

Indian Parliament League (IPL) - All Out for NO LOSS, to the Nation

On one hand the Chairman Planning Commission is wanting to "Pull Off Reforms Act Soon After Prez Polls" (story by Devika Banerjee and Vinay Pandey), and on the other hand the MOEF is keen to pull the strings of all the environment norms and policies on the industries. Forget everything the "Jungle Raaj is Here". BHEJA FRY also touche...d upon the story of ET on "Tribal NGOs Misused Grants to Make Private Residence" by Nidhi Sharma. It is surprising why Ministry has not so far gone for the audit of funds of NGOs who are particularly residing in naxal hit states/areas. Why these NGOs should not file returns like any other listed company? What are we waiting for ? Manifesto for the next elections? What do we expect is happening.

On one hand the news of Sachin Tendulkar taking oath as Rajya Sabha member is flashing and on other hand Baba Ramdev and Anna are highlighting the worry of people of India. Admist all these issues, Government seems to be busy in some how inviting FDIs and also some how pin-up the GDP.

You just wait, the blame game will start soon, rather very soon. We will have a different IPL this time, "The Indian Parliament League." ALL OUT FOR NO LOSS, to the National ofcourse.

Bheja Fry : Whose money are you spending Mr. Minister

Don’t allow subsidy. Raise the price of Petrol. Diesel prices are holding to be increased. Land should not be given to the industries. Protect the growth of Indian industries but increase the export and import duties.  Protect the farmers but bring in FDIs in agriculture sector. Tax the middle-group but the government should look like working to the welfare of only middle group. Change the signed policies and agreements but invite foreign industries. Bring in White Paper on Black Money. GDP is falling but how FDIs have increased ?

Do it all, in the name of National Interest. 

Look at the condition of our country in the last two years Mr. Minister.  It has become prone to all kinds of social and economic attacks by foreign countries.

Bheja Fry was very proud when Indian giants were taking over foreign companies. All the top business houses were scouting for takeovers. It was a befitting reply to all those years we suffered during the pre-independence era. But Mr. Minister, you have brought us back to square one.  I am afraid, do you want foreign companies to survive by taking a large pie in Indian share. How pathetic. What is your hidden agenda ?

Shekhar Gupta has rightly written in his column, National Interest, `Crude Politics’. 

Mr. Minister, you have brought country to a stage, where more than development, it is the deficit budget which is being talked. To hell with your deficit budget. 

Whose money are you spending by the way ? It the money of people whose taxes you deduct at the source (TDS). People pay taxes on the presumption that it will be used for the welfare, rather it is being used against their wellbeing.

What cost cutting measures have you taken for your own self Mr. Minister? The fuel prices have risen earlier also but there was some rational behind. You invited foreign investment to support Indian industries and infrastructure earlier also in way back in 1990s, but that was for strengthening economy.   But today you are inviting FDIs to derail Indian industries, which are already in doldrums due to your environment crusaders.

Bheja Fry is just unable to understand your hidden agenda Mr. Minister? Does some one needs to tell you what happens when these FDIs go back or disinvest ? They do not wait for your Cabinet approvals.

You have a pathetic condition of Airlines sector due to volatile market and here you inviting FDIs in airlines.  Or is it that elections are nearing and you need the funds or is it that you cannot stand that one airlines surviving.

Dilasha Seth in Business Standard wrote about `GDP growth in FY 12 likely to disappoint’. Dilasha, your figures of 6.9 coming down from 8.4, worse than the year when the country passed through global crises, is enough to speak all.  Mr. Minister, the people of India’s consumption pattern only saved the country from going into deep recession, if you think, the government did anything, sorry. Ask the countries like USA, CANADA, and Europe who are still struggling to come out of it. I thought some one learned from US President’s visit to India.

Why is it that when ever the government speaks about GDP, the heart beat of 120 crore Indians minus 545 (MPs) goes down. It sounds as if you are some how managing the country and it is going out of your hands.

Arun Singh from D&B has clearly mentioned in the story by Dilasha Seth that stale growth in industrial sector is a reason for the declining GDP.  But who can make you understand.

Bheja Fry would also like to take you to the story of two authors from International Food Policy Research in yesterdays Financial Express, `Prices are pinching again’.

Bheja Fry would not want to relate advocacy of inviting FDIs in agriculture sector and today Rural Development minister statement in the story in Economic Times by Urmi Goswami, `Jairam Wants Govt. to take subsidy bull by its horns’. I do not wish to relate them but what do I do, the Bheja says something else.

Are you trying to say, FDI’s will improve the condition of farmers, who are spread across 70% area in India ? or Are you trying to say that FDIs will bring another AMUL movement.

Since 1947 India has been waiting to become self-reliant, but Mr. Minister going by the kind of slogans government shouting, Bheja Fry believes, following the advise would for sure make India slave of foreign companies, it may not be East India Company.

It is a different matter that all these `Companies of Foreign Origin’ know the kind of protection they would get  from the Indian government. Examples of Vodafone, Cairn Energy, Vedanta, Posco, are not limited to Indian media.

Economic Times - Jairam Tells Govt to Take Subsidy Bull By its Horns

Financial Express - National Interest: Crude politics

By:  Shekhar Gupta on 26th May 2012

　

UPA’s dismal political management turns a belated (and much needed) petrol price hike into an ‘event’.

More than two months after the prime minister said we needed to bite the bullet, and a couple of weeks after the finance minister talked of hard decisions, we finally have one: the petrol price increase. Even more encouraging, there is no talk of a rollback yet. Petroleum Minister Jaipal Reddy even showed some old-style political skill in asking people to wait a few days before a price reduction might be considered. Crude has been slowly moderating lately and the oil marketing companies are supposedly free to reset the petrol price on a fortnightly basis anyway.

The question to ask, therefore, is: why have they not been doing that lately? Because if they were, this week’s approximately 10 per cent hike would not have become such a story, or rather, event. Before this, the last increase of Rs 1.80 per litre in petrol prices was carried out on November 4, 2011, followed by reductions of Rs 2.22 and 78 paise in the following two fortnights. And then the process stopped. Why? Because, apparently, the UPA was getting ready for the Uttar Pradesh elections. We suspended that fortnightly rhythm in search of cynical electoral gains which never came. Then we waited even longer as nobody wanted to give the silly Opposition a chance to scuttle the Budget Session of Parliament. At the same time, crude kept rising, and the dollar falling, the deficit widened and inflation peaked, so the voter all over the country got angrier anyway. Even at the risk of some over-simplification (but we are talking political governance, not statistical perfection), look at it this way: in the same period, overall inflation has been running at around 10 per cent, and nobody, not even Mamata Banerjee, has been out in the streets protesting. Would anybody, even the voter of Uttar Pradesh on whom this fiscal suicide is being blamed, have noticed?

How would a more political government have handled this? It is lazy now to say that Atal Bihari Vajpayee’s NDA had an easy time because they had crude running at $12 a barrel. The fact is, Vajpayee carried out 33 (yes, 33) fuel price increases over his six years. Of course, the average increase was so tiny nobody seemed to notice too much — while there were token protests by the Congress and the Left. Yet, in the process, the price of kerosene, the most politically sensitive fuel, was taken from Rs 2.52 to Rs 9.01 per litre, an increase of more than 350 per cent. The second most sensitive, diesel, was more than doubled from Rs 10.25 a litre to Rs 21.74 and the equally troublesome, LPG, was nearly doubled, from Rs 136 to Rs 241.60. Petrol went up only by 50 per cent, from Rs 22.84 to Rs 33.71 and, in the process, the distortionary gap that is rapidly — and destructively — dieselizing our economy and environment, was narrowed to manageable levels.

In comparison, in the eight years of the UPA, crude has risen nearly 170 per cent, the rupee has fallen more than 20 per cent, yet prices of kerosene and LPG have been increased by 65 per cent only and diesel and petrol by 88 per cent and 114 per cent respectively. In the process, the fisc has been vacuum-cleaned, and yet, for its spasmodic but headline-making price increases, the UPA has got much more bad press. Diesel, meanwhile, is back to being the evil polluting king of all fuels. The inherently indecisive style of this establishment is compounded by the fact that its administrative and political authority is so scattered — so scattered, in fact, that the buck has to make a dozen halts en route, like a DTC bus, before it finally stops with somebody. This results in even routine decisions dragging themselves out into public controversies and, finally ending up as "events". Thirty-three fuel price hikes, one every two months or so on an average, can never be events — in fact the frequency and the tiny size of the increases make them relatively non- news worthy. But that is not the style of the UPA. It dithers and meanders into making everything out to be a story, a controversy, an event.

The current plight of civil aviation is a pretty good case. Every day there is a speculative headline somewhere saying that FDI in private airlines will soon be allowed. Nobody reminds anybody that it is already allowed, to the extent of 49 per cent. So what is the story? It is just that this FDI policy was customized to the "needs" or "demands" of one private airline known for legendary "persuasive" powers in New Delhi then. So if you are a chappal, apparel, automobile, candy manufacturer, in any business whatsoever, you can invest in an airline in India. But not if you are a foreign airline. Now, would you call that incredibly stupid? No, it is incredibly smart of an Indian capitalist who found the right cronies and had the law customized for him so that all competition is kept out. This incredibly unique restriction is not merely the most striking example of Indian crony capitalism, it makes us look like a banana republic. Changing this should have been a minor, routine editing correction. Yet, we have dithered over this for so long that it has been allowed to grow in the popular mind as some kind of a bailout for an Indian capitalist as "effete, decadent, wasteful and incompetent" as Vijay Mallya. So when this FDI policy is indeed rationalized, it will be another event.

Because the UPA takes so long with its deliberations — in fact, it usually prefers deferring a decision a lot more than taking one — it has forgotten the virtue of political management by boring routine. In state after state now, electricity utilities have gone bankrupt (their combined losses now top Rs 2 lakh crore and the banks are bracing for another shock) while the regulators have either sucked up to their governments and not allowed tariff increases or because the chief ministers have also caught the UPA virus. It has taken two really powerful chief ministers, J. Jayalalithaa and Mamata Banerjee, to make abrupt, sizeable tariff increases of 37 and 25 per cent recently. Most of the others — except Rajasthan — are letting the monster grow. You do not have to be an economist to see how, with new capacity being added, India will be power surplus by 2015. Yet, by then, everybody involved in the electricity business, from producers to distributors to their banks, would have gone bankrupt. We will not address these tariffs and deficits as a matter of routine now, and one day everybody will need a giant bailout — may be from the IMF. Now that will be some event, not witnessed since 1991.

Financial Express - Column : Prices are pinching again

By: PK JOSHI, VAISHALI DASSANI on 28th May 2-12

The authors are with the International Food Policy Research

Because despite the shift in consumption patterns, rice and wheat still dominate in policy debates.

Food prices are again pinching the pockets of Indian consumers; the recent data released by the ministry of commerce and industry revealed that food inflation breached the double digit again after six months. With no relief in the household budget, the inflation stands at 10.5% in April as compared to 9.9% in March 2012. Vegetables, which had shown some sign of relief in the previous month, shot up to 61% in April as compared to 30.6% in March, while potato prices increased by 53.44% from 11.6% the previous month, thus denting the household budget even further. The inflation for meat, eggs and fish remained unchanged, with some relief to the budget, but milk showed slight sign of increase.

If we try to understand the dynamics, as to what causes the shift, then it is noteworthy that within the food basket, with rising incomes, consumption patterns are diversifying. The per capita consumption of rice and wheat by the Indian consumer is slowly declining, whether it be the rich or the poor in either rural or urban areas. On the contrary, if we look that over the years from 1983-2004, the per capita consumption of fruits and vegetable has increased from 49 kg to 76 kg for the rural household and 55 kg to 81 kg for the urban consumer, and budgetary share of cereals has declined by 17% in rural areas and by 8% in urban areas, which has been diverted towards high value food commodities. The increasing shift from rural to urban and also increased demand from the processing industry for products such as juices, jams, pickles, ready-to-eat items etc has added additional pressure on the demand side. Due to inadequacy of storage and refrigeration facilities, vegetables and fruits suffer over 30% wastage due to perishable tendency. Increasing reach of MGNREGA has substantially increased the wage rates of agricultural labourers, thus increasing the input cost and also increasing the demand because of increase in earning. Average daily wage rates in agricultural sector have increased across the country. The minimum wage for agricultural workers in Andhra Pradesh in 2007 was Rs.64 and in 2010 it was Rs.112; similarly in Haryana and Punjab, it was at Rs.98 per day in 2007 and in 2010 it was Rs.162 and Rs.136, respectively, for the two states. Another important factor of price rise is the impact of the seasonal cycle. In every new season, during the initial weeks, the slow supply of vegetables in the market results in higher prices, and then over a couple of weeks with an increase in supply the prices fall.

So, what steps can be taken to divert pressure and balance the supply and demand equation? Despite the shift in the consumption pattern, in policy debates, rice and wheat still dominate and remain the focus of food security concerns. It may be interesting to note that India has rice and wheat stocks 125% higher than the buffer stock norms; stocks exceeding 70 million tonnes. So, India has been not only meeting its effective demand for basic staples but also producing enough surplus to build its buffer stocks. The shift is required towards high value produce, and investment priorities and programmes need to be shifted towards high value food commodities (vegetables, fruits, milk, meat, poultry and fish). It is welcome that the year 2012-13 is being celebrated as the year for horticulture. Programmes for introducing best practices, promoting micro-irrigation and fertigation, and linking producers with the markets are necessary. Investment in post-harvest infrastructure, such as cold storage, refrigerated vans, processing units etc will help to reduce wastage and help in improving supply of these commodities in distant and remunerative markets where demand is high.

The role of the organised private sector is important in developing markets and for post-harvest facilities. Investment in infrastructure such as roads and transportation will help to connect markets.

Another important step forward is the development of market institutions such as modern food retailing that strengthens and compresses the value chain and offers low prices to the consumers and higher realisations for the farmers. Opening of foreign direct investment in multi- brand retailing will help in strengthening the supply chain and increase centralized procurement of agri- products from farmers. This will open new avenues of assured market and technology inputs, and increase the knowledge of market demand, thus creating affordable prices for the consumers.

Business Standard - GDP growth in FY 12 likely to disappoint

By:

DILASHA SETH on 27th May 2012

Even as memories are fresh of the recent Index of Industrial Production (IIP) goof-up, the Ministry of Statistics and Programme Implementation (Mospi) is yet to receive all the required data for issue of Gross Domestic Product (GDP) for 2011-12, though barely four days remain to do so.

Initial trends show that even services numbers, expected to hold up GDP, are very weak, government officials say. This may pull down the overall GDP growth to less than the 6.9 per cent calculated in advance estimates for 2011-12. The actual figures are slated to be released on Thursday. GDP growth was 6.7 per cent during the global financial crisis period of 2008-09. In 2009-10 and 2010-11, economy grew by 8.4 per cent.

Industrial production data is anyway bad, growing by just 2.8 per cent in 2011-12 against 8.2 in 2010-11, though the agriculture sector may provide some relief.

The ministry had earlier expressed helplessness when the IIP data goof took place, saying it had received data much after the deadline of the last working day of the month previous to the one when the data is to be released.

Mospi had estimated the January industrial growth figure at 6.8 per cent, while the revised figures were just 1.1 per cent. This gross error was described as "totally baffling" by Finance Minister Pranab Mukherjee.

On the GDP data, Mospi had advised all the agencies to give it the data a week before the numbers were to be released, so that it could detect any errors and rectify these. However, government officials said all the data for the purpose of calculating the GDP were yet to be sent to the ministry. Even the Reserve Bank, they said, had yet to do so (for a part of the private corporate services sector). They, however, played this down. saying, "It (RBI) may be waiting for more numbers to arrive from private companies. It is only better to wait for more data than to calculate final figures with less data, which may show biased numbers," said an official.

Sombre trends

For the economy to grow by 6.9 per cent in 2011-12, GDP growth for the fourth quarter needs to be 6.9 per cent. Initial trends do not suggest this number may be met, officials said, without specifying the numbers. GDP has been on a decline since the beginning of 2011-12, from 7.7 per cent growth in the first quarter to 6.9 per cent in the second quarter and 6.1 per cent in the third quarter.

Economists have already doubted the numbers given by the advance estimates. Icra economist Aditi Nayar pegged GDP growth for the January-March quarter at 6.2 per cent, due to weak performance of the manufacturing and mining sectors in the IIP.

Industry showed growth of 6.5 per cent in the first quarter of 2011-12, of 2.79 per cent in the second quarter and 0.79 per cent in the third quarter. It needs to grow 4.3 per cent in the fourth quarter to attain the 3.6 per cent growth for 2011-12 in line with the advance estimates.

However, IIP growth in the January-March quarter was just 0.4 per cent. It contracted 3.5 per cent in March, after growing 1.1 per cent and 4.1 per cent in January and February, respectively. Mining stayed negative in eight months of 2011-12 and the IIP grew just 2.8 per cent in 2011-12.

In the advance estimates, farm and allied sector growth was pegged at just 2.5 per cent for 2011-12 because of the high base effect of seven per cent the year before. Many economists are expecting farm growth to be better than the advance estimate figure. The sector needs to grow by just 0.76 per cent in the fourth quarter to achieve the growth calculated by advance estimates for all of 2011-12.

However, the negative impact from industry may more than neutralize positive news from the agriculture sector, economists said.

This leaves the services sector but this is now also expected to be weaker. In the first three quarters, services (including construction) grew 8.7 per cent. By the advance estimates, in 2011-12, services would grow by 8.8 per cent, for which the fourth quarter growth needs to be 8.9 per cent.

The weakness in services growth could be also be attributed to dismal industry performance. "Industry has a lag impact of one to two quarters on services," said Arun Singh, senior economist, Dun and Bradstreet.

Agriculture and allied activities Industry Services GDP

Growth according to advance estimates (2011-12)

Q4 figures needed to meet advance estimates (in %)

GLOOMY NUMBERS

We have taken construction in services sector, to make the data in sync with IIP data) Source:Ministry of Statistics and Programme Implementation

Economic Times - Raisina Watch - Paralysed Govt, Matching Oppn

By: 

C L MANOJ published on 23rd May 2012

A terrible train accident in Andhra Pradesh clouded the UPA-II’s third anniversary on Tuesday. But what was there to celebrate for a government that is caught in crisis after crisis since 2009? The many crises: serial scams, crippling policy paralysis, mounting financial issues, slowing growth, absentee leadership, awful political mismanagement and coalition crossfire. One can go on and on at the risk of testing the patience of readers who are too familiar with this lingering tragic comedy. My sympathies are with those who have been assigned the unenviable task of putting together a presentable ‘UPA report card to the people’.

How much can one make of social sector schemes, sop offers, clever use of data and twisted phrases to hide the home truths? The Congress’ electoral setbacks have only further diminished its energy and complicated the ‘succession plan’, for a leader "with granted authority".

One can’t put off birthdays to better times. Nor can birthday boys or girls choose the gifts coming home. If Congress allies gift a boycott, better accept it. But every birthday person has one undeniable right; to have a secret wish, a god-sent gift. So, what is that secret that still makes the Congress- UPA brass chuckle quietly? It is a totally disoriented Opposition.

We are often asked, "Why is this government carrying on in such pathetic fashion?" Governments normally do not head for the Himalayas in mid-term to look for moksha. They always try to complete a full term and renew their mandate. Sometimes, ones with extreme confidence or misplaced bravado gamble with a snap poll. The universally-acknowledged execution method on any non- functioning regime — which the UPA regime is, according to the majority of the SMSing TV electorate — is for the Opposition to get rid of it via constitutional methods.

If UPA-II, even without a clear Lok Sabha majority, has been a living disaster, any Opposition worth its salt would have brought a no-confidence motion — as a show of its responsibility to the people and its political confidence to form an alternative government or face mid-term poll. The worst-kept secret in Delhi is that our Opposition, without a credible leadership or a plank, is more scared than the Congress or UPA to go to the hustings. If that is the state of the Opposition amidst the gloom in government, then why blame UPA alone?

From Left to Right, the Opposition is facing crises. The CPI-M, the traditional Third Front booster, is all but smashed in West Bengal and is facing a time-bomb in Kerala. The real action is in BJP. In a room with a dozen BJP central leaders, you will stumble upon half a dozen self-floated and warring ‘prime ministerial candidates’. Most of these so-called PM candidates think they can actually capture the organisation, win Delhi and wrest the PMO without working among people, building a movement, contesting polls or possessing any charisma or mass appeal.

The whispered grievances of some of these BJP central leaders include how state units of their party have become ‘autonomous bodies’. Well, what can you expect when after the Vajpayee-Advani era, the ‘collective’ BJP central leadership has become so thoroughly lightweight? Why expect regional satraps who rake in votes to show reverence to Delhi?

The RSS should have a more legitimate ideological worry about its Akhand Hindutva votes being divided on the lines of castes and sub-castes by these emboldened satraps. Why, even Team Anna and regional parties make BJP play second fiddle now.

Then there is an evident in-house discomfort about the RSS dictating things guided by its ‘outdated vision and planks’. You would have imagined that people joined the BJP knowing that it is a political wing of the RSS, launched with definite ideological and political purposes, with or without power.

Didn’t these very central leaders — who demolished L K Advani after the Jinnah episode, when the RSS only asked them to eject him from leadership — further embolden the Sangh to tighten its grip? The BJP brass who really feel suffocated by RSS should challenge it, risking Nagpur’s capability to launch anew party — like it launched the BJP after Jan Sangh.

It is worth a confrontation provided these central leaders are confident about their mass base and ability to convert the BJP into a new-look Swatantra Party. If not, then join Modi’s own resistance with a difference. The RSS clearly thinks these leaders won’t bite the bullet.

That is why the Sangh will force the BJP this week to begin the process of extending the term of the party chief, Nagpur’s chosen one, Nitin Gadkari — who the RSS thinks has matching charisma and electoral creditworthiness of his colleagues! The RSS’ aggressive show of confidence in Gadkari to lead BJP to the 2014 polls is itself a no-confidence motion against the other leaders. So, we have some no-confidence motion by the listless Opposition, even if it is about its leaders.

• The UPA-II has little to celebrate on its third anniversary in power

• But its real birthday gift is the Opposition BJP, which is hapless and floundering

• The BJP has a no real leader in the central party and too many in the fringes

Business Standard - What is India’s real growth potential?

Published on 23rd May 2012

The writer is a senior fellow at the Peterson Institute for International Economics and Centre for Global Development, Washington

In 2004, before India’s growth surge towards Chinese levels became evident, Dani Rodrik of Harvard University and I wrote in the Economic and Political Weekly that India’s potential growth was "at least 7 per cent". The outcome over the next few years was a pleasant surprise, but also a mild rebuke of our analysis. Not only did actual growth surpass our projection, it was achieved much sooner than our "medium-term" horizon — which was evasive econo-speak for "not immediately, but sometime in the future".

Now, as economic growth declines from its giddy pre- crisis levels, two questions arise. First, what is India’s true growth potential: today’s rate of close to seven per cent, as we had suggested, or the pre- global crisis rate of nine per cent? Second, has this government contributed to a decline in this potential? Consider each.

Today, analytics and evidence suggest that the nine per cent pre- crisis performance may have been the aberration. In the comparison across countries, and even allowing for some initial advantage, India’s growth performance was inexplicable. By any measure of market-based reform –trade opening, privatisation, liberalization of the financial sector – and whether reform is measured in terms of levels or changes, India has lagged most developing countries in Africa, Latin America, and perhaps also China. Yet its growth was nearly twice the average for developing countries outside Asia. This cross-country comparison also ruled out benign international conditions in the years before the global crisis – which, after all, benefitted all countries –as an explanation for India’s unusually strong performance.

Moreover, the case could be made that each of the factors of production that contribute towards India’s supply potential is becoming scarce. Skilled labour, which has become a source of India’s comparative advantage, has been remunerated in double digits for nearly two decades in part because higher education is in too sorry a state to rise to the demands of an economy that is hungry for skills.

Social capital (or governance) has been depleted because of corruption and weak state capacity. Deteriorating governance has, in turn, meant that infrastructure, especially power, has not kept pace with the demands of high growth. It has also meant that as the locus of corruption shifted to land, prices started skyrocketing, rendering it an increasingly scarce factor of production. And India’s abundant unskilled labour is essentially not part of the equation because a panoply of regulations leads to its chronic underutilization.

The most telling macroeconomic manifestation of these constraints has been persistently high inflation, the highest amongst emerging markets. The longer it has persisted, the less convincing micro explanations –food shortages, rising minimum support prices, employment guarantee schemes –sound, and the more the finger points at the simpler explanation that, in the aggregate, supply is failing to keep up with rising demand.

The conclusion is that India may, in the absence of significant supply-enhancing reform, have to get used to lower rates of growth –of six or seven per cent –as the norm. To put it more starkly, the puzzle is not why growth is slowing today, but why growth was high in the first place in the years before the crisis.

This government’s fearlessness in keeping the pedal on demand, by increasing social expenditures, maintaining subsidies, and reducing taxes (until the most recent Budget), is well known. But what role has it played in determining India’s supply potential? One weak compliment that might be paid to this government is that while it may have been unable to resist fiscal populism, it has not reversed the fundamental course of market-based reforms: protectionist trade barriers have not been erected; the state has not taken over more of economic activity (as is alleged in China); the domestic financial sector has not been re-regulated in a way that thwarts efficiency; and, if anything, the economy has been further opened towards foreign capital (in response to the recent decline of the rupee, the Reserve Bank of India has had to re-impose restrictions that hark back to the 1970s, but these are relatively minor).

What, then, is the complaint? In the last few years, the Indian economy has become increasingly afflicted by the curse of rents. There have been terrestrial rents (from the allocation of land), subterranean rents (from the allocation of rights to coal mining and oil and gas exploration) and ethereal rents (from the allocation of spectrum). The curse has not just been the unfair sharing of the rents between the government and private sector at the expense of the consumer. It has really been the resulting efficiency cost, whereby corruption has impaired the supply capacity of the economy. Rent-seeking in land has affected the provision of infrastructure.

Rent-seeking in coal has affected power generation capacity. Rent-seeking in spectrum nearly paralysed the process of government itself. The private sector is far from blameless for the surge in rent-seeking, but this government is its root cause because it decides and controls the allocation of scarce resources.

More recently, though, policy-making has taken anew twist. For reasons still unclear, the government wants to address the epic corruption and venality that it has presided over. From being cosy with the private sector, policies are issuing forth from the government that smack of hostility to some or large parts of it. Whether this near volte-face will reduce rent-seeking is unclear, but they seem to be taking a toll on the environment for private investment and risk-taking. The government seems to be correcting one wrong by committing another. Each of these actions – whether the retroactive amendment on taxes or the new guidelines for the telecommunications sector –may have some extenuating rationale, but the overall effect, actual and perceived, is negative. The plunging rupee is, above all, an expression of deep concern about the impact of these actions on, and hence a downgrading of, India’s medium-term growth prospects.

Can this government summon the will to change course? If current trends continue, this government may well have to go to the polls at a time of decelerating growth and high inflation. And the likely consequence will be electoral humiliation as long as the Opposition is not in total disarray. Avoiding political extinction should be the spur for action for this government.

The nine per cent growth of UPA-I was an aberration. But voters will still judge this government by that standard, says Arvind Subramanian

Source:

http://epaper.business-standard.com/bsepaper/svww_zoomart.php?Artname=20120523aN011101002&ileft=334&itop=44&zoomRatio=130&AN=20120523aN011101002

Times of India - UPA’s green delays hit growth

Published on 23rd May 2012

The UPA-2 government on Tuesday show cased several initiatives that have helped in sustaining the environment during its three year rule despite the fact that delay in environmental approvals have hurt project implementation and overall industrial growth.

The report to the people outlined the major steps taken to preserve the environment. It talked about the National Action Plan on Climate Change, forest conservation, mission clean Ganga, the setting up of the National Green Tribunal and tiger conservation.

The business of the environment ministry, however, got treated more as an albatross around its neck by the UPA than a subject of concern, with clearances remaining at the centre of all debates amid the competing demands of industries.

The environment ministry gained profile and so did its work in UPA-2 but very often it got pushed to ease norms and amend rules even as the government found the debates on how to marry growth with greater equity gain ground.

The ministry also got dragged into the 2G scam, as the issue of better regulation of natural resources remained stuck. The UPA was unable to push through either the reformed mining bill or the land bill even as existing legislation's such as PESA and Forest Rights Act remained relative non- starters.

Ironically, UPA-1's impetus to move the debate on natural resources out of the ambit of traditional boundaries - protecting the tigers and forests from tribals and poor - into an argument about better distribution of benefits tied UPA-2 into knots. Big ticket projects such as Posco and Vedanta hit an air pocket of uncertainty as government vacillated on how far to move on the agenda it had set before 2009.

On climate change, the other big ticket issue in the environment ambit, the UPA veered back to its original stance gaining some lost ground though fighting the battle at international negotiations with its back to the wall and domestically failing to step on the gas.

The two climate change missions that seemed to be taking off - energy conservation and solar power - got bogged down. The former, victim to government's prevarication and the latter, to a controversy similar in nature to that which had hit other resource allocation decisions.

Source: http://timesofindia.indiatimes.com/india/UPAs-green-delays-hit-growth/articleshow/13401688.cms

Economic Times - Black Money Figures Much Inflated: Govt

Published on 22nd May 2012

The government has suggested in its first-ever official document on black money that a lot of the illicit cash stashed away overseas over the years may have come back into the country as investments, seeking to debunk the commonly-held notion that hundreds of billions of dollars of Indian money was held illegally in Swiss banks. The document listed participatory notes (PNs), foreign direct investment (FDI) flows routed through low-tax countries and complex corporate structures as possible contributors to the scourge, but steered clear of naming offenders or putting an estimate on black money, provoking critics to slam it as more of a whitewash than a white paper. The White Paper on Black Money significantly singled out the Vodafone tax case as an example of misuse of corporate structure to avoid paying taxes, further proof of the intensity of the finance ministry’s feelings on its tax dispute with the UK firm and suggesting a compromise was unlikely.

Presented by Finance Minister Pranab Mukherjee in Parliament, the document said illicit money parked outside India may have been brought back as FDI through Mauritius and Singapore and via stock market transactions involving participatory notes and global depository receipts, indicating a tighter scrutiny of these inflows in the future. The release of the white paper, a day before the third anniversary of the UPA government, comes when the ruling coalition has been mostly on the defensive in its second term in office, buffeted by a series of scandals, popular anti-corruption agitations and scathing court judgments. Not helping the government is the commonly-held notion that hundreds of billions of dollars have been spirited out of the country and stashed away overseas. US based Global Financial Integrity, a non-profit research body that has long crusaded against illegal capital flight, said in 2010 that India had been drained of $462 billion between 1948 and 2008.

But the white paper said some of these numbers were over the top and baseless.

"Some of the widely-circulated figures about black money of Indians stashed abroad are baseless exaggerations," it said. Scathing Criticism of Report.

There is strong likelihood that substantial amount of such money transferred abroad illicitly might have returned to India through illicit means," the white paper said. It cited the case of a widely circulated 2006 report attributed to an entity called the Swiss Banking Association, which said Indians had $1,456 billion stashed away overseas. The white paper said actual checks showed no such organisation existed and the money held by Indians in Swiss banks was less than Rs 10,000 crore ($2 billion).

All this did little to silence the government’s critics, who were especially scathing about its failure to give out an estimate of black money and disclose the names of tax offenders with large fund stashed overseas.

"This white paper is in reality a non- paper. It is rather like a bikini as it conceals all the essentials and reveals only the non- essentials," said senior BJP leader Jaswant Singh. "The shortcomings include no reliable quantification of illegal money." The government has tasked three domestic research institutions with arriving at estimates of black money. Their reports are expected later this year.

"I would have been happy if I could have included the conclusions of reports of three premier institutions that have been tasked to quantify the magnitude of black money," Mukherjee wrote in the foreword to the 108-page white paper.

The government had agreed to bring out the white paper during the debate over black money and corruption forced by Anna Hazare’s anti-graft campaign.

The government said it was bound by tax treaties not to disclose the names of tax offenders with funds overseas. But this failed to cut ice with another of its bitter critics, yoga guru Baba Ramdev, who called the explanation hogwash. "Lack of political will and the government's lopsided intention is clearly getting reflected in its policies when it says it has no jurisdiction on foreign laws," he said.

Anna Hazare’s associate, activist lawyer Prashant Bhushan, said the white paper showed the government had not handled the issue seriously. "If the government was serious about curbing illicit money, they should have taken steps to absolutely stop non- transparent financial instruments like participatory notes. Also, the treaty with Mauritius that legalizes black money should have been changed," he said. Official data shows Mauritius accounted for 41.8% of total FDI inflows of $54,227 million into India between April 2000 and March 2011.

During the same period, Singapore accounted for $ 11,895 million, or 9.17%, of the total inflows. "Mauritius and Singapore with their small economies cannot be the sources of such huge investments," the white paper noted. "The ultimate beneficiaries/investors through the PN route can be Indians and the source of their investment may be black money generated by them," it added, raising credibility over two of the biggest sources of capital flows into India.

Experts said the problem was likely to be in foreign direct investment through the automatic route, but cautioned that future regulations to plug loopholes should be done in a manner so as not to hurt investor sentiment at a time markets are wobbly and the currency is under pressure. The government’s budget proposals for 2012-13, especially the General Anti-Avoidance Rules (GAAR), spooked the markets, forcing it to delay their implementation by a year.

"The problem largely lies in instances of FDI through the automatic route and the current reporting mechanisms may be modified to address this. But it should not create hurdles for genuine investors," said Akash Gupt, executive director at Price water house Coopers.

The white paper was mostly silent on the links between black money and political funding, which some experts have long cited as the source of corruption and generation of illicit funds. It said the government could consider a one-time amnesty or a gold scheme as viable means to catalyze voluntary disclosure and tax recovery. Citing successful implementation of such schemes by countries such as the US, UK, France and Germany, the paper said the government could explore partial benefit schemes that provide immunity from prosecution in lieu of voluntary disclosure along with payment of taxes, interest and penalty.

"In view of the increasing capacity of tax administration to access information from foreign jurisdiction… a similar scheme (amnesty) targeted at black money stashed abroad can be a one time option," the paper noted.