DA Case : Did the system work?

In the past, I have written posts here grumbling about a non-performing judiciary in our country. The recent verdict on a 18-year old corruption case against the AIADMK supremo Jayalalitha and her subsequent arrest is one that needs a response here in my columns. On conviction, she lost her MLA seat and her post as the Chief minister. She became the first sitting chief minister to go to jail under the Prevention of corruption act. She is currently lodged in the Bangalore prison fighting for her bail.

There is a feeling that the system worked and an environment that the rule of law is finally in place. Did the verdict really convince the average man on the street? Not really.

There are many highlights (rather lowlights) in this judicial verdict:


Time Line: Why would a corruption case against a single public servant go on for eighteen years. Did it take that long to find, if a person got richer more than his officially stated income. why can't those be solved lot sooner than that? If the courts do not deliver the verdict in-time, then they should drop the case and move on. Why waste time of the defendant and the prosecution. People barely remember what happened 18 years old in their life. This empty statement of - Justice delayed but not denied might sound comforting to heart for some, the fundamental flaw in the judicial process in our country is right in front of our eyes. Wonder, if it is even possible that someone in the judiciary or the legislation can possibly defend that. It could be argued the defense team was instrumental in the delay. Why was it allowed? There were instances in this case, where documents got translated from one language to other as requested by the defense. The question is why allow that? Why even have that option to choose from, for the defense. It is also a mental agony for the person who goes through the trial process for these many years. It is not fair to someone who is eventually found not guilty. Would the courts compensate for that. One idea is to make a threshold starting date say January 01 2015 - any case that has been filed on or after this threshold date, will be prosecuted to its logical conclusion within a maximum of 6 years. If no verdict has been reached in that time frame, just throw the case out of the courts and make the case "void". No one needs to stay in prison anymore for it. Free up the prosecution and defense, so that they can do something else productively. The crime can be forgotten and the country can just go on.

Special Court:The trial was moved from a court in Tamil Nadu to a court in Karnataka. The reason cited was the defendant is the Chief minister of the state and would not get a fair trial. This itself is a fair admission of the judiciary that the political establishment can easily fix the outcomes of any trial. This is screwed up to its core and a proof that you could get away with murders and looting in our country, if you have the political power. The Judiciary has to reform itself to impinge its authority on the society. Right now, because of its historical under performance, it is not credible in performing its duties. Once it has the confidence and respect of the society - a fair trial can take place in any part of the country for any citizen. Right now, the machinery is so out of control and hence inefficient. A complete revamp is necessary.

Bail Process:Once the verdict was delivered and the Chief Minister was taken into custody, the defense started filling for bail petitions. There were undue delay in the process mainly because of Dussehra holidays. The holidays were running not into days, but weeks. Do the judiciary need these long vacations? Say Someone has a genuine medical emergency and is languishing in Jail and needs a bail immediately - would it be right to make him wait until the courts come back from vacation? With lakhs and lakhs of cases pending in Indian courts - is Dussehra vacation really needed? There is no other institution that has as many holidays on a calendar year as the judiciary. Weekends are also holidays. whatever way its counted - its just too much. The bail petition was rejected by the high court judge who came back from Dussehra vacation (Hope he had a nice vacation!). Now the bail petition is looming in the Supreme Court. It would not be surprising, that it might be postponed for another week, becase the court is out for another week for Diwali. what a horrible employer is the Indian judiciary. No institution can succeed with this set-up.
The judiciary has to be reformed so that it acts better and sensible to the society and gives fair trial to both people outside and those convicted and in custody. On a high level - reduce the number of people who hit the courts for example, as a argument sake - anyone who has been convicted cannot apply for bail for the first 3 months. Some thing like that would make things more predictable. Make the process so simple and straight forward, so that the people can understand it and not just the lawyers. Laws that affect the common people is supposed to be non-complex.

Fine Amount:The defendant in this case has been asked to pay Rs. 100 crores as fine as part of the conviction. How was the Rs. 100 crore arrived at? why not Rs. 99 crores! Everyone knows for a high-profile leader like the AIADMK supremo - the amount is not substantial. It can be managed either through the individual's asset or through the party machinery. Why can't the rules be changed that ALL assets in the defendant's name will be taken over and auctioned out., if found guilty. A public servant found guilty must be disowned of all assets in his name irrespective of whether they were obtained prior to or after the looting. It is one - a good source of income for the courts and two - it could act as a firm deterrent for perpetrators. In general - court fines must be increased a lot, at least 10 times the current amount. They should act as deterrent for people to come to the court. Only valid and genuine "winnable" grievances need to hit the court causing less traffic. Most cases that are pending in Indian courts today are just "false" cases. At the face of it, they can be rejected/verdict delivered. But the horrible truth is, even these cases are put in the queue process, and they drag on for multiple years. A high fee to initiate a court proceeding would act as a deterrent. It could be argued that the poor might not be able to afford it. In reality its not true. Now they end up paying the lawyers for years together as fees. The poor would be happy to pay more and get a verdict than to end up paying the lawyer and go through the pain of the delay for years.

The work of the judicial system in this country is not to deliver verdicts once in a blue moon on high profile cases. With so much high profile cases on, It needs to perform consistently every time and very fast. Most of the elected member of Parliament and State assembly have criminal cases pending against them. Their only hope is the courts would never deliver and they could get away with it for very many years when the suit is "pending". The courts facilitates the existence of a corrupt ruling class by not responding actively to their old complaints. It doesn't matter if its a guilty verdict or not-guilty verdict. The essence is to get to a verdict.

Appoint a committee

Whenever new scams surface, there is usually a political rally by opposition for it. Newspapers flash story about it. They come up with huge monitory figures to depict how serious the crime was. They make it so juicy and nice to read for its viewers. The 24 x 7 news channel would be on top of it until they get the next story. It is fun time everywhere. Initially the ruling government denies anything ever went wrong. Usually they all end up in the same way - the government would set up a committee to investigate the issue. (like any other Indian movies that end with the hero marrying the heroine and all moviegoers leave the theatre happy) The people who are accused of, say the investigation is going to bring out the truth. We don't want to discuss this - because its under judiciary now. Basically it says - Lets leave this out for now and lets move on. To make the intention look sincere they sugarcoat by saying that only a retired supreme court judge would handle it. Anyone with a lesser cadre would not be able to track the truth. They make a committee, with the judge's name (at least he gets some publicity) and for now - Its Business as usual for everyone including the accused, government, opposition and the common man who is glued to his television set and the newspaper. How many committees has this country seen. Countless. Over time - the intensity of the matter comes down and the committee itself gets multiple extensions. We usually don't hear about it for a long time., sometimes even decades. We hear quiz questions and even in public service exams about which committee is tracking which scams. Most often people get it wrong because there are just too many of them and it gets really confusing for an ordinary candidate. Pockets of news appear on the newspaper here and there about its existence by saying it conducted an investigation of so and so witnesses. Usually the committee member comes in a ambassador car with a public servant with him - carrying his suitcase/files and trying to make him way to get into the building. After that the accused comes in a fleet of car, with lots of his supporters surrounding him and raising slogans against sometime unrelated opposition party. The person would wave his hands, hug people around, would talk to the waiting cameras. The supporters around him are very agitated and are pushing people around. Its a hectic place to stand within for anyone. It is really a good publicity for the politician. Next day you see pictures flashed in newspaper and very same rhetorical political punch statements. You don't hear about it for a long time after that. Over time - the investigation gets diluted. Nothing comes out of these committees ever. Sometimes when it does see a day of light, they don't make it to main page of any newspaper. Most witness turn hostile. The political climate is far different from the original days. Basically the wrong-doer gets away with it.

The Adarsh report is one such report to have met its deadline. It has blamed four chief ministers of wrong doing with multiple political heavy weights also mentioned in the report. The ruling party has taken a decision to discard it. In fact it is the same establishment that the report finds fault with. To accept that would mean - that the Congress party has to admit its Chief Ministers tried to exploit government funds for personal benefits. The current home minister of the country is also accused to have got the favor. He should resign too. It is just lot of things to admit. The Maharashtra state government has refused to accept the report. This is a new low point in the Indian Democracy. If there are no credible action or punishment - why even constitute a committee. Just think that the committee came out saying that everything was followed as per law and discharges everyone from any guilt. The establishment would praise the committee and would highlight it by saying : I always trusted the Indian Judiciary. Are they not supposed to find what went wrong and bring people to justice? Issues like Adarsh - the politicians consider them harmless vice. They just think - they just capitalized on a apartment building built for fallen soldier's families. They extended the project by building more house on top of that for themselves. If rules are not followed in strict sense, this is what happens to civil society. Every law of the country is diluted one-by-one. It makes us wonder - which laws really are followed tooth and nail. Either all laws are treated equally and followed., nor everything goes out of the window. In India - looks everything goes out of the window. People who commit murders come out on bail within a month. People who are accused of rape are out of prison right away. People who are convicted with jail term - come out by appealing to a higher court. Lallu Yadav did it recently. People who are punished by Supreme Court (after decades) - just come out on parole very often for months. Sanjay Dutt and Manu Sharma are recent examples. Things are so confusing to put a logic below them. It looks you could get away with ANYTHING in our country.

If you just think it over - it all ends up as a thamasha to public. The initial phase keeps media busy. The government counters them with their own statements, press releases. Opposition makes their own statements, dharna, bandh. Finally its all nothing. The status quo remains. No harm caused anywhere. The looting continues.

The Rise of AAP

First let me take some credit for myself  - for rightly predicting a rise of a political force after the Anna Hazare movement in 2011. (http://indiapoliticalblog.com/2011/04/19/anna-hazare-the-catalyst-of-new-india/#.UsGYc6yA2t8)

I am also glad, I used the word "Catalyst" - meaning Anna Hazare would facilitate a formation without being a part in it.

Now that you are impressed - let us get going.

The rise of the AAP is simply spectacular. Historically, a rapid rise of a political power in Independent India was always due to a larger than life image of its leader. NTR and MGR are notable examples. They were people from the screen. The face recognition was there., and they capitalized with a favorable personal image. The next line of new netas where mass leaders. They came out of  vote bank politics. They adhere to their base (religion, caste) for their political ascent. L.K Advani, Kanshi Ram, Mulayam Singh Yadav, Lallu Yadav are notable examples. In both cases, unlike the AAP - the leader was bigger than the party. The rise in AAP however is amazingly different. AAP was more or less a leader-less grouping to start with. It was a group of people who reflected a big section of Indians - who were upset with the status quo of the political apparatus in the country. The frustration and anger at established political parties and their unwillingness to change., and the peoples sorry state of helplessness - were fundamental reasons of the formation and rise of the AAP. When they decided to contest the Delhi state elections., we all knew it is going to play a role. But it was difficult to predict that they would win 28 seats. As the campaign got into momentum it was successful in convincing the people of Delhi that they were honest and more importantly - one of them. Because it was their first election - the people in other parts of India had serious doubts about their survival. The Delhi results were stunning. The BJP not able to get a majority on its own was a blessing in disguise for AAP. This new party suddenly in lime light now. The phenomenon has evolved., and it took just over a year. Unlike the film stardoms or vote bank political leaders, the AAP leader, Arvind Kejriwal is still very much unknown even today across the country. The principal he stands for are getting noticed. His involvement and evolvement as the face of AAP is tremendous progress. His name is not "pronounceable" to most south Indians like me. (Before the NDA PM's name hit households repeatedly in south India, there were times when you asked who Vajpayee is - the immediate question is - in which film has he acted?) His simplicity and thought process looks promising.

Now that the Delhi government is in place, it is time for AAP to give good governance. It does not have to be a perfect government - but should be vastly different from current establishments. The Congress would support the initial vote of confidence. With a heavy defeat, the wounded grand old party is looking to save its face. It is highly unlikely it will withdraw support to the AAP., even if it means its targeted for corruption in the 15 year old Sheila Dixit government. So I believe AAP party is here to stay in Delhi government at least till the Lok sabha polls. BJP would function as an opposition and blame the AAP, even if something minor goes wrong. It too has the may-election in mind. It will try not to spoil its name and would just concentrate on the Modi magic somehow take it home to 272 seats. So for now it looks - the BJP would be a silent opposition for the next 6 months.

Arvind Kejriwal oath taking was impressive. The symbolism of taking the metro to get to the swearing-in ceremony has been well received across the nation. Also having it in Ramleela maidan was symbolic too. Unlike the crackers going bizarre and people in white and white netas running in their scorpios, safaris, Benz and BMWs with a hooligan crowd dominating the proceedings  - this gathering was different. The speech by Arvind Kejriwal was also impressive. He made people take a oath that they would not give or take bribe. No political leader has done that in recent memory. At least we have someone who talks about it. The common man is looking forward to it.

There are low hanging fruits that can be done without much effort. They are not controversial., but will have deep impact on society. It is also positive step to ban all the red-beacons and personal security to people. They are completely useless and in more than one way "spoils' the society and the perception of a politician. We have got to realize that no one needs a police security. Why in the world you need a police personnel coming around you when you are walking or riding in a car - where everybody goes in the road? It is not that they are going in a dense forest with wild animals around. It is really ironic that elected law makers, even village chairman go in fleet of cars. Not sure - when it got introduced., and people started accepting it was OK.

AAP effort to tackle this menace and identity itself with the common man is unparalleled to ethics of other political parties. The introduction of Lokpal is next goal. This should reflect Zero tolerance for corruption in public offices. System in place to report bribe seekers. Strict punishments to start with immediate loss of Job. Heavy fine and jail term., if proved guilty. It should also Increase fines to abnormal levels. Even petty traffic violations., should cost lot of money to the people. This will fund the state's coffers and judiciary. Strict enforcement of law and order is vital and the whole system has to change.

On the government financial level, it should concentrate only on Bijli, Sadak, Paani, Education and Health. Reduce ALL unwanted expenses of government. Ban ALL subsidies that goes to people of age 15 and above., and age 60 and below. Only Children and old people should be entitled to government subsidies. Also streamline taxes. Make them low and simple in procedure. Tax consumption but not income. (We got rid of the British because of taxes.)

AAP with its media hype surrounding it should not play into their hands. The time has come to leave the camera out and do efficient governance. They don't have to be sitting there and clapping for every move. And more importantly the government doesn't have to impress the public every single day. All that matters is a systematic change for a better livelihood for the people. Three months from now, if the people of Delhi see visible improvements in how the society operates - that would be the only gauge to measure the new government's success.

There is a charge against AAP - that its pursuing the now outdated communist ideals. Personally I do not think so - but there is a feeling its going to shower freebies on the poor and going to tax everyone else for it. Since the movement identifies itself with the common man - and the majority of the common man are poor - policies needs to be done according to reality. Arvind Kejriwal I believe understands that. But at the same time - it is not possible the government can supplement their hard work. The nature of the society has to evolve such that everyone can get a job and pursue a living with hard work and make a decent wage with basic freedom. The government should try to create this kind of society. Flushing out free rice, wheat, bulbs, saree, dhoti, television laptops (by the way - have no idea how this benefitted) etc. is just repeating failed policies. It will only make poor people worse off.

The AAP government seems to be on-ground and getting its act together. Let us wait and watch and see how they are able to make it better. A long way to go.

What would be AAPs strategy for Lok Sabha has become the next point of interest. I will not be surprised if they pull north of 200 seats with the current momentum in place.  The party has left the nation guessing on this. Unlike Delhi, the rest of India is lot different. Delhi being a small state and fully urban - AAP mode of reaching to the people has clearly worked out in its favor. This approach cannot be replicated in the entire nation simply because of vastness of the country and its diversity. More importantly - with just six months away for the election. Just wonder - if India had a presidential system - Arvind Kejriwal would definitely become President. (Even Modi or Rahul Gandhi would agree!) With representative form of government still in place - the number of MPs is what matters. AAP needs to employ a different strategy. The following are some options that they might consider.

(*) Contest ALL seats and hope for the best.
(*) Contest realistic seats only - say 150 seats (Delhi, Mumbai, Kolkata, Chennai, Bangalore and other urban cities)
(*) Contest realistic states - say 150 seats (Delhi, Maharashtra, UP, Gujarat, Tamil Nadu)
(*) Align with parties like Lok Satta and create a genuine seat sharing agreement in some specific states.

I am not going to guess any more - let AAP surprise us more.

With the rise of AAP - both the national parties in the Congress and BJP have been left thinking. Congress is the worst hit. Poor assembly election results have exposed its vulnerability in the national election. Modi - who until now seemed to have capitalized on the anti-Congress feeling in the country is suddenly feeling just not strong. The assembly election results have proved that people are against the Congress. But if there is a non-Congress, and non-BJP alternative - then people would opt for it. This is where AAP filled the vacuum in Delhi. This is a good news for AIADMK supremo Jayalalitha in Tamil Nadu and the YSR Congress's Jegan Reddy in Andhra Pradesh. With current mind-set of anti-Congress and anti-DMK (with multiple scams to its name and the perceived vision of not doing enough in the Sri Lankan war against tamils) AIADMK should sweep the state. Modi is not a factor in the state, I believe. (goes back to which film he has acted!!)

 The rapid rise of the AAP is because of "lack of will" in the Congress government at the center particularly in the last five years. In UPA-1, the policy hurdles and lack of major progress in decision making was pin-pointed to the Communist parties in the coalition. But the UPA-2 was without them. Congress had a better margin of seats. But the complete lack of will in the part of the government to enact strict / ground breaking laws really cost the party. They could have changed the face of the society by vital reforms, such as Lokpal and would have taken 100 percent credit for it. Rahul Gandhi coming out now and pointing out the problems is probably too little too late. The government underestimated the anger of ordinary Indians., who were suffering because of lack of change. In India - the so called spring Arab revolution did not topple any ruling heads, but it created a new wave of leaders to lead this nation to a better destination. At last we see some light. Power was lying on the ground for someone to take it, and AAP took it. Good Luck AAP.



 

Software mergers and acquisition

The company that I have been working for the past seven years has been acquired by a bigger competitor in the same industry. In modern US insurance industry it is common. In fact we have been sold and resold three times in the last five years.

The modern capitalistic system particularly in the west grows on mergers and acquisitions. Gone are the days where industries became more productive, produced more and because of that, added more resources and serviced more clients, and as a consequence made more profit. When this happens, they invest the profit in more machines, man power and take it to the next level.  They diversify into related fields and expand businesses around them. They grow from scratch to huge conglomerates.

The modern capitalism - the way it is practiced in the west now., has brought in a new phenomenon in the past decade or so. You do not grow by being more productive but instead you acquire smaller (multiple) businesses with often borrowed capital and show up a bigger revenue estimate and a fatter balance sheet. This way the path to becoming a bigger company is sooner and easier rather than a painful way of growing up from start. This has resulted in successful companies. They acquire and brand it as though it was yours. You build on the legacy. It is always the end users (client) who benefits from it. Overtime the acquired company name and brand become oblivious and only the buyer is known. Not many people remember wa-mu, Wachovia these days. Do they? They were easily recognizable until the 2008 economic crisis. People had their money in them actually. It takes few moments to recognize their past now.

Why is this trend so prevalent. Western industries have moved from manufacturing to service sector in the past 20 to 30 years. A normal progression of a manufacturing company is long often cumber some. It involved huge capital, high-end machinery, factory, labor, time, and a lot of years to make it successful. Most often the people who started the business end up running them for a life time. We see this setup in growing economies like in Asia. I have seen it in India where the entrepreneurs run their business as part of life. Most often they start it in their late 20s and 30s and end up running it through their life time. It gets carried over to their siblings who end up running it in the same fashion. Lot family owned businesses follow this model.

Acquiring a manufacturing firm is lot riskier. it often involves lot of capital. Service sector industry is so abstract.

One of the primary reason for mergers and acquisitions to be so common is the easy monitory policy of the US Fed. Big business often with a good track record can borrow millions of dollars from the bank and buy out competition rather than competing with it. This consolidate business. Eliminates competition in a way and ultimately results in fewer options for end users.  The money that is supposed to create new jobs often end up cutting jobs. There are harmful effects of easy credit policy.

**** Companies get bought for more than market price.
**** Ridiculously low interest rate skews market demand / supply.
**** Badly informed decisions by upper management.
**** More optimism for success there by masking failures.
**** Stock market highly priced based on bad facts.
**** Unproductive labor employment. Eventually huge layoffs when reality catches in.
**** Poor cost benefit.

Unlike manufacturing, the service oriented companies tend to be acquired or merged with others relatively with ease. The aim of the merger is to consolidate business and be more a major player. The field is reduced to lesser players. It does not add any new value.

With respect to acquisition that happened in Aplifi:

> Cost of acquisitions is higher than market price.
> Merger hopes for a more weakened competitor rather than strength of "Merged Company".
> Promise on new products that is yet to be developed from scratch. No one knows what this should look like and there are more probability of failure.
> Process and resources are in conflict and needs a careful management strategy to put things in place.
> Right now in my opinion the morale is at an all time low with unclear directions or road map. Unless there are radical changes., it is just a lost cause.

One thing that is always overlooked is there is huge money changing hands at these times of mergers. Often it's done with secrecy and only the top tier knows about it all. They sit together, deliberate it and decide. There is too much hype on the compensation claims, partnerships, bonus packages, relieving terms - the fundamental value (software products with resources to develop and maintain) is often overlooked. End of the day it's the "nuts and bolts" that matters. Enhancing the nuts and bolts is the ONLY thing that decides performance of the firms.

The current deal hugely lacks clarity on these.

One of the problems in merging service sector businesses is - we don't know if it's a good buy for a long-long time. The cause of failure can be easily blamed on a trivial change that happened post buy out. It wouldn't be a ideal for the top management to admit it was a bad deal to start with.
During mergers they shut down software products in favor of a better product that the bigger partner has. So what happens to the productive work that went into developing it in first place. Of course it was priced and sold off. But there is no continued value proposition of labor. This trims employment rather than create new employment. This would be unfair. The hidden truth could be the product that is being shut down could have had a better future prospect. It is lost opportunity. It would have been better to exist than to be sold on a fire sale.

Acquiring a company only to shut down later is true loss of productivity and a major mismanagement for the leadership. Multiple smaller companies benefit the real economy more than the few bigger ones. Some companies are found and operated by an entrepreneur. They reach a point there is a buyer for their company and the entrepreneur sells it for a fee. The cause could be that he is getting old or is unable to run the business or he thinks it makes sense for someone else to run the firm which could make it more profitable. This is a clean sale. Founder has interest in the well being of the firm and it's future. Many people find it more profitable and they initiate businesses with the sole aim of selling it to someone else. There is nothing wrong about it. Soon the trend carries over to people who are loaded with cash. They buy a business from a single owner and take it to the next level. These people are called investors. They do it because they are lumped with cash. And once they feel it's good for resale, they just flip it over. It's value addition to a commodity. Is this good for business always? But unlike the founder, the investor does not care about the future of the company. He just happens to be the holder for a brief period of time. In  a service oriented company it is very hard to measure the value proportion during these mergers. lot of emphasis is given to the revenue growth. We hear talks on how to make the company from a $10 million company to say, $50 million company. Lot of massaging of the financials take place to sell it to the biggest guy. One of the primary consequence of this is a reduced work force and less benefits. Income is exaggerated for the purpose of accounting and the expenses are cut drastically to give an impression of less cost. Sometimes you wonder if these really work at the ground level. irrespective of the huge numbers as I said before the nuts and bolts that govern the basic success is what matters.

Only the future can say how good Aplifi sale would work out. I will definitely want to know about it say 2-3 years from now.

If you don't mind living life in "whatever way you want" then you can lead a life like that. Some things bother you, and you go along with that. But if you decide to live a life with some self imposed conditionality then you might have to take some personal decisions that you know is right but would involve losing something personally.
Unfortunately you have to do those, not because it's different but because it is right. In a distant future, one day in my life I would turn back to look at this very moment and have a sense of satisfaction of the behavior. And that is where you gained.

Inflation numbers

We got the recent inflation numbers this week. The government usually underestimates them. But for the sake of argument lets go with what they say. The CPI (consumer price index) is again in double digits at around 10.09 percentage and the WPI (wholesale price index) hitting the 7 percent mark. Food inflation is as high as 18 percentage. As usual the RBI, the finance minister, the media have their own reasoning for it.

Let us take a step back and understand the terminology here. There is a gross misunderstanding (misleading I should say rather) if you read the message coming out of policy makers and the media.

The basic question : What is inflation?

Before giving out the definition, let me say what is not the definition. Inflation is NOT rise in prices.
Inflation is expanding money supply. Rising prices are a consequence of that.

They often blame the demand-supply for rising prices. The prices do not rise in double digits for multiple years because of demand and supply. Permanent price increases are results of monetary policy only. Demand and supply are one significant factor for inflation but they are mostly short term. India is under significant inflation for the past few years. Demand and supply logics hold true - only if the money supply remains constant. If money supply expands exponentially as in the case of our country, only the RBI and the government are to be blamed for the problem. Blaming the entire problem on supply side bottle necks is just to deflect the problem from its real cause.

The Indian rupee has been expanding for decades now. See below link.

http://upload.wikimedia.org/wikipedia/commons/3/37/India_Money_Supply_Components--Larger_Label_Fonts.png

This can be easily reflected in the union budget figures.

The total expenditure amount for the year 2009-2010 was 10.2 lakh crores.
The total expenditure amount for the year 2012-2013 was 16.7 lakh crores.

The expanding balance sheets are a positive, for business or industry. It conveys expanding business. More money in the balance sheet reflects more business activity and hence more profits. On the other hand - a expanded or inflated balance sheet of a country with amounts in monetary bills that it can print endlessly - is a sign of serious weakness. If the budget is a surplus budget - meaning the income (tax collection) is more than expenditure - then it is good. But the Indian union budget is always a deficit budget. The expenditure outweighs the income heavily. If the budget is a deficit budget - who pays the difference ? The government borrows the money. Who does it borrow from ? Because of lack of viable creditors, the bulk of the money is borrowed from the RBI in the form of government bonds - who then create money by running the printing press.

Printing new money causes the existing money to lose value.

This excess money supply does not percolate into the society creating productive assets. They are usually squandered. They get misallocated and eventually plundered by few. The real economy would be better off without the excess money. The Non-performing Assets (NPAs) of public sector banks are 3.25 lakh crores. If you compare it with the above budget figures of the country, they are significant part of it. Unfortunately the NPAs are going to get worse. Because the government owns them - they need to induce cash into it (read bail out) with fresh money., which again expands money supply.

The expanding money supply kills the ordinary saver. Retirement savings of individuals will be blown out causing social problems.  Asset prices become over priced. Recent real estate price escalation is a direct result of the expanding money supply. Misallocation of funds to these sectors have starved other productive sectors of the economy. Hence the growth has stalled.

To rectify the situation - RBI has to suck the liquidity out of the system. There is too much money in the system. Inflation will not come down until the excess cash is sucked out and destroyed. Increasing the interest rate by 25 basis point every other month is not sufficient. The general perception is by decreasing the money supply, it will drag down growth. Unfortunately growth has to be sacrificed in the short term for long term gains. The current rate of inflation is unsustainable. Failure to take hard and unpopular decisions lead to more social problems and more economic disaster in the future. Current trends would lead us to what Argentina went through economically.

Persistent high inflation of course will cause weakness in currency. No wonder the rupee is trading at an all time low against pretty much all the currencies in the world. Indians are earning poor and getting poorer returns for their labor because of its policy makers. Purchasing power of the rupee is going down like a sinking stone in the pond. You can still see news article that says - the weakness in currency would boost exports which is great for the economy. This is an idiotic argument. Exports are results of economic success. If weakness is good for exports - why can't we make it Rs. 200 to a US dollar., why around Rs. 65.

A weak currency reflects a weak country.

Unfortunately all Central banks around the world are increasing the money supply at the same time. Japan being the worst of all. In a world with no gold standard or an equivalent system - these things lead to terminal economic disasters. The pace of money printing has increased post the 2008 financial crisis. The western economies in the US and Europe still recovering from the financial crisis and still not out of the woods with high unemployment and slow growth. In spite of this we see oil above $100 a barrel. Just imagine what would be its price if the economic activity picks up rapidly. The price of oil would at least double from here. Can any economy afford that?

The US Fed is also practicing cheap money policies. It is doing historic blunders. It is pumping in $85 billion dollars every month with the intention of boosting its economy. The result of this is gold being around $1300/ounce and $100/barrel oil. Being the world reserve currency it is exporting inflation to all around the world.

You cannot read a single news paper in India today - without reading the story where the policy makers are trying to impress the foreign investors - FDI  (foreign direct investment) and FIIs (foreign institutional investors). They give the impression that without the foreign money - India cannot survive. Actually the truth is - without the foreign money the current bad policies cannot survive. India does not need foreign investment in any form - it needs only foreign currency. This is to fund the imports. The government would not slash its subsidies, particularly oil and food. To fund these in CAD and fiscal deficit - the easiest way is to get new money from outside. The ultra cheap monetary policy in western nations is currently funding it. But India would soon run out of it. That is why the mere mention of taper in the US is causing the FII to withdraw money from Indian investments sending the rupee to hit new lows.

For years - Indians have moved abroad for work. It is often sighted that they move to seek opportunities, better standard of living, etc. Those reasons mask the original intent. The sad truth is - they go there ONLY to earn in an appreciating currency far higher than the Indian Rupee. Just say - the salary of a Indian software engineer (in purchasing power) is same (or more) in Bangalore than in New York or London? Would any one go for work to the west? This is exactly the same reason we do not go to work in a poor country - say Somalia or Sudan but to rich western nations. Without a high value currency the reason to live abroad makes no sense. The value of the Indian currency is indeed in our policy makers hand and not controlled by foreign nations. Creating a very productive environment would lead to a appreciating currency.

Public awareness is needed about monetary policy. It is a sad truth that subjects like these are not discussed in open forum. This will keep Indian politicians in check. Over years, the political establishment has given undue subsidies and made the poor people more poorer. The fre money helps them to hold on to power. Intentionally people are misled on these subjects. The rich segment of people who understand this - invest in hard assets like gold, silver, rental properties and manage to retain the purchasing power. But the poor and the middle class with relatively less money with salaried income and meager savings get washed away during these times of sudden increase of money supply. This is exactly what is happening in the country now. With no gold standard in place, the governments around the world with huge debts are practicing the easy way out. Appreciating currency promotes hard work and in turn savings. These savings fund investments. Because the savings are hard earned - they get invested only in productive labor and hence productive assets. Expanding money supply causes all the prices to rise. Capital gets misallocation, causing mal investments, low growth rate and resulting low wages. Hope one day we Indians (who already save a lot) live in an environment where our currency appreciates against other nations and we contribute to a flourishing economic activity within the country and not move abroad for earning other currencies.  

Lunch with Charlie Rose

The company I work for got recently bought over, and we had a big lay-off and the mood within the employees is at an all time low. Sorrow has descended on the floor and its silence all around most of the time. But on an individual basis I see people interacting more among themselves, sharing their thoughts more openly that before. The primary point of discussion is the everyone's problem of being on the list next time. The theme unites every one. This triggers more open discussions. It was as though the personal opinions have come out of the closet and more open comments on relevant topics without the class tier among employees. One thing I realized was unlike popular belief that people group/pool together better at happier times it the sad times that bring them more closer. Someone more famously told - the precious part of the human body is the shoulders. There would once be a time someone needs it to rest their head on amidst profound sadness out of uncertainty.

Re-enforces the most common political wisdom - we need common sorrows to unite people.

Everyone has the same concerns and they see themselves in others. This motivates more conversation/discussion and opinion sharing. It is a good sign but unfortunately wrong cause. May be that is why tight deadlines build successful teams.

Let us come to Charlie Ross story now - Recently I had lunch with my office co-workers. The discussion was about all topics. The crowd was of "opposite" nature to the way I think (I am the sick one). Things like fashion, dancing, partying were discussed. As always I was a patient listener with some occasional comments - sarcastic most of the time. At one point - someone told usually young crowd (this time girls) do not want to know someone who watches Charlie Rose's interview. This made me think.

For someone who do not know who Charlie Rose is - he is a relatively serious political commentator who conducts interviews with newsmakers. The interview is always with someone across a small table in a dark room to create a illusion of serious talk. It is just series of question - most of them relevant. Candid discussion. Most of his interviews are serious - he isn't talking to the guy who raises Panda somewhere or they guy who split up with some so called celebrity. He asks some tough questions (relatively to other main stream American media).

Watching serious political commentary cannot be a bad thing. Why has the younger generation lost interest in it ? Communist regimes were very careful in motivating ideology among the young people. But Capitalistic societies is losing out to trivial areas of interest. May be if there was something like world war or something going on - people would be more keen to the stories that come up on politics.
Politics and current affairs are part of life for everyone. Lack of interest on those is deeply worrying. Particularly among younger generation who are more tech savvy and live in their own virtual world. It is not that they are not important but they are less important. critical thinking is vital for people who are young. To do it., you need to understand people and their problems. Human race has come a long way from hunting and gathering. Those must be primitive. Now we have a modern world.

The majority of population has moved away from politics particularly in the western world and is spending more time in the virtual world like websites, fashion, vacationing, leisure. The younger generation is completely insulated from world problems/issues and an environment has been created that it is someone else problem. It is as though an international calamity - like a world war or a huge economic crisis is probably needed to unite the human mass. (just a comment)

Current affairs is not a boring topic that you can choose to follow or ignore. You follow it because it affects your life directly. Your decisions, life style depend on it. In the west, information that people get is heavily masked to create a sense of "everything is great and it can only get better".  

In the pre-world war two era there was a famous quote when Hitler was in power in Nazi Germany which is worth a mention here. The quote goes something like this.. First they came after the Jews. I did not worry because I was not a Jew. Then they came after the communist. I did not worry because I was not a communist. Then they came after the trade unionist. I did not worry because I was not a trade unionist. Then they came after ME. There was no one to help me.

Life is a mix of happiness and sadness. It is a mix that makes life interesting. It looks without the sadness in it., we will never be happy.

Economically viable : Right to escape disease

Seeman, the leader of Naam Tamilar party in Tamilnadu recently made a casual comment in a public rally that caught my attention. Seeman is well known for his anti-congress stand. He blasts the UPA leaders on policy issues and that part is not unexpected. But he took a swing against its president which is not often stated publicly, may be out of moral ethics and political decency. But is of course a truth.

He told (to para-phrase) - Smt. Sonia Gandhi, the ruling UPA chairperson and Congress party president had gone to the United States of America for her treatment to an undisclosed illness. The treatment for that cannot be availed in India. They have the money and can afford to go to a different country to extend their life but what will we the ordinary citizen do if we have the same illness and cannot afford to go else where for treatment. Should we then go to the graveyard to die ? These are the people who ruled us for more than 55 years. Are they not morally responsible for this situation we are in?

I believe - this was a passing comment by the speaker and he didn't venture into it further. But it does raise few valid questions.

We don't hear political opponents of the congress say this. The general perception is that the personal health issues are beyond politics. It would not be decent to raise such an issue in open forum. People always have sympathy when health issues are brought up. But why? Not even considering a open discussion on this is anti-democratic in my opinion. The media should discuss it and deliberate. The people on the dusty streets of India should know that their rulers are a step ahead and they may not be privileged enough when it would really matter. In a open democratic societies like ours - nothing is beyond deliberation. If there is a conscious effort to leave out this story and consider it not worthy of a discussion, then it is an insult to way democracy is practiced and should be thought of as agenda-driven. The media is orchestrated for its wealthy masters and not for the general mass.

People have a take away from this - these are universal truths - most importantly they are responsible for themselves. You have to be economically viable if you or your loved ones need to avail a facility that would enable you to live longer. Dependence on government for health benefits is suicidal. You are responsible for your loved ones. The government is just a foreign direct investment (to borrow Seeman's phrase). It just doesn't care about you. It might give you free rice, wheat. But don't think if you have a illness it will fly you out for a treatment to a advanced medical facility in a foreign nation. They will definitely leave you to die.

Of course the treatment is to escape diseases and not death.

In the 1980s, MGR was on a stretcher and was moved to USA for treatment for a terminal disease. With socialistic society, we were all told - the advanced western nations (capitalistic) have better ways of treatment. In Post 1990s liberalization - Indian leaders still go abroad for treatment. what a shame! it doesn't matter which political leader he or she is or which party they are afflicted to. Rulers are the nation's conscience. People of India look to them as gods. When they themselves are dependent on a service from a foreign country., Is it not a insult to the way of life in our country?  If the political establishments are skewed to another nation for a personal benefit - would it not lead to an unfair assessment in making political decisions. Just for argument sake, If Pakistan had the best medical facilities - will a Indian leader go there for medical service at a time of conflict within the countries ?

Whose fault is this for the current state of the country. In fact it is Congress that has ruled India for much of its post independence era. It has to take credit for whatever  progress that has happened and more importantly whatever that has not happened. If you have to think rationally - the policies and performance of the governments since 1947 have created more problems than they ever solved. Basic health and hygiene is absent in most parts of the country even today. Diseases like malaria, dengue fever which has been eradicated in most countries are still common causes of death in the urban cities of the country. We lose lakhs of people to this 'avoidable' illnesses.

India started off as a Soviet ally, and preached communist ideology in first 40 years of its self rule. It never became a communist state but with the government in all fields of business was essentially navigating towards that. And then the Soviet Union disintegrated and with the balance of payment crisis of the 1990s India started opening up its market to private players. Now after more than 20 years of anti-communist policies otherwise called globalization/liberalization, India is pertaining to a capitalist line of operation. It doesn't follow capitalism in its strict form either. It is somewhere towards it. So ordinary Indians have lived through both life styles. In spite of all this - health care system has not improved the way it should be. The leader of the government leaving the country for treatment summarizes its achievements in that field.

The common argument may be that the western countries are more advanced in science and technology and hence in health. So it would make perfect sense that India hasn't progressed because it is still a developing country. If this was true, why would Cuba be better in health care. There isn't any liberalization there. Life expectancy is higher in Cuba than in most scientifically advanced countries. Leaders from Latin America like Hugo Chavez, flew to Havana for medical treatment. So advancement of science promoted by privately owned huge corporations can only give better health care is a flawed logic. The government controlled Cuba medical system has proved it.

It is an under achievement in the health sector (just like other sectors) as a country. Poor health care - is because of serious government mismanagement in post-independence India.

We need to have policies that benefit our people. Blindly following the trend of the day - either communism or capitalism which works in other country (in a different set-up) is equivalent to a person forgetting that he has legs and dependent on a person who walks, to carry them around. They would take you to where they want and not to the place where you want.

The aspiration to live longer is universal. It would be a big failure if a huge country like ours is dependent on other nations for it. Scientific research has to be encouraged and health care needs are to be affordable to all. World class treatments should be in our cities and villages and not in New York or London. Indians are highly educated and scientifically smarter compared to others around the world. Their math and science skills are second to none. Technology has to be nurtured and promoted so that people from all over the world come to India for treatment and we do them all a service of affordable treatment at a reasonable pricing.