I am not an admirer of Ayn Rand, the high priestess of unrestrained individualism and laissez faire economics (Alan Greenspan was a chela). But I am tempted to quote her on our neta-babu raj. “When you know that in order to produce, you need to obtain permission from men who produce nothing, when you see that money is flowing to those who deal not in goods but in favours, when you see that men get rich more easily by graft rather than by work, and your laws no longer protect you against them but protect them against you, you know that your society is doomed.” What could be the tipping point for a crisis? BoP? Fisc? Inflation? - A. V. Rajwade
India's extra borrowing this year is almost equal to the total borrowing of the government of India in 2007-08. And with it the Centre’s total borrowing for this year will be over Rs 5,10,000 crore. This is more than a four-fold increase in the government’s borrowing in four years. - Senthil Chengalvarayan
Nobody in the political system realises that the historical window of opportunity for putting in lasting changes is very small. In our case, it is 10 to 15 years given our demography. If we don’t lay the foundation for wealth and prosperity in the next 15 years, then the India story is gone forever. You will then grow old, before you grow rich. - Pratap Bhanu Mehta
In many ways, a global slowdown/recession will be extremely useful for our political masters as the domestic problems can be attributed to that phenomenon over which we obviously have no control. The fact, however, is that most of the problems are home-grown. - A. V. Rajwade
The irony of all this is that 2011 was a milestone year that marked the 20th anniversary of the first wave of economic reforms of 1991 that Manmohan Singh, then finance minister in the PV Narasimha Rao government, unveiled. With firmness of manner that is uncharacteristic of him, Singh had said in his budget speech of that year: “Let the whole world hear it loud and clear: India is now wide awake.” Twenty years later, sadly, India’s policymakers are asleep at the wheel – and the opposition and even some allies of the ruling party are so cussed as to reflexively work for a stalemate on every move. The results of this are manifest in every aspect of the economic slowdown and the political polarisation. 2011 was, in every way, the year in which India lost its nerve. And, from the looks of things, the next year brings no certainty that things will get any better. - Venky Vembu
Professor Ian Little who was the PM’s teacher at Oxford, once advanced the idea that reform cycles in Indian politics got exhausted within five years. The radicalism of the Mahalanobis Plan did not survive the 1950s. Indira Gandhi ran out of steam before she had five years in power and resorted to repression. Rajiv Gandhi got derailed thanks to Bofors, and the NDA thanks to Tehelka. This time the Indian Miracle has been killed. When and if India regains its growth momentum is anyone’s guess. In the meantime, welcome back, the Hindu rate of growth. - Meghnad Desai
Unlike the Asian authoritarian political regimes that favoured political openness after becoming economically open, India is moving ahead with the reverse combination, and with the additional liability of weak coalition governments. To be sure, unlike Deng Xiaoping in China, Lee Kuan Yew in Singapore or Mahathir Mohamad in Malaysia, India has no effective visionary reformist-politicians who can ably negotiate political consensus on reforms. Prime Minister Manmohan Singh, who is in office but does not seem to be in power, appears to be an accidental reformer at best. - Rajeev Malik
You will see a different set of guidelines and difference in speed at which decisions are taken after February. You will see that. I am very hopeful, I am very optimistic that prime minister and his team have taken a view, have taken a decision, 'we will not let 2011 continue'. - Deepak Parekh
My thinking is that there are four inputs to budget. First one is revenues which are well below target. The budget itself had an estimation of some 18% growth which is supposedly some 8%, the expenditure growth which was supposed to be 3.5% is 10%, and the divestment proceeds were supposed to be Rs 40,000 crore, they are Rs 1000 crore not to forget subsidy that is out of control. So when you are making next year's budget; the last quarter's run rate for revenue growth is only 8%; then the government itself will not do what they project at 14-15% revenue growth. They will have to somewhere ballpark, if off the last quarter's trend and if that is the number of 8-10% revenue growth, divestment let us say is zero this year up to March, then would you allow them to say again Rs 50,000 crore for next year? Basically the four components, all of them are much different from all the expectations- revenue, expenditure, subsidies and divestment, and therefore, when you are making next year's budget, you will have to benchmark off last quarter's trend. If you were to project on that basis and not take numbers out of thin air, you will not be able to come anywhere near the budget number which the market and the government would be comfortable with. Therefore there will have to be some tax increases. Most of the excise of 2% which was still pending will be done, and maybe some corporate tax surcharge or something. In that context, at that time, if you say that you are going to do a few reforms, unless those reforms are done then and there and have a direct co-relation with the market in the short-term, we will not know at that time whether to focus more on the budget and their numbers and if there is a tax increase, or whether be pleased with the fact that reforms have happened or are promised. Hence I think this will take time. Also because the budget is so close to the end of the elections, I think it is completely wrong to think that as soon as the elections are over, government will start doing reforms because by that time, the results will be just out (between 4th and 7th March). The budget is scheduled to start between 10 and 15 March. So it is too close to suddenly change your complete view based on what has happened. And that also assumes it will be a relative victory for Congress so that they will be able to sacrifice mentally at least a Trinamool Congress the same morning and in the afternoon announce things which may not have been done if the results were slightly different. So I think that will take two-three months for them to form new equations and be confident about who is supporting whom at the Centre and whether Samajwadi Party (SP) is there or not. So, all these things cannot be done in the budget because it is too close to the end of the elections. - Samir Arora
Perhaps the Congress is in love with the ‘C’ in its name. Corruption was not enough. It had to become corrupt, casteist, communal and cynical. India’s tragedy is that there is no national level challenger to this party that is diminishing us all. - Pratap Bhanu Mehta
Religious reservations are bizarre. Consider this, one cannot convert his or her caste, but can convert their religion. So, could we see a scenario in the future in which a Hindu boy cannot get a job or college admission, but if he converts to Islam, he can get it under the quota? Are we incentivizing conversion? How can we allow such a policy to be even announced or be put in a manifesto, let alone take effect? ....... The problem is not with the politicians, who simply mirror and adapt to the environment. The issue is with the Indian electorate, or us. The great Indian mind is filled with prejudice. Centuries of persecution, discrimination even in the present day, and a belief that one's own kind is superior has led to these prejudices. These in turn have led to a haphazard democracy that is more cacophony than consensus. The ruckus we often see in Parliament is nothing but a visualization of the average Indian mind, of chaos and confusion about who we really are. ...... And until such time that most of us stay prejudiced, we will have the confused and mediocre leadership that we have right now. - Chetan Bhagat
If too many of our citizens believe that all politicians are corrupt (just recall the response Anna Hazare got), the other side is that the election propaganda reminds us that most political parties and their leadership reciprocate the sentiment: the only way they seem to know of getting elected is to “bribe” the voter through reservations, quotas, subsidies and other populist measures. (To be sure, culturally, we have nothing much against corruption: just look at the number of people who offer mannat to the gods for getting a son, a daughter married, or a promotion in job.) ...... If the voter is so wise as claimed, how is it that he elects criminals; gives the divine right to rule to dynasties; does not see reservations and quotas as bribes aimed at perpetuating differences? - A.V. Rajwade
In India, we have a combination of grinding poverty and a strong democracy, a combination that makes redistributive policies almost a given. - Manas Chakravarty
Subsidies as a percentage of total expenditure in the central government’s budget is now much higher than they used to be even before liberalization. ..... Central government expenditure on subsidies as a percentage of nominal GDP. For 2009-10, this was 2.3%, just a smidgen below the 2.4% it used to be in 1990-91. - Manas Chakravarty
Indian politics hinge on patronage—the doling out of opportunities to rob one’s countrymen. UID would make this harder. That is why it faces such fierce opposition, and why it could transform India. - The Economist
While it is an excellent policy goal to ensure that no one goes hungry, the manner in which the UPA government is going about food security is dangerous; it will worsen corruption and is quite likely to be counterproductive. The price of overloading the bill of rights will be paid in terms of the state's inability to enforce any of them. The PDS is independent India's biggest and longest-running scam. If implemented, the FSB will worsen the widespread corruption that is involved in the government buying, storing, distributing and retailing foodgrains. The UPA government's ideological blinkers do not allow it to see that there are far simpler methods to ensure food security. Conditional cash transfers are a far more efficient and liberal way of addressing the challenge. - Nitin Pai
The minimum wage in China’s town and village enterprises (TVEs), which account for much of that country’s manufacturing and export prowess, is the equivalent of about 64 cents per hour (it is three times as much in a special economic zone like Shenzhen). For a 200-hour working month, the wage in a TVE is therefore $128, or about Rs 6,600. The minimum wage in parts of India is no lower, and in most manufacturing plants is much higher, though India’s per capita income is less than half China’s (Kunal here - and productivity much lower). Is it any wonder that sectors that China vacates as it moves up the income ladder are being taken up by Vietnam and Bangladesh, more than India? ..... India’s history of government intervention doesn’t flow from market failure as much as creates it — like excise duty distortions which in the 1980s made this the only country in the world where TV-set assembly was a small-scale business! Research shows that some 85 per cent of the garment factories in India employ fewer than eight people; in China, which is the king of the garment market worldwide, less than 1 per cent of factories are that small. Market distortion has made a volume business into a small-scale business in India; our garment exports have stayed small-scale too. The essence of the reform programme of 1991 was to attack this approach to policy-making, to reduce if not remove the distortions. Twenty years later, however, the ancien regime is back with a vengeance — it was in the name of garibi hatao earlier, now it is in the name of the aam aadmi. - T N Ninan
UPA 2 put forth the Right to Education (RTE) Act under the new HRD Minister Kapil Sibal. Besides enforcing quotas in private schools, RTE has put such draconian restrictions and regulations that many private schools will be forced shut. Study after independent study has shown how India’s poorest have rejected government schools and choose to enroll their children in private schools - but the government has ignored them all and enacted laws that hurt the poor the most. - Live Mint
In the Programme for International Student Assessment (Pisa) international competition for children’s learning, India came 72nd out of 73 countries. The Annual Status of Education Report (Aser 2011) reveals that the proportion of Class 5 children able to read a Class 2 text has fallen from 53.7% in 2010 to 48.2% in 2011. The proportion of Class 3 students able to do simple subtraction sums is down from 36.3% to 29.9%. India is bidding to be a super-dunce rather than superpower. - Swaminathan Aiyar
Gujarat's education department recently conducted teacher aptitude tests for primary, secondary and higher secondary teachers. Only 33% of primary teachers and 48.68% of secondary and higher secondary teachers qualified by securing a minimum 50% marks. And yet, the HRD ministry's Statistics of School Education 2009-10 claims the state has 100% trained teachers at all levels in its schools! - Saira Kurup
Yesterday (23rd Jan), the head of the Maharashtra Anti-Terror Squad announced in Mumbai, to much fanfare and media flourish, that its ace team had cracked the July 2011 bombings in Mumbai, with the arrest of two persons – Naqi Ahmed, 22, and Nadeem Akhtar, 23, from Darbhanga in Bihar. ..... Mumbai ATS chief Rakesh Maria offered merciless details of the investigations, which took the ATS team to 18 states, led them to interrogate over 12,000 witnesses and review 180 hour of CCTV footage of the blasts. ..... But barely hours after Maria had finished preening in front of cameras, central intelligence and Delhi Police officials were rubbishing the claims – and saying that in fact the ATS had got the wrong man. How were they so sure? Because, they say, one of the arrested men – Naqi Ahmed – is in fact a Delhi Police informer who was to lead them to the masterminds behind the attack, including two Pakistani nationals. And, they further claim, the premature revelation of the facts of the case by the ATS on Monday had “botched up”” the investigations by alerting the masterminds, who had fled. - Venky Vembu
In a 33-state-and-Union-Territory study of milk samples by the Food Safety Standards Authority of India, 65 per cent of the milk samples from Maharashtra turned out to be adulterated. West Bengal had the worst results with 100 per cent contamination across the samples and Gujarat emerged with 89 per cent adulteration. Goa and Pondicherry had the best results with 100 per cent of the samples conforming to required standards. Water, detergent, fat, skimmed milk powder, urea and glucose were identified as common adulterants. - Times of India
Hazare failed to draw big crowds in Mumbai to witness his fast, and then gave up the fast after a day, a pathetically un-Gandhian performance. His said he had failed to persuade the government to introduce a strong Lokpal Bill, and so the reason for the fast was over. ..... In UP, campaigning against Congress will, by implication, mean campaigning for the highly corrupt government of Mayawati . What a fall for a Gandhian! - Swaminathan Aiyar
Like frenzied illiterates, Anna’s team members have decided that the job of passing the Bill in Parliament is solely the Congress’s responsibility. - Prashant Panday
The India Against Corruption (IAC) crowd represents a modern, outward-oriented, aspirational generation spawned by the economic liberalisation of the 1980s and 1990s. On the other hand, look at who they have chosen as their leader: Anna Hazare, an anti-modern, moralistic, finger-wagging old man who lives in a time-warp. - R. Jagannathan
Residential prices in Mumbai have risen at an annual average of 14.6% in the last 10 years, according to Merrill Lynch analysts. That is 50% more than the average price rise in the preceding 30 years. This anomaly has to correct to even out the growth rate, they said. - DNA
The World Gold Council estimates India has the largest stock of gold in the world with households accounting for nearly 18,000 tonnes. At current prices, this is valued just a tad less than $1 trillion. - Live Mint
Do-gooder economics and the Lokpal - T N Ninan (Brilliant, must-read essay on unintended consequences and more)
Lokpal a shortcut that will not work - Amitabha Pande (I forwarded this link - and the one above - to Arvind Kejriwal's suggestion-seeking email, let us hope someone at IAC took notice)
India nowhere: How we lost the plot in 2011 - Venky Vembu
The UPA and it's 1970s mindset - Anil Padmanabhan
Can the UPA borrow it's way into the high growth club? - Senthil Chengalvarayan
Striking parallels with 1991 - Pramit Bhattacharya
How ‘national’ policies have ended up being anti-national - R. Jagannathan (Unintended consequences galore)
Fertiliser folly: How to benefit foreigners and shoot ourselves - R. Jagannathan
Manmohan Singh: The reformer who never was - Sadanand Dhume (Is he even a proper economist? One for future historians to debate, perhaps)
The costs of democracy in India - A. V. Rajwade
Is a banking crisis brewing in India? - Haseeb A. Drabu (Very pessimistic essay, even by today's standards)
How the US lost out on iPhone work - New York Times (Many competitiveness lessons for India here)
India's private schools face closure - New York Times (Here is another ticking time-bomb)
Education in India at the crossroads - Ajay Shah
Why no one ever forgets a good teacher - Saira Kurup
Video: CNN-IBN predicted the disruption in Parliament - CNN-IBN
Stop dreaming of a Lokpal - Venky Vembu
Lokpal may go the Bofors way - Swaminathan Aiyar
