Punarabi Jananam, Punrabi maranam

Punarabi Jananam, Punarapi Maranam

As I look back at he lost years which withered away, I feel very much upset and throttled. What did I achieve? The fleeting time in the formidable age of my life: time spent nonchalantly, wasted and forgotten!

To rise from a great fall, one requires formidable courage, considerable luck and Divine Grace, and above all, destiny. Destiny, changes the course of life, alters outlooks and rewrites perceptions. Time, is a great healer, and helps man to gain experiences from foolishness, fine-tunes his capacity, brings out all his perfections, makes him think ahead of times, and makes him great, as destiny smiles on him. It makes him sober, steady and stable. He endures the present with past livid memories of Time.

What is life? What is its meaning? Tagore, eloquently and beautifully describes the boy at the age of 14, his whining ways, meandering paths, his tantrums, moody behaviour at times, restlessness, oscillating attitudes, best of times, etc. At 20, the boy sheds his Youth and he changes in his behvaiour, attitude, physically and mentally. He often finds fault with the world. At 25, a huge transformation to adulthood. A fascinating change that nature bestows on a human being. The age of adolescence brings all round change in a man; he becomes handsome, radiant. His attitude to life changes. His behvaiour changes instantaneously. His likes and dislikes vary. His voice quivers. He feels lonely. He seeks championship. This attracts him to the opposite sex. Life at 30 brings maturity and responsibility. He comes to face life. It is at this age, his championship ends in marriage. Blissful days follow. Championship strengthens. As he reaches 40, he becomes philosophically inclined, though buries himself with the bustle of life’s chores. As one is near to fifty, he becomes mature. He transforms himself. He leans more on philosophy to understand the ‘elixir of life’, and examines his life with contentment and disgust of his life, which oscillated like the pendulum. As he becomes sixty, he is in the midway- the fast life and future. Darkness seems to engulf him, people fade, near and dear ones slowly disappear. He sits forlorn, sad and in solitude, reflecting on the good, bad and ugly of his life. Reflection after reflection. Memory pulls its strings as he sits in melancholy, forlorn, and with musings of the good old days of the Past often coming in flashes.

William Shakespeare, the bard of Stafford Avon, has beautifully versed the seven stages at different ages of Man. Ben Johnson, his contemporary has poetically emphasized for a short life for enchantment rather than long for withered ending.

Lord Krishna in the Bhagavat Gita sings a symphony to drive home the two pillars of extremes, as life cycles are meant to be endured, cherished and enjoyed, which might oscillate from one corner to another. From womb to grave, man thinks that he is born to enjoy life in its pinnacle form. But before and after, he knows not what he was and what he will be. Adi Sankara’s “poonarabi jananam, punarpi maranam”, sums up all. Life is a mist, with birth and death cycles. Birth, Death, Rebirth…..

Petroleum companies are fleecing people?

Indian petroleum companies are shedding crocodile tears for no apparent reason.

Myth: 1] Indian oil Corporation has gone on record and stated that it incurred a loss of Rs 3,388.89 Cr in the first quarter of current fiscal as against a nett profit of Rs 3,682.83 Cr recorded in the first quarter of last year.

2] The Company made a net profit of Rs 10,000 Cr in 2009-10 and the Dy Chairman, Plg Commission states that this is inclusive of the 50% subsidies provided by the Government to the tune of Rs 20,000 Cr during 2009-10.
3] It is a fact that Government revised the prices of petroleum products by Rs 3/- in the last quarter of 2009-10, the benefit of which would have cascaded to 2010-11, and in the second instance, another adhoc increase, just a month ago, raising the price of petrol by Rs 3.50/litre, diesel by Rs 2.00, LPG Cylinder by Rs 35/-, Rs 3/per litre for kerosene. Kerosene is mostly used by the Below the Poverty Line families.

4] Oil companies contend that they incur $ 3 barrel on processing of every barrel of Crude oil. This year (April-June, 2010), they state that their gross refining margin (GRM) was Rs 7.36 per barrel.

5] The oil Companies admit that ‘refining margins were low due to inventory losses on oil as oil prices had come down compared to the closing stock(April 1).

While oil companies put forward such arguments to prove the acute under pricing in the import of crude, and the under recovery caused by the sale of oil, which is only 50% subsidized by the Government, they argue for increased prices from the consumer. Simple Law of demand and Supply pricing.

Reality: 1] One should go into the mathematical calculations of the purchase of Crude oil, quantity of Crude oil purchased, what is the demand: supply position of Petroleum products in India, how is the pricing done in the existing circumstances, and when there has been no appreciable increase in the petroleum prices in the international market, why are the Petroleum Companies in India are on a song, and hungry for more revenue? Now, how could the profit of Rs 3,682.82 Cr during the last first fiscal, turn into a loss, assuming that Government did not part with Rs 1,694.45 Cr as 50% of its share in the loss. This is only a notional adjustment in the balance sheet. Loss is a loss, whether it is subsidized by people or Government.

Dr B K Chaturvedi Committee went into the issue of usage of Kerosene oil in the Country. His findings have been documented. The study revealed that the use of kerosene has come down from 40% to 51% used earlier, only 1% is used for cooking purposes; out of 39% PDS Kerosene, 18% finds a way to the black market to adulterate diesel, 24% of rural consumption used for lighting is in villages where there is 100% electrification. Only 40% of the kerosene finds use. The rest is not used. Government’s subsidy for kerosene is Rs 17.92/a litre. What happens to the kerosene which is said to be distributed? The distribution is only in paper. Why can’t the Planning Commission do a detailed study to unearth the truth?

2] The truth is Petroleum companies’ profits are notched. They are virtual profits. How can any body say that factoring government subsidies, Companies make profit? These are monopoly Companies who are answerable to nobody.

3] During the year, the Government revised the petroleum prices at least on two occasions. Yet, why should there be a steep loss. Is it operational efficiency? Seepage? Misue?

4) How come such a vast change in refining? Has the government gone into the pricing of refining? In the first instance, they use the term cost of processing of Crude oil, and in the second case, they say gross refining margin. What does these two mean? Let the Economists of North bloc ponder over this aspect

5) The oil inventory showed it held excess stock. This stock had a price that was higher than the prevailing price as on 1 April 2010. The Oil Companies also admit that negatives on account of exchange losses due to Rupee depreciation and higher provisioning of bonds(the Government bonds that was given in lieu of 50% of the under recoveries). If they contend that these anomalies must be factored into the price of petroleum products, it is not fair and decent price determination.
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Due to dollar depreciation, the invoice value of crude import should have come down, as the prices are paid in dollars. There is a comfortable cushion in this. In India, you are selling in Rupees. You don’t link the price to the Dollar. Hence twin advantage. Please use the same matrix for comparison.

The Company argues that the nett revenue lost by IOC was Rs 11,013.58 Cr. It was compensated Rs 3,671.26 Cr from upstream firms like Oil & Gas Corporation, GAIL and Oil India. Consequent to non revision of retail selling price in line with the international prices, net under realization was Rs 7,341.59 Cr. The usual practice was that the Government reimbursed Rs 20,000 Cr for under recoveries of IOC, BP, and HP during 2010-11.

The oil Companies agree that the net sales during 2010-11 went up by 23% to Rs 71,257 Cr. IOC alone had 17.254 million tones of petroleum products against 16.703 million tones duing the corresponding period (April-June 2009) while it exported 1.058 million Tonnes. The Refineries refined 13.278 million tones of Crude oil against 12.466 million tones a year ago during March-June of 2010 and 2009. The refineries are said to have clamped Rs 6.50 per litre as charges.

The oil Companies do not do any homework and incapable of working an alternate strategy. One aspect that Planning Commission should look into the capacity of motor cars being sold in India during a year, and whether the present infrastructure has capacity to withstand them. Secondly, if the demand for petroleum products could be brought down through planning, it will have a cascading effect on the supply and pricing. Merely to boost the manufacturing output, if uneven growth in manufacture of motor cars is made, the infrastructure would break down. It is good to draw a road map to build 7,000 km of highway Roads. But the wear and tear, its optimum capacity and longevity are factors that needed to be factored in. It can’t be utopian. Banks find it easy to provide vehicle loan as the motorcar is a tangible asset. But whatever incremental growth that is achieved should be practical and long withstanding otherwise, it will become Robinson Crusoe paradox situation.

Tax the Politicians

An Open Letter to the Finance Minister of India

We have a pragmatic Finance minister at the helm. He is a seasoned Politician. A friend of the Left, a Parliamentarian of vast experience, and very close the source of Congress power 10, Janpath. 5 and 7 Race Course Road are not relevant when Congress leads the coalition and is governing the Country. India, perhaps, due to practicising grass root economists, and Cambridge, Oxford and Harvard studied Economists, India never have to bear the holocaust of the Economic meltdown or world economic crisis. We have laid a road to progress. We know the path to prosperity. We will be guided by our goals and pragmatic vision which will take India to the pinnacle of Glory. Already BRIC is supposed to be akin the roaring Asian Tigers of the 90s. The world will be at out feet, sooner or later.

Our Finance Minister is hungry to tax the people. Already, he has made it very clear that people will bear higher charges for the petroleum products. Still, the under recovery the GoI will bear is estimated at Rs 20,719 Cr. National Rural Employment Guarantee programme (NREGA), Sixth Pay Commission, loan waiver for agricultural sector (Rs 70,000 Cr), subsidy on fertilizers, the FM in his election year budget procrastinated that the inflation will cease, and the fiscal deficit would be brought down considerably in a two year frame. When India recovers fully, our FM promised that we will breach 9% growth. In the post-Lehman period (2007-8), India was able to garner a shade below 6% for a couple of months and could settle down to 6.7%. In spite of the shadow growth, India attracted an investment of 25% of the GDP.

With having stabilized the enormous liquidity available in the System, our Finance minister is looking for greener pastures for begetting more taxation.

Already he has reached the super saturation level as far as TDS is concerned. The only sector from where government regularly gets tax is from the Tax deducted at Source head. Another head is the Services Tax when introduced by India’s present PM when he was Finance Minister yielding Rs 500 Cr has ballooned to Rs 60,000 Cr. According to United Nations Conference on Trade and Development (UNCTAD), India attracted FDI worth $ 34.6 billion, while the outward FDI was $ 14.9 billion in 2009-10, and by 2012 expected to be third highest economy for FDI in the world in 2012. The Indian exports are in strong weather with $ 185 billion, expected to surge $ 200 billion. The Goods and Services Tax is expected to increase the GDP upward by 2- 2.5% with 10% increase in exports. India will emerge as a $ 2 trillion economy.
The Country is happy to know that the Finance Minister is going to give a fixed salary of Rs 80,000 every month from the present Rs 16,000/- to every Parliament member, and correspondingly, the state assemblies will also increase the emoluments of Members of the Legislative Assemblies. These members are doing Public service and devoting their precious time for public good. With Parliamentarians in good mood, the nation can expect lot of good from these people who will steer the Country to great heights. Since, every Service is taxed in India, the finance Minister could reap a harvest, if he were to impose Service Tax on the Politician from the highest to the lowest, so that this constituency which has a good numerical number would provide many Crores to the exchequer. The Ministers at the Centre and State, panchayat members, municipal councillours,Corporation members, District Panchayat members, Rural Panchayat members, should be made to pay Service Tax. Why exempt “public service” from taxation? No taxation without representation, cried the Boston Tea party members. Representation with taxation should be our motto. Is it not, Finance Minister?

Do we want to destroy our fragile eco System?

If you are very choosy about God’s Own Country, you will describe a number of positive things that is unique to the state. You will also list out Kerala’s negativity, which will consume a larger paper than all the good that you wrote. Kerala is nevertheless a tourist’s paradise, for every year, a large trek of people from countries across the globe which are not noticeable in the atlas, land, come and seem to enjoy.

Kerala’s past, in the opening years of history has been formidable. It was known to the ancient sea faring tribes, voyagers, traders, merchants. There have been regular plying of vessels carrying riches from the Orient, and they take back invaluable pepper, spices, and other remarkable crops, which had great value in the international markets. Kerala people knew the stories of Arabian Nights much before other parts of India and the world were aware of. But these traders came strictly to trade, make a barter trade, bring their goods, take goods from Kerala. When Jesus Christ introduced to the world, Christianity, his direct disciple St Thomas, came to Kerala. There is vivid history of Christianity having spread to the four corners of Kerala. Christianity came here, much before it went to Europe. Islam also spread to Kerala much before the world was aware of this religion. The Jews came here in herds, when they had to run away for their lives. In the 15th century, we have seen the European powers one on the tail of others, coming to trade, colonizing the country and looting its wealth for their well being. English, French, Dutch, Portuguese, all belonged to this School.

It has been in the blood of Kerala people to voyage. Set sail by sea. This adventurous trait of the ordinary Kerala man, and the appetite to do hard work, and the vision to succeed, made him leave Indian shores in search of greener pastures. As a single person, the ordinary Keralite called mallu, in North India, always performed admirably, but as a team, there was always poor performance. This limitation of behaviour had strayed to every part of life of a Keralite. When six economists are gathered, there are seven opinions. But when six Keralites discuss, they will give ten opinions.

Opening up of educational institutions by Christian missionaries, had a large impact on the educational field. In the old Ernakulam, there were only two Government Colleges, one Maharajas College and another Law College. All the other colleges were privately run. There is a powerful educational lobby in Kerala, where education is both in private and public forms. Dr T M A Pai would have conceived the privatization of commercial education, but it was Kerala, who developed private education in such a big way. Though there was higher education, and many educational pursuits, there was no matching economic or industrial growth in Kerala, which could absorb the talents. Central investment was/is the lowest in Kerala. The private sector is also reluctant to set up their units in a big way. All these have made Kerala absorb consumerism, and not manufacturing activity. Trading is a way of life. There are more malls in Kochi than in a metro like Bangalore or Hyderabad. People’s craze for gold is higher here than in any other place. One Economist in a lecture pointed out that Kerala required more policing because of its craze for Golden jewellery which accounts for sizable investment in each household. His comment should be taken seriously. Second is fashion consciousness. I do not think, there is any other place in the world, where fashion is part of culture. Tradition is breadth. Festivities are part of every Keralite. Hospitality is a trade mark, special to Kerala. The religious cosmopolitan culture has held the state proud. But today, the name of Keralites crop up everywhere where a terror act has disturbed the public peace.

Militancy of labour has been benchmarked with Kerala, rightly or wrongly. This has been the chief reason, why industries fear to thread to Kerala territory even though they see lot of potential. In Kerala, they say there is rampant unemployment. But if I look around for a car driver, carpenter, plumber, electrician, I seldom get one. In Kerala, there is more Voluntary Unemployment than in any other state because the Gulf remittance from one member in the family takes care of the other members of the family making their both ends meet.

Vallarpadam Container terminal, growth of IT industry, growth in Kochi Export Processing zone, bio-technology and industrial hubs concept promoted by the Kerala Government has started yielding results. Cochin port, Nedumassery Airport, are all on their feet booking profits through improving their business. This is a good sign.

Then there was a Jairam Ramesh effect on Kerala based export merchandise. From 2007-9, when he was the Minsiter of State for Commerce, he highly patronized the Kerala sectors, tea, marine products, cashew, coconut, coir, and rubber. The price of 1 kg of rubber is Rs 175/-. This has been made possible by Jairam Ramesh effect. Every Saturday/Sunday, he used to tour Kerala, and actively participate in raising the standard and productivity of these industries. A tiny industry like Coir exports rose from Rs 475 Cr to Rs 800 Cr. Spices exports, got many schemes, Spices Park, branding of spices produce, participation in international exhibitions, developing use of vanilla, etc were outcome of his support.
Now let me come to Athirapally Project. The Kerala Government which never bothered to use Mr Jairam Ramesh, even though he was more than friendly to the Kerala crops, now accuse him of playing spoilt to Kerala’s development. When he was Minister of Commerce, I had taken him to Kodungallur, and showed him the historical monuments there, and explained to him. Based on his note, Central Government gave a bonanza of restoration of Kodungallur as a historical monument and sanctioned Crores of Rupees.

Athirapalli is one of the most bewitching waterfalls in Kerala having a high percentage of aquatic and eco diversity in the State. The outlay for the entire project is estimated at Rs 675 Cr. The expected power production is arrived as 163 MW. The dam is supposed to come up in the east of Chalakudi, along Chalakudi Annamali inter-state highway (Vazhakal forest division). The dam is expected to have a height of 23m and will have a width of 311 m. The dam is projected as a peak load station where Water will be diverted via penstock (pipe) to turbines downstream. A dam toe powerhouse downstream of the dam will be built to maintain Athirapally-Vazhachal Waterfalls. On the basis of the expert committee of River valley projects, power should be generated only between 7-11 p.m. during Feb1-May31 which are the driest months in the Kerala calendar. It has also ordained that 7.65 cubic metre/second (cumec) of water over the Atirapalli falls must be maintained always.

Environmentalists and public spirited hydrologists argue that the river experiences the maximum flow during July (102 cumecs) During the dry months of Feb,March and April, its flow is reduced to 14-15 cumec, and if the water level be reduced to 7.65 cumec during the dry months, there will be no waterfall at all. It is also argued that for power generation, 7 Km long penstock will absorb 86% of water from the dam, which indirectly will leave people living upto 7 kms devoid of drinking water, as no alternate sources exist. The project being a peak loading station, Chalakudi River will experience heavy fluctuation in its flow during the 4 hours when power is generated during which time the release of water can be as high as 130 cumec. Overflowing problems and affliction to downstream Chalakudi River diversion scheme which irrigates and provides drinking water to way side villages and panchayats in Trichur and Ernakulam district will cease. The riparian forests of the Chalakudy River have revealed the existence of a thick riparian vegetation of more than 10 metres width for a distance of 10.5 km downstream from Peringalkuth, covering an area of 58.5 hectares. Out of this, 26.4 hectares lie within the Vazachal area, including three large islands densely covered by riparian forests.
The riparian forests of the area have been found to be characterised by the presence of typical riparian species of plants, in addition to evergreen and semi-evergreen species. Out of the 319 species of flowering plants identified from the study area, 24 are endemic species of the Western Ghats and 10 are rare and endangered.
Moreover, the Chalakudy River is known for its diversity, as it contains 85 species of fresh water fishes out of the 152 species known from Kerala. Among these, 35 are endemic species of the Western Ghats and nine are considered to be endangered. Highly endangered Cochin Forest Cane turtle and the river bed is the nestling site of Malabar pied hombele birds. The area is supposed to be the best elephant conservation spot. . Any disruption to this ecofragile ecosystem will spell disaster.

The Power Engineers also feel that reduced water flow would not even help production of 26.7 MW as against 163 MW envisaged (234 million units of energy). In such a case, the cost: benefit analysis vis-à-vis the investment costs, running costs, maintaining costs, and recovery of costs would be unviable. The notional cost for the destruction of ecology and ecosystem would be unimaginable. Kerala’s density of forests has come down because the estuaries have been destroyed. Sea and Coastal erosion is taking a heavy toll due to unscientific dredging. Our fish sanctuaries have vanished, and bird habitats have disappeared. As per the state records, there is a transmission loss of 3020 million units. Why don’t we try to curb transmission losses by at least 10 to 15%, which will allow a nett energy of 303 million? The other way, is increase productivity of the existing hydro electric projects by up-grading the machines. Hydro electric projects are no answer for restoring balance to the power needs of the state. Mr Nehru called Bakranangal as the temple of India. Today, there are many alternate sources to produce electricity. And the cost of producing power is also cheaper.

In view of so many negative features that deters go ahead for the Athirapally hydro electric power station, can we blamed Hon’ble Shri Jairam Ramesh alone. We have to give solid arguments countering each of the points. Our eco systems are already overburdened. Any callous attitude or action will cause catastrophe tomorrow? We do not have the right to destroy the fragile eco-system which belongs to tomorrow’s generation.

Finance Minister's Chicken & the Egg Econometrics

On the one hand there is a clamour against price rise. On the other are various restrictions on imports. This way, prices will remain high and we will continue to see more and more tinkering with interest rates. The problem is that high interest rates raise the cost of capital and, therefore, discourage investment. When the rate of growth in investment reduces, growth suffers. Lower rates of growth are clearly unacceptable, so are high prices. But with high tariffs and high/vague protectionism, we will not be able to help neither the slowdown in growth nor increase in domestic prices.

Look at the recent hike on June 25, 2010 in Petroleum prices. The increase was (+) Rs 3.50 for petrol, (+) Rs 2/- for diesel, Rs 3/- more for kerosene, and (+) Rs 35/- per LPG Cylinder. The increase is across the board. According to Government, subsidizing Petrol companies which show book profits on sales price of petrol + Government subsidies which causes 5 digit profits cannot be afforded by the nation. The subsidy burden is transferred to the people, whom the Government feels, have paying capacity so that vulnerable sections who do not have paying capacity can be helped through specialized subsidy schemes. India is after all a benign socialist democracy. Economic pundits and intellectual economists who have been advising the Government have averred that the hike in petroleum products will have an impact less than 1% on headline inflation which is hovering around 10.16% making it rise to 11%. The disparity between the Wholesale Price Index and Consumer price Index which was very high has been narrowed down, and the food inflation has been brought down to 12.92% from 16%. To further counter check inflation, RBI has increased the repo and reverse repo rates which today stand at 5.5% and 4% respectively.

The Finance Minister’s cautious budget had placed fiscal deficit at 5.5% of the GDP. His expenditure was estimated at Rs 11.09 lakh Crore, while tax and non tax revenue were expected to yield the state Rs 6.82 lakh Crore. Fiscal deficit for 2009-10 was 6.9%. Rolling targets for fiscal deficit for 2011-12 and 2012-13 has been expected to come down to 4.8%. Very commendable progressive budget compared to the deficit finance budget of earlier years. Forget, it was the Congress that ruled the country and the Finance minister was from one of its ranks.

Who said that the Public Distribution System is not in order? The 57% of the targeted 652.03 lakh Below Poverty Line people are covered for which an outlay of Rs 64,929 Cr was ear-marked. The Government has fixed Central Issue Prices (CIP) for APL at the purchase price of FCI, so that BPL could be supplied at 50%of FCI’s economic cost. But with all this spending the incidence of poverty should have come down. But it has gone up. Government wants to preserve money for the Food Security Programme to obliterate poverty by providing one square meal a day. Already 100 days compulsory employment programme has emancipated the capacity of many, claims Government. There are many who want to remain ‘voluntarily’ unemployed. These people are in the ‘you can take horse to water but cannot make it drink’. According to the study conducted by Dr B K Chaturvedi Committee, it was found that 39% of PDS was diverted and 18% reached the hands of those who used it for adulterating petrol. The Committee also observed that rural use of kerosene for lighting has come down to 40% to 51%, and hardly 1% is used by BPL families for cooking purposes. A shock assessment was that 24% of rural consumption going to states for lighting where there is 100% electrification. Often kerosene oil reaches the hands of the unintended. The difference between APL and BPL prices provide strong incentives for illegal diversions to the market. The number of BPL families varies according to the State list, Planning Commission figures, NCAER, etc. A new study-the multidimensional poverty index(MPI)- by Oxford Poverty and Human Development-UNDP initiative revels that there are 421 million MPI poor spread across Bihar, Chittisgarh, Jharkhand, MP, Orissa, Rajasthan, Uttar Pradesh, West Bengal(in India) compared to 410 million in the 26 poorest African countries put together. The MPI assesses poverty on the deprevations on a host of key factors. How can BPL inspite of heavy subsidizing multiply? Is Malthusian theory at work?

The prices of vegetables and other food items have been going up steadily. The manufacturing growth has been accelerating. Share market is steadily galloping. However, there is a short term shift is noticed from equity and reality markets to risk free, capital guaranteed deposits in India. This is the reason, that despite the purchasing power among the middle class, white collared, ethnic population, etc, invest in Fixed Deposits though the returns are marginal having eroded due to government’s wild fetched theory of low interest regime. When interest is lower than inflation, it is not a healthy sign, forgot the Economics studied rulers and advisors in the Government.

Surpringly for Government, Spectrum auction brought Rs 70,000 Cr to its coffers. Petroleum hike reduced the subsidy burden on the Government. Base rate will enable the Banks to squeeze the common man, advantage multinationals, so that more paper interest will accrue, and the balance sheet will be green. Even though all the bank top executives shook their head together when an internal committee of RBI had recommended replacement of erstwhile BPLR system with base rate regime. Now Bankers started having second thoughts. If the borrower refused to accept the ‘base rate’, there would be two set of interest bearing loan accounts- one with the old rate, and one with the base rate. The bankers have requested RBI to add a sunset clause to its earlier notification asking banks to benchmark lending rates on the base rate effective from 1 July 2010. It was announced that the RBI will give the Banks an extension of a year to follow the base rate. Should not the notification anticipate legal problems, before the announcement? Government bodies become wise after the event. That is what Harshad Mehta taught the Government. Limping export sector is grouping in the dark, awaiting Domiciles Sword at any time. Half of the Stimulus outlay will be removed says grapevine from Delhi. That would add to available surplus. Finance Minister has already announced disinvestment to the tune of Rs 24,000 Cr. Another shedding of 2.5% in the nationalized Banks, Insurance Companies and navaratnas would easily fetch him Rs 25,000 Cr. With all these monies on his chest, the Finance Minister is sitting on a chest of money. If P Chidambaram can write off Rs 70,000 Cr as farm loan waiver, why can’t his successor do much more? Provide Food Stability to the extent of Rs 1, 00,000 Cr?


Has the Finance Minister heard of Nils Gilman, who authored the ‘Deviant Globalization theory?’ In our economy, there are illegal unrecorded transactions like flow of unaccounted money, black money transactions in financial, real estate, energy, drugs, organs, hawala transactions, which can torpedo meticulous planning in the controlled economy. Swiss Bank accounts? Every body promises to bring the money, but nobody has. We need to vigilantly and vigorously pursue the agenda that we have written. Finance Minister should be slow when undertaking the exercise of taxation which he thinks is the only way to bring sunshine to India’s fragile economy, a philosophy exploded by Dr Montek Singh Aluwahlia at the Devil’s Advocate programme.

Kochi Port wants a Patron

We talk about Imports and Exports. We talk about shipping capacities. We also talk about containerization. Seldom is break bulk cargo shipped, as the modern ships are not built to carry break bulk cargo. Mother ships call at various Ports. There are voyages to Europe and United States once in a week. As transshipment Ports were not available, the Indian cargo bound for Europe/America had to go through hub Ports like Sri Lanka and/or Dubai, and then they are dispatched to Europe/USA. What happens in such situations is, the turn round time for cargo diversion is more, making shipping costs high, and the time schedule in respect of receipt of Cargo also about a month. The feeder vessels who make journey to and fro Colombo and/or Dubai, will be costlier compared to the shipping cost, if the merchandise is conveyed through a mother vessel. There is also no break off time at the hub Port.

Cochin Port is one of the best ports, an all-weather Port in India. With the fact that there were regular visitors through sea to Kerala from time in memorial, sea routes have been designed, mapped, and virtually available. Yet, in terms of income from cargo, why is Kochi lagging behind other Ports like Tuticorin, which was set up in 1985 only. People attribute it to the labour strife. But the fact of the matter is, labour strife is prevalent but the more important aspect is political apathy to the development of Cochin Port. The Port authorities are vexed that around 60 lakh tones of Palmoil is imported into India; but its import through Cochin port is banned. Inspite of the territorial ban, palm oil is abundantly available in Kerala. Why to deprieve revenue for the Cochin Port only. On what basis or logic? What is Cochin’s loss is Mangalore, Chennai and Tuticorin Ports gain.

Kerala historically is a neglected state. There have been top political bosses in Kerala who had a hand in running the Government of the day. Shri R K Shanmugham Shetty, the last Diwan of Cochin was India’s first Finance Minister. Another great name was that of Shri V K Krishna Menon, who was left and right hand of Mr Nehru.. Kerala had surplus electricity, which it sold to neighbouring states. The income from sale of electricity was a revenue head in the State budget. Kerala has 44 rivers, and water everywhere. Today, in terms of per capita consumption of water, it is in the 20th place, lower down to Rajasthan. The National Highway stretch is very bad compared to the stretches elsewhere.

Kerala’s more than 1.5 million educated have migrated to West Asia, Europe, America, etc. Around 0.7 million are working in different parts of India. According to Government’s statistics, of 20 million expats from India, 8 million are in West Asia (most of them from Kerala). The remittances from West Asia are higher in volume (no of transactions) while United States NRIs lead in absolute value. It is also a fact that India account for about 20% of remittances to developed countries. A recent phenomenon noticed is that the people abroad do not use the money in share market operations and real estate deals, though valuation are at such amazing levels, but invest in risk free capital guaranteed deposits in banks. That is why, despite the low interest rates offered, the Deposits in Banks are swelling. AP (IT) accounts for 22% of the remittance, Maharashtra has 15%. Kerala constitute the highest 55%. RBI acknowledges that $ 40.296 billion is the inward remittance which in value is higher than the Foreign Direct Investment in India.

New generation ships are not coming to India, least of all to Kerala. Newer ships coming on-line are able to hold 2/3 times as many TEUs as ships as old as a decade. New ships are faster, undertaking more voyages than the older ships. The number of containers sucked up by new ships is manifold compared to the older ones.

There are destination wise Ports. Ports which have imports and exports in tandem. Some are only Ports having export consignments. There are some other Ports which have import priority. There are Internal Container Depots and Container Freight stations. ICDs are beyond 100 Kms of a Port while CFS is set up adjoining the port also to avoid congestion. Now, if the two ways (Import/Export) from a Port is brisk, then the problem of availability of Containers is not a problem. Otherwise, the container gone, or the container that has been off loaded, has to be transferred in an empty state, for which railways charge freight, if by Road transport it is uneconomical. Ages of the containers are also going down. So, there can be a compartitative cost only if the net imported container trade in volume compares well with net export portion.

The problem of Ports is compounded by the interpretation of tertiary policing agency like the Customs, Central Excise, DGFT, etc. Indian government publishes tariffs and import tax rates, but they are not transparent. There is no single official publication that includes all necessary information. Importers must consult separate tariff and excise tax schedules as well as any applicable additional public notifications and notices to determine current tariff and tax rates. Furthermore, different classification nomenclatures for tariffs and excise taxes cause confusion, even though they are aligned at the 4 digit and 6 digit levels. . India continues to maintain a negative import list. The negative list is currently divided into three categories: (1) banned or prohibited items; (2) restricted items which require an import license; and (3) "canalized*" items, importable only by government trading monopolies subject to cabinet approval regarding timing and quantity. India has liberalized many restrictions on the importation of capital goods. The government allows imports of second-hand capital goods by actual users without license, provided the goods have a residual life. The laws governing customs duties are the Customs Act, 1962 and the Customs Tariff Act, 1975. The Customs Act, 1962 is the basic Statute which empowers, under Section 12, duties to be levied on goods imported into or exported from India. The categories of items and the rates of duties which are leviable have been specified in two schedules in the Customs Tariff Act, 1975. The first Schedule to the said Act specifies the various categories of import items in a systematic and well considered manner, in accordance with an international scheme of classification of internationally traded goods – termed ‘harmonized system of commodity classification’. Different rates of duties are prescribed by the legislature on different commodities/group of commodities mentioned in the first Schedule. The duties are levied both on specific and ad-valorem basis, while there are few cases where at times both specific and ad-valorem duties are also collected on imported items. The Government of India applies discretionary customs valuation criteria to import transactions. U.S. exporters have reported that India’s customs valuation methodologies do not reflect actual transaction values and effectively raise tariff rates. Indian Customs requires extensive documentation. Processing delays often occur. In large part the delays are a consequence of India’s complex tariff structure and multiple exemptions, which may vary according to product, user, or specific Indian export promotion programme. The Government of India fixes minimum import prices for certain imported products.

The exporter/importer may have to study a lot of theory to do foreign trade. Our government, even though the export value had quadrupled from $ 44 billion in 2003-4 to US $ 185 billion in 2009-10, fails to give importance neither to the export sector nor improving its logistics and infrastructure.

Contradictions in Planning

Indian economy has withstood the torrential economic crisis of 2007-9. That is what the Government wants us to believe. Double dip growth cruve, we are at the fag end of the curve, and what remains is an inclined growth. It is raining cats and dogs, and our agricultural growth looks promising. In the end of the last fiscal, contrary to the Planning Commission’s expected growth of (-) 0.20% while, the agricultural growth posted (+) 0.20%. Quite often, planning commission’s growth figures are not only wrong but goes astray notwithstanding that they are only supposed to Plan, write the guidelines, question the achievable or non progress made. A project is included it in the
Plan, but the Commission is unable to ear-mark actual outlays due to funds’ volatility or shortage. Like sure sciences, economic planning is subject to rational or irrational human behaviour which can be contradictory to what could have been imagined. What are Plans? Mere estimates or one’s real assessment of growth, development in mathematical form.

The Union Finance Minister when he unveiled the budget, pictured a scenario of modest to good growth based on his premise that the world economy was growing, blooming, and zooming. However, in view of the carry over of the crisis-riddled economy, he had to impose certain taxes, increase certain surcharges, maintain the equilibrium in some areas, be considerate in some other areas, and be tight fisted in areas where lot of help has been given. The first step was when the prices of petroleum products were increased in March. The feeble voice of the Opposition, who became men of straw, did not have the vigour to shout. Hence kept quiet. Emboldened by this silence, again, on June 25, the Group of Minsiters (like the proverbial monkeys- see me not, hear me not, no speak) decided to increase the petroleum prices at the rate of Rs 3.50 per petrol, Rs 2.00 per diesel, Rs 3/- per kerosene and Rs 35 per LPG Cyclinder. Government’s argument was, though the oil companies showed profit in their balance sheets, it was factoring the subsidy given by government, which was causing a drain on the exchequer. Why not use it for some more productive exercises. And even after this added pricing, the inflation would enhance by less than 1%. Headline inflation was 10.16%, which government corrected as 11%, while food inflation touched 12.92% falling from 16%. No doubt, ONGC got a whopping Rs 5,400 Cr by way of bonanza because of this raise while Oil India’s additional income is expected to rise by Rs 800 Cr. In addition government got a share of central levies at the raised prices. The Railways would incur heavy losses while gas based power would have to incur an additional of Re 1/ unit (kWh).

The Fiscal deficit envisaged by the Finance Minister was 5.5% of GDP. He had budgeted an expenditure of Rs 11.09 lakh crore, while tax and non tax revenue was expected to yield Rs 6.82 lakh Cr. He had to resort to borrowing of Rs 3.81 lakh Crore. He was on a strong wicket, as his deficit pitched at 5.5%, while 2009-10 (6.8%) (revised 6.9%). The Finance Minister had proudly announced that the rolling targets for fiscal deficit was plugged at 4.8 %( 2011-12) & (2012-13). Finance Minister is in a tearing hurry to jump the fence.

We can heave a sigh of relief that our headline inflation (10.16%) and food inflation which dwindled to 12.92% from 16% have become even, after WPI and CPI had 10% difference between them. So leveling of the inflation, has given comfort to our Finance Ministry.

The first casualty of the guillotine of the stimulus was the Technology Upgradation Fund of the Textiles Ministry which has been withheld temporarily. He may cut down DEPB, reduce DDB, and other fiscal stimulus offered to various segments of Exports which did exceptionally well in spite of several shortcomings.

Under the targeted Public Distribution System, only 57% of the 652.03 lakh BPL families (up from 596.23 lakh) are covered by it. The amount of subsidies for food, fertilizer and petroleum is expected to be Rs 64,929 Cr. Central Issue price (CPI) for Above Poverty Line will be 100% of the commercial FCI’s commercial cost, while 50% subsidy was provided for Below Poverty Line people. The difference between APL and BPL prices provide strong incentives for illegal diversions to the market. The Government had identified BPL families through select geographical targeting which they found unrealistic, hence abandoned.

Dr Montek Singh Ahluwalia, Dy Chairman, Plg Commission when questioned the rationale, replied that the Government is not supposed to subsidize the oil companies. Somebody has got to pay for it (cheaper kerosene and LPG) - either through general revenues or from jacking up petrol prices. Subsidies need to be utilized for building schools, education, hospital, etc. He candidly said that people building roads should have knowledge of building roads, while Planning Commission members provided guidelines, econometrics, and implementation strategy. But the implementation was by some other body. He concurred that the Planning Commission had targeted 7000 Kms of National Highways @ 20 kms per day. But funds have to be found for it. He said regarding building of Delhi Airport, the role of the Commission was just selecting the Operator.

Regarding the point that under Road Transport, Planning Commission had targeted 7000 Kms of national highways without allocating funds would mean that the non availability of planned allocation would halt the project. There cannot be discussions on it. Secondly, the Planning Commission deputy chief should be aware that around Rs 70,000 Cr were pumped to the Government account by the Spectrum auction. The expected and anticipated bringing down of stimulus for sectors which had done well last year, would yield another Rs 50,000 Cr. Already the announcement of ‘base rate’ would help the Banks to mobilize more money and more income, which would be pro rata given back to the Government as dividend. India accounts for about 20% of remittance to developed countries. Overseas investment to India is directed at not the share markets and real estate markets, but to risk-free capital guaranteed deposits in India. That is why, Banks deposit base is soaring in spite of poor RoI (Return-on-Investment). If Indian Oil Corporation has been patronized through subsidies and if they had made profits to the extent of Rs 10,220 Cr in 2009-10, how much of it was granted to government by way of dividend. In Rs 10,220 Cr, what was the percentage of subsidy that the Government shelled out? Dr B K Chaturvedi Committee appointed by the Plg Commission has clearly pointed out that subsidy for BPL families in 100% electrified villages found way to black market, and 26% of the total kerosene was used to adulterate diesel, what action did the Planning Commission or Government of India do? If the Plg Commission was so concerned for money, why are they importing Crude Palm oil at ‘nil’ Customs duties and edible palm oil at 7.5% which account for a loss of income to the tune of Rs 24,000 Cr. Further 3 lakh tones of Palmoil is distributed through PDS by subsidizing 1 litre of Palm oil by Rs 15/- which amounts to around Rs 500 Cr. Planning Commission targets a growth rate, then mid-course changes it, and at the end of the year alters it, and what is achieved is a different percentage? How does Planning Commission Deputy Chairman endorse this? Accountability rests with the Commission. It cannot absolve/abdicate itself of the responsibility. If Planning Commission should consist of Accountants only, why put intellectuals, economists, scientists, thinkers, sociologists, and pay astronomical sum to them? Better disband Plg Comm?

Public Speaking, a gift or profession?

There are number of highly paid Public Speakers around the World? Why have the celebrities, politicians or business tycoons entered the domain of Public speaking? The Politicians, who were bosses, running their country from exalted positions, why have they become highly preferred strategists, planners and Public relation experts? Would a musical feat by a celebrated singer or a dance and music show by Michel Jackson or a solo performance of a noted dancer, cost as much as a lecture on public or theoretical themes of Public speakers, however gifted they may be?

If Dale Carnegie were alive today, he would have written a Book, “How to Speak, win audiences and to make more money?”

William Jefferson Bill Clinton, the 42nd President of America (Jan20-1993-Jan20, 2001) is one of the most sought after Speakers around the world. He has addressed 197 meetings spanning across 45 countries of the world earning US $ 65.5 million. 1 speech is expected to fetch him around $ 1, 50,000. He was remunerated US $ 4,50,000 for a Public Speech he made after recouping from his bypass surgery in 2004 (where his performance was practically nil). This is stated by his wife, Ms Hillary Clinton, on her assuming charge as Secretary of State regarding spouses income submitted to the Government. A President who was on the verge of being impeached but for his acquittal by the US Senate, has been spending his time usefully spreading his philosophy, sharing his expertise, and Planning strategy [which did not make a major difference to the Country during his Presidency]. His successor Bush Jr made $ 1, 50,000 during 2009-10 after vacating the White House.


Tony Blair, former Prime Minister of England, is the highest paid Public Speaker in the world today. He was paid $ 6, 16,000 for a Public lecture during 2009. He was able to garner 12 million pounds over the past one year, 6 times of the income he earned during his entire period of his stay at 10, Downing Street. He charged around $ 2, 50,000 for a 90 minute speech.

Ronald Regan, made $ 2 million from just one assignment in 1987, helping a Japanese Company to improve their Public Relations. Al Gore, Nobel Prize awardee, charged $ 100,000 per speech.

Sarah Palin was unknown outside Alaska till the Presidential election of 2008. The Presidential race where she was nominated as the Vice President by the Republican Party and loads of media attention heaped on her, secured for her royalties worth $ 12 million. She charged $ 1, 00,000 or more for a Public speech, after she demitted the office of the Governor.

Mikhail Gorbachev, the USSR leader who saw the collapse of the United Socialist Soviet Republic, though he tried his best to reform the stagnating USSR economy, was in great demand as a ‘Public Speaker’ and he was rated highly. He was also rewarded fees to the tune of $ 2, 00,000 per speech. Was he not a failed prophet?

These great Politicians who played with the destiny of the Countries when they were at the helm, left the governance scene, and became noblesse oblige of sharing their thoughts with the World. As rightly advised by a famous author, the Comfort Zone of each individuals should be stretched (Comfort zone is referred as the area in which one is comfortable operating) because outside the ‘comfort zone’ is where great opportunities are waiting.

Taking a leaf from these outstanding statesmen and Politicians, Indian Politicians who are above the age of 60 would do well to retire and give way to the youngsters, second line leaders, and preach the philosophy and their experience before audiences across the world to enrich themselves with Dollars which can be exempt from any tax. Instead of trying to push their outdated, obsolete and discarded theories which they learned in School or in College, they would do a world of good, if they gracefully adumbrate their counterparts in England and America, and spread their philosophy and Utopian theories. Instead of thrusting their theories on the people of India, let them captivate the world audiences – Ayodhya the land of Rama, what is meant by Indian dose of Secularism, the functioning of the bureaucracy, how to increase illiteracy and poverty, tell the world about non violence, Roadside bundhs, sidewalk bundhs, hartals, etc.

Justice is slow

Chief Justice of India, Justice S H Kapadia, hit the nail right on the head when he bemoaned that many cases could have been solved through negotiation, arbitration and mediation, instead of being filed under one section or the other, and goes up to Supreme Court for no reason. He regretted that unnecessary prolonged delay in delivering justice because of mountain of Cases that were at the hearing stage, or admitted and where stay was given, took a long time for adjudication. . An ordinary citizen of India is vexed at the delay, making justice denied as far as he was concerned. If lucky, may be, his son may get justice, after long winding years.

Supreme Court will crumble under the weight of pending cases, one Chief Justice remarked. Justice Chandrachud, who was CJ for seven long years, expressed distrust at the legal delivery system in India, even though he held the top-most post of the Judiciary for a record term.

Everybody is seriously concerned about the judicial system. Parliament is concerned, lawyers are concerned, and litigants are frustrated, judicial officers are anxious to settle the cases. The suffering litigants feel dejected because of the delay in the adjudicatory process and the high cost involved in it as well as the inflexibility of the process.

The Motor Vehicle cases, third party settlement cases, insurance cases, where the mighty organizations are on the one-side prolong the case as much as possible, causing untold distress. After a long time after a claim is filed, finding some loophole and absurd reason, they reject the claim. There are many hit and run cases, where proper compensation is not got, because of grave miscarriage of justice. Insurance Companies act like an arbitrary forum. They have haste in thursting a Policy, and never about the settlement of a Claim. The cases that come under the Compensation for land acquired by the Government, goes upto the Supreme Court. Why can’t there be an arbitrator channel, where the case is decided once and for all. From what could have been cleared at the District Consumer Forum, the case is appealed and appealed until it reaches the Supreme Court after inordinate delay, and the judgment given by the lowest forum is upheld by the Supreme Court. Why should Court accept appeals which neither have any unique point of law which requires judicial interpretation at a higher level, or when some gross miscarriage of justice has happened. Like Jessica Lal case, Ruchika case, and some other well known cases like Olga tellis, Bhagalpur blinding, Airhostess case (discrimination as they were retired at 40, while men worked up to 60). The Bhopal Gas tragedy case took quarter century for the Hon’ble Court to give judgment, that too the Court of original jurisdiction- Chief Judicial Magistrate’s court. Now appeal against this will lie in the High Court, and further to the Supreme Court, and the accused are having money bags. How many more years the case will take, the turn it will take, only God knows. Speedy justice should be the maxim rather than the rule.

Chief Justice of India was right in saying that, “we must understand the value of time. This is one of the areas we need to focus on how to promote that culture.” He cited the example of a case which was for recovering Rs 5, the litigant spent 15 years in Courts.

It is not that we don’t have people who are experts in the art of negotiation. There are excellent mediators who know the law and can adjudicate disputes methodologically, and legally. Arbitration is one fora where the disputed parties questioning an interpretation of a Contract, or failure to supply goods within the stipulated time, or the supplied goods were defective so asked for compensation etc.

The Government is the greatest litigant. For anything and everything, the bureaucrat when confronted with a problem writes that the matter may be referred for judicial scrutiny. I have heard many Government servants, including top bureaucrats telling me that if he adjudicated the case honestly in one way or the other, some body will blow up the Case and CBI will come into the picture, and his embarrassment will start. To be clear and clever, if he can pass on the buck to somebody, he is free from trouble. There is Income-Tax cases which does not have an iota of argument in referring to Courts, Sales/Commercial Tax cases, Customs cases, Central Excise cases, Commercial disputes, tenancy problems, insurance cases, administrative, etc. These can be settled locally, and the consensus implemented. In foreign countries, people preferred Mediation, and the cases were solved in no time. In Tirupur in Tamilnadu, Tirupur Exporters Association took up arbitration, cases amongst members, cases against workers, even foreign buyers complained to the body to settle. This experiment has been found to be very successful. Why can’t other apex Chambers of Commerce and/or other bodies sort out the issue amicably through their apex organization, instead of dragging it and stretching it upto Supreme Court.

If cases are appealed against for silly and unsustainable reasons, higher Court of Appeal should reject appeals at the introduction stage itself. Granting of stay, a weapon used by the rich litigants, must not become universal. It must be sparingly given on merit.
The Lok Adalt movement must be revived. It can settle a number of cases where intricate law points are not involved. The disputes can be settled amicably. The Courts, should take the first step, to prevent filing of cases, revision petitions, appeals, etc.