Fooling all the people all the time

Could Government have avoided charging an extra bite of Rs 5/- per litre per diesel? Every additional Rs 5/- that is priced, Rs 1.50 goes to the Government and Rs 3.50 to the oil company which suffers loss during under recoveries and need to be compensated by Government. This levy will compensate the oil companies for the loss incurred by them in the under recoveries and Government gains Rs. 1,400 Cr. Fine, let us move on.

If we need our economy to be bright, we need capital to flow. Only investment will raise capital. For that foreign flow is a must. FDI in Retail will result in infusion of capital. This will help in more money flow by way of circulation. When money circulates, there is business. And this business will create growth. Growth will cause a higher GDP. Can’t we not invite Foreign Direct Investment, with riders? Asks the Government.

Country cannot afford RBI easing interest rates. All its efforts to tame inflation failed. Inflation is still a matter of great concern. Rupee depreciation is holding up the benefit of our trade balance. This in effect causes tight monetary effect on the country’s economy. Bank is not having enough funds for Credits. We need to bring in reforms. We cannot remain in the paralysis mode all the time. Opposition does not allow the government to perform. They do not give space to government to run Parliament. Second generation reforms cannot be introduced. Prime minister according to them is the villain. But the prime minister says, he is the victim. If subsidy is given priority in a empty balance sheet, deficit which was budgeted at 4.6% rose to 5.9%. Inflation continues to peak at 9%. No body wants sacrifice. Will anybody agree to decrease their salary? Even members of Parliament who get allowances? When production is low, how will the Index of Industrial production performance grow up?  If every state agrees to decrease their Tax on Petrol, Diesel etc, the prices will naturally slip. How many of the opposition ruled states willing to do it? Forsake revenue for the welfare of the people? Economic growth which grew to 9% slipped to 6.5%. How can we revive? If each step Government takes, you oppose, even a small step like that of Armstrong when he put one foot on the moon will make you fall from the moon, forget gravity!  We had a bilateral trade of $ 750 billion during 2011-12. Did you appreciate?

These Oil companies, are they not greedy? Do they not hide many things from us? Let us look at the truth.

Indian Oil Corporation is holding its 53^rd Annual General Meeting. Let us cast our eyes to the Balance Sheet of the Corporation. They registered a turnover of Rs 40,957 Cr. They had the highest ever crude throughput @ 55.62 million metric tones surpassing the record of 52.96 mmt recorded in 2010-11. Distillate yield touched a record level of 77.8% and the refineries achieved the lowest MBN (indicating the combined energy utilization factor). Capacity utilization, one of the benchmarks of refinery performance was over 100% for the 5^th consecutive Year. The operational performance was a Record!!!

Let us continue to look at the profit figures after tax. Profit after tax was pegged at Rs 3,955 Cr. With this huge profit, the Company Board has recommended a liberal 50% dividend coughing off a dividend of Rs 1,214 Cr during 2011-12 fiscal.

Hold your breadth. Last year, the dividend declared was Rs 9.50 per equity share of Rs 10/-. Forget the net capitation value of shares if even 55 is transferred. Cumulative dividend of Rs 20,882 Cr have been paid by the Indian oil Corporation even though the weeping Mr R S Butola, Chairman, IoC was repeatedly weeping about the so-called under recoveries.

Wait a minute. The profit after tax declared by the Company of Rs 3,955 Cr is only one side of the coin.  What has not been said by the company, but written in small point is, Rs 8,156.56 cr being the provision for payment of Entry Tax imposed by the Government of Uttar Pradesh on crude oil received at Mathura Refinery was decreased from the profit of Rs 12,111.56 Cr. That was provisioned, hence the profit is shown as Rs 3,955 Cr. The IoC went to Supreme Court and got a stay. Why do not the parties move the Court for early hearing so that the case could be disposed off.

Now, let us move to the under recoveries. Under recoveries sale of HSD, SKO (PDS), LPG (dom) in 2011-12 are compensated by Government. What the oil companies pay is the interest on working capital expenses involved for borrowing money till the compensation is received by the Government. Barring a) entry tax by UP and b) interest burden, the Report of the Board of Directors of Indian Oil Corporation says that the financial balance sheet is fine!

Another aspect of the Balance sheet. 1473 MMT petrochemical products grew by 62% Y-o-Y. Polymers and PTA were exported to the tune of 76,000 m tones.

The problem highlighted by the Company in the Balance sheet refers to high reliance on borrowings leads to high costs in the form of raising financial costs. The company instead of recycling its money through prudential norms expects 100% compensation from the Government.

Now let us ask our Dy Chairman of the planning Commission, one question: Sir, the profits of the Company, as indicated by the Balance sheet does not reflect the fact that Government’s compensation to cover the entire under recoveries is factored in it. Without factoring this, the profit has come. Add the with held profit amount due to positioning, it is Rs 12,111.56 Cr. Why do you fleet people of Rs 2 and Rs 5 when the management of the IOC with little more adroit skill can manage their finances without any government funding? IOC should be treated as a Public Limited Company. Why is the Government talking the divided from the company? Let it be made a corpus.

When people in the Government do not exercise due diligence, then errors in fiscal policy would cause an economic upheaval, as is happening in India, today. It I not enough we have Economists; we also need Accountants who will point at accounting cover ups. The Comptroller and Auditor General of India. Politicians should remember not to take Coal to Newcastle. Did I say Coal? That includes Coal from Indian mines as well!

Who is response for India's economic mess- Dr Singh, UPA, or Politics?

Is Dr Manmohan Singh alone responsible for India’s underachievement?

            Is India’s under performance in its economy due to Dr Manmohan Singh’s underachievement?   Is he, alone, responsible for slowdown in India’s economy, huge fiscal deficit, falling rupee, corruption scandals, political paralysis due to inept leadership qualities, and unfair power sharing agreements with regional parties who do not share Congress party’s economic  philosophy.

            It is true, that India’s growth momentum is slow and low compared to previous years. The Prime minister is projected as an ‘unachiever”, because he is in no position to launch any of the Second Generation Reforms. Is Dr Manmohan Singh alone the culprit for the economic mess that India is in?

            Foreign Direct Investment and Foreign Institutional Investments brought Crores of Rupees in foreign currency to India. Setting up of collaborative ventures, opening up of aviation to the private sector, auctioning of coal blocks to private sector, Telecom miracle, privatization of infrastructure, disinvestment, giant setting up of Original manufacturers of automobiles, gave fillip to industrial growth, increased  capital formation due to setting up ancillary industries under the patronage of a mother units for original equipment manufacture as well as Replacement parts industry, gave impetus to increasing employment. The growth of the software industry, as a result of which 55% of the foreign exchange came from Service exports, put India in a frontal position in respect of bilateral, multilateral trade. The unemployment got reduced as India’s educated got employment in the new generation banks that began operations in nook and corner of India, the need for software and hardware engineers, aviation personnel for various private sector airlines, big industrial houses which went for Acquisitions & Mergers, acquiring properties abroad, manpower required for on-shore operations abroad, telecommunications which grew vertically and horizontally, export houses , export logistics, export infrastructure, export consultants, requiring qualified personnel, drove the employment market upwards. The purchasing power of the younger generation professionals, their fat pay, the change from joint family to nuclear families, easy loans for buying apartments, motor cars, household items, etc., saw more and liberal spending rather than depositing the money in the Banks, which kick started the economy which saw growth touching two digits. Inflation was at its low, because, there was huge consumption, and all round passing off money, rather than getting blocked in deposits alone. Currency circulation created enough money flow in the market which diminished inflation. Insurance Companies, including foreign companies, set shop here. There was sufficient business for anybody and everybody. The money came into the organized net and got circulating through bank drawls and deposits. Banks had enough money to lend, and with a wide variety of products for which it gave loans, its coffers filled. The loans were given against collateral guarantee, and hence non- performing- assets in the consumer, middle class sector like house loan, gold loan, car loan, durables loan, was nil if not very low. The credit Card/Debit market rose geometrically. The launch of Telecom Revolution saw the increase of teledensity grow by 1000% giving business opportunities across a value chain. Exports which were $ 45 billion in 2004 grew to US $ 300 billion, bringing in the much needed Foreign Exchange. Foreign Exchange Reserves crossed US $ 300 billion. Stock markets began to grow by more than 100 points on a regular basis. Private sector contributed to a Indian Retail Chain, which changed the mind-set of the buyers who flocked to the Retail markets, and big malls, so as to get everything under one roof. BoP position was easily met due to Foreign Exchange Reserves, remittances from Indian Diaspora, FII, FDI, Exports, etc. Banking sector got strengthened, as it was able to contain the excess flow of liquidity which would have created volatility.

            Come UPA II. Everything began to go sour. Rs 80,000 Cr was written off to compensate the farmers’ credit which had become NPA. Reforms halted as one or the other coalition partner refused to tow the line. Enormous money was required for providing subsidy and to undertake popular Schemes. Opposition was relenting which made governance difficult. America’s meltdown caused a lightening strike on India’s software industry. Our exports shrunk as that country was India’s largest bi-lateral trading partner. American economy which became weaker and weaker, and the brakes applied did not work to change the mood of the economy. The economic crisis engulfed to Europe. This struck the European Union in more than one way. Indian professionals or the service industry, felt the brunt. Inflation started to mount. The more the RBI tried to tame inflation, it grew, and increasing interest rates 13 times did not even get an inch of recovery. Government resorted to Keynesian formula. Liberal spending. This caused more discomfort than benefit. People stopped spending. They were careful with the money. It caused a downturn in consumption. Reduction in consumption caused reduction in production. This was instrumental in creating lay offs, and retrenchment. Banks did not credit as it should have got. The robust economy slid to 5.2% against our declared target of 9%. The financial deficit was uncontrollable. The deficit finance which was reckoned at 4.2% went up to 5.9%. Even though Direct Taxes receipt showed an increase, the actual receipt was only 55-60%, as most of the money due got caught in litigation.

            Scandals, scams, became a scourge to our economy. When Parliament was incapacitated to function by pandemonium and when one entire Session was lost, what policy trajectory was possible? There have been crusaders, who have been blocking every move of the Government. The coalition parties were declining to support the Government which is surviving on the mercy of Opposition parties who are ruling some States as regional parties. The fiscal deficit in the State budgets is no better. They want funds infusion like Rs 10,000 Cr (UP), Rs 12,000 Cr (Bengal), Bihar (Rs 10,000 Cr), etc. From where the Government will augment, is another matter?

            Dr Manmohan Singh when he was Finance Minister in Mr Narasihma Rao ’s cabinet, had to look after only Finance. The economic conditions then, were rosy. America was interested in India’s growth and the bi-lateral trade began to grow from US $ 30 billion to US $ 60 billion. The government of Rao was a minority government, and even if it had fallen, there would have been no serious repercussions. Today, if anything happens to the Government, Congress will lose face, and there are no strong statesmen in that party to bring unity in the diversity coalition.  Can we blame only Dr Manmohan Singh for all the ills?

            

             The monsoon , as we take stock, only rains but never pours. the deficiency will be reflected in the final tally of crops, and agricultural output, which will send India into a tail spin. Dr Singh's worries are not over. It would crop up again and again. Mamta is waiting with a bowl. So also others. And we have Anna Hazare waiting at the other end to cleanse the rotten political system which has already saturated.

Fair and fast Judicial reforms

Indian judiciary, one of the pillars of the Indian Constitution, was venerated, respected and believed to be conscience keeper of the Country’s constitution. Certain land mark judgments, which recognized the right of the individual over absolute Power, independence of the IV estate and Executives invasion into the freedom of the Press had been considered sacred by the Courts, even Courts looked into certain legislative actions from the strict eyes of Law and juristic covenants, precedents and templates, have bee lauded and respected. It acted as an accountable body protecting the fundamental rights, the Courts struck acts and laws transgressing the limits of the Constitution, and kept up its supremacy.

However, when the Governments at the Centre and States started tinkering with Laws, and any arbitration between Centre and states, states and States, States Vs individuals were referred to the Courts for adjudication, the Executive wantonly transferred its responsibility to Courts. When even administrative matters were not solved on the basis of Driot Administratef, Central Government and State Government Rules, but referred to Courts,. Examples of this are Ayodhya dispute, Cauveri Water dispute, etc were referred to Courts for its arbitration. There are many issues which had been referred by the President of India to the Supreme Court for its clarification, Courts naturally became highly pro active, and took upon itself, cases which normally should not have been admitted. The Public Interest litigation was easy route for anybody to approach the highest Court of the land, whether the applicant had prima facie interest and affected by a particular order or action of the government, he surpassed the usual channels of law available to him, and knocked at the Supreme Court whether he was bona fide affected or not. This PIL later became a nuisance, and Supreme Court had warned the petitioners not to file vexatious PIL without sufficient reasons.

The present judiciary is losing common man’s respect for obviously many reasons. Cases have been piled up in the lower Courts, higher Courts and Supreme Courts for ages, there are corruption charges against Judges of the higher Court, there are impeachment proceedings against some Judges, some judges involved in the PF case have brought shame to the judiciary. Criticism of one judge by another pusine judge through twitter or speeches have become common, there are parallel trails by the visual media 24x7 which prejudices the Case and one of the sad repercussions of these are loss of faith by the litigants on Courts which is supposed to dispense Fair Law. There have been past judgments which have been reversed 360 degrees by higher Courts. The recent incidents involving some of the sitting judicial officers for their Post Graduate legal examination at Andhra Pradesh were caught red handed copying by a CCTV camera is a shame on the entire judicial system. If a judicial officer who should administer fair justice indulge in incorrect procedures, who will give justice to the litigants? Can litigants have faith in such judicial officers or the judicial system?

There are also reports that appointments to the High Courts and Supreme Courts and transfer of High Court judges from one state to another are not fair. Good lawyers do not want to become Judges. Another factor in delay in delivering Justice is shortage of Judges. Even cases filed in the Fast Track Courts are unusually delayed.

There is a need for overhauling reforms in Judiciary. The left over of the colonial past including Rules, regulations, acts, laws have been a stumbling block to deliver Law in these days when speed is a necessity. Globalization has changed global laws. World has changed. There are States or nations which indulge in Wars. There are non state actors who indulge in terrorism acts or take Law into their hands. Whether these acts are out of frustration, economic backwardness or political thinking is another matter. Judges are human, they can commit mistakes. But when some of the judicial officers think that they are conferred with infinite powers, they should be told that there are checks and balances in the judicial system. There are many acts of indiscipline within the Court rooms. The Judges are accountable to the system and Rule of Law. They are also accountable to the Constitution of India. They must be mild in their observations for the litigant who has obeyed the Law and stringent in their language against law breaker. Government also should respect protocols and act impassionately. During the vote on account during the introduction of the Financial bill, CBI told the Supreme Court that enough evidence of financial irregularity against Mayawati is not there; but when to get the Nuclear Bill passed, where there was necessity to get the Left and BJP to support the Government, the CBI took a 360 degree turn and now says that evidences are there against Mayawati. This is the highest political misuse.

Judicial Reforms is the need of the hour. Like the Fourth estate, Indian judiciary needs to exert self discipline. The hallowed institution should command respect, reverence and worship! It must regain its lost legacy.