Friday, February 18, 2011

BLAMING COALITIONS FOR CORRUPTION IS LAUGHABLE

Ever since Rahul Gandhi made a remark that coalitions are responsible for corruption, all Congressmen have accepted it as gospel and are busy parroting the same from every platform. It is a little more disappointing when a person of much acclaimed integrity (though I must say the behaviour of the Prime Minister in recent times could end up giving a new meaning altogether to the word integrity) like Dr. Manmohan Singh parrots the same line and says that the hailstorm of scams that have been hitting the headlines are because of the compulsions of coalition politics. It is absolutely shocking when many so called pundits in the media establishment swallow this nonsense hook, line and sinker and start giving it some legitimacy.

Let me first point out how we are collectively making a mockery of our democracy and our constitution. When visionaries like Dr. B. R. Ambedkar framed the Indian Constitution, they made two things very clear: the first is that it is purely the prerogative of the Prime Minister to appoint his or her Cabinet. The second is that the Union Cabinet must share collective responsibility. Bot these basic tenets of the Indian Constitution are being openly destroyed by this UPA regime and no pundit seems to be raising even a whimper of protest. When Manmohan Singh says that it is not him but the DMK which appointed the now arrested Raja as the Union Telecom Minister – and he says this without a qualm on live television broadcast across the world – he is openly admitting that the Constitution has been trashed. Earlier, at least there used to be some eff orts to maintain a fig leaf of Constitutional sanctity when allies used to pressurise the Prime Minister for cabinet portfolios and appointments. Dr. Singh has – at one stroke – removed even that fig leaf. Virtually, everyone in India who has any sense knows that Dr. Manmohan Singh is not a Prime Minister in the sense Nehru, Shastri, Indira Gandhi, Narasimha Rao and Atal Bihari Vajpayee were. Everybody also knew he was more a courtier than a leader; India's first 'appointed' rather than elected Prime Minister. A few issues ago, our sister magazine The Sunday Indian had asked CVoter to conduct a major nationwide opinion poll to assess the attitude of voters towards this UPA government. In that poll, more than 3 out of 4 Indians said that Manmohan Singh is even more of a puppet now than he was earlier. There could be no more damning indictment of both Dr. Singh and the state of the UPA government.

The other manner in which this government merrily trashes the Constitution is the complete refusal to follow even the basic norms of collective responsibility when it comes to the Union Cabinet. We have the sorry spectacle of ministers shooting off their mouths and announcing policy decisions which are then publicly ridiculed by fellow cabinet ministers. Surely Dr. Ambedkar and other framers of the Indian Constitution would have thought of a different structure if they had even an inkling that matters in the Republic of India would come to such a sorry pass. Can you imagine Barrack Obama admitting on live television that he has no authority to make or unmake cabinet appointments? What is truly shocking is that all of us in the media are collectively letting this UPA government trample upon the Constitution without even pointing out how insidious and dangerous this is for the future of India.

That brings me to the point about how wrong and false spokespersons of the UPA regime and their fifth horsemen in the media are when they correlate coalitions with corruption as if it is a statistically proven certainty. In fact, if he had read the speech delivered by the late Rajiv Gandhi in 1985 during the centenary celebrations of the Congress and many subsequent remarks, Rahul Gandhi could have hesitated a bit because his father had a very different opinion on the real reasons behind widespread corruption in India. When Rajiv Gandhi publicly said that only Rs.15 out of Rs.100 spent on welfare and other government schemes actually reached intended beneficiaries, his party lorded over Lok Sabha with a brute majority and also ruled over much of India with huge majorities. Rajiv Gandhi kept saying that it was vested interests and power brokers who were responsible for corruption. Tragically for him, it was the same vested interests and power brokers who smeared his clean image with the Bofors scam.

Then again, a quick look at history will show that corruption increases manifold whenever there is a dictatorship or a brute majority. The latest example is the ousted dictator Hosni Mubarak of Egypt who is reported to have stashed away more than $3 billion during his 30 year reign. Most us would have forgotten a colourful Congress leader called Pratap Singh Kairon whose government ruling over Punjab was perceived to be so corrupt that it embarrassed even Jawaharlal Nehru. Then again, there was the Congress Chief Minister A. R. Antulay who was forced to quit his post because of the infamous 'cement scam'. Surely, we remember the allegations of massive corruption-and cases-against J. Jayalalitha who ruled over Tamil Nadu as Chief Minister with a brute majority? And of course, was it alliance partners and allies that resulted in the notorious fodder scam that implicated Lalu Prasad Yadav and his family? In Orissa, Chief Minister Naveen Patnaik rules with a brute majority. And despite his clean image, his government is literally swamped by scams.

There are only two reasons why corruption flourishes in India, and both have nothing to do with coalition politics. The first reason in vesting discretionary power with ministers and bureaucrats. The second is the well justified belief of the corrupt that our judicial system is so rotten that the corrupt usually get away with anything without any fear of punishment. So let us not delude ourselves with this stupid excuse that the UPA government is being battered by scam after scam because of coalition compulsions. At least Dr. Manmohan Singh can be honest and state the true reasons for corruption flourishing under his watch. We know – as he himself admits – that he is incapable of doing anything about it. But at least please don't pass the buck in such a deviously brazen manner.

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Friday, January 21, 2011

TAMING INFLATION OR KILLING GROWTH?

Really, this UPA government and its scatterbrained, harebrained and brainless approach to serious policy making simply takes one's breath away. Despite brazenly false assurances by many top honchos of the government, the rate of inflation continues to rise and give nightmares to the aam aadmi. So what do our esteemed and revered policy makers do? They (in this case, the RBI – and one has to be a fool to believe the nonsense that the RBI is truly independent of the Finance Ministry) once again raise interest rates and play the charade of doing something worthwhile to tame inflation.

These fantasy land policy makers will fail to answer some basic, commonsense questions about the nature of inflation in India. Will higher interest rates lead to a fall in the prices of onions? Does the persistent and recurring raising of interest rates mean that Indian citizens will see lower prices of petrol in the near future? Or will they lead to falling prices of cooking oil, milk, vegetable and spices? Equally important, will the raising of interest rates lead eventually to a rise in the prices of LCD televisions, mobile phone handsets and laptops?

You and I know that is not possible. So why this nonsensical obsession with interest rates? The policy makers themselves – RBI included – admit that the recent spurt in inflation is caused primarily by the rise in prices of food items and other "essential" commodities. They themselves admit that supply constraints have been playing a large role in the recent spurt in prices. So how will a hike in interest rates solve these problems? How will it positively affect more than 600 million Indians earning less than $2 a day, who have mostly nothing to do with interest rates or the banking system, except taking loans at astronomical rates from local moneylenders? Will the farmers of Nasik immediately start growing more onions? Will the rain gods become more benevolent and stop ruining crops? Will the global oil industry bow down to the diktats of the RBI and redress the imbalance between supply and demand?

You and I may not be economic experts spouting jargon the way some of these lordships do. But surely we know this much: That a hike in interest rates eventually leads to an increase in the cost of capital and discourages investments. Interest rate hikes could possibly control or tame demand led inflation – if at all they do anything. Surely, it doesn't solve anything when supply is the problem. In fact, higher rates will inevitably damage investment and growth.

And who gets hurt most by higher interest rates? People taking loans. So housing goes beyond the reach of the lower middle class family, as do many consumer durables. Worse, large Indian business houses have access to global financial markets for cheap funds. High interest rates hurt the small entrepreneur who has to depend on Indian sources. In eff ect, we are perpetuating elitism – both at the level of the consumer and the entrepreneur.

Most mystifying: this government is dotted with venerated economists at the top echelons. What in God's name are they thinking – and doing?

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