Democracy or Deal-o-cracy?

“... THAT government of the people, by the people, and for the people, shall not vanish from this earth” said US President Abraham Lincon speaking at the dedication of a national cemetery at Gettysburg in 1863. It is perhaps the best-known definition of democracy in American history.

In the Indian context, our Parliament has always been well represented by men and women coming from various states, speaking different languages, following diverse religions and belonging to different casts. Members’ educational, economical and professional backgrounds have also been vastly different, but all of them had one qualification in common — they were elected by us. Thus, they have been people representing the people of their constituencies, in running the government for us, the people at large. After all, we are the world’s biggest democracy!

Despite all its positives, decision making in a democratic government is by majority vote and is never known to be quick and fast. Democracy is perhaps the most complex and difficult of all forms of government. It is filled with contradictions and requires its members to labour diligently to make the government work with accountability. We are probably experiencing one such difficult situation now and seem to be drifting in the undesirable terrain. Right from the day Left decided to withdraw support to the UPA government, all that we read and hear about is ‘deals’. At the centre of all is the nuke deal. But the government requires 272 (majority) before 123 (agreement) and that has thrown up the game of politics open to all sorts of deals.

We hear about an airport being renamed to garner a few votes and wonder if Taj Mahal and India Gate will also be named after some MP’s wife or a daughter in the coming days. We see MPs talking to TV channels from their hospital beds and party leaders pressurising the attending doctors to let the MP travel to Delhi on the voting day. Some MPs are being persuaded by promises to consider nationalisation of mines in their area and others are being offered ‘structured deals’ , such as CM chair in the state along with two ministers-of-state positions in the Union Cabinet or the desired Cabinet berth at the Centre and deputy CM post for the son. A few MPs are also agreeing to indirectly support the government by abstaining and are silently extracting their pound of flesh.

Then, there are smaller parties, demanding creation of separate states, possibly with a vision to become the USI (United States of India), comprising over 500 states, each covering the area of a constituency. And there are discussions for introduction of industry-specific or company-specific windfall taxes, threatening to end up in some MPs coming up with a list of permanent account numbers (PANs) that they wish to be taxed at higher rates.

There are interventions at the highest level to patch up differences between big businessmen and there are usual lunches/dinners being organised by political parties to hold their flocks together. Finally, there are TV channels and MPs openly discussing anything from Rs 25 to 100 crore as the price for one vote in favour of the government. And what else than a promise for release can be a deal with MPs (with criminal record) in jail to enlist their support, when they go out on bail to vote in Parliament. In short, it seems to be a government of the deals, by the deals and for the deal. Isn’t that deal-o-cracy ?

In such a cacophony of personal and party specific deals, one really wonders what our MPs are thinking about the nuclear deal. What do we get and what do we give in by signing up 123 agreement? Are we running our nuclear power plants at full capacities? Has our country fully exploited its potential for hydro power? Have the party think tanks shared their viewpoint and aligned all their members? Or are fence-sitters planning to defy the party whip and realign themselves in anticipation of early polls? Isn’t current level of inflation that is affecting the common man a bigger concern than the nuclear deal? Are our MPs not bothered to know whether the loan waivers granted in the budget reaching the target farmers or not? None of these may seem relevant in the dirty deal-o-cracy .

To get our elected members focus on real policy issues and ensure good governance, we actually need the government to get out of ‘running businesses’ and concentrate on its key roles viz. defence, law & order and delivery of justice. Once the government gets out of businesses, MPs may not see value in demanding specific ministries and there will be no deals to strike. Till such time anything like that happens, may the MPs who represent us, responsibly exercise their votes, for our democracy to triumph over the dirty deal-o-cracy !

How BRICs have changed the world?

In 2001, Goldman Sachs came out with the concept of the BRICs - Brazil, Russia, India China - as high-population countries that would dominate the world economy by 2050. At the time, global financiers sneered that this was a facile formulation to get business from the gullible. Very little global finance trickled into the stock markets of the four countries in 2001.

Seven years later, the BRICs have outperformed the most optimistic projections. Goldman Sachs had predicted that these countries would account for 10% of world GDP by the end of the decade. They have already crossed 15%.

Analysts have offered various explanations for their success. Let me suggest one more. Without consultation or planning, the BRICs have stumbled into a four-way division of labour yielding huge gains in productivity and synergy.

China has specialised in manufacturing. India has specialised in service exports. Russia has specialised in energy. And Brazil has specialised in other commodities (iron ore, sugar, ethanol, soyabeans, beef, orange juice). All four have become world-beaters in their respective specialisations.

Of the four, only China looked remotely like a champion in 2001, and it too was struggling with social discord in interior provinces that had missed the great export boom. In 2001, Russia was in financial straits after defaulting on its external debt in 1998, Putin was struggling to re-establish Moscow's control over the provinces, and the price of oil was just $18/barrel. India's growth rate had plunged after 1997, and in 2001 was down to the 5.8% level of the 1980s. Brazil had barely overcome its financial crisis of 1998.

Seven years later, the BRICs have exceeded all projections. China ontributed more last year to incremental world GDP than even the United States, whose economy in absolute terms is four times bigger. India has averaged almost 9% growth for several years. Russia has become an energy superpower, and in place of its huge current account deficit in 2001, it now has a huge surplus approaching $200 billion a year. Brazil, with 5.4% growth, is the slowest of the four, yet is among the few countries that looks like growing strongly even in the coming global recession.

Few Indians realise how dominant Russia has become in energy. I am sure 99% of readers think Saudi Arabia is the world's biggest oil producer. Wrong. Saudi Arabia has the biggest oil reserves by far. But in terms of production, Russia at 10.1 million barrels/day beats Saudi Arabia's 9.3 million barrels/day.

Russia is even bigger in natural gas. Its dominance in world gas reserves parallels that of Saudi Arabia in oil reserves. Huge new gasfields have been discovered offshore in the Arctic Sea, encouraging Russia to lay claim to the Arctic seabed all the way to the North Pole. Western European governments are horrified to find themselves woefully dependent on Russian gas for future energy needs, but see no alternative.

Brazil's commodity dominance is not well known in India. It is a huge producer of iron ore and sets the world price. This year Vale, Brazil's biggest producer, negotiated a 65% increase in iron ore prices with East Asian importers like China, and the world market (including India) has followed suit.

Brazil has a huge land area and ample rainfall, but a modest population. So, at a time of soaring prices, it is among the few countries that can rapidly expand high-quality acreage and exports. It is the world's largest producer of sugarcane, from which it makes ethanol that is much cheaper than petrol, and fuels Brazil's ethanol-based cars. It is the biggest exporter of soyabeans and orange juice. What's more, it has discovered the two biggest oilfields offshore in recent years,
containing an estimated seven billion and 33 billion barrels respectively.

Indian readers are fully aware of China's phenomenal success in manufactured exports, especially labour-intensive items like garments, footwear and toys. Readers are also fully aware of India's phenomenal success in service exports, especially software and business outsourcing, which are projected to touch $50 billion this fiscal year. Notwithstanding huge increases in salaries in the last five years, Indian companies remain as competitive as ever, and their future looks bright.

Two final points need to be made about the unplanned but serendipitous specialisations of the four BRICs. Specialisation brings a country high benefits from productivity growth, but also creates vulnerability. In the event of a technological change or sudden fall in global demand, a specialised producer can be particularly hard hit.

The BRICs, however, have all become producers of a wide range of manufactures and services, including high-tech ones. Brazil is the most high-tech manufacturer in Latin America, and even has a competitive aircraft industry. Russia has more engineers than the US, and so should do well when its Soviet-era industries are completely replaced by 21st century ones.

India's merchandise exports have been sizzling recently, and Indian manufacturing companies are acquiring dozens of giant multinationals. China, which started as an exporter of labour-intensive goods, has moved sharply up the value chain. Less than half its exports are now labour-intensive, and it is a big exporter of heavy machinery and chemicals. This diversified profile means that the BRICs will be resilient in the face of external shocks that may hit their specialised activities from time to time.

The second point to be made is that the different specialisations of the BRICs are synergistic and self-reinforcing. The fast growth of India and China, both of which are at a material-intensive stage of development, has helped spark a huge and rising demand for commodities (which benefits Brazil) and energy (which benefits Russia).

Brazil's stockmarket is among the few to remain strong in 2008 because markets think commodity demand from countries like China and India will remain strong even if there is a global recession. That looks optimistic to me. But if indeed this happens, the BRICs will create history. Never before have commodity demand and prices remained high in a recession.

Next generation of NRIs to dominate the world of finance!!

A dozen young Asians, most of them ethnic Indians, are in the Daily Telegraph's Made It By 40 list of Britain's best young entrepreneurs, using a yardstick the paper said they all understand - wealth.

Heading the list - among several run by the paper this week - at number nine is Baljinder Kaur Boparan, who along with her husband Ranjit owns the chicken processing company Boparan Holdings. The family is said to be worth 130 million pounds ($250 million).

The others, with fortunes ranging from 56 to 106 million pounds, are:

* Mehan and Raj Sehgal of the fashion company Visage Holdings;

* Sanjay Vadera of the Fragrance Shop retail chain;

* Mayank Patel, who owns Currency Direct, a foreign exchange specialist;

* Sanjay Kumar of the textiles company Rajan Group;

* Arif and Munaf Patel, whose Faisaltex group of companies supplies socks, underwear and other children's clothing to discount stores;

* Shafqat Rasul, who runs E-Net Computers, claimed to be the biggest buyer of DVD and CD-media in the world;

* Sandeep Chadha, whose Supreme Imports Group is one of the largest sellers of batteries in Britain;

* Raj Chatha, heads of the Halifax-based European Food Brokers, a major wine and beer company;

* Ajaz Ahmed, founder of Websign and interactive marketing agency AKQA, which employs over 650 people in New York, Washington DC, Amsterdam, Singapore, London and San Francisco.

All are 40 years or under, but their success does not surprise another former award-winning entrepreneur.

"These people are entrepreneurs, not businessmen. They love owning their businesses and hate being told what to do," said Ab Banerjee, chairperson of Immediance, a global online trading platform for institutional investors and company shareholders.

"Their story is part of the way Indian immigration has taken place," said Banerjee, a former newspaper director whose Raw Communications was named by The Times newspaper as the fastest growing British private technology company in 2001, when he was only 36.

"The first generation came here, found jobs and put their children through the best education. The second generation has now come into their own," he said.

However, the Daily Telegraph's list shows that many of the Asian entrepreneurs are still engaged in traditional Asian businesses: textiles, fashion, food processing and wholesaling.

Analysts predict the next generation of NRIs will dominate the world of finance. With a large number of them graduating from top universities to enter the banking and financial services sector, it's only a matter of time before they start out on their own.

"They have their entrepreneurial drive already. They will be money managers," said Banerjee.

The drive and determination are evident in the Daily Telegraph list.

Chadha came to Britain with his parents at the age of two, but fled back to India at 15 in order to escape racist bullying at boarding school. He was the only Asian at school, and wore a turban.

Returning after a year, he cut his hair and began helping out with his father's business, selling fancy goods - imported clocks, watches, radios and toys - from the back of a van.

Today he is 40 and owns Supreme Imports, which sells 180 million batteries a year - roughly 20 per cent of the British market - with a turnover of over 200 million pounds.

The dollar downing

 

No seriously, how much lower will the dollar go? It's gone lower beyond Mallika's neckline and even Rakhi Sawant's décolletage seems nun-like proper in comparison to this plunge. Is that how low it goes or will it plunge further?

78 per cent of Americans say that the economy is getting worse, according to a recent Gallup report. So we poor third world types better be ready for some tough times because the greenback today looks increasingly like what the Bangladeshi taka looked like a few years ago. It's safe then to say, "Dollar to do takey ka nahi."

Why if Karzai is given a free hand, the Afghani will be equal to the dollar. The ISI can then trade their ill-gotten dollars with the Afghani.

And those wealthy Indians, who stashed away dollars without Chidambaram's knowledge, weep copious tears because the taxman is having the last laugh. Your dollars are not worth the Samsonite suitcase it is packed away in.

Try traveling anywhere in Europe with dollars instead of Euros. You are met with stony looks at currency exchange counters. One gets the same look that Arab sheikhs got changing dinars few months after 9/11.

Recently in Moscow, I tried paying my hotel bill in dollars. I was politely and firmly ticked off. "No dollars here, or anywhere sir." I presume she meant anywhere in Russia, but she would probably not be too off the mark if she meant the world minus the US and England. Oh yes in England the Bureau de Change (as you would have gathered I hate paying commission fees) accept the dollar as if accepting 'shagun' from a relative. The US is their relative from across the pond, you see.

Once the oil barrel become a $100 and more, Americans will know what it feels like to be Indians, who hesitate to order a double iced, skimmed venti latte at Starbucks wondering how many nimbu paanis you could have bought with those Godforsaken dollars. With the rupee growing stronger there are more Indian billionaires than before we are told. K P Singh of DLF replaced Azim Premji in some billionaire lists. More power to our real estate maharajahs. They are the true blue blooded types in the new millennium.

Now, how about a Sahara Mall or a DLF Plaza in Texas? Right in the middle of Dubya land? The Texan product, George Bush, has brought the dollar where it is today. He just might take the Rupee to new heights. Of course he will welcome us Indians, after all he is our best bet, right Mr Prime Minister?

 

Courtesy: Economic Times