Indian Economy- any light at the end of the tinnel?

Utopian Indian Economy? Indian economy is in the doldrums. The caretakers of the Governments (Ruling coalition) and the watchdogs (Opposition parties) have been creating a near riot, and the economy, if it is not contained will hit gloom. The tsunami has already been formed, and to liberate the economy from its low would be an impossible and Utopian task. Companies are not performing to their capacity. There is a big gap between the installed capacity and working capacity due to idle capacity. Government has made RBI to commit all the economic flaws, impersonating the very same mistakes other nations in similar circumstances adumbrated. Our economy is slowly entering into a ‘debt trap’. Handsome foreign trade achievement. Between April- August 2011, despite the continuing meltdown and slakness of the markets, Indian exports generated Foreign Exchange to the tune of US $ 134502 million (Rs 602031.90 cr). A growth of 54.21% in dollar terms and 50%in Rupee terms. The export sector delivered a growth of 50% in Dollar, Rupee terms. Imports, necessary and unnecessary devoured US $ 1, 89,393.77 million (Rs 8, 47,987.07Cr) notching up a BoP position of the trade balance standing at (negative) $ 54891.23 million. The Rupee is fast depreciating against the Dollar (which continues to be weak). Corporate have borrowed in debt instruments more than US $ 50 billion but due to over heated Rupee, their gains have turned losses. Rupee is at its highest depreciation. The Commerce Ministry has been expressing hope that all is not lost, there would be no “w” growth, but momentum will see a gradual change by March 2012. Our Oil companies continue to bleed the consumer. Having monopoly status, every market affliction will be faithfully passed on to the consumer. There is a week Oil and Natural Gas Ministry at present, which cannot diagnosis the symptom with the result turning to be incorrect. Inflation has been mounting. Food prices are rising with alacrity. Oil prices are unbearable. It is very difficult for a middle class man to make both ends meet. Indian economy has become a candle, and due to the worst reign ever, since independence, the candle has burnt more than 70%. Fiscal deficit continues to haunt the government. Yet, the Finance Ministry is persisting with it, so that the continuum has made a spin off to the vulnerable sectors. Bank Credit rates increased 13 times in the last 18 months, has put India’s liberalization twenty year backwards. That too, when the architect of Indian reform, who’s Economic Revolution, made India one of the faster growing economies? Why is the economic clock turning anti clockwise? Why? Dismal financial conditions? Low down Economy? Depressed economic scenario? Our ineptitude handling? Prices skyrocketing, economy is struggling dragging its feet, industrial production has gone awry, industrial clusters wear deserted look as production has slipped to 50% with the growing of idle capacity, common man continues to be burdened and over burdened without any relief, expenses are mounting like Tendulkar’s batting, fiscal deficit is growing momentously, FII, FDI has come to a near halt, and the stock markets continues to fickle instead of dazzling. Our debt burden is likely to reach Himalayan proportions if we do not rein in the negative out flows. But we cannot stop imports. In spite of all these negative signs on the economic landscape, the mandarins in the Government profess to cough off all these happenings as a mild headache which can be corrected. Priorities are distorted, no course correction to direct the economy towards positive direction. There requires an attitudinal change on the part of the ruling Party especially the men who control the nation. The opposition also have a moral duty to prevent an economic collapse. Balance the economy is the imperative need, and any dithering will be catastrophic to the economy as well as the Nation. Better late than never.

Content in Reputation economy & Social Capital

While some believe that the World without money but with reputation economy and social capital will bring all round happiness, others deem wealth as an important ingredient than ethics and decency. Real wealth is in each of us, and value addition to life and environment is greater than monetary wealth one can acquire. “Content makes poor men rich, while discontent makes rich men poor” (Benjamin Franklin). When some Indian is included in the Forbes list of millionaires, which goes on enlarging, the percentage of growth in terms of new entries gets news space. Plethora of previews about the millionaire, varied views regarding their capacity, reviews of their work and interview to elicit their riches story, all make headlines. Some are born great, some achieved Greatness. This tribe belongs to the second category. Monetary wealth gives them the reputation of being the lucky few, who get the lime-light and make them famous. What is their value addition to Life? The rich gets invitation to the Chambers of Commerce, gets their Honorary Membership, toasts from Community Organizations like Rotary, Lions, and others, gets invited to Clubs where the rich and mighty Socials meet and they are introduced in the Hall of Fame. They might beget some Padma Awards as well, invitation from Rashtrapathi Bhavan, Governors House for Republic day tea, or a dinner meet with some dignitary from abroad. Look at the contrast. The Below Poverty Line person is given a definition. A person who spends Rs 32/- per day. And for he will spend the Rs 32/- is quantified. For him, no body is bothered except those mighty Politicians during the eve of election canvassing Votes promising him the Moon, but after elections, he has to moan for his discomfort. He is evicted out of the House, even though he had resided there for two generations, and there was nothing in it except the man in the Forbes list found the area lucrative to expand his industry. He was investing capital, providing wages, spending money on goods and services, which will make money, circulate, and he would sow the seeds of development so that our Gross Domestic Product would grow by double digits. This growth would make India surface as one of the most emerging economies of the world. The poor man who was displaced, uprooted from his home where two generations spent their years, living on an arithmetic sum to be called ‘Poor’ would continue to live elsewhere, with the same adjective, and meager means, while the land where he lived will breathe prosperity. When the bank increase the interest rate, the Forbes millionaire who has invested money out of the borrowed capital, and his tribe would make hue and cry, and though undesirable to the Government which gave him everything, he will make a popular speech at the expense of Public discourse, frequently misinformative. Squalor and valor have different connation in different circumstances. When the world works for its betterment without money, value addition to life changes from monetary wealth to social wealth. When reputation is wealth, only those, who do good and well unto others, are the richest. There is a Science to creativity, after all. Men are rated by human qualities, on a person to person basis, and not in terms of the Bank balance running into their SB account. When reputation is wealth, only those who do good and well unto others are the richest. When the Poor talks about his poverty, the rich always say something about another having nil gross value except it gets published in news-papers and telecast! Issues which are worthless. Well, India needs to focus on Reputation Economy and Social Capital rather than on materialistic pursuits and maintain its rich traditiona

Where do you take the Monetary Policy from here?

When the going gets tough, we need to get tougher. After failing 13 times to evaluate the reason for the acceleration of inflation, the RBI seems to be persisting with the theory of higher interest rate. The poor should have money to live and eat, when the market gets costlier and costlier. Market prices, it appears are determined in North Block in Delhi and RBI, Mumbai. Petrol prices hikes have been jacked up, knowing fully well that there will be spirilling inflation. Import is becoming costlier, and subsequently imported prices too, due to faulty policy of the exchange rate mechanism(by RBI) from 2002. If we continue like this, we will hit the ceiling. The Government has failed to achieve the promised Growth rate, it has failed to keep the fiscal deficit at 4.2%, inflation continues to rise, Rupee continues to plummet. Our Government seems to be in total darkness over Monetary Policy which seems to be driving the economy of the country to the brink, with inflation exceeding 9% for the last straight 11 months, food inflation crossing to 11%, North block seems to be unaware of the economic earthquake which is in high percentile on the Richter scale. Appreciating Dollar is probably adding and continues to add to the national woes. RBI is watching the situation with calm alarm! Oil Companies gleefully add Rs 2/- to the oil price but when things change in the international market like the recent decrease in price of oil per barrel, they cold shuddered Government’s admonition to reduce the oil price by Rs 2.05 paise, instead reduced it reluctantly Rs 1.85 per litre (petrol). With oil companies holding monopoly, they have been conferred right to increase the oil price as they choose by the Government which wants to shed responsibility and blame and wash off their hands of the price hike. Fiscal deficit has hovered beyond the Finance Minister’s 4.2%. How much it would over-shoot has to be seen. Banks has been raising interest rates, thirteen times in the last eighteen months, while the base rate concept remains off bank’s implementation calendar, yet the resultant inflation rate has been growing to touch the double figures. Inflation swells, interest rates are going up, money has to become dear but becoming dearer up-setting the monetary theory propounded by RBI. How and why? Credit squeeze has resulted in slowing down of the output of Goods and services while not necessarily driving demand upward. Increased cost of deficit has an impact on the industry in two ways- one, industries who were expected to go in for expansion have shelved the proposal, no new proposals for release of primary market shares, FIIs selling their stakes and repatriating, which has put the pressure on the Rupee. Our Country which imports 70% of petroleum products and 150 lakh tones of edible oil is increasing its Balance of Payment position by increasing the cost of import. While the Planning Commission, Finance Ministry, Prime Ministers’ Advisory Council rant that things will make correction by March 2012, slippery slopes of a vicious stagflation cycle is visible; it would be very difficult to break it. The avalanche of price rise is cutting the common man. In a developing economy like ours, money supply grows faster than the economic growth, but in reality RBI’s breaks slows growth of money supply. Reserve Bank should realize money supply is not the villain, but the artificial inflow of black money which has been flowing to our system is causing upward inflation. Even a Bank demand draft became exchangeable currency. Monetary policy and monetary tightening need innovation and clever anticipation. Tightening of money supply alone cannot help lowering inflation. The Rupee devaluation against Dollar’s appreciation was visible in 2002. But RBI’s inability to stem the riot in the bud has cost the nation heavily.

Telecom Revolution

India’s XI Plan had projected a telecom services growth, but in reality, but the growth rate exceeded planned projections. In the matter of telephony, India attained the near impossible of more than 75% in density. India’s rural areas were widely covered, giving access of telephony to a large number of people in the rural areas. Though the growth was sensational, there were some policy lapses pertaining to the award of licenses and the matter is seized by the Courts of Law, hence sub judice. There are charges and counter charges. 2 G Spectrum is sparse and naturally, its use should have been made under harsher conditions and upper value. Many experts believe that the licenses were given at rock bottom prices. Though different agencies like Comptroller and Audit General, Central Bureau of Investigation, TRAI, Government of India had given varied figures regarding the revenue that would been acquired if 2 G Spectrum was auctioned, and the revenue that actually came in because of grant of licenses on First-cum-First-served basis. The comparison made by the various authorities must have been made on a base, and that base has to stand the test of law of probability under the eyes of Law. There were certain agencies who calculated the increased revenue by comparing the value received in 3 G auction, some calculations were made on the disposal of shares by companies who had fetched the license (based on the market value of shares), one company had quoted a pan-India value for receiving the license in Court and that value was taken etc. There have been economists and experts who had argued that the ‘base had to be on demand of tele services and the cost to the company to service a customer including cost of investment to be incurred in the new services that would have resulted in ‘x’percentage of growth’. The mean value of that would have accurately and fairly determined the demand for the Services on the basis of which the revenue should have been based. The growth of the Telecom industry in India during the 3rd millennium was reckoned as 40%. Expansion of a service and its acceptability of the same depend on its cost effectiveness. The example of dramatic market expansion in the Telecom industry proves the above concept. When mobile telephony started, the total number of subscribers in India was around 40,000. Telephone instrument costed Rs 40,000/-. The in-coming and out-going charges were Rs 18/- and Rs 32/-. All the Service providers were making huge losses. Today, on an average 5-6 million customers are added and the cost of the calls is very low. Instruments are available from Rs 500/- onwards. India has the World’s second largest mobile phone users at 865 million (August 2011). Teledensity is 73.97%. By 2014-15, it is expected to grow to 1 billion (84%). Wold’s 4th largest internet customer is India with 100 million users (Dec 2010). Internet hosts are 45, 36,000. 40 million use internet through their mobile phones. 10 million are employed in the industry of which 2.8 million are on direct employment and 7 million on indirect employment. In 2005-06, the Revenue through mobile phones at factor cost at constant prices was Rs 32,000 billion, but in 2010-11 it went up to Rs 57,600 billion and in 2015-16, it is expected to yield Rs 103,680 billion. Telecom equipment segment sold equipments worth Rs 1,17,039 Cr (US $ 23.74 billion).ARPU(Average Revenue per Mobile User per month) and the total income has been calculated on the basis of Gompertz model of mobile phone diffusion in India. Government receives Regulatory charge, Service charge from each mobile user. Government Regulatory charges are 13%(This is far more than Pakistan 4.5%, Sri Lanka 0.3%, Malaysia 6.5%, South Africa 5%) Service tax (which no other country charges) in India is 12.24%. The revenue to the Government for 2005-6 at factor cost at current prices would be Rs 53 billion (Regulatory charges) + Rs 41 billion (Service tax) fetching a value of Rs 94 billion. In 2010-11, it was Rs 156 billion +Rs 187 billion = Rs 343 billion, while in 2015-16 it is quantified using the Sigmoid Curve(S-shaped Growth curve) at Rs 324 billion and Rs 388 billion = Rs 712 billion. [The Diffusion of Mobile Phones in India by Dr Sanjay Singh, IIT, Kanpur]. 4G Mobile servicing with LTG Tech will be introduced in 2012. All this will take the nation to a telecom revolution. This is the reality. The annual recurring income revenue to the Government has to be noted.

Pre-historic India was ultra Modern

History is more or less bunk, felt Henry Ford. Those who cannot remember the Past are condemned to repeat it, prophesized George Santayana

. We cannot retreat from the search for knowledge or new explanation- either in this world or beyond. As a species, we are approaching maturity. Are we? People are unwilling to confront mysteries which cannot be eventually explained or incapable of theoretical explanation in terms that they can understand. It’s more spiritually comforting to be able to recognize what we may face on the perimeter of the physical World than to face an unknown threat. If the Phenomenon cannot be explained, the best response is to ignore it- a more reassuring course of action, and, in a way, more innocent. The only explanation we believe is no explanation! Ancient records, there is reference to the reign of Gods, before the First dynast, a time of superior civilization and miraculous powers shared in memory and records of the most ancient World Cultures, considerably antedating Greece and Rome, possessed Knowledge of astronomy, advanced Mathematics, the calculation of time and the measurements of the Earth and Solar System, thousands of Years before these same facts were described or re-established in modern History. To have come by this information, the ancient Culture or Cultures would have to have had telescopes, other sophisticated instruments sufficiently precise as to make the extant calculations. The cyclic theory of Civilization, prevalent in the ancient World and still, to a certain extent in Asia, is in marked contrast a ‘Progress Theory of our own Culture’, with its pre-occupation with the passage and pressure of time, and the constly forward march of Civilization and Scientific development. As our own knowledge increases, however, we may find that what was suspected by observers in antiquity will be shown to have eventually transpired. World catastrophes and destruction of entire Civilizations may have previously resulted from a variety of causes, several of which face us today, however, resolutely we may refuse to contemplate them. Outstanding among these is the question of Overpopulation, atomic tests, nuclear waste, environmental pollution of air, water, imbalances of ecology, etc. Effect of a man-inspired melting of the Polar ice together with tidal waves and flooding of sea-coasts throughout the World is reminiscent of what we now consider to be the far from legendry Flood of pre-history which covered surface lands. Spillage of Oil would cause large-scale melting of Polar ice. Extinction of so many species of animal life will predate the human species elimination in its totality! We find mention in the records of antiquity in Mahabharata that the sub continent suffered from strangling overpopulation. Ancient religious legends of India betel nine crisis of the modern World. The earth is strewn with works of pre-historic engineering connected with the use of Polar magnetism. Within the ruins of an ancient structure whose vast size has hitherto rendered it invisible- linking together the great stone remains of pre-history still standing on the Plains, mountain deserts, in the jungles and under the Seas of the World. That defies the Laws of Science- we do not understand today- the stresses and pulls that represent the hidden forces of the Earth, Planets, Sun, Moon and the Stars! That a knowledge of spherical trigonometry and the use of geodetic instruments of excellent precision, and the possibility that they were originally plotted during a period approximately 8,000 to 10,000 years ago , many many centuries before our own recorded History, show that they knew all that we are presently inventing and discovering! Einstein’s space-time continuum, Newton’s theory of Gravity and Laws of Motion were known to them. Subjects discovered in Mahabharata, Ramayana, Samaraganasutradhara, Vaisesika School of Science Philosophers of anicient India, and other well-known Indian Philosophical books contain unexpected reference descriptions in complete detail on atomic warfare. These precious works which escaped destruction and burning covered subjects such as

relativity of time and space, cosmic rays, the law of gravity, radiation, the kinetic nature of energy, atomic theory, etc. These scientists knew that earth was spinning on its own axis

. They not only knew the shape of the earth, but its rotation itself. These Scientists have also recorded that atoms were in incessant motion. They subdivided the measure of time into a series of incredible fractions of seconds, the most infinitesimal being considered as the period taken by an atom to traverse its own unit of Space. Their knowledge of airships, enemy aircraft, tow-storey sky chariots, modern weaponry, artillery, rockets, agneyastras (cylindrical cannons) depicted that they were well versed in the modern type of war fare. They also knew how to release fog dart dense camouflage, use of different kinds of artillery, bullets of iron, lead shots, explosives of saltpeter, Sulphur, Charcoal, rocket bombs, etc. Ramayana describes travel by Vimanas describing the aerial view, which are precise and balancing view of part of Srilankan and Indian Coast. There were cresting and vanishing waves of Civilizations. Scientifically advanced civilizations have vanished leaving no trace except in legend. It may presently be a preserved memory but references of the Past describe a Pre-historic scientifically advanced civilization which brought about their own downfall!

Relationship between Inflation,Growth,Capital

India is a growing economy, set to join a League of Nations (BRIC) to emerge as one of the emerging economies by the middle of the third millennium. It had an impressive growth rate, upward of 9%, its Foreign Exchange reserves enlarged more than 7 times of the figure in 2003-4, its trade grew to beyond three century mark, its poor slowly were growing and had better living conditions, the purchasing power of the middle class grew, and consumption began to drive the economy. Inflation was at its lowest, in contrast to the high growth returns. India was on the red carpet growth to prosperity. India slowly emerged as a economic powerhouse with investments from abroad soaring in making it the favourable foreign investment destination. Ever since March, 2008 there has been a constant increase in the rate of inflation. In Nov 2008, it touched 10.45%, in Dec 2009 it was 14.97%, in January 2010 it went up to 16.22% and in September 2011 it posted 9.72%. The Government, made a monetary Policy amendment by increasing the low Bank interest rates, which has seen revision more than 13 times since the last 18 months. Relentlessly, the Banks went on expanding the interest rates with the hope that they would be able to slide down the inflationary impact on the economy. More they tried, more difficult it became. India’s war against inflation resulted in sacrificing its growth which came down to 7.5% and may slip to 7.2%. The Government gave the Magna Carta to the Oil companies to decide the petrol prices. The Petrol prices have been increased repeatedly, so that it increased the percentage of inflation. It has become very difficult to tame inflation as it has gone beyond a point. Our markets have seen a lull. Foreign investors do not beseech India like before. There has been a fall in percentile of investment. American economy is creating a Permbra situation in the Indian economy. When markets are lull, it passes on the feel to the Economy. Interest hike has seen the Non performing asset of Banks increase by 20% in the period, June-Sept 2011 (Rs 16,132 Cr). All the Public sector restructured their loans and 17% of all the advances show that it had turned bad. Many Small Medium Enterprise are turning red or closing shop as they are not able to get proper and timely Credit. A propped up credit at 14% makes availing loans unviable for units. Big Corporate companies can opt for External borrowings, but with the Indian Rupee turning meek against the dull Dollar has made foreign loans costlier than before (Rs 49.70= 1 $)(from Rs 40 = 1 $). They are indeed, waiting for some threshold. The aviation industry is in the dole drums because of this. The Exporters are also facing brunt on this front. Their dollar worth of goods account for more rupees while the expenses in the domestic market has gone sky high. The cost of credit through Foreign Exchange for Packaging Credit is not sustainable. Conflict over Policy objective higher level of well-being, that is means of achieving it- by higher growth or by lower inflation, trade-off is necessitated; both cannot be achieved simultaneously. Government intervention in financial and goods markets, due to macroeconomic rigidities has caused market failure and microeconomic instability. Inflation is harmful rather than helpful to growth. Policy implications will see inflation- growth nexus. Negative co-relation between inflation and growth in the long run would result in the influence of the former on reducing investment, productivity and growth. We are in the thick of core inflation, inflation on the basis of CPI, food inflation, low asset creation, declining value of parity (Rupee- Dollar parity), monetary inflation, and price inflation. There was a semblance of over heat in the economic growth and its irrational exuberance has seen the trajectory of growth going hay-wire. More than the fiat currency (paper currency), over supply of bank notes has resulted in depreciation of their value (Classical Economists David Hume & Ricardo). This may perhaps be one reason that the Draft which had a life of 6 months was traded in the market between persons. (This was treated like commodity money). Money is what money does. Money is transferable. It is constantly exchangeable. So long as money is in circulation, money gives equal value of other goods and services. Somebody may invest money to make some product. He employs workers and other managerial persons who look after his unit. They buy the raw materials out of the funds from their working capital and manufacture end product for sale to some wholesaler or retailer, on receipt of which he pays the money towards the cost of the goods which are demanded on the basis of Invoice. He pays the money and takes the consignment and sells the same and makes money. Again, he places the order. These steps are repeated. The money received is put in the Bank account. Salaries are paid to workmen, other staff on duty. Bills of Raw material supplier, embellishment supplier, packaging supplier, transporter, telephone bill, electricity bill, other temporary staff bill, other bills towards purchase of merchandise, etc are all paid, and they in turn pay for goods and services. There is circulation of money. Bank charges interest rates. The owner takes the Profit. Money capital is recycled again and again, and another session he will restart the cycle of reproduction with the aim of accumulating more capital and its disbursal. Suppose, the businessman feels that he does not want to continue his industry, so he sells his company to somebody and puts the entire corpus in the Bank. Instead of putting his money-capital back into commodities, he invests it in the bank. He now holds in his hands a claim to capital, perhaps in the form of a bank-account, or a bond, shares or whatever, rather than capital as such. Now his money lies idle in the bank vault. But his claim to the money is secure. However neither his claim nor the money itself are capital as such and can earn no interest, because the money is not in circulation. By its being in the self, it is not expected to produce more money. The Bank, need to loan this money to somebody. May be one person. Or many persons. The persons who have availed the loan should use it productively to earn a return by which he can circulate the money, pay interest, instalments due to the Bank out of his profit. The Bank should pay interest to the depositor as well. It should also make profit to be in business of banking. However, as the class of speculators, bankers, brokers, financiers, and so on, grows, as is inevitably the case wherever the mass of capital in a country reaches a sufficient scale, what happens is, for example, the bank finds that it is able to loan out far more than it has deposited in its vaults; speculators can sell products that they do not possess, “the right kind of person” is good for credit even when they have nothing, .etc., etc. Thus one and the same unit of productive capital may have to support not just the one retired industrialist who deposited his savings with the bank, but multiple claims on one and the same capital. If the bank accepts one million as Savings, but loans out ten millions, each of those ten millions has equal claim to that same value. This is how fictitious capital comes about. Fictitious Capital is value, in the form of credit, shares, debt, speculation and various forms of paper money, above and beyond what can be realized in the form of commodities. The ability of the bank to make unsecured loans is dependent on “confidence”, and at times of expansion and boom, the mass of fictitious capital grows rapidly. Then, when the period of contraction arrives, and the workers can no longer feed the voracious appetites of all these capitals, the bank finds itself under pressure and calls in its loans, defaults occur, bankruptcies, closures, share prices fall, and things fall back to reality – fictitious value is wiped out. In times of recession, even good, useful commodities cannot be sold because money and credit has become scarce, and the commodities prove to be valueless. Fictitious capital is that proportion of capital which cannot be simultaneously converted into existing use-values. It is an invention which is absolutely necessary for the growth of real capital, it constitutes the symbol of confidence in the future. It is a necessary but costly fiction, and sooner or later it crashes to earth. Roughly every ten years, the mass of fictitious capital grows while trade is good, and then, as the capacity of the workers to sustain the mass of hangers on reaches its limits, the downturn gathers momentum and fictitious capital is wiped out, and the cycle begins again. The scale of these crises grew continuously until the Wall Street Crash of 1929, and the Great Depression of the 1930s. The Depression and the War which followed wiped out all the accumulated mass of capital so that a new cycle of reconstruction could begin again in 1945. The New Deal in the US, Keynesian economic policies and particularly the international monetary arrangements set up at the Bretton Woods Conference of July 1944, created conditions for an exceptionally long period of growth after the War. The particular mechanism for the creation of an unprecedented mass of fictitious value in this period was the role assigned to the US dollar as the medium of international exchange in lieu of gold. Under the Mashall Plan, Europe was rebuilt and the US capitalist class further enriched by the labour of all those workers who did the rebuilding. But capital could not organise that reconstruction other than by creating a new mass of fictitious capital, in the form of inconvertible dollars. Today, we are seeing the declining value of the Dollar. There is currency depreciation. By the mid-1960s this mass of fictitious capital began to collapse and world entered a prolonged period of crisis. The mass of fictitious capital circulating in the money markets, futures exchanges and so on today is, however, far greater than ever before. 98% of the value of monetary transactions in the world is speculative, only 2% involve actual use-values. Capital continues to exist by means of the delicate balancing act performed by all the governments and banks of the major capitalist countries, staving off the collapse of this gigantic and parasitic fantasy. The collapse of Banks due to ‘mortgage crisis’ can be attributed to this fictitious capital. The Banks could not recover the debt as the value of property had shrunk. Money is substitute to Capital (Tobin effect). Money, according to Stockman, is complimentary to Capital.

India's flip flop scientific Temper

Ancient India produced a lot of good science. Theorems attributed to Pythagoras are described in Indian texts that predate the Greeks. Foreign subjugation for around 1,000 years has discredited India’s ancient texts including the Vedas which contained many stanzas which were really ‘more advanced than the modern Science’. Since these texts were written in Sanskrit, and the statements were concise that it was difficult to expand the verses. Even as Indian economy continues to grow at a fast clip, several other statistics indicate that there are many challenges that will need to be taken in stride if the growth is to be sustained. Of them, arguably, one of the biggest challenges is the fact that India has the world’s largest number of uneducated children. These children can be India’s scientists, astronauts, doctors, engineers, economists, journalists and even politicians. Our educational system continues to be lacking in spirit. We lack continuity. The amount government earmarks for higher education, Research, etc is inadequate. All that the Government Research bodies do is present papers at international fora. None of their models have been tested on the ground for successful results. None of their suggested outcomes have come true. There are fundamental flaws in our approach to Research and Development. Statistical data released by these experts are found to be fallacious resulting in our continuing with the same Policy though it required a change. Wrong predictions result in wrong diagnosis which again fails the Policy, however, well intended it may be. Scientists are at a superficial level, equipped with knowledge but not in terms of feeling. The depth in scientific temper is found wanting. India does not attach importance in nanotechnology, information technology, biotechnology, space technology, cosmology, astrophysics and astronomy, etc. It is a sad fact that we have allowed our universities to degenerate. Most of the money goes to special centres, which have high connections. Research centres like agricultural research, economic research, product development, packaging and design technology which are the monopoly of the highly influential get government grants running into tens and thousand crores of Rupees. But the outcome is not visible as we see studded growth everywhere. If you want to excite young students to do research they should see research being done in an environment where they are studying. Only a handful is doing research in universities. In Institutes where there is reasonable amount of research being done, they are very few students. If the research institutes were on university campuses, then things might have been different. We should try to link university students and teachers with research institutes more closely and intimately. Indian universities lack scientific temperament. Experimenting is not their forte. Scientists get a spiritual high from science; they feel connected to the universe; and intellectual challenge is often their goal.

Rule of Law is extension of natural justice without discrimination

Law, Rule of Law, Natural Justice Judicial activism is desirable in a democracy, but it should not water down the Natural Justice which forms the core and crux of Rule of Law. The Law holds no discrimination and equality of all persons before Law is a basic right, a human right, a fundamental ingredient of Natural Justice. The established principle of Criminal jurisprudence that in the absence of specific countervailing factors, there is a general perception in favour of bail in all cognizable cases. This legal covenant is a natural extension of Rule of Law that presumes that all are innocent until proved guilty. The maxim “let hundred guilty escape punishments, but not a single innocent be found guilty.” In a recent case involving grant of bail to Ms Kannimozhi, one of the accused in the 2 G scam, the CBI Court despite not opposing bail of one accused woman was denied bail by stating that the benefit of Sec 437 Cr.PC was not available to her as she belonged to the upper strata of the Society. Sec 437 Cr.PC does not differentiate between classes of women. The benefit of gender justice seems to have been interpreted differently by the Judge when there is no distinction in the Constitution or the code of Criminal procedure regarding class distinction. This is a mistaken conclusion. Further, the Judge says that the ends of Justice would be better served, by incarceration in jail during the trial as the accused can influence the witnesses. No where in the IPC or Cr.PC such a course is prescribed. The charge sheet is filed, and the case against her is mostly circumstantial, evidence being the various records which are in Court’s custody, and the chances of intimidation of witness looks far fetched. Further more, the Supreme Court had asked her to appeal for bail after the filing of the charge sheet. The same judge who denied her bail gave her good certificate by saying that he had to reluctantly deny her bail as he found her dignified in her conduct within the Court room. The Judge has quoted the Sathyam judgement of the Supreme Court for refusing bail. The same Supreme Court has enlarged all the accused in Sathyam case including Ramalinga Raju. Therefore, the ends of Justice would be better served,if the legal issues which vary from case to case are decided on merits. The judiciary should not get swayed by public opinion, and public sentiment, as Public perception is based on little known facts and liable to change.

The Petrol price oligopoly?

We see a whipsaw market performance, huge runaway inflation including core and food inflation, bank’s already high interest increased 13 times in the last 18 months, poor contribution of government sector banks in nation building, unfair credit/colossus saving rate policy which is not conducive to Saving, freezing of administered prices of petrol in June 2010 has seen greedy and competitative Oil companies raising petrol prices at least half a dozen times- these are myxovirus that hurt India’s economic mobility to the top as an emerging market. We also see a government which is insensitive to Public reaction .The salaried class is epitome of woes of escalating prices. Government’s obsession with Growth rate, and reduction of fiscal deficit, as the main formula of public Policy, and privatization of all administered price regimes so as to reduce government’s subsidy allocation, is a retrograde step contemplated by the Planning Commission to change the edifice of economic policy followed by the architects of Indian economic growth. Momentum of growth depend upon the increased output of manufactured companies who should be given a level playing field with the foreign investors, the high growth in exports (US $ 275 billion) added the Foreign Exchange Reserves, but the industry’s perseverance to grow is cut in the bud by the insensitive support given by the Government with its oscillating Foreign policy which is self defeating. Gross Domestic Product is calculated on the Expenditure method, and thanks to the social sector schemes with huge outlays, excessive liquidity in the system creates inflation. Another factor that adds fuel to the price is born again retail Trading houses which were mega Wholesale super markets, withdraw some of the daily use item causing artificial scarcity, causing too much money chasing two few goods. Prices soar. When domestic banks raised interest rates, Government allowed the Corporates to raise funds from foreign debt markets at low LIBOR rates as the limit of borrowing was increased from $ 20 billion to $ 30 billion per year. But the exchange parity rate did them in, as Rupee depreciated to Rs 50 against a Dollar, making the loan costly. Corporates deserted the external markets. The cost of 1 barrel of oil is $ 110 in the international market. 1 barrel is approximately about 160 liters. The cost of Refining 1 litre of Crude oil costs around Rs 34.09. There is Central Excise levy, Customs duty which is around Rs 5.148 per litre. There is an addition of State levies, and the states have been opting for nil additional duty. One Crore litres of Crude is refined every month. This huge refinement of oil would bring down the per capita cost to negligible percentage. According to the statement of the Finance Minister in the floor of Parliament, more than Rs 8,000 Cr is given as subsidy to IOC, Rs 2,000 Cr to Bharat petroleum, and Rs 1500 cr to Hindustan petroleum. Last year, according to the balance sheet published by Indian Oil Corporation, the net profit after tax was Rs 10,000 Cr! The CEO of IOC went on record two days ago, and made a comment that under recoveries came to Rs 2500 Cr. What has necessitated an increase of Rs 1.80 per litre according to these oil Cos? One, cost of under recoveries need to be embedded in the sale price. Second, the appreciation of the Rupee (Rs 50 = $1) need to be compensated. Just like private exporters, the exchange fluctuation is a market phenomenon, and the Oil companies cannot ask the public to compensate it for the fluctuation. When all along it was the other way around, what concession you have provided, the oil companies must answer. PSUs should cut the cloth according to the cloth and not resort to Arab Spring tactic to raise prices at will. Reliance and other private sector companies also cannot make market phenomenon responsible for enhancing market prices indiscriminately. If you are in the market economy, you should try to adumbrate market perfections. When the profit of PSU is given back to the Government, it goes as Government’s receipts. Why don’t the government reduce Customs duty just as they have done for private players who are getting edible oil from certain countries at “nil” customs duty? If they can favour private cos, why not the PSUs who are essentially government run companies? When the administered price mechanism was dismantled, the Oil Companies should obey the tenants of the market. Since these PSU hold monopoly, they cannot form a cartel and rob the public in the name of factoring in imaginary losses as they may appear from time to time. The problem with the oil Companies is that their expenditure is beyond comprehension. Their operative expenses should be reduced. The quantity of import and the quantum of sale, there should be a match. What is the carry over stock? If an audit is conducted, many Skeltons may fall. Government should always opt for hard options and not easy options. All Companies should have due diligence on expenditure. It would also include the maximum percentile return of refined from the Refineries. What is the cost to the company to work out the sale price? Follow expenditure per customer centric mode and not per employee centric. Even after giving Rs 80,000 pm plus perks to the Government Secretaries, the output of Government babus have not under gone even 1% higher productivity. Higher economic growth would mean je ne sais quoi, unless they reflect in the poor graduating to the next higher class by begetting higher income. It must not be an empty rhetoric and lot of economic jargon explanations. The administered pricing of Petrol must be reinstated, as Companies are going haywire without accountability. They are not mature to handle pricing on their own. Market prices must be determined by competitative pricing and not monopoly pricing. The gap of 30% between Budget Estimates and Revised Estimates should be introspected; government expenditure must be reduced. Let us not be a Jeremiah, predicting discontent!

Conservative and derided Indian Middle Class?

The middle class is any class of people in the middle of a societal hierarchy. In Weberian socio-economic terms, the middle class is the broad group of people in contemporary society who fall socio-economically between the working class and upper class. Could the Great Indian Middle Class be the Great Indian Mythical Class? A persistent source of confusion surrounding the term "middle class" derives predominantly from there being no set criteria for such a definition. From an economic perspective, for example, members of the middle class do not necessarily fall in the middle of a society's income distribution. Instead, middle class salaries tend to be determined by middle class occupations, which in turn are attained by means of middle class values. Thus, individuals who might fall in the middle ground on a societal hierarchy as defined by sociologists do not necessarily fall into a middle ground on an economic hierarchy as defined by economists. As a result, intuitive colloquial and journalistic usage of the term casts a wide net and does not necessarily coincide with an academic sociological or economic definition. National Council of Applied Economic Research (NCAER) has held that a family with an annual income between Rs 3.4 lakhs and Rs 17 lakhs (at 2009-10 price levels) falls in the ‘middle-class’ category. Applying this arithmetic, NCAER hold that the middle-class households would be 53.3 million (267 million people). This unwieldy definition base puts the statistics to ridicule. The same way, Planning Commission calculated poverty as per day spending equivalent to Rs 32/- in urban and Rs 26/- in rural area. The absurd methodology adopted by these bodies to calculate the basic statistics is to arrive at a high figure in the case of ‘middle-class’ and a lower figure at the Poor category of the Population. Growth rate has never been able to reduce the unemployment rate which stood at 9.4%(2009-10) while average quarterly growth rate has been averaging around 7.45 % between 2000-11, even though in Q3 of 2003, the growth was 11.8%, Q3 of 2002 was 1.6%. Rob Peter to pay Paul. This seems to be the economic philosophy of the Government. In spite of persistent, consistent, aimless designed social security programmes with outlay of Rs 1 lakh Crores end up incomplete with neither the physical nor the monetary targets accomplished. The Policy editors have narcissist temperament, deceptive assumptions and outrageous greed. Against laudable objectives with which the Scheme was ambitionally lodged the Result is dismal emptiness, creating an un-necessary class war. The Poor continues to be poor, and the generation gap sees another poor taking over from his ancestor (Munishi Premchand’s famous story), when our well worked Planning Economics take us half way to zero, mathematics no longer work! Horizontal organizing, democratic decision making challenges, technocratic governance driven by credentialed experts, takes Indian economy to the dark jungle economy of wealth for none! The term “middle-class” is a classical example of a semantic plot! It is a widely misused term. People of the ‘cattle class’, legacy of the Victorian era, is it not linguistic outrage? The rich are busy counting their cashes. The Poor, darling of the political class, social scientists and so called intelligentsia, while, the ‘middle-class’ forlorn and uncared is without a Patron or a God-father but increasingly, the Finance Minister wants him to buckle his shoes by making him pay dear and dearer. His salary is cut in the mode of Tax deducted at source, service tax clamped while Government is pretending to be lax in collecting taxes from their favourite Corporate who enjoy plethora of tax concessions and benefits and in case of trouble can approach the ‘settlement commission’ The income earned by the Cricket Board which vulgarly displays wealth is exempt from taxes. What public purpose they serve, only the North Block die- herds know. Tap funds from these people who figure in Forbes list, increase the tax slab for the high rich, those who build houses worth Crores Float high interest Government bonds and compulsorily make these corporate houses to purchase them, so that the additional income earned can be used for reducing fiscal deficit. World Bank has pointed out that Indian Government is very liberal with low taxation base at the higher income slab- only some 15-16% of the GDP is collected as direct taxes, mostly they are the ‘middle class’ who can be meddled in any way to shell out, as compared to 25-40% in developed countries, enough taxes from the taxable lot. But the Corporate rich, who play the victim card, say that the jealous Indian Middle mentality in them feel that they want to take somebody else’s ‘Cadillac’ for nothing! In India, the middle class is a neglected constituency. Hike, hike, hike in the domestic interest rate on a regular level, while allowing the Corporates the luxury of availing Credit from External markets at low rates, increasing the prices of petrol incessantly, not because of high crude world prices but for making the Public sector navaratna bulge their profits, tinkering with indirect taxes, and reducing the taxable portion of income from the Corporates while hiking the rate for the middle-class. The population share of the rich is shrinking, the Poor is shrinking but the middle-class is growing. This augurs well for the prophets of high, higher, highest growth in the Indian Economy.