Why pamper industries at the cost of agriculture? A Tata example..

It was more than a decade and a half ago, in 1992 to be precise, that I happened to hear an economist speak on 'sustainable integrated balanced development'. Just to reminisce, that was the beginning of the globalisation phase of India, probably just before India Inc. started receiving the limelight, or shall I say more positively skewed share of focus, from the powers that be. The internet boom had not yet started its ascendancy. We had just survived the fall outs from the liberation of Kuwait and the (first) Iraq war by Mr. Bush, the Senior. It was only a few months prior to that, that we'd been through the the Indian Express expose on the pawning of gold by our government under the stewardship of the then Finance Minister Yashwant Sinha, who was at that time with the Janata Dal (his pre-BJP days). Dr. Manmohan Singh (MMS) had unveiled his first budget. P. Chidambaram was commerce minister at that time. IMF doctrines had just began its influence on governmental policies.

This sets out the back drop. 

It may be just coincidental that the 'economist-speak' (which I have referred to in the opening paragraph) was in Calcutta, in Narendrapur to be more precise. It took place during a refresher course which I was attending in my then employer's training complex at Narendrapur. Among several interesting things which he shared with us, he recounted his student days at the famed Delhi School of Economics, particularly the discussions that took place with MMS himself. He was tangentially indicating that there was a gradual shift since then in the economic postulates of Dr. MMS, compared to where he was in his DSE days, and he tried to make out a case that that was possibly due to the 'learning unlearning' process he subjected himself to in his is days at Washington. He (our speaker) felt that MMS got catapaulted to a totally different kind of doctrinated pedestal after his stint with the IMF.

Let us come back to our theme. His (our speaker's) one question was - why should we give primacy to industries and particularly so, at the cost of agriculture? His argument was that stimulated economic growth derived from enhanced industrial growth in a manner out-pacing agriculture may be less meaningful to a country like India. Politicians after politicians speak about the fortunes of industrialisation, but do not spare even an iota of thought on agriculture. Unless we have a sustainable environment-friendly integrated and balanced development where the primary, secondary and tertiary sectors are given balanced focus, it can only help widen the rift between the rich and the poor. As the saying goes, how does the rich becoming richer help the poor who is left with only one option - to become only poorer. Increase in the number of millionaires is by no means a good measure of what real development is. This was the crux of his rather thought provoking speech.

However, it is nothing but a bare fact that the story is no different irrespective of whether the state is ruled by the left or the right or those who take a middle path. Let us take the Tata project which was supposed to have gone to fruition in Singur. Have we spared a thought on how much financial assistance was promised to the Tatas by the Left-controlled WB government?Here's a snap shot of some of the "highlights" of the deal.

• Tata's investment supposedly ~ Rs. 1500 Crore.
  

• Heavily subsidised lease of ~1000 acres of land to the Tata on an express way, supposedly worth upwards of Rs. 600 Crore. Here's what a 'Rediff' report says
  

Incidentally, land for the factory had also been provided at a subsidised rate with 645 acres being provided to Tata Motors at Rs 1 crore a year against market rate of Rs 19.3 crore a year in that area, and with 290 acres being provided for the vendor and related facilities units at Rs 23 lakh a year against a market rate of Rs 8.7 crore a year. This excluded the cost of acquisition of the land pegged at around Rs 120 crore.

• Concessional power @ more than half of the rates charged to any high tension industrial unit, and promise of offset should the tariff increase by more than 25 paisa per KwH.
  

• Soft loan to Tatas of Rs. 200 crore loaned within two months of inking the MoU in May, 2006 at an interest rate of 1% per annum repayable 21 years thence, in five equal installments. By way of aside, please do a small calculation how much this amount would grow to, if invested as an FD in a bank. On interest subsidy alone, this would mean something like Rs. 25 crores a year.
  

• Reimbursement by WB government of Central Excise Duties that Tata pays for 10 years.
  

• Reimbursement by WB government of all corporate income taxes in full for first five years and 30% for next five years payable by Tata.
  

• All sales taxes i.e.VAT and CST collected by the Tata Motors from the customers to be kept with the Tatas for 31 years at an interest rate of 0.1% per annum!!!
  

• Reimbursement by WB government of the loan interest payable by the Tatas to build the project. A 'Yahoo' group report reads thus:
  

This can be described in very simple words that who ever buys any car and pays
taxes on that, the money is retained by Tatas for thirty years and instead of
depositing in the exchequer within 45 or 90 days, will deposit after 31 years.
If the amount of money that the Tatas will retain during the thirty years, it
will amount to huge sums of money to which 1500 crore will look pigmy.

In addition to the above, the government would have had to open new sections within the government secretariat, only to run separate accounts for this project keeping in view the accounting complications involved in the deferment of loans, reimbursements etc. explained in the foregoing..

My initial thought on reading the related reports is - who cannot be starting and running a project given the sops and incentives? Is the public aware of all these? It is nothing but an absolute shame that nobody speaks about any of these, but will outrun the other in fixing the blame squarely on Ms. Mamta Banerjee, who for whatever reasons chose to speak for the farmers. She may have had her own political agenda behind it, but can that reason mask the facts behind the deal? And to get what benefit - tangible or intangible - in return? 

More details about these here and here. Those who are inclined can read on...

PS: It will be interesting to do some research on the specifcs behind the likes of this - say the 'Smart City' project in Kerala, and see if similar things come up there as well.....

Impudence - but can that go to this extent?

Amidst the turmoils that we are witnessing day by day in the financial world, who would have expected that the American International Group (AIG) would dare throw a party at a Californian resort to celebrate US Government's bailout of their group with tax payer's money?

Please see what AIG officials have done (here) and some reactions to it (here)

WASHINGTON — Less than a week after the federal government had to bail out American International Group Inc., the company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company's meltdown said Tuesday.

The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.

The retreat didn't include anyone from the financial products division that nearly drove AIG under, but lawmakers were still enraged over thousands of dollars spent on catered banquets, golf outings and visits to the resort's spa and salon for executives of AIG's main U.S. life insurance subsidiary.

"Average Americans are suffering economically. They're losing their jobs, their homes and their health insurance," House Oversight Committee Chairman Henry Waxman, D-Calif., scolded. "Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."

Some gory details of the spend...

Here is your hard earned tax dollars at work....

$139,375.30 for rooms. $147, 301.71 for "banquets." $1,488 for the Vogue Salon, which features manicures, pedicures and hairstyling. $6,939.09 on golf. $2,949 for tips. $5,016.32 at the Stonehill Tavern. $3,064.71 for in-room dining and the lobby lounge. That's part of the $440,000 bill from a recent weekend bash that an American International Group Inc. subsidiary threw for its top performers ........

Gandhiji In The Context Of Globalisation – A Glance At The Ethics Of Globalisation

Last two three weeks had been quite hectic at work, so much so that getting organised mentally to go astray on blogging thoughts was quite difficult. There was one more reason, in fact, for that. My intent was to write on the Indo-US nuclear deal, but then the amount of opinionated, and many a times conflicting, information that was coming in from various sources made it rather difficult to get a firm pedestal on which to start writing from. The conflict continues still, with the left parties deciding to observe the day on which the agreement gets inked as a 'black day'. As the saying in our vernacular goes, ours is a society where sides are taken even on an issue of one beating his mother, and no wonder the polity is so wide apart on its affiliations to this deal that the hapless millions who are caught in between the two sides (those using the grey cells, perhaps?) really find it a struggle to distinguish black form the white...Anyway, few more things to read on before I ink my thoughts on that.

But then today is October 2, the day on which the greatest of Indians was born 139 years ago. Perhaps now is the time when the ordinary Indians will be missing this great man, more dearly than ever. Just thought it timely to reproduce an article that I wrote a few years ago for a souvenir that was being published by the Embassy of India here commemorating the Indian Republic day. To be honest, the write up is more of a compilation, and several publications have been relied upon, in compiling that write up.

Here goes.....

Quite oft-quoted in social and economic circles the world over, and almost clichéd as a result, is the submission that today’s is an era of globalisation, and that globalisation is here to stay, and that nations and peoples will necessarily have to go through a “learning- unlearning” process or bring about a paradigm-shift to stand up to this social, economic and irreversible inevitability. Much as strong as this argument presented by protagonists of globalization remains, there stands an “equal and opposite” reaction to it, validating yet again the famed postulates of Newtonian physics. Most of the thinking world, more so many of the NGOs, have voiced and tabled their stiff opposition to having sweeping changes under this guise. Nevertheless, there is no denying the fact that globalization, whether right or wrong, has become a defining moment in contemporary human history. Globalisation impacts every human being in every aspect of their being - ranging from the conceptual to the materialistic, from a philosophical definition of ourselves to more mundane, physical, material and down-to-earth aspects of our lives. Something loosely akin to the Industrial revolution and colonization; probably following a similar chronological sequence too.

This write up examines how Gandhiji’s views on globalisation have become crucially relevant today, as they indeed were decades ago during the colonial days. 20th century history tells us that India's Independence scripted one of the most significant defining moments in history – one that ignited a world-wide process of decolonization, probably ending with the handover of Hong Kong to China, five decades later. But almost coinciding with this period of political de-colonisation, one could see the emergence of another kind of economic transition commencing with the establishment of the “Bretton Woods” institutions, the end of the Cold war etc. – symbolically represented by the fall of the Berlin Wall or the collapse of the USSR.

A larger sweep of history could, however, indicate that the above statement may not entirely be correct. The notion that universal identities must always take precedence over particular identities can be seen to be an old one. Karl Marx identified the highest solidarity as that of man’s with his species-being. And, one could also argue that globalisation is a process that has been going on for a long time. Amitav Ghosh, in his novel “In an Antique Land”, narrates how global links had been established long ago between traders from the Middle East and Indian merchants, long before Vasco da Gama landed on the coast of Kozhikode in Kerala.

But globalisation then had a more humane face than what it has today. Since the advent of Vasco da Gama, the trade scenario changed – the links have started assuming inhumane proportions, leading to slavery, oppression, colonialism, imperialism, and above all inequality. In one view, it may look as though globalisation has expanded choices and created more goods and services for consumption, and resulted in economic expansion of various countries. However, one should not forget that while globalisation may well have expanded the economy, it has fundamentally, and often negatively, affected the conditions of production and employment. Whether this has resulted in any upliftment of the common man - the man in the streets, the man who struggles to win his bread, clothing and shelter, is very much open to question. In one sense, 'production by the masses' which provided dignity to the worker, and is more appropriate to a society with a huge population, had to make way to 'mass production', the brutally aggressive, ecologically damaging, and self-destructive product of the market forces. As Schumacher put it, it dehumanizes the labour. The market instead of being one’s servant, has become his master.

In such a scenario, where does Gandhiji’s relevance spring up? Gurudev Rabindranath Tagore, inspired by the vision and values of Gandhiji, once wrote thus in an article titled “Crisis of Civilisation”:

"We have for over a century been dragged by the prosperous West behind its chariot, choked by the dust, deafened by the noise, humbled by our own helplessness and overwhelmed by the speed. We agreed to acknowledge that this chariot-drive was progress, and the progress was civilisation. If we ever ventured to ask, `progress towards what, and progress for whom', it was considered to be peculiarly and ridiculously oriental to entertain such ideas about the absoluteness of progress. Of late, a voice (Gandhi) has come to us to take count not only of the scientific perfection of the chariot but of the depth of the ditches lying in its path."

Nothing reflects Gandhiji’s relevance in this context, better than Gurudev’s quote. To be objective, there is nothing on record to prove that he was against globalisation per se, even though anti-globalisation movements often portray him as someone who shared their ideological leanings. Nor was he against India going global. Probably, it could not have been otherwise, as he himself was a product of globalisation – having been educated in London and influenced by the lives and teachings of the likes of Jesus, Tolstoy, Thoreau and Ruskin, and having started his political activities in South Africa before he even joined the political arena in India. He is in fact seen to have stated that globalisation is no bigger a threat to India than what she faced from the Greeks, or the Huns or the British.

Moral and ethical development should go alongside economical development. This was Gandhiji’s maxim. He believed, and rightly so, that wealth amassed unethically can only make a human being poorer – probably poorer than the poorest of a man who never neglected morals despite struggling hard to make both the ends meet. He advocated that every nation should adopt and execute a development model or strategy which is suited to improving the quality of its people's life. At the same time, he would also say that economic well-being of an individual or of a society by itself need not necessarily mean high quality of life if he, or that society, stands low on the cultural-moral scale. In other words, globalisation should be rooted in ethics. The idea which is the most foundational to his developmental model is that neither in planning nor in its execution, should there be anything unethical, or which prompts, or provides an opportunity, to any participant in it to do anything unethical. It may look outlandish to be so much concerned with ethics or morality at this time because many of the so-called world leaders of today’s tend to be believing, and firmly so, that certain amount of immorality or non-ethical behaviour is unavoidable or not worth bothering about in the larger interests of development. Gandhiji however believed that true economics never militates against ethical standards. He did not distinguish much between the two in fact. To him, good ethics must make good economics, as true economics stands for social justice, and promotes the good of all equally, including the weakest.

In the globalisation models that we see galore lately, development starts from the top with the affluent – a development measure that enriches the already-rich and the affluent, with an assumption that the resultant benefits may percolate to the poor and the under-privileged. But in reality, instead of percolating, the benefits simply evaporate or get dried up before they reach the bottom rung of the ladder. In the Gandhian model, on the other hand, the development process starts with those who are at the bottom of the affluence scale, and therefore it is sure to benefit the poor, which eventually promotes social harmony which in turn will benefit the society at large.

His economic ideals were not about the destruction of machinery, but about regulation of excesses. He did object to the 'craze for machinery’- the labour-saving machinery because such machinery can help only a few to ride on the back of the millions. He did not consider profit to be necessarily unethical; instead he postulated that a businessman has the right to make profit, but he has to do so within the bounds of morality. If profit is the sole motive of an enterprise, then such a motive is sure to throw humanity out of its equilibrium. The emphasis has to be shifted back to the person rather than the product. Costs have to be measured in human terms by taking cognizance of its benefit to human beings.

Gandhiji once said “Whenever you are in doubt or when the self becomes too much for you, apply the following test. Recall the face of the poorest and weakest man whom you have seen, and ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to a control over his own life and destiny? Will it lead to Swaraj for the hungry and the spiritually starving millions? Then you will find your doubt and your self melting away”.

No doubt - there is no better test than this that could be applied in today’s world, in today’s economic order.

Historical Blunder - Revisited ....

Last week, couldn't get pen to paper (or in this case, fingers to the key board) to write on the Left (not by any means to right the left, which is not my business). And thanks to the 'changing-by-the-minute' political dynamics in our country, the scenario which I was trying to comment on last week underwent further changes - whether such changes were significant or not is debatable though. The position which the Left in India has taken lately in relation to the Indo-US nuclear deal, was among the few points that I wanted to ponder in my blog, but then the usual 'shifting-of-the-goal-post-to-suit-their-game' done by the US (leaking of a secret letter to the press), as can be expected from them on any issue on any day, has altered the political and technical dimensions of that issue, though not in a fashion that can change the complexion of the issue altogether, but change enough still to alter its moorings somewhat, nonetheless. Might it be that one can say that the issue has gone murkier.

More on the nuclear issue, obliquely later on in this blog or possibly more explicitly in a separate one. The object of this blog is mainly to air my views on what I believe to be a gross political mistake yet again by the left. The first one took place in the mid nineties (see here) when Mr. Jyoti Basu was offered the Prime Ministership of this country, and the Communist Party (Marxists) declined the offer. This was what was termed as a 'Historical blunder', or gross political mistake by Jyoti Basu himself. The second one took place during the last two months, and that smacked of nothing but political expediency, the proclamations by the Karats of the CPI (M) and the Bardhans of the CPI, and the Chandrachoodans of the RSP about the issue-based dimensions of such a political decison notwithstanding. It was a grave error of judgement, to my mind - political or otherwise.

The arguments substantiating the view that I hold belong to different layers, but I am at the same time not discounting the fact that there could be different layers of arguments counter to those as well. But firstly, the point to be underscored is that the underlying political agenda which prompted the left to extend support to the UPA hasn't changed a bit. In fact, the stark reality remains that what they have done now amounts effectively to undermining the very political compulsion that made them extend support to the UPA. That is to say - in a scenario where the nation was divided on its 2004 verdict, the left decided to support the UPA to keep the BJP and its allies at fray. I should say - that was the main, if not the only, driver behind such a political move. None is so naive as to falsely thinking that the left is in sync with the Indian National Congress as regards political agenda. All are indeed aware that both have their own distinct and different scripts on hand and both have fiercely fought one another in the electoral battle - sometimes on a one-to-one battle (like in Kerala or WB). Hence the common ground, a common platform on which to reach a broad consensus called CMP or 'Common Minimum Programme' (see here or here) It was supposedly a consensus document on programmes and issues, meant to act as a back drop for the Left - UPA alliance to consummate. Everything seemed alright up to this stage. The problem lay in the left's interpretation of the CMP. It wasn't meant to be a back seat from which the car is driven, and if the left had any such mistaken notions, it was simply a continuation of their ongoing saga of political misjudgements. They should not have attempted to convert the CMP into a sword of the Democles - a gun pointed at INC's head. No government can work in that manner. Governments should have some breathing space of their own from which to function. I can't say my views are a reflection of the reality, but I can say such a perception did exist, and does exist still, - that the left tried to put a stranglehold on the government under the banner of 'supporting from outside'. It was nothing but an attempt to do a back seat driving. "Wrongs can adduced on the INC and the rights can be claimed by ours" - that was the essence of their "support from outside".

I have heard several staunch leftists, or the so called leftists in this part of the world where I am based at the moment (many of who in reality are Petite bourgeoisie in the Marxian parlance), shamelessly take credit for any positive contributions of the UPA government a la the famed Basheerian character “എട്ടുകാലി മമ്മൂഞ്ഞു്”. In my personal life, I have come to be in close touch with a few of of the leftist leaders, and be able to view a few others, at close quarters. I have no disregard for any of them at a personal level, but from a political or ideological perspective, I just can't stand the nauseating self righteousness of their leadership. Let me go to the extent of saying that if they really meant business and wanted to show their political superiority or honesty, they should have had the moral courage or candour to join the UPA government. But the fact is that they did not, despite being invited more than once by the UPA. Quite possibly the left in general, and CPM in particular, in their collective wisdom would have though that having to join the UPA would have meant 'political harakiri'. I'd say that their 'historical blunder - act 2' started right at that point.

My view is that by being a part of the government, they could have been better-placed to influence the policies or actions of the government. They could have become a strong balancing force, a potent correction factor, within the government, if that was indeed their intent i.e. if they really wanted to ensure that only the good gets delivered to the people. But then one can say that their intent was only to gain the position of a big brother, to be able to breath down the neck of the government i.e. to preach rather than to do. Such a postulation can't be faulted - I should say that there is much merit in such an argument. (Interestingly, does that explain why the left makes a better opposition than their perform at the Treasury benches - a food for thought, indeed!!).

The 'historical blunder' continued. They withdrew support to the UPA on the nuke deal - an issue that is not yet close to the common man who the left supposedly represents, and not on economic issues, or social issues which the common man identifies with, more closely. On the nuke deal, true - there are several facets to be reviewed closely and carefully. What is needed on such issues is the ability to have an dispassionate and objective analysis, devoid of all self-righteous megalomania and philosophical or political baggage. But the fault lay with the left to have brought forth the nuke deal as a single point agenda on which to withdraw support to the UPA, and in that process clear the hurdles before the BJP and its allies so that their march forward becomes clearer. There were several other issues like the inflation, like the sale of PSU assets, like the food security issues, like the micro-economic issues on which their fight with the ruling regime - be it ideologcal or otherwise, would have been more meaningful to the common man. It would have become a fight for the people. If, in Kerala or West Bengal where they are in power, they could have coined phrases like "agitate together with governance (ഭരണത്തോടൊപ്പം സമരം)", what prevented them from agitating in the streets while being a supporter of the UPA? Instead they withdrew the support, resulting in a 'lose-lose' situation for all.

Just think about where they are at the moment? Ignominiously keeping the seat of PM-ship warm enough for someone like Mayawati, who till a few months ago was working for the BJP and their allies in the company of people like Chandra Babu Naidu who was, and still is, a BJP ally, to occupy come 2009. God save them - Amen!!!!!

Sir - blunder is something which gets committed once and is pardonable; twice committed, it becomes being foolish that warrants a warning. But more than that, what should we call it? Being imbecile, blind.....

Sir, will history ever pardon the Left for this.....?