For more Olympic medals, need more Raghuram Rajans!

As I write this piece, the situation is slightly better. Only slightly. A tally of 2 medals – one Silver and one Bronze at the Rio Olympics for India. Just a couple of days ago, as a country it was all despair.  We were staring at a situation of returning empty handed and that was something for a proud and populous country like ours – ‘bilkul Shoba nahin deta’. The usual diatribes ensued. – “A country of 1.3 billion and just 1.3 medals!” “As long as we laud Cricket and applaud only Cricketers, there’s no hope for Olympic sports!” “So long as we keep praying for Engineers and Doctors in maternity wards, athletes will be hard to come by!” “As long as sports administration is in the hands of politicians, there is no chance for medals.” So on and so forth.  And these are nothing new. Every time our contingent returns with a modest performance it’s usually a repeat of the above template outrage.

Our rather modest performance in sports events historically could indeed be due to one or combination or all of the above causes. But I do believe there’s one more important bullet.  And that is the size and state of the economy. As we speak, USA is at the head of the medals table at Rio Olympics followed by Great Britain and then China. In terms of GDP, USA is at No. 1, EU of which Great Britain is a part as of now is at No. 2 followed by China. Russia which is at No. 4 has been a past economic super power.  The medals table at London Olympics looked almost similar.

olympics , gdp

China which has been at the 11th rank in terms of medal tally at the 1988 Seoul Olympics, has been at No.3 or better since 2000. Around the same time when China was deemed to have shrugged off the developing country tag and took guard as an economic powerhouse.

By this logic, we have hope. One would have thought that our good performance at the London Olympics in 2012 would be the tipping point as a country in so far as Olympic performance is concerned. However it seems that’s not to be. Drawing a parallel, doesn’t our economic performance mirror this?  A country which was on fire around 2011/Mid 2012 and gradually sort of lost its way and now seems to be on the recovery path once again.

While I am trying to draw a parallel here between the state of the economy and our sports performance, it could be just a coincidence.  But where I am coming from is, for a country to excel in sports and be at the top 10 of the medals table, it should be doing well economically.

Excelling in sports is today an expensive affair. It is not enough to have strong willed, talented and focused individuals. It calls for financial resources to be poured on infrastructure, training, coaches, equipment and the like.  And in a country like in India not just in cities but in fledgling towns as well which are now throwing up talent like never before. We keep hearing tales of talented girls stopping coaching sessions because of ill equipped toilets. Or those who give up when they cannot afford to spend money on professional coaches or facilities. And those who still cross all these hurdles and arrive at the National scene – need to be exposed at International levels for which you need to invest on foreign coaches or send them abroad for training for longer stints all which costs a lot of money that too when you need to do this not for 1 or 2 but 100’s of individuals.

An Abhinav Bindra did not have the need to fall upon the state or other sponsors to chase his Olympic dream. He was more than financially sound to acquire for himself the ecosystem required to win an Olympic Gold. But then all are not Abhinav Bindras. Ergo, you need the support of the state or private sponsors to adopt potential medal winners and provide all the support required without counting the last paisa.  Even for a noble movement like Olympic Gold Quest (OGQ) spearheaded by champs like Geet Sethi, V. Anand, Leander Paes, Padukone Senior,.. with a clearly stated mission “To Support Indian athletes in winning Olympic Gold Medals” the biggest challenge is to raise funds to achieve their mission. A fledgling economy doesn’t count the last rupee to sponsor a Sakshi’s stint abroad or a Narsingh’s 24*7 nutritionist. A struggling economy on the other hand will be hard pressed to focus on other priorities.

In much of our or water cooler or these days WhatsApp discourses, parents who think that their wards are better of chasing an Engineering / Medical dream than that of sports are at the receiving end. I do believe that in general, parents think of only the well-being of their kids. So if they do feel that a career in athletics is not remunerative enough to have a decent life, they can’t be blamed.  However this can change and it is changing. Olympic sports unlike in the past have started getting the attention from corporates who are willing to support athletes for a longer period of time. And just as we saw a few days back the bronze medal winner from HaryanaSakshi Malik is already a dollar millionaire based on the many announcements we heard. This kind of commitments are possible for both the Government and private players if their coffers are growing with tax collections and profits respectively.

So as a country as we transition ourselves from a “developing” country to a “developed” country in the next couple of decades our economy will be in a better position to afford to support the needs of churning out Olympic champions.  So we are back to Bill Clinton’s 1992 campaign theme – “it’s the Economy, stupid” here as well. Our country has to continue to grow as an economy, lift millions of people out of poverty, collect a lot of taxes which will help pour money on giving birth to Olympic champions. So, for more Olympic medals, we need more Raghuram Rajans to help steer the economy on a continued growth path 🙂 🙂

Budget – A “Surplus” of “Deficits”!

I wonder if there is any other country in the world where the Annual budget presentation by the Govt. is attached so much hype and importance as in India.  The Oxford English Dictionary lists the meaning of the word Budget as:

Noun

  1. an estimate of income and expenditure for a set period of time
  2. (Budget) an annual or other regular estimate of national revenue and expenditure put forward by a finance minister
  3. the  amount of money needed or available for a purpose
  4. archaic –  a quantity of written or printed material

I tend to believe these days that the meaning of Budget is just close to the 4th one mentioned above.  It’s intriguing to find out why is there such a fuss over what should be normal hisab kitab? Well, some of it I guess is historical and rest mostly hysterical.  In the pre-lib era or during the license permit Raj, budgets were meant always to give bad news about increasing income taxes, raise in excise duty and what not. So, no wonder in that time people were pretty anxious about the budget pronouncements and speculations were rife of price rises.  However in 1991, what is regarded as a watershed budget presented by the current Prime Minister Dr. Manmohan Singh, path breaking reforms were announced. From then on I guess the normal presentation of income and expenditure for the forthcoming year has turned out to be the Govt.’s Annual policy statement.  The result is that once the budget is presented, discussed (so we believe) and passed, all the ministries in general and the finance ministry in particular stop thinking for the rest of the year.  So much so that Feb/ Mar is the only period where we can get to see the Hon. Finance minister talking of growth, numbers,.. and for the rest of the year he becomes the Hon. Minister for Fire Fighting!  People expect that when the FM rises to the present the Union budget, he rises to the occasion and delivers a path breaking budget year after year.  However in the last 10 years or so we have been only seeing unimaginative, tepid budgets being presented which has no vision or a game changing road map for the country.   Is it that the scope of reforms to be carried out is over and the job is all done?  Nope.

I’ve no doubts in my mind that once the budget is presented with some numbers, no one in the Govt. goes through that document again for the rest of the year.  It’s a simple fact that “What gets reviewed gets done”.   But in Govt., forget review, even the budget document is not viewed later!  As the budget day approaches, there is a frenzy of activity in the media which creates a massive hysteria and expectation year after year for the budget.  There are pre-budget discussions, during budget analysis, post budget discussions, analysis were learned economists hold forth on what could be in store.  On the budget day, the FM appears in channel after channel and gives “Exclusive” interviews to each one of them!  The unfortunate part is that once the budget week is over the media forgets about the promises, provisions and the math of the budget.  Won’t it be a good idea if the news channels interview the FM once in a quarter and review the promises and remind him of some of the unkept ones? Like the annual budget speech, will it not be a good practice to have the FM present progress made every quarter in the parliament so that closure is attained on the  commitments made?  I would like to substantiate my concern with a couple of examples:

Example 1: In the budget speech for 2011-12 (last year) our FM mentions about Tax reforms:

“Point 22. As Hon’ble Members are aware, the Direct Taxes Code Bill was introduced in Parliament in August, 2010. After receiving the report of the Standing Committee, we shall be able to finalize the Code for its enactment during 2011-12

Nothing of this happened in 2011-12. What is the status now?  The current year budget speech says:

“Point 26. As Hon’ble Members are aware, the Direct Taxes Code (DTC) Bill was introduced in Parliament in August 2010. It was our earnest desire to give effect to DTC from April 1, 2012. However, we received the Report of the Parliamentary Standing Committee on March 9, 2012. We will examine the report expeditiously and take steps for the enactment of DTC at the earliest.” 

Example 2:

“Point 23. Unlike DTC, decisions on the GST have to be taken in concert with the States with whom our dialogue has made considerable progress in the last four years. Areas of divergence have been narrowed. As a step towards the roll-out of GST, I propose to introduce the Constitution Amendment Bill in this session of Parliament. Work is also underway on drafting of the model legislation for the Central and State GST”

What’s the status in Mar 2012? 

“Point 27. Similarly, the Constitution Amendment Bill, a preparatory step in the implementation of Goods and Services Tax (GST) was introduced in Parliament in March 2011 and is before the Parliamentary Standing Committee. As we await recommendations of the Committee, drafting of model legislation for Centre and State GST in concert with States is under progress”

1 year has passed since and we don’t seem to have made any progress and with this it is 5 years since we started talking about migration to a common Goods and Services Tax in India.  If only a quarterly stock taking of such important steps happens, I’m sure these can be expedited.

According to me, GST would be the single largest Tax reform post 1991 which will pave the way for removal of so many different State and Central taxes, make goods movement within the country easier and in short make “doing business” in the country a lot simpler. I remember vividly that when VAT was introduced in India finally in 2005 there were a lot of apprehensions from states, traders and other stake holders about the same. Finally it’s obvious that all those apprehensions were mis-guided and VAT has changed life for the better.  Govt. must reach out to all stake holders aggressively to remove any misgivings and show the way for implementation of GST quickly.  To summarise, in the last 10 years there has been a serious deficit of Big ideas and surplus of run of the mill thoughts in the budgets.  ( Not to forget, there has been a surplus of schemes named under Rajiv Gandhi, Indira Gandhi, Nehru – last count 12 in the centre and 52 in the states as well !!! )

Manmohan Singh who created history as a finance minister had (or still has) the opportunity to make history once again this time as Prime Minister.  Instead of getting choked under the pretext of “coalition pressure” and allow the country to explode, if he can use his economic mind as a “Safety Valve” , he will avert a disaster and make it to headlines of history.  Talking of headlines, that even the FM is nervous about the headlines he makes the next day can be borne out by the last lines in his 2012 budget speech – “Whether or not today’s announcements make tomorrow morning’s headlines matters little, as long as they help in shaping the headlines that describe India a decade from now”.  Well one hopes that Pranabda is prophetic on this one.

P.S: As I draw close to this lamenting piece, I get reminded of an interesting episode which I would like to share on a lighter vein. In our B School in 1990, as part of the Perspective Management course, one of the assignments given was to create the Economic Times newspaper of 10 years hence i.e. dated 1st Mar 2000 (the next day of budget).  While we all drove our creative horses all over the place to create futuristic content for the Eco times newspaper our professor while reviewing our creations said “you never know, in year 2000, the newspaper may be dead and you may just have a video cassette!”.  Well, we are now in 2012. The more things change, the more they stay the same.  The Eco times newspaper is alive and kicking and comes up with a monster of an edition the next day of the budget!  The big change of course has been the online edition!  One hopes that in my life, I can see the FM walking hands free (and not with his trademark brown briefcase) into the parliament and makes a budget speech from a Nano pen drive or some such uber cool device!!!  I realised that this brown briefcase is also a colonial hangover from the British which we have not got over ! Look at this picture of George Osborne, the Chancellor of UK posing on the “Budget Day”!!!

I only hope that our FM doesn’t copy Osborne’s tax proposals as well.  In this year’s budget, Osborne has imposed what is now called as stealth “Granny  tax” whereby anyone retiring from April 5, 2013, will be stripped of the tax break introduced by Winston Churchill in 1925 !!! India’s Senior citizens beware !

Anti Corruption Movement Ver 2.0

Team Anna confused, does not know the way forward” screamed the headlines of Times of India dt. 6th Jan.  This was after the Mumbai fast derailed ( pun intended ) and the politicians had the last laugh when after 3 days of some debate and more drama in the Parliament, the Lokpal ball was thrown back to the drawing table ( that’s what we hope !! )

Coming at the end of an eventful year for the civil society, this turn of events was unfortunate to put it mildly.  For most part of the year passed by, the civil society under the aegis of Team Anna was setting the agenda for the politicians.  There is not an iota of doubt that but for the pressure mounted by this movement, the government would not have made the MPs enjoy the Delhi chill longer to bring and discuss the bill to the parliament. So when the going was so good, what went wrong ? Gigabytes of analysis theories have already pervaded the cyberspace on this and hence I’m not going to clog that space further.  Key member of Team Anna, Arvind Kejriwal in a signed article admitted candidly that the anti-corruption movement is at the crossroads today and asked where to go from here.  He also requested people to suggest the way ahead thro e-mail to iacsuggestions@gmail.com. The genesis of this blog came from this candid admission and request.

Crossroads ??? One failed fast and another fast one pulled by the politicians – have they dented the civil society’s confidence ? My submission is that the Anti – Corruption movement needs to be launched as a ” New Improved” product in FMCG parlance or a Version 2.0 in IT lingo. My humble suggestions for Team Anna are as under :

  • The Lokpal bill is only means to the end and not the end by itself.  So what if the parliament passes a “Jokepal bill” or a toothless bill.  The agitation must continue which will expose the political class than ever before.
  • You have asked if Anna should fast again.  The Answer is Yes and No ! Yes – as it is a legitimate non violent method of protest which can galvanise people and at the same time send the right signals across but must be used as a tactical tool.   No – as Anna’s fasts have become repetitive and hence the shock value follows a graph of diminishing returns. Coming back to the question, Yes Anna must use the weapon of fasting but in proper measure and not fasting at the drop of the hat  topi !
  • How to agitate and keep up the pressure ?  Campaigning against “A” party ??? You must not forget that the main reason for Anna to succeed in hitting it off with the public at large was because he was apolitical.  So in the new avatar it is important to stay completely apolitical and not repeat Hissareous mistakes.  It’s common knowledge that as far as corruption is concerned “Hammam mein sab Nange hain” So taking side of 1 political party means playing partisan politics and losing credibility.
  • The best way to put pressure on the politicians is to hurt them electorally. From now on for any election ( Municipal/State/Central ) the moment political parties announce their candidates, IAC ( Indiaagainstcorruption) must do a thorough background check on all the candidates, their source of wealth,.. and present to the public feeds through the media on a daily basis and set corruption as one of the most important talk points in the elections. ( Remember last year’s Tamil Nadu elections )
  • You have so far done a great job in capturing the imagination of the public. One failed fast should not satiate the hunger for spirited fights in the future.  It’s certainly not right to conclude that just because people didn’t turn up, they are not concerned about corruption.  The same agitation if it was post the parliament fiasco would have perhaps yielded a different result. So if you are going for a fast again, getting the timing right is important.
  • When not in an agitation, or not in the midst of elections, your best bet in getting your views across strongly is the Media ( TV & Print ) and the internet. It’s important to understand where Key opinion leaders ( read as TV anchors/editors ) stand on the Anti Corruption Movement and get them to your side. If some of the key opinion leaders are with you, your views become their views and gets adequate air time/space.  Viralling the internet then becomes more simple. ( May be rope in Dhanush or his father in Law in to the team and watch the “Kolaviral” effect ! )
  • Rome was not built-in a day and a crucial bill that too with so much implications on the  revenue model for the politicians will not be passed in a day.  The time available now is crucial to build public opinion against the ills of the proposed bill through the media and internet.
  • Aiming for a perfect law 1st up is being idealistic.  Show maturity and pat the back of the politicians when they pass the bill even if it is not the perfect Anti corruption remedy.  There is always an opportunity to see how the remedy works and change the formulation in the future.  Garnering public opinion in that situation will be easier and if it is a different government in power that time, it presents a good enough reason for them to bring in amendments to the bill. ( though all parties are partners in crime on passing this bill )
  • In the last year, sometimes one found that Team Anna was desperately trying to outsmart the politicians and trying to beat them in their own game. Well, again the Anna factor owes its success to his sincerity of purpose.  Losing a battle is not so much a concern as long as the war is not lost.  So political brinkmanship be best avoided. Play with a straight bat, play with sincerity. Public will be with you.

Wishing all the best for a bug free Ver 2.0 !

Save the #2012

On the 1st day of a New year – 2012, what I see all around is as one magazine called ” The Fear of the Known” !!! 2012 is being brandished as one of the worst years in decades to show up !!!

The build up to the year has not been the best for the world in general and for India in particular.  My focus of this piece is India.  GDP for this fiscal year is projected to be at 7.7% a steep fall from 10.4 % of FY2010.  Government’s fiscal deficit is expected to be at 5.5 % of GDP- up from last years 4.8 %.  Combined with this, the looming crisis in the Eurozone, upcoming elections in the US and the “Work in Progress” Uprising in the Middle East – the only certainity is the uncertainity that is imminent.

The result is that the forecasts for growth for India in 2012 ranges from 6.75 % ( Moody’s) to 7.9 % ( ADB ) the only exception being 8.3 % by Goldman Sachs.  And these predictions were supposed to be optimistic and before the results are out for a worse Oct/Nov/Dec quarter !!!  Most of the Indian pundits have already cursed the Indian economy to be at 6 % which is now touted as the new “Hindu Rate of Growth”

All this has been reproduction of what has appeared in public domain.  So what’s new ? Just reading what the stars foretell for me for this year today – it appears that it will serve me good to stick my neck out and thats what I aim to do here.

My stick out prediction is that India is going to have a Rocking year meaning a fantastic year in 2012 with GDP ending up at 8 – 8.5 %.  Is it just a guess or wishful thinking or I am out of my senses ?  None of this. Its simple economics.  And my reasoning is as follows :

1. As one who has followed Indian politics and its tryst with economic reforms for 2 decades now, our politicians of the day ( any party / any front in power I mean ) resort to reforms when pushed to the wall.  That’s what happened in 1991 and that’s what will happen in 2012.  None of our famed finance ministers or PMs were/ are compulsive reformers. They were more “reformers under presssure”. This is true for Narasimha Rao, Manmohan Singh, Vajpayee, Jaswant Singh, Yashwant Sinha, Chidambaram and now Pranab Mukherjee. I’ve not seen them coming out open and selling to the public at large the virtues of reforms and carrying them out with sincerity.  ( As far as I remember Arun Shourie was the only politician who used to fight for reforms in public when he was the Telecom/ Disinvestment Minister ). With rupee on a free fall,  interest rates getting out of hand and fiscal deficit climbing up, the writing on the wall is of an economic crisis.  This is good enough reason to trigger the reluctant reformers to get back to the reform agenda which will propel growth.  I expect initiatives like GST implementation, FDI in retail, Land acquisition bill, Mining policy getting pushed without making a large hoopla or being touted as Reforms in this year.

2. For this to happen, the UPA government which is in a battered state must regain some confidence. And something tells me that they will get this confidence from their performance in the elections for the states which go to poll in the 1st quarter which includes UP. The public as we have seen know very well whom to punish ( as in TN/WB ) and whom to reward ( Bihar ).  There is no room for arrogance or last minute gimmicks to buy votes.  At the same time sincerity of purpose has paid whether it has been Bihar or Orissa or Gujarat or for that matter Delhi.  People want their rulers to put effort and they know that the results will not be immediate.  Going by this, Congress under Rahul may spring some surprises in the UP elections and that may provide the much needed filip to the UPA at the centre.

3. For a most part of 2011 through well orchestrated plugs in the media, India Inc has been posturing of ” flight of capital and investment” out of India if government doesn’t get its act together.  With the crisis in Euro zone, uncertainity in the US India Inc has only China to invest. My take is India and other countries will invest in China basically to stay competitive as long as it allows.  However purely from a consumption perspective, India Inc. will continue to invest in India.  Global environment will also force investments to come into India by second half of the year.

4. With inflation slowing down officially and interest rates softening I believe the worst is over.

5. That 2011 was the worst year for Manmohan Singh as a politician so far is a no brainer.  With so much of political issues threatening him to consume all over, his only ace up his sleeve is Economics. It will serve him well if he resorts to his strengths to set the agenda.

Though I’ve tried my best to logically reason out, much of it seems to be wishful thinking I guess.  But still I am going to stick my neck out for a Great Year for India in 2012 and I will be happy to have the last laugh and a Stiff neck !!!

Wishing all a year of GDP – Growth, Development and Prosperity !!!