Indians as a rule like to deify individuals to the extent that their images become larger than life. Next, we seek perfection in these images, which means that nothing that they do can be wrong and consequently these creations are superimposed on the individual.
Now, they become icons of perfection to be revered. Third, once these icons are created, we are not allowed to criticise the same and getting even faintly critical of these creations is blasphemy.
And last, while all other perverse acts such as communal animosity or corruption are tolerated in our society, these heresies are punished with violence, and the freedom of expression is choked.
This is a systemic observation in our evolution and it is not surprising that Joseph Lelyveld has gotten on the incorrect side by making observations about Mahatma Gandhi, though they are supposed to be based on letters from the official archives. We have seen such instances in the past too, where any such pointers against any of our predefined icons have led to wide scale damage of property and the consequent banning of books.
There are three aspects there. The first is that we are rarely able to separate the issue from the individual. Gandhi played a very important role in India’s independence, and our discussions should surround this issue only. The personal habits or proclivities, even if true, and apparently deviant in the conventional sense are irrelevant. It is here that we err as once we convert the human form into a symbol of virtue (very broadly defined in very orthodox terms) we get intolerant to further discussion.
We need to change our way of thinking. If we like Keith Richards or Lady Gaga, it should not matter what they do to their personal lives, as it is only their music which counts. The same happens with our cricketers where Tendulkar is deified and nothing that he could do can be incorrect. Recall when ex-Austrailan cricketer Adam Gilchrist had in his autobiography said something about the sporting spirit of the genius, it created a stir because we cannot accept that our God-like cricketer can behave humanly at times!
The second is who is it that makes a noise about such things? It is invariably the lumpen elements of society, which includes politicians hoping to gather electoral support, who like to raise a storm. The man on the street does not really bother about such things. These elements use the occasion to get closer to their constituency and the best way is to point out to the masses that their gods are being challenged and they are protecting India’s honour by indulging in violence. It is assumed that this works, and maybe politically fulfilling. The effective way of showing dissent is to beat up the distributors or publishers and fight for a ban. This high disruptive nuisance value always wins as the loss on account of damage to property is a high cost to incur for preserving the sanctity of a book.
The third is why do people invite such controversy? While Lelyveld’s intentions are not clear, very often controversy is good publicity as it invites interest of people who would otherwise have been indifferent. Both Advani and Jaswant Singh saw their books do well at the counters by making controversial remarks even though they invited wrath from the BJP.Gilchrist too released his book when a match was being played in India, which meant that lots of Indians would have bought the book to know what was written. Salman Rushdie too knew that he could not get away that easily as did James Laine.
The first question is whether anyone cares? The present generation’s knowledge of the Freedom Struggle is limited to the history textbook and treats Gandhi just like say the earlier generation looked at the World Wars or our parent’s generation, the Mughal dynasty. Values have changed and the modern gods are Microsoft and Facebook. What Gandhi or anyone else did, if at all it is true, is of no consequence. The illiterate would however find value in such actions while the unemployed now have some work to do in indulging in arson like activity.
The second is whether a ban would work? The answer is straight forward no. In this day and age, banning any form of literature transfers eyeballs to the internet, which would otherwise not have shown much interest. A mature approach would be to simply ignore what is written and let historians argue the same at their conferences. Gandhi will remain a global icon for his contribution to India’s independence. Nothing else matters really.
Wednesday, April 6, 2011
All padded up: Hindustan Times: 6th April 2011
Cricket and economics may seem to have little in common. But India’s World Cup victory is actually reflective of the myriad changes that are taking place in the economics of the country. The ascendancy of Asia in the economic sphere has been reinforced with India prevailing over all the main cricket ing powers. In cricketing terms, India over Australia is the equivalent of India challenging the United States in economic growth. The fact that we had staged the World Cup in the subcontinent was also a pointer to this growing presence on the centrestage. The subcontinent’s ascendancy is not very different from the G20 becoming more powerful today than the G8. The Board for Control of Cricket in India (BCCI) now dominates the International Cricket Council (ICC) and the reason is simple: the money is here. The logic is the same when applied to the G20 and global economic growth.
The finals in Mumbai on Saturday had around a seventh of the tickets available for the general public with the rest reserved for VIPs. This, in a way, is also reflective of the story of economic reforms where the aam janta receive only a fraction of the goodies from the high growth story of India. The 85:15 ratio that holds in the distribution of economic prosperity was mirrored in the Wankhede Stadium last weekend.
The Indian reaction to the victory is as schizophrenic as our response to the ‘India Shining’ story that reverberates in conference halls. Just as reforms have been concentrated on industry, finance and foreign trade and investment to the neglect of the farm sector, the government’s response to this sporting victory draws an analogy. The government and other related agencies have been extremely generous in rewarding our already wealthy cricketers. Economic policies are generally geared to make the rich better off in the hope that the fabled ‘trickle-down’ theory works in course of time. This is also noticeable in the differential treatment of cricket victories and those in other sports such as tennis, wrestling or badminton. A caste system in sports is very much in place.
The quality of commentary during the World Cup matches left a lot to be desired. This again is similar to the level of economic and business discourse in which experts keep trying to explain various economic developments and data, only to contradict themselves when the revised numbers come in. So we have our Gavaskars and Sidhus on the economic front too.
The Indian team has been very charitable in acknowledging the contribution of their South African coach Gary Kirsten for this victory. We have had foreign coaches for quite a while now, John Wright and Greg Chappell having preceded Kirsten. Look at our economic policies and we get a similar feeling — since 1991-92, we have had the Washington Consensus driving our policies that have cantered towards liberalisation and more liberalisation.
Finally, a drive along Mumbai’s roads on Saturday night was revealing. There were various sets of slum and hutment dwellers dancing away. Would they be getting anything from the World Cup win? Would their standard of living improve? Theirs was the true Indian reaction where we learn to live in our suffering and revel in the great strides made by India Inc. No wonder India lives on, happily ever after.
The finals in Mumbai on Saturday had around a seventh of the tickets available for the general public with the rest reserved for VIPs. This, in a way, is also reflective of the story of economic reforms where the aam janta receive only a fraction of the goodies from the high growth story of India. The 85:15 ratio that holds in the distribution of economic prosperity was mirrored in the Wankhede Stadium last weekend.
The Indian reaction to the victory is as schizophrenic as our response to the ‘India Shining’ story that reverberates in conference halls. Just as reforms have been concentrated on industry, finance and foreign trade and investment to the neglect of the farm sector, the government’s response to this sporting victory draws an analogy. The government and other related agencies have been extremely generous in rewarding our already wealthy cricketers. Economic policies are generally geared to make the rich better off in the hope that the fabled ‘trickle-down’ theory works in course of time. This is also noticeable in the differential treatment of cricket victories and those in other sports such as tennis, wrestling or badminton. A caste system in sports is very much in place.
The quality of commentary during the World Cup matches left a lot to be desired. This again is similar to the level of economic and business discourse in which experts keep trying to explain various economic developments and data, only to contradict themselves when the revised numbers come in. So we have our Gavaskars and Sidhus on the economic front too.
The Indian team has been very charitable in acknowledging the contribution of their South African coach Gary Kirsten for this victory. We have had foreign coaches for quite a while now, John Wright and Greg Chappell having preceded Kirsten. Look at our economic policies and we get a similar feeling — since 1991-92, we have had the Washington Consensus driving our policies that have cantered towards liberalisation and more liberalisation.
Finally, a drive along Mumbai’s roads on Saturday night was revealing. There were various sets of slum and hutment dwellers dancing away. Would they be getting anything from the World Cup win? Would their standard of living improve? Theirs was the true Indian reaction where we learn to live in our suffering and revel in the great strides made by India Inc. No wonder India lives on, happily ever after.
Banks driven by commercial considerations, financial inclusion long way off: Economic Times 6th April 2011
RBI's latest release of 'Statistical Tables relating to Banks in India' is quite revealing when we juxtapose FY00 and FY10 data. We've had several measures that have been invoked under financial liberalisation while a lot has also been spoken of on inclusion to add a social dimension. How has this model worked?
The study of data over these 10 years has some interesting stories to tell. Three aspects of banking development could be looked at: banking structures, business profile and financial performance. Under banking structures, the growth in network increased from 67,532 branches to 87,768. However, the share of rural branches came down from 48% to 37% while that of urban and metro increased from 30% to 40%. Quite clearly, banks have been going to places where there is business.
Simultaneously, the staff strength came down by around 14% to less than a million i.e. 869,412 (FY09). Banks have effectively used technology to replace surplus manpower. The business profile reveals that deposits remain the main source of funds, accounting for 79% of total liabilities as against 80% in FY00. Second, term deposits continue to be around 65% of deposits and there has been virtually no change here.
Third, surprisingly, households have become less important for banks in terms of garnering deposits with their share going down from 67.6% in FY00 to 58.3% in FY09. Banks evidently prefer to raise bulk deposits from corporates which have lower transaction costs and are easier from the point of view of ALM considerations. This also reflects household's preference for stock markets and insurance products and corporate proclivity for parking funds with banks through the CD markets, which is a sign of a mature banking system.
On the lending side, some discernible patterns have emerged. To begin with, the share of term loans has gone up from 36.5% in FY00 to 57.4% in FY10, which may be attributed to the demise of development banking with banks taking on the role of long-term lending. Second, the share of priority sector lending remains at around 31% and banks have just about met their targets and have not really followed the inclusive model. Maybe, there is a very critical role for MFIs here. The fact that NPAs in this sector tend to be higher could be a reason for not converting enthusiasm into action.
Third, the level of concentration in loans is unchanged and Maharashtra and Delhi still account for around 42% of credit, which is reflective of the demand coming from the more industrialised states where business is higher. Fourth, the sectoral distribution of credit has also changed. In terms of share in total credit, professionals (3.2% to 9.8%), personal (11.2% to 12.7%), finance (4.8% to 8.5%) have been gainers while trade has come down from 15.6% to 10.7%.
The success of banks in terms of financial performance has been quite amazing. Profits, which were never really very important for public sector banks , have seen a turnaround. The return on assets has increased for the entire sector from 0.73% to 1.05% in FY10, after peaking at 1.12% in FY08. This is remarkable at a time when the base of total assets has quadrupled from 15.16 lakh crore to 60.25 lakh crore. Return on equity, however, has been more volatile. The increase in base of net worth explains most of this phenomenon.
Third, despite interest rates coming down on account of RBI policy on both deposits and advances, the spread has remained rather stagnant. Such high spreads are atypical of mature banking systems and may be attributed to a combination of higher risk in the system as well as operating expenses.
Intermediation costs have been coming down from 2.68% of total assets to 1.80% in FY10.Last, gross NPAs have come down from 12.8% to 2.5%.
So, how does one evaluate the performance over this decade? Banks have been driven by commercial considerations as witnessed in improved financial performance and proliferation of banking structures towards centres and sectors of growth. Intermediation costs have to be improved upon and one vital missing link in banking ideology which has to get excluded is the 'inclusive nature of banking'. Quite evidently, new innovative models have to be built aggressively if we are really serious.
The study of data over these 10 years has some interesting stories to tell. Three aspects of banking development could be looked at: banking structures, business profile and financial performance. Under banking structures, the growth in network increased from 67,532 branches to 87,768. However, the share of rural branches came down from 48% to 37% while that of urban and metro increased from 30% to 40%. Quite clearly, banks have been going to places where there is business.
Simultaneously, the staff strength came down by around 14% to less than a million i.e. 869,412 (FY09). Banks have effectively used technology to replace surplus manpower. The business profile reveals that deposits remain the main source of funds, accounting for 79% of total liabilities as against 80% in FY00. Second, term deposits continue to be around 65% of deposits and there has been virtually no change here.
Third, surprisingly, households have become less important for banks in terms of garnering deposits with their share going down from 67.6% in FY00 to 58.3% in FY09. Banks evidently prefer to raise bulk deposits from corporates which have lower transaction costs and are easier from the point of view of ALM considerations. This also reflects household's preference for stock markets and insurance products and corporate proclivity for parking funds with banks through the CD markets, which is a sign of a mature banking system.
On the lending side, some discernible patterns have emerged. To begin with, the share of term loans has gone up from 36.5% in FY00 to 57.4% in FY10, which may be attributed to the demise of development banking with banks taking on the role of long-term lending. Second, the share of priority sector lending remains at around 31% and banks have just about met their targets and have not really followed the inclusive model. Maybe, there is a very critical role for MFIs here. The fact that NPAs in this sector tend to be higher could be a reason for not converting enthusiasm into action.
Third, the level of concentration in loans is unchanged and Maharashtra and Delhi still account for around 42% of credit, which is reflective of the demand coming from the more industrialised states where business is higher. Fourth, the sectoral distribution of credit has also changed. In terms of share in total credit, professionals (3.2% to 9.8%), personal (11.2% to 12.7%), finance (4.8% to 8.5%) have been gainers while trade has come down from 15.6% to 10.7%.
The success of banks in terms of financial performance has been quite amazing. Profits, which were never really very important for public sector banks , have seen a turnaround. The return on assets has increased for the entire sector from 0.73% to 1.05% in FY10, after peaking at 1.12% in FY08. This is remarkable at a time when the base of total assets has quadrupled from 15.16 lakh crore to 60.25 lakh crore. Return on equity, however, has been more volatile. The increase in base of net worth explains most of this phenomenon.
Third, despite interest rates coming down on account of RBI policy on both deposits and advances, the spread has remained rather stagnant. Such high spreads are atypical of mature banking systems and may be attributed to a combination of higher risk in the system as well as operating expenses.
Intermediation costs have been coming down from 2.68% of total assets to 1.80% in FY10.Last, gross NPAs have come down from 12.8% to 2.5%.
So, how does one evaluate the performance over this decade? Banks have been driven by commercial considerations as witnessed in improved financial performance and proliferation of banking structures towards centres and sectors of growth. Intermediation costs have to be improved upon and one vital missing link in banking ideology which has to get excluded is the 'inclusive nature of banking'. Quite evidently, new innovative models have to be built aggressively if we are really serious.
UID's not quite the panacea you think : 2nd April 2011 Financial Express
We may end up creating another white elephant while destroying a system that's working in parts of India
The UID scheme, given our disdain for the current system of providing support to the poor, has spoken of an alternative to the existing structure of publicdistribution,whichisinefficientand needs to be replaced. The Union Budget has spoken of the same and spoken of the ubiquitous committees that will be looking at this issue. Does this really makesenseorarewecreatinganewsystem that may only be a marginally better solution, if at all?
The problem with the PDS is not that itisintrinsicallyabadscheme.Infact,it is a fairly smart scheme if implemented well. There are 4.99 lakh fair price shops catering to 330 million people, according to the ministry of consumer affairs.
The problem is with the implementation: the first is the identification issue where the system of selecting the people is warped. The poor could get left out while the not-so-poor come in, which has only partly been addressed with the coloured cards concept. The more serious issue is the leakages in the form of grain being diverted. The question to be asked is, if corruption is in our blood, then can a new system actually overcome this shortcoming?
Let us look at the UID scheme, where each and every individual will have a unique identification number. This will be a laborious process and will be sub ject to administrative issues just as we have in the case of population census. Assuming that this is taken care of by superior systems by mapping all ration card holders to begin with so that no one is left out, then there is a case of opening a bank account for individuals.
We do not have banks everywhere, which have created issues with microfinance institutions. This being the case, where will the money be transferred?
Suppose this is also taken care of through, say , post offices or retailers. Is there any guarantee that there will not be fraud committed by the person responsible for it just as it happens for the PDS where the ration shopkeeper says that the stocks have not come in? We will be back to hoping that the system is honest enough to address this issue. Next, once the money comes in, can we be sure that the person does not spend it on, say , liquor or gambling, which is a problem endemic to rural India. In this case, the money will not really go into buying food and the poor will continue to go hungry .Theexistingsystemisbetterbe cause given the quality of grain distribe uted; there is no secondary market for . the same! Food coupons are what the y new pundits talk of. But this would be analogous to the PDS cards where there is fraud being committed and may not work smoothly as a grey market can develop or the same.
Now, to be charitable to his new design of UID, le us assume that these do each the targeted people How do we fix the amoun of money that has to be ransferred? Just remem ber that prices of food widely across the country grains vary widely across the country .
Consideringthatthepeoplewhoreceive the money have to buy at the market prices,theywouldhavetoreceivedifferential amounts to buy their foodgrains.
On January 31, for instance the retail price of rice varied between R14 in Agra to R27.5 in Ernakulam. Wheat varied between R12 in Agra to R25 in Hyderabad.
How do we arrive at the right price to arriveattheamounttogivetoafamily?Local politicians will try and lobby for higher prices for their constituencies and hence higher allocation.
Further, today we have, on paper, a good system that provides standard products at fixed prices to all the people.
We will just not be able to crack this problem as once there is greater demand for foodgrains, automatically the market price will start increasing. We willthenhavetouseanothersetof price indices to adjust these cash transfers to just as we have for Dearness Allowance for salaried workers. We do not have suchindicesacrossthecountry ,andwill end up creating a more distorted structure. Further, what happens to these structures of fair price shops that we have created?
This entire concept of UID is technologically speaking very eloquent and needed for the purpose of identification and goes steps ahead of the PAN card provided. But to expect it to change the structure of our distribution system is stretching our luck too far and we may just end up in a bigger mess. We may hence just be creating another white elephant and in the process destroy a system which is still working well in some of the southern states. Besides, when our intrinsic nature is profitseeking from any good enterprise, structures may not really matter.
The UID scheme, given our disdain for the current system of providing support to the poor, has spoken of an alternative to the existing structure of publicdistribution,whichisinefficientand needs to be replaced. The Union Budget has spoken of the same and spoken of the ubiquitous committees that will be looking at this issue. Does this really makesenseorarewecreatinganewsystem that may only be a marginally better solution, if at all?
The problem with the PDS is not that itisintrinsicallyabadscheme.Infact,it is a fairly smart scheme if implemented well. There are 4.99 lakh fair price shops catering to 330 million people, according to the ministry of consumer affairs.
The problem is with the implementation: the first is the identification issue where the system of selecting the people is warped. The poor could get left out while the not-so-poor come in, which has only partly been addressed with the coloured cards concept. The more serious issue is the leakages in the form of grain being diverted. The question to be asked is, if corruption is in our blood, then can a new system actually overcome this shortcoming?
Let us look at the UID scheme, where each and every individual will have a unique identification number. This will be a laborious process and will be sub ject to administrative issues just as we have in the case of population census. Assuming that this is taken care of by superior systems by mapping all ration card holders to begin with so that no one is left out, then there is a case of opening a bank account for individuals.
We do not have banks everywhere, which have created issues with microfinance institutions. This being the case, where will the money be transferred?
Suppose this is also taken care of through, say , post offices or retailers. Is there any guarantee that there will not be fraud committed by the person responsible for it just as it happens for the PDS where the ration shopkeeper says that the stocks have not come in? We will be back to hoping that the system is honest enough to address this issue. Next, once the money comes in, can we be sure that the person does not spend it on, say , liquor or gambling, which is a problem endemic to rural India. In this case, the money will not really go into buying food and the poor will continue to go hungry .Theexistingsystemisbetterbe cause given the quality of grain distribe uted; there is no secondary market for . the same! Food coupons are what the y new pundits talk of. But this would be analogous to the PDS cards where there is fraud being committed and may not work smoothly as a grey market can develop or the same.
Now, to be charitable to his new design of UID, le us assume that these do each the targeted people How do we fix the amoun of money that has to be ransferred? Just remem ber that prices of food widely across the country grains vary widely across the country .
Consideringthatthepeoplewhoreceive the money have to buy at the market prices,theywouldhavetoreceivedifferential amounts to buy their foodgrains.
On January 31, for instance the retail price of rice varied between R14 in Agra to R27.5 in Ernakulam. Wheat varied between R12 in Agra to R25 in Hyderabad.
How do we arrive at the right price to arriveattheamounttogivetoafamily?Local politicians will try and lobby for higher prices for their constituencies and hence higher allocation.
Further, today we have, on paper, a good system that provides standard products at fixed prices to all the people.
We will just not be able to crack this problem as once there is greater demand for foodgrains, automatically the market price will start increasing. We willthenhavetouseanothersetof price indices to adjust these cash transfers to just as we have for Dearness Allowance for salaried workers. We do not have suchindicesacrossthecountry ,andwill end up creating a more distorted structure. Further, what happens to these structures of fair price shops that we have created?
This entire concept of UID is technologically speaking very eloquent and needed for the purpose of identification and goes steps ahead of the PAN card provided. But to expect it to change the structure of our distribution system is stretching our luck too far and we may just end up in a bigger mess. We may hence just be creating another white elephant and in the process destroy a system which is still working well in some of the southern states. Besides, when our intrinsic nature is profitseeking from any good enterprise, structures may not really matter.
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