Biz and Eco

tiger vs dragon

By Karthik Shankar

If you believe the reports that Modi’s visit to China was the second coming of Beatlemania, you will also believe these figures that have the government seal of approval – we are finally beating China in growth. Prematurely celebrating about ‘overtaking‘ China is akin to AAP assuming that winning the elections counted as a victory for the party rather than the cold hard job of actual governance.

tiger vs dragon
Photo Credit: Mike Cohen

Technically speaking, the figures are akin to a white lie; true only in a certain context. Our growth in the last quarter of 2014 was 7.4%, a smidge higher than China’s. Many analysts using their favourite reductive analysis of spirited India and inscrutable China will have you believe that they have switched places in the economy sprint race.

It’s About Method Stupid

First, it’s important to note that we changed our methodology of calculating our GDP. By changing it from factor prices to market prices, we have added in that secret X-factor, which are the numerous taxes levied on us by our overlords. However in 2014 the difference between levied and collected taxes was Rs 77,000 crore; large enough to overshadow Jayalalithaa’s disproportional assets (I think).

Interestingly when retroactively applied, the methodology shows a significant increase in the GDP growth recorded in the last year of the UPA regime. I wonder why ace economist Manmohan Singh didn’t dream up this solution.

All About That Base

There’s also the GDP base. China as of 2013 has a GDP of $ 9.24 trillion while India’s was pegged at $ 1.87 trillion. Saying that India grew faster than China is like saying you’re a bigger philanthrope than Bill Gates because percentage wise Rs 100 from your salary wins out against his billions of dollars. Then look at infrastructure. Despite our relentless belief that Mumbai’s glittery glass and chrome structures will put Shanghai’s to shame (on a non-rainy day), we allocated $11 billion for infrastructure. China on the other hand is fast tracking a whopping $950 billion worth of infrastructure projects this year. Tiger and Dragon seem like very apt synonyms considering one can swallow up the other whole.

Many experts have also wondered if the data really paints an accurate picture of the Indian economy. Our Chief Economic Advisor Arvind Subramaniam himself was mystified with the numbers. Just earlier this month, data showed that growth in eight core sectors was at its lowest in seventeen months. Forget China when we haven’t gotten over the UPA political free for all.

One Ticket For Pragmatic Central

Now this doesn’t mean it’s time to stop buying those Xiaomi phones (because let’s be honest those are great deals). We just have to take a pragmatic look at our economy by clearly demarcating actual growth versus comparative growth. Of course stopping the train to hype express is almost impossible, considering we as a country are addicted to jingoism.

China’s growth story is remarkable and awe-inspiring no doubt, but why do our politicians and the media always rush to draw the parallels? We are very dissimilar countries. Ours is a democracy with a highly socialist economy whereas China is an autocracy with a fairly liberalised economy. So the next time Arun Jaitley announces that India is set to overtake China in growth, don’t applaud, question if that economic feat can be replicated for the next 30 years.

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By Chaitanya Mallapur:

On 26th October, 2014, Border Security Force (BSF) soldiers seized counterfeit notes worth nearly Rs 15 lakh from a border outpost in West Bengal’s Malda district. Counterfeiting has emerged as a new challenge to the government, a form of economic terrorism, say experts.

Photo Credit
Photo Credit

According to central intelligence and investigating agencies, Fake Indian Currency Notes (FICN) stream into India from various countries, such as Nepal, Bangladesh, Thailand, Malaysia, Sri Lanka and the UAE, through a well-operated criminal network that routes fake currency through the South and South East Asian region, in addition to the new route of China via Nepal.

Several agencies, such as the Reserve Bank of India (RBI), Ministry of Finance, Ministry of Home Affairs, along with security agencies, such as the Central Bureau of Investigation (CBI) and National Investigation Agency (NIA), are working together to address these challenges.

Let us look at the major denominations under which fake notes were circulated in India over the last three years.

You Might Want To See This Chart Before You Hold Another Rs. 500 Note

Between 2011 and 2014 (up to 30th June), a total of 2.5 million counterfeit notes worth Rs 122 crore have been recovered and seized by RBI and security agencies. Rs 500 notes are the most circulated fake denomination in India, with more than 1.3 million notes circulating between 2011 and 2014. Rs. 100 notes are next, followed by Rs 1,000 notes, to be circulated as counterfeit currencies.

Here is a comparison of the top five states that face the major challenge of counterfeit notes:

Source: LokSabha; Note: Others include Denominations of 50, 20, 10, 5, 2, 1

Delhi leads the states that report fake currency, a total of Rs. 6.69 crore in counterfeit notes, followed by Maharashtra (Rs 6 crore), Tamil Nadu (Rs 3.7 crore), Andhra Pradesh (Rs 3.5 crore) and Gujarat (Rs 2.9 crore). Similarly, Delhi reported the highest number of fake Rs 500 notes in 2013 (67,783), a decline of 74% from 2012 (259,210).

Let us now look at the number of persons arrested in the last three years in counterfeiting cases.

Source: LokSabha

A total of 2,456 persons were arrested for counterfeiting currencies in 2013, with West Bengal reporting the highest number at 490 people. Andhra Pradesh was next, arresting 312 people, followed by Bihar (304), Maharashtra (221) and Uttar Pradesh (190).

In states like AP and Bihar, arrests have gone up over the last two years; there is a decline in states like Maharashtra, Uttar Pradesh and West Bengal. One of the reasons for West Bengal and Bihar reporting so many arrests could be that these states share porous border with Nepal and Bangladesh, major counterfeit-smuggling routes.

Delhi, the state most affected by fake notes, does not rank among the top 10 states in terms of arrests for counterfeiting of notes. In 2013, only 50 people were arrested in Delhi.

The government has strengthened the legal framework; smuggling or circulation of counterfeit Indian currencies is now declared a ‘terrorist act’ under the Unlawful Activities (Prevention) Act, 1967.

RBI highlights features to be watched for identifying counterfeit notes
RBI highlights features to be watched for identifying counterfeit notes

Some of the measures taken by the government to prevent counterfeiting include:

– Ministry of Home Affairs (MHA) has formed a special FICN Coordination Centre (FCORD) to share intelligence or information among different security agencies within India and abroad.

– A Terror Funding & Fake Currency Cell in the National Investigative Agency (NIA) will focus on terror funding and fake currency cases. The MHA has directed the law-enforcement agencies of the states, central armed police forces, ministry of civil aviation and the bureau of civil aviation security to augment security.

The RBI has launched a multimedia, multi-lingual awareness campaign, initially through Doordarshan channels, titled “Paisa Bolta Hai”. The short film tries to inform the common man about the measures of examining bank notes.

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This article was originally published by IndiaSpend.

make in india

By Mayank Jain:

“It’s complicated, too many relations, too many people can have a say, too many people can block. Currently, there are lots of complexities or uncertainties. Was I surprised at the international backlash post the retrospective taxation, I was not surprised. Has this really backfired on India, the answer is yes. I wasn’t surprised when India’s public image suffered.” – Vodafone Group CEO Vittorio Colao.

Prime Minister Modi, with his unfazed focus on improving the industry and manufacturing conditions in the country, launched the ‘Make In India’ initiative. He has graciously rolled out the red carpet, inviting MNCs and other industrial corporations to consider India not just as a market but as a manufacturing hub. With demographics on our side and every third person with a graduate degree looking out for a job, manufacturing in India is not a bad idea at all and instead, is the need of the hour.

Make In India couldn’t have come at a better time, but will it be enough?

The differentiator between developed and developing economies is majorly seen to be the contribution of organized manufacturing to the GDP, which is devastatingly low in India as compared to our contemporaries. India’s manufacturing sector accounts for only 16% of GDP, while China is already receiving one third of its GDP from manufacturing. The share of Indian manufacturing in the worldwide markets is also pitiable at 1.4%, while China has already zoomed to 13% plus from a level of 2.9% just 20 years back.

Make In India projects India as a fertile industry base, and competent to handle the business needs of MNC’s due to its linkages with the rest of the world. However, the rosy picture depicted in PowerPoint presentations and press conferences seldom holds true on ground as global businesses seem to back off from setting up bases in India; Vodafone, Walmart, and a whole lot of Japanese companies are glaring examples.

The 3 Problem Children Of Manufacturing

Indian manufacturing revolves around the FDI rhetoric so much that we have most likely forgotten that around 8-9 million people join the workforce every year. Not all of them can be employed in projects that come through the way of FDI since the process is usually long drawn and erratic. The Ease Of Doing Business Index, which tracks the relative easiness of setting up operations in the country, reveals the same fact about rampant red tape and lax governance in the country. We are placed on a measly 134th position with countries like Uganda, Kazakhstan and Cyprus ranking above us.

Infrastructure Deficiency: Projects Worth Rs 7 Lakh Crore Stuck In Red Tape

“We need infrastructure, we need highways, we need cold storage facilities”, we have all heard this enough and now we need a break. It isn’t a bad idea to actually think about delivery before planning new projects. Promising is easy, but fulfilling isn’t. A lot of projects never take off from the paper they are inked on, and remain stale headlines in some forgotten newspapers.

Infrastructural development is not just about making better buildings or faster trains, but at the same time, overhauling the overall processes involved in getting a new entity set up. Intellectual properties, research and development grants, a market friendly atmosphere with transparency and focus on e-delivery of services are all part of infrastructure which we can start to build right away instead of waiting for the disbursement of hundreds of crores from the Union Budget every year.

Job-Skill Mismatch: Only 10-15% of regular graduates are employable

People graduate with flying colors every year from popular courses like Engineering, Medicine and Business Studies, but end up looking for their elusive first job simply because they aren’t equipped enough to work in the industry. While we blame the industry for not giving young graduates a chance to work and point out evils in FDI, the focus never comes back to the quality and characteristics of the kind of training and education people receive.

75% of IT graduates are deemed ‘unemployable’, 55% in manufacturing, 55% in healthcare and 50% in banking and insurance, as pointed out in a report produced by FICCI and Ernst and Young, called Higher Education in India: Vision 2030.

Studying about an industry and working on the shop floor are two completely different things, and a lot of surveys point out the anomaly that has crept in our mode of imparting education. The government should start analysing the quality of education soon and industry interface needs to be built in schools and colleges so that students are apprised about the current trends and requirements in the job they hope to take up right from the beginning of their courses.

Agriculture Myth

India is often termed as an agricultural economy whose mainstay is agriculture. However, the contribution of agriculture to the GDP is fast coming down from its above 50% levels at one point. Industry and services together rose over 11% in their contribution to the GDP, but employment figures rose only by 6%. This implies that we continue to employ more and more people in agriculture while income growth is happening in the industry.

share of sector

The mismatch is due to a lot of factors and the major one is lack of skilled labor in the country, which could be employed gainfully in the factories and shop floors. However, lack of education and hereditary patterns observed in the interiors make youth more drawn towards agriculture. This, however, is no excuse to not internalize the industrial development and make work opportunities reach people rather than waiting for them to migrate.

Despite these three big anomalies and other issues like red tape and corruption, Indian industry continues to grow, which reinstates faith in the resilience of the economy. However, it is the right time to take the debate beyond FDI and fix on ground issues at home before we throw open the doors for visitors and expect them to ‘Make In India’.

breakout-nations-review

By Parul Garg:

‘Interesting book’ would clearly be an understatement for ‘Breakout Nations’ by Ruchir Sharma. Economics lovers or not, you have to read this book to understand what economic development had been like, and how it is working now. I must tell you that your perspective develops and changes a lot while you are reading this book. It’s not like all other development economic texts, it captures your interest and keeps your mind on the move.

breakout-nations-review

Here are 10 things which inspire me to tag ‘Breakout Nations’ as a must read:

1. The book talks about the course of economic development as a racing track, where no winner wins for a long period of time, and the competition gets stronger and harder with development reaching the new level every time.

2. The book is a perfect blend of economic and political situations in different countries, and apprehends their influence on each other very smoothly.

3. “Breakout Nations – In pursuit of the next economic Miracles”, the title says a lot about the book itself. It is like a book having future year forecasts for different economies which might be true or false, but definitely insightful.

4. The book gives you a walk through history, which in turn helps you understand the present scenario better. It very efficiently bridges the gap between history and present economic situations.

5. The book takes examples of many different countries like Brazil, India, China, Philippines, South Korea, South Africa and others, and explains their journey down the development lane till date. It also talks about their future growth prospects, which then give you not only an inward outlook of the nation, but also the outward stance of the world.

6. It familiarises you with working conditions, investment climate, growth progress, and price level variations in different economies, which further makes it easier to compare growth and development strategies in different economies. i.e. It also puts to display the relative viewpoint.

7. It gives statistics in the form of remarkable facts, which not only makes it easy to summon up, but also makes it more interesting than usual monotonous data tables.

8. The book is not only about the good picture, instead, it also discusses accidents and trends which lead to negative forecasts.

9. It comes up with words and phrases like cappuccino economy, is god Brazilian?, E-merging markets, Efficient corruption, and so on, which makes a few important concepts build home in your memory.

10. The book is no less than the stage show going on among the developed and developing countries, synonymous to insightful entertainment.

So go ahead, grab your copy of this international best seller.

Happy Reading!

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By Rahul Muralidharan:

The world is being deluged in a massive downpour of data. ‘Big data’ is the latest buzz word doing the circles. Big data refers to voluminous amounts of data that cannot be processed through traditional techniques. This data ranges from a few terabytes to many petabytes. Making sense of this big data and using it to drive business growth is an uphill task. The concept of using previous consumer data to predict consumer behaviour and sales has been prevalent from quite some time.

Photo Credit
Photo Credit

In the 90s, the point of sale scanners was to gather consumer insights and influence pricing. With the proliferation of the Internet, a humongous volume of consumer data is waiting to be processed to generate valuable nuggets of information. Marketing today, is faced with both the challenge as well as the opportunity to utilize big data to revolutionize the relationship between the customer and the business. A survey conducted by Teradata revealed that 71% of the marketers plan to design and implement a big data analytics solution in the next 2 years. Efficient use of big data analytics would ensure the success of data driven marketing. Big data helps marketers in several ways. It helps not only in retaining the existing customers but also to tap into new customers. Analyzing trends in big data can lead to more marketing opportunities and measure the effectiveness of advertising campaigns. They can micro target the customers with personalized products, campaigns and offers. Outlined below are 7 principles that marketers should keep in mind to ensure effectiveness while adopting a big data strategy.

1. ‘Strategy is Alohomora’: The key idea is to understand how big data insights can support the marketing strategy of the company. It needs to be aligned with the company’s vision and goals. This reduces complexity as data is now in the context of a specific strategy. For example, if Amazon wants to improve its website experience, it needs to look at the relevant data.

2. ‘Divide and Conquer’: Marketers must understand it is impossible to use all the data available. They need to profile the data, filter it into good and bad. After this, they need to divide and analyze the data according to their objectives for efficient results. For instance, if Shoppers Stop wants to launch loyalty and promotional offers, it must filter and study the consumer behaviour in similar scenarios, particularly that of the First Citizen Card Holders to effectively launch these offers.

3. ‘The pricey fallacy’: The advent of big data has made pricing quite transparent and competitive. Starting from Flipkart to MakeMyTrip, there is a growing trend to offer the lowest prices. Marketers must avoid this temptation and focus on enhancing the brand equity so that pricing can be in accordance to the quality of the products.

4. ‘United we stand’: Using big data strategically involves a cross functional collaboration. The 2012 BRITE-NYAMA Marketing in Transition Study reveals that nearly 50 % of the marketers acknowledge that a lack of sharing customer data within the organization acts as a barrier to effective marketing campaigns using big data. Marketing has to work in tandem with all departments especially with IT to ensure its campaign success.

5. ‘Cook the Cookie’: A common mistake perpetuated by most marketers is to place excessive reliance on ad cookies. Cookies serve as an effective tool to identify the target audience. For instance if your web search increasingly revolved around CAT coaching, your Gmail ad suggestions would pertain to CAT coaching centres and study packages. That is due to the ad cookies. However ad cookies suffer from two major flaws. Firstly, most customers remove cookies periodically, and secondly, on a multi user system, the identification of the target audience might be wrong. The solution lies in using in-flight campaign information so that the data is real time and accurate. Marketers should cook the cookie before using it.

6. ‘See the tree’: A potential problem that marketers face is that of selection bias. Sometimes they choose non-random samples of data from the data pool that leads to mistaken inferences. This is described as ‘seeing the forest and not the tree’. This percolates down the various layers of strategy and hinders the end goal of the marketing strategy.

7. ‘Be a Soothsayer’: Marketers should use predictive analysis to determine the customer behaviour and future buying preferences. Amazon has successfully used predictive data analysis and recommendation algorithms to suggest products to customers. This not only enhances the user experience but also helps generate more sales.

flipkart

By Mayank Jain:

Flipkart: 2.4 seconds. That’s the amount of time it took Flipkart to go out of Xiaomi’s latest phone Mi 3’s units as soon as it was launched. Flipkart is riding high on its exclusive tie ups with companies, thereby helping them wipe off their inventories in a matter of a few days to a few seconds in some cases. And now, in this latest tie-up, it’s the Ministry of Textiles that is exploring the marketing capabilities of a ‘website’ which has challenged millions of on ground retailers to sustain themselves, as people are buying everything online at a cheaper price point after they check it out in the stores.

flipkart

Ministry of Textiles: The Ministry took Indian textiles to the ramps of a renowned fashion show. Hand woven fabrics like chanderi, tussar silk and kalamkari crafted into new-age silhouettes made their debut at the Lakme Week Winter/Festive 2014. The response to this Indian Handlooms collection was stirring. Handmade silks and kadwa brocade technique from Varanasi stole the show as truly Indian outfits made from antique and at the same time, exquisite materials were given a modern twist.

25th August, 2014: Flipkart and Ministry of Textiles came together to market Indian textiles online in a game changing and first of its kind association.

Indian handloom industry can be best classified as ‘exotic’; it offers superior quality products at competitive pricing but the reach of these products is largely limited by zero or negligible marketing efforts. The public at large knows ‘khadi’ only as the fabric that Mahatma Gandhi spun and his followers donned during the freedom struggle to signify India’s capacity for self-reliance and not as a flagship brand. Though we ride high on exports and culture/region specific demand like that of Pashmina, there is usually no impetus for the common man on the street to check out the clothing and handloom products which workers and artisans help manufacture in Indian villages.

In a one of a kind tie-up, Flipkart has managed to rope in a government unit to market their products on a purely private e-commerce platform. The collaboration between Flipkart and the Ministry of Textiles will provide a platform, analytics of their sales, data on trends as well as support in customer acquisition to numerous weavers in India. This is a step in the right direction as remotely located weavers will finally be able to reach out to buyers from across the country. Their products will sell under their own brand name and soon enough, they will turn into self-made entrepreneurs with a clear sense of running an online business for indigenous goods and a ready market.

Flipkart plans to put its nationwide network of business associates to good use and help weavers provide their goods from their door steps and the network will assist them in distributing these products without ever stepping out of their workplace or shop floor.

“This kind of a coordinated effort has been planned and executed for the first time with Flipkart for handloom weavers which will bridge the missing linkages of market intelligence, market access and logistics and help the Indian weavers in getting remunerative prices for their products,” the press release detailed.

The list of problems with Indian manufacturing sector runs long and almost equals the potential. With our 820 million people still living on less than $2 a day, the boost in employment opportunities is long overdue. While agriculture remains the largest ‘employer’ in the country, it can’t be called ‘financially viable’ given the erratic monsoons and lack of infrastructure which make farmer suicides a common phenomenon during a bad harvest. Manufacturing needs to step up and so does the infrastructure.

This partnership will open avenues beyond traditional retail which is expensive and not always profitable. It is a brilliant opportunity for Flipkart to firm their position as the premier online marketing platform while the Ministry has a chance to resurrect the glory of Indian handlooms. We are yet to see how this partnership works out but it definitely holds lots of promises for manufacturers. With 243 million internet users in the country, it might just be the right time for the small scale industries to finally go online.

Narendra-Modi

By Jaimine Vaishnav:

PM Narendra Modi’s slogan “minimum government, maximum governance” is economically an expropriation of the ‘acting agents’ and is an intrinsic threat to the economic liberty of all.

Narendra-Modi

What it is

‘Unity in diversity’ is a superficial phrase. In the Indian context, it is practically impossible to generate ‘unity from diversity’. The diversified culture in India is a natural blessing to the economy of India as it motivates the scope of division of labor and specialization. This also influences the scope of the rule of catallaxy in the market, making the functional role of big/socialist government structurally unnecessary. Catallaxy is an alternative expression for the word “Economy”. Whereas the word economy suggests that people in a community possess a common and congruent set of values and goals (“imposed order system”), catallaxy suggests that the emergent properties of a market (prices, division of labor, growth, etc.) are the outgrowths of the diverse and disparate goals of the individuals in a community (“spontaneous order system”). According to Nobel laureate F. A. Hayek, catallaxy is “the order brought about by the mutual adjustment of many individual economies in a market”.

“If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of finer clay than the rest of mankind?” – Frédéric Bastiat

How it is

Minarchism, in the strictest sense, holds that states ought to exist, that their only legitimate function is the protection of individuals from aggression, theft, breach of contract, and fraud, and that the only legitimate governmental institutions are the military, police, and courts. In the broadest sense, it also includes fire departments, prisons, the executive, and legislatures as legitimate government functions. Such states are generally called night-watchman states. This, holistically speaking, massages PM Modi’s belief - “minimum government”. Whereas, statism is the belief that the state should control either economic or social policy, or both, to some degree. Statism can take many forms from minarchism to nazism. In my opinion, minarchism is the ‘diet coke’ of statism. The problem, I believe, with ‘minimum government’ is that it doesn’t stay limited because the organism of the state is driven by the animal spirit. The health of the armed state is dependent upon abundant production of unthinking disarmed agents. Minarchists also expropriate the liberty and privacy of all individuals, thereby intimidating the financial portfolios of the acting agents through the means of legal robbery, called taxation.

Actions in the past few weeks, however, have clarified that Modi’s vision of minimum government is very different from the classical liberal notion of limited government. For all heavy political rhetoric about smaller government, Modi has done little in moving towards reducing the role of the state. And judging by his policy decisions, the idea of “minimum government” in Modi’s lexicon seems to mean, at most, nothing more than an Indian state with a downsized bureaucracy. Thus, to those who had expected radical reforms, scaling back the size of government, what was offered was a mere restructuring of government ministries. A slimmer bureaucracy was envisioned to implement policies, albeit the same old regressive ones that strengthened the status quo of an economy with very little scope for the enrollment of catallaxy. With great pride, the finance minister said the government will not engage in retrospective taxation but recognized its legality. This, the finance minister believes, will get foreign investors brimming with confidence to invest in India and help growth pick up. But it is simply reminiscent of Jawaharlal Nehru’s buffoonish promise to foreign investors, “We want to encourage in every way private enterprise. We want to promise the entrepreneurs who invest in our country, that we will not expropriate them nor socialize them for ten years.”

Sadly, unlike Arun Jaitley, or Modi, who couldn’t care, but for the next general election, many investors do possess time horizons over five years. Given its sizeable contribution to government spending, even a partial rollback of wasteful subsidies could have counted for “radical reforms” in India. But the government earmarked Rs.2.51 trillion towards subsidies, more than what P. Chidambaram had estimated in February this year. The Mahatma Gandhi National Rural Employment Guarantee Scheme, the pet scheme of the Congress that was widely criticized for wasteful populism, was allotted a massive Rs.33,353 crore–up from Rs.33,000 crore last year. Adding to these, a massive Rs.37,880 crore has been allotted to fund a Keynesian government infrastructure spending programme, and, as usual, a lot more money has been splurged on a number of pet projects to satisfy every vote bank. To fund all of this populism, the government wishes to improve the tax to gross domestic product (GDP) ratio, sell public assets, and implement a nation-wide Goods and Services Tax (GST). The idea has been lauded as favourable to fiscal consolidation and helpful to create a single, uniform market across India. However, higher government spending , funded either through increased taxes or liquidation of assets, directly contradicts the fundamental principle of limited government, which is to cut down the share of government spending in the economy. A nation-wide GST, on the other hand, would once and for all end tax competition between states that is crucial to preventing draconian taxes. To fund all of this populism, the government wishes to improve the tax to gross domestic product (GDP) ratio, sell public assets, and implement a nation-wide Goods and Services Tax (GST). The idea has been lauded as favourable to fiscal consolidation and helpful to create a single, uniform market across India. However, higher government spending, funded either through increased taxes or liquidation of assets, directly contradicts the fundamental principle of limited government, which is to cut down the share of government spending in the economy.

Whether it is

PM Modi’s esoteric allegiance to India’s surveillance project Centralized Monitoring System (CMS) also reveals the government’s lethal and all-encompassing surveillance capabilities, which, without the assurance of a matching legal and procedural framework to protect privacy, threaten to be as intrusive as the U.S. government’s controversial PRISM project. This clearly indicates the fallacy of minimum government.

“Full government control of all activities of the individual is virtually the goal of both national parties.” — Ludwig von Mises

PM Modi’s “minimum government, maximum governance” requires critical reconsideration, because it camouflages the theory of liberty. Blessed with resources, but tortured by red tapism, India can culturally disintegrate “on its own, for her own, by her own” for the economic goodness of the acting agents because only an individual thinks, reasons and acts. It is naturally impossible to enhance maximum governance, without the facilitation of maximum government.

Where it is

Marginal cost-pricing is not dysfunctional, when the equilibrium is left to the market for decision. Problems begin when the state, be it any form, distorts the peaceful transactions processing in the market. So, it is immoral to trust individuals with liberty and moral to trust people with power? The urge to shield the ‘mass society’ against any external factor is nothing but a greedy motive to extend statism systemically. For example, Finance Minister of India Arun Jaitley set the military budget at 2.29 trillion Indian rupees ($38.35 billion) for 2014-15, 50 billion rupees more than what the previous government agreed in an interim budget earlier this year. India’s increased military budget, at just under $40 billion, is however still less than a third of China’s. So, while India continues to play catch-up, it still has a long way to go. Also, the expansion of the military budget certainly won’t ease relations between India and Pakistan, which already share one of the most militarized borders on earth. It is hobby of any form of state to add more fuel to the fire, and expecting government to honor liberties of all individuals is like seeing fire creating the wood.

The past two months have provided proof, that the so called ‘acche dinn’ (good days) are certainly amiss for the near and distant future. It seems as if we are back in 2004 at the start of the UPA term, with the announcement of various new social welfare programs, infrastructure projects, tweaking of existing programs, and SEZ projects. There is little proof that “Modinomics” is any different from the previous government’s “Keynesianism”. Any visible changes seem too small, around the edges which will have no significant on the Indian economy. A prime example of the continuing cronyism of the previous government is the latest announcement from the Commerce ministry regarding [new] Special Economic Zone “incentives”. The typical list of incentives includes tax holidays for a fixed time period for private firms to start new businesses, and increase investments in existing ones. A common theme that runs through the SEZ project is the acquisition of land, primarily farm land. The government at the center and states always run into the difficulty of convincing farmers to sell their land to the government at a “fair price”. The farmers are generally promised a market price for their sale of land, which most of the time turns out is a false promise, and a distorted price. Once the tax holiday ended, the firms had to bear the cost of paying a tax along with the existing taxes. If it is not profitable to produce goods and services, minus the crony benefits provided by government, does it not make sense to let firms bear the initial cost of setting up their respective businesses, and not tax them at all?

Special Economic Zones (or SEZs) seem to be part of a growing list of ‘reforms’ which are passed in the name of ‘liberalization’. But a closer inspection shows that these reforms (along with the rest of them) are in fact corporatist reforms. SEZ, far from being liberal reform, is a corporatist reform that cares mostly for the well-connected and should not be confused with free trade and free market, in anyway. Free trade is the freedom of all individuals to trade freely, SEZs are a travesty. Do the people who support the SEZ projects consider the fact that in the long run, sale of the large farm lands will drive the prices of land high, which leads to an unsustainable boom in real estate? Does the thought of directing away land as precious capital and a scarce resource to taxpayer subsidized activities in manufacturing and IT/ITeS cross their mind? Do we know if the firms in the manufacturing and IT sector are actually competitive, if it not for taxpayer funded subsidies? Do they even consider the impact this has on higher education, and creating an unsustainable boom in education? Can it be ignored that State intervention has created an education bubble in India, which has rendered a vast majority of students to mere low skilled employees? Subsidization of Air India, reservation policies (legal racism), food security act and appeasing certain religious schools are all/also another addition to India’s fiscal deficit. This all interventionist measures or minimum government in action is/are succinctly antithetical to catallaxy. Nevertheless, in the long-run, we’re all dead.

When it is

Concluding that ‘human action’ (acting agencies) is a purposeful behaviour. Or I may say: ‘Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life.’ Such paraphrases may clarify the definition given and prevent possible misinterpretations. But the definition itself is adequate and does not need complement of commentary. What PM Modi fails to realize is that the various measures he suggests are not capable of bringing about the beneficial results aimed at. On the contrary, he is producing as well as sustaining, a socialist state. Now, if the government, faced with this failure of its first intervention, is not prepared to undo its interference with the market and to allow establishment of catallxy, it must add to its first measure more and more regulations and restrictions. Proceeding step by step, on this way, it finally reaches a point in which all economic freedom of individuals has disappeared.

flipkart

By Anju Anna John:

One of my greatest woes about going back to Kochi for the next semester stems from the fact that Flipkart has stopped delivering in Kerala[1]. As I skim through the items that I want to order and try to check if they deliver to my address, I am told that ‘This product is not available in 683503 (my PIN number)’. In fact, Flipkart is not the only online retailer that has stopped providing services to their consumers in Kerala, popular sites like Snapdeal, Jabong and Myntra had also stopped services to postal addresses within the state of Kerala. However, eBay and Amazon continue to deliver, albeit with longer shipping durations.

flipkart

One of the primary features that helped Flipkart gain its popularity was the Cash-on-Delivery feature. This service seems to be the root cause that triggered a string of events that have resulted in the present problem. The Kerala Commercial Sales Tax Department is of the view that, in case of the Cash-on-Delivery option, the sale takes place within the State and thus, becomes liable to be taxed by the State.

The modus operandi of most online retailers is to hire third-party logistics to deliver their merchandise to the consumers. According to the Circular No. 16/2011 , in case of inter-state movement of goods, the shippers are expected to fill in the Declaration Form 8F under the Kerala Value Added Tax Rules, 2005 [Rule 66(6)]. A courier company (Blue Dart) was penalised to the tune of Rs. 3 Crore, by the Commercial Sales Tax Department. Following this, the matter has been taken to the court and a verdict is awaited regarding the same[2].

However, Vijay Kumar, CEO of Express Industry Council of India, has been reported to have stated that, Blue Dart has managed to get a stay on further proceedings from the High Court. If this is in fact the case, Blue Dart and other courier services would be able to resume the Cash-on-Delivery service until the matter has been finally decided by the court. Thus allowing e-Commerce sites like Jabong and Myntra to resume the Cash-on-Delivery service for the time being.

There are speculations by online shoppers in Kerala that the Sales Tax Department’s policies are in order to help the local business . Although this may be disputable, there is no denying the fact that the present situation has benefitted the retail market in the State. Kerala is largely considered a consumer state with a large NRI population.

The essential question that this issue has raised is whether the Cash-on-Delivery option (in pursuance of an e-commerce purchase) should be subject to Central Sales Tax (CST) or the State’s Sales Tax Department? Or both? A uniform tax policy with regard to e-commerce across the nation is the need of the hour.

[1]Source
[2]Source

By Jhalak Agarwal:

The hike in gas prices may be just a speculation now but that doesn’t mean that it will always be that way. There has been a lot of controversy when it comes to the subject of gas pricing. If the Model code of conduct was not implemented, the price would have risen to USD 8 per million British thermal unit (mmBtu) as against the current USD 4.2/mmBtu. “The model code of conduct is a set of election rules that restricts government decisions that might unduly influence the country’s 815 million voters.” The Cabinet Committee of Economic Affairs (CCEA) has decided that the gas prices should be increased and that raises fear among the power producers as well as the fertilizer manufacturers who are the chief users. If the prices do rise, this will hugely favor the Reliance Industries.

If we talk about the way the prices are estimated, we find that the method is quite controversial. The Rangarajan panel recommended a base price that is arrived at by averaging the prices of imported gas by different users over a 12-month period and the prices that prevail in major international gas trading hubs. In an ideal world, India should not rely on the prices that prevail in international markets. This method is not fair either for the consumers or the domestic suppliers who provide natural gas. The estimation of the cost gets complicated because a part is sourced from the international markets and a part from the domestic users.

At present, India faces a very odd situation when it comes to the hydrocarbon sector. ONGC dominates in the public sector while RIL is the only company in the private sector. In such circumstances, we need to carefully evaluate, implement and regulate its management in order to avoid disproportionate gains for the producers. One of the ways in which equity as well as the efficiency issues can be addressed is when the government intervenes in the pricing decisions, but it always results into controversy instead because of the non-transparent and corrupt environment in which the decision making takes place.

It is still not certain if the prices should be increased or not. No one seems to know how the increased price was reached at. Even Veerappa Moily had no idea how the new price was decided. In an ideal situation, the pricing decisions should be broadly disseminated. Instead, it was left wide open for speculation. This situation is quite complicated. The KG-D6 basin is in the hands of RIL at present and the fact that RIL needs to raise the gas prices because of the circumstances invite suspicion.

Recently, the Comptroller and Auditor General has indicted that India’s largest private sector company, Reliance Industries Ltd has violated the terms of its contract for exploring the gas fields in the Krishna-Godavari Basin. If this were to be true, this would be the chief factor for the rise in the gas prices because such corruption in the assets of the country puts inflationary pressure on the price of the goods because of the extremely high rate of transportation as well as fuel.

When it comes to Modi’s agenda, his stand is that “he may review the formula on the lines suggested by a senior party leader last year and announce the date of implementation of new prices.” It is said that the Ministry will make a presentation on the issues pertaining to the gas and oil sector to the PM Narendra Modi and then it will give a clear direction on how to proceed on gas pricing. If the PM agrees to go according to the Rangarajan formula which was approved by the government in December last year, the announcement will be made forthwith.

Before its implementation, there are some changes that are required in the formula in order to protect the users in the fertilizers and the power sector. The Rangarajan Formula prices seek out to bring price clarity to support the E&P activity. They also seek out to remove the arbitrariness of prices as determined by the APM. Nevertheless, these prices may have an undetermined impact on the subsidy bill. “On the one hand, fuel subsidy may reduce, but on the other hand, the central government may end up spending more on fertilizer subsidies.” Also, RIL is seen with a suspicious eye as it is alleged that it has kept the production of KG-D6 block natural gas low over the past few years deliberately so that they would make a windfall when the prices rise and the production is increased.

With all these controversies flying around the corner, it is hard to know the truth and even the Supreme Court verdict asked the government to file an affidavit explaining why present gas prices in India are double than those in Bangladesh and why is the complex formula of Rangarajan necessary. At present, it seems that the hike will benefit only the RIL and will be highly against the domestic producers and the consumers.

fin-bluetooth-ring-1

By Mayank Jain:

The Indian innovation has led the way for the world to follow from the times of giving the world a ‘0’ to paving the way for modern Chess as we know it today which developed in Europe after borrowing from the Indian game of Chaturanga, developed in Gupta Empire.

The sun shines over us in the 21st century and the Indian innovation space is heating up with multiple contenders with their products and services promising to put India back on the world map of innovation. The start-up space has been given a new lease of life by the interest of foreign investors and venture capitals while rural innovators are counting on funding by National Small Scale Industries Corporation and together, they are giving birth to a new enterprising India which is first to unveil things the world will love.

Here are the best of recent innovations that you should keep an eye on:

1. Fin: Fin can be rightly called the lord of all the rings. It is a path breaking product in the wearable technology space. Fin is a tiny ring that you can wear on your thumb and connect seamlessly to many devices through Bluetooth and go on with your work without the need of pulling out the device out of your pocket. With Fin, one can share music, change songs, control car AC, switch the lights of their living room by just gesturing the thumb on other four fingers. The uses are endless and the cost is just $120 making it an affordable piece of the future for you. Fin was born in Cochin and incubated in California. Here is a video that explains Fin:

2. Adister: Adister is a startup in the right direction. Started by Ex IIT Roorkee students who didn’t go for placements to make their dream come true. Adister provides smart notebooks which are every day notebooks with high quality paper and an advertisement on their cover which brings down the cost of notebooks by as much as 60%, or more in some cases. The availability of cheap stationery is crucial to achieving India’s dream of literacy and this ingenious idea needs as much support as it can get to scale up and revolutionize the way we educate our children. Here is a video you should watch to understand the concept:

3. Reliance Jio Wi-Fi Hotspots: Mukesh Ambani’s Reliance Jio telecom is about to make another dent in the Internet universe of India by 4G Wi-Fi hotspot services being rolled out on pilot basis. As many as 55,000 devices in parts of Gujarat are using these services which are free of charge, for now. Reliance Jio has already entered into multiple content tie-ups with Walt Disney, Extramarks Education, and Network18 for its offerings. A small country called Niue is the world’s only country with free Wi-Fi available all over its 260 square kilometers of area. On the other hand, most European and American provinces have Wi-Fi hotspots available which make the internet easily accessible and ensuring seamless availability of work and fun on the devices.

Master jio logo-ver-CMYK

4. Renew It: Computers from the scrap, that’s what Renew It does every day. Started by an IIM alumnus Mukund, the company is in the business of buying computers and electronic scraps from the corporates and they turn them into working computers. These working machines are then, sold to the rural areas at very cheap rates which makes computing, an affordable affair for the people with limited means. The company has already sold 10,000 computers so far and you can check them out here.

5. Flipkart-Myntra Wedding: The great Indian eCommerce wedding, as it is being called in the tech circles is one of the greatest acquisitions so far in the Indian eCommerce space. The deal is one of the biggest attempts at consolidation in the e-tail market. The growing dominance of Amazon and eBay has been effectively put on hold with this acquisition which will enable Flipkart to eye its IPO plans more seriously. Flipkart’s one day delivery, premium services called Flipkart First and its alliance with Motorola to retail their phones have already made the world take notice of this new fire power in the Indian economy. Here are the implications of the deal.

Sachin-Bansal-CEO-Flipkart-and-Binny-Bansal-COO-Flipkart-2

The Indian technology industry is finally going beyond just software development and IT services concentrated in Bangalore and the sheer potential of Indians to change the world can be observed in the success stories of Ola Cabs, Zomato and Flipkart to only name a few.

What do you consider to be the next big thing from India? Tell us in the comments below.

To know more about this story and what I think, follow me on Twitter.

INDIA-ECONOMY-RBI

By Tushar Mangl:

Everyone likes to save a little money. The rich, the poor, the average earner and even the lavish spender likes to have a little nest of savings. Banks are the biggest media today to enable investment and savings transactions. It is no wonder then that we need banks for a good economic system and an ideal way of life where we can save some cash and also go for any needs of loans. They make good business too. You save your money at four or six percent and your friend gets a loan from the bank at 10 percent plus.

When the British left India, they left behind a fairly good banking system with a nice number of banks in select corners of the country. All we needed to do was use the system, polish it well, and spread it thick and deep. What Indians did instead was use it as a milking cow, ruining these institutions instead of using them for positive gains. In the 1970’s Indira Gandhi led the nationalization of the banks. The cat was out of the bag. Politicians controlled the banks and not the bankers or professionals. They now had almost autonomous power over the banks, which were trustees of sorts of the public money. The people of India loved the idea. They even loved the idea of Vajpayee who years later started selling shares of these banks as IPOs or FPOs in the open market. So, first you nationalize a bank, and then you make money selling its share. We Indians have done our socialist, communist and capitalist dharma in a matter of decades. All this time, did we ever stop to think, which way do we want our banks to go?

INDIA-ECONOMY-RBITo spice up things, co-operative banking was launched in India. Now, most of these banks are going nowhere, with tight political control and awry finances. But then we had an economist Prime Minister. He is the great Dr. Manmohan Singh, who is the former finance minister of India and also a former governor of the Reserve Bank of India. You would think, banking system could be saved or put on a right track under his rule. And yes, he and his cronies in the government did allow a lot of great banking reforms in India. He made sure that all hard working politicians of his party, the Indian National Congress be accommodated as much as possible as the directors of various public sector banks.

The list of hard working Congress workers, who were appointed as directors of various banks include — Indu Singh Panwar (Central Bank of India), Ram Chandra Khuntia (Andhra Bank), Sooraj Prakash Khatri (Indian Overseas Bank), Maulin A Vaishnav (Bank of Baroda), A Ali Azizi (Bank of Maharashtra), Romesh Sabharwal (Central Bank of India), Masarrat Shahid (Bank of Baroda), Nafisa Ali Sodhi ( Indian Bank), Pankaj Gopalji Thakkar (Canara Bank), Ponguleti Sudhakar Reddy (Indian Bank), Satya Behn (Central Bank of India), Prabha K Taviad ( Bank of India), Maj (retd) Ved Prakash (Central Bank of India) etc. The list is quite long.

Today the media, while branding the corporate and business class as villains of the latest banking mess that is brewing in India, won’t tell you how the government of India being the legitimate representative of people of India, played around favorites while running the banks. A recent report of the RBI shadows doubts on quality of board governance in the public sector banks. Is it possible that the policy of accommodating a number of working members of the party in the financial institutions backfired?

unorganised labour in India

By Aanchal Khulbe:

The Indian Constitution abolished the last remaining form of slavery in 1976 by the Bonded Labour System (Abolition) Act. However, slavery persists. In the little dark concealed pockets around the nation, we see the diluted form of slavery. Which, being unsung, unprotected and legally unrecognized finds its stronghold in the lowest sections of the society- The Below Poverty Line families, the Dalits and women. Temporary recruitment, permanent exploitation- the strategy is simple. Boasting of more than 94% of the employment, the lucrative unincorporated sector is undoubtedly the nation’s most formidable, and the most infuriating.

unorganised labour in India

Contract labour is characteristically not only the sale of one’s labour when there is absolutely no scope of job security, a regular pay, gratuity or pension, but also that of one’s dignity. It is the workforce not run by legal provisions, but solely on the mercy of the employee industry.

In this destructive framework of opposing identifications to ‘development’, the role of states need to be emphasized. The industries glean the urgency of the minimum classes, and this has supplemented momentum to the system. Being devoid of legal provisions or state protection, this process has had unprecedented access to almost-free labour. The prospect of “healthy employment” through this has been epitomized so much so that the former Gujarat Chief Minister, Narendra Modi, legalized the setting up of SEZs or Special Economic zones in Gujarat and this had been welcomed as the supreme-most constructive policy n the line of national development. SEZs offer unhindered control of industries over the amount and type of labour they desire , and this is how he was able to present a 5% increase in industrialization on paper (I would have mentioned other leaders who have implemented the SEZs as well but the Gujarat Model of Development has been potrayed as the best model in India, and this, I thought, needed a closer look!). Nobody highlights what is beneath this industrialization – a class of unprivileged labour being raised from the shackles and dumped back, devoid of rights, devoid of means. A legal form of slavery this is, a working institution called Contract Labour.

For the Indian patriarch, the female gender endorse a form of such submissiveness that the task of mobilizing labour on unequal wage basis and sheer discrimination becomes very easy. Therefore, the unorganized sector has seen a large ‘feminization’ of the work place. This easy to recruit, cheap to maintain and easy to un-employ community has come out as the clear majority in the total amount of labour recruited on contract basis. Women are also subject to sexual harassment at workplace which, like all other forms of exploitation, goes unregistered because the perpetrator is generally a person of authority. About 96% of the employed women come under this sector.

When we talk about economy, an increase in investment or industrialization, we are not talking about development as a whole. In fact, the upward directed arrow on paper is a downhill ever-falling graph of exploitation, and this is not what growth is about. It is about raising the complete standard of living, providing resources even to the marginalized, including them in your schemes as well. The growth in economic development is an illusion. Development of half the state is still half the story. And the gap between the two sides is ever-increasing.

Consecutively, it does not guarantee a future for their children. Parents have to force their children to go out and work in order to contribute to the family economy. Children themselves grow up in an early realization of this band grow up to be labourers themselves. Therefore, the occupation takes the form of a hereditary chain.

The industries make huge profits by exploiting the already exploited, thereby limiting any opportunities for their growth. The unorganized sector is that successful milking machinery of the economic right wing which works on a simple agenda of maximum exploitation and minimum pay, which shows the Dalits their eternal place – inferior.

fdi

By Ankita Nawalakha:

In December 2012, the Indian Parliament approved of the central government’s decision to allow foreign direct investment (FDI) in multi-brand retailing. There have been many speculations on its potential benefits and costs and, depending on their socio-political-economic ideologies; the commentators have positioned themselves either in favour or against this policy. The policy impacts people across various sections and hence it is important to closely analyse its impact on different stakeholders.

fdi

Firstly, FDI in retail will directly benefit the Indian government. The organised retail sector facilitates the generation of significant tax revenues through the building of a sophisticated supply chain. Also direct tax receipt like income tax will also increase as large number of employees engaged in this stream will get salaries/benefits in transparent way as per laws and rules of employment. Conclusively, there will be an improvement in balance of payment.

The most immediate beneficiary from the coming of multinational players in retailing would be our farmers. Certain regulations have been put in place by the Indian Government, one of which says that at least 50% of the total investment has to be on back-end infrastructure- cold storages, warehouses, transport etc. Thus construction of storehouses and improved transportation will reduce the losses of the farmers and will provide a larger market. The farmers will receive better/fair prices by directly selling to organized retailers and getting away from relying solely on the intermediaries who often pay lower prices.

Furthermore, FDI is likely to benefit micro, small and medium industries. With clause of 30 % sourcing from MSME mandatory, a precautionary approach has been taken to safeguard and promote MSME sector. For the MSME, there will be an increase in demand for their goods from organized retailers provided that they improve the quality of their products and are able to match certain standards. There will also be growth in export opportunities for MSME’s.

Also, there is no dispute over the fact that FDI in retail will improve consumer wellbeing. The entry of foreign retailers will not only provide cheaper prices for products but it would provide larger space for product display, hygienic environment in the shopping area, availability of a large number of products under one roof, and better customer care.

The section of society which people speculate might be harmed from FDI in retail would be of unorganized retailer, local kiranas, street vendors etc. The major apprehensions of those opposed to FDI in retail is that unorganized retailers will lose their business and the large number of people employed in this sector will consequently become jobless. However, this is a gross misinterpretation. FDI in retail can only be implemented in cities which have a population of more than one million. There are only 58 such cities in India. It is true that in these cities unorganized retailers and local kiranas might lose some of their business. However, the experience of other developing countries indicates that the presence of foreign retail and consumer companies contributes to building a new middle class, which drives economic success, prosperity and social progress for all. This can be proved through China’s example. Since 1992 it has attracted huge investments in the retail sector without affecting either small retailers or domestic retail chains. In fact, since 2004 the number of small Chinese outlets has increased to around 2.5 million from 1.9 million. Moreover, we cannot neglect the fact that small retailers have inherent advantages- they are located next to the consumer, they know them well, they give credit too – which no large retailer does. Today, we have retail companies like Big Bazaar and Shoppers Stop but people have not stopped going to kirana stores. Thus even if small retailers and local kiranas lose some of their business, it will be rather small and insignificant compared to the benefits FDI in retail will bring.

Finally, it’s important to assess the likely impact of FDI in retail on job employment. Contradictory to the apprehensions that FDI in retail would lead to massive unemployment; it is more likely that bringing in foreign investors would create jobs that will offer better salaries, work environment, social security as compared to unorganized trade.

The concern about the competition to domestic companies, monopolization of market, loss of employment, procurement of produce from farmer at low price have been addressed properly through provisions in the scheme announced on FDI in retail. However, it is difficult to conduct an objective assessment of potential benefits and costs of FDI in retailing for several reasons. It is also unlikely that all the potential benefits and costs will be realised to their fullest extent, at least in the foreseeable future. The economic dynamics and the political process will play an important role in determining the outcomes of this move to allow FDI in the retail sector and will ultimately determine the effects on various stakeholders.

Sources

1) Department of Industrial Policy and Promotion (2010). Foreign Direct Investment (FDI) in Multi-brand Retail Trading. Discussion Paper.
2)Ernst and Young, “The Great Indian Retail Story”, 2012
3)Dr Hiranya K Nath, “Foreign Direct Investment (FDI) in India’s Retail Sector”; Space and Culture, India 2013
4)Dr. Sheetal Mundraa, Mukesh Mundra and Manju Singh, “A Review of the Impact of Foreign Direct Investment on Indian Retailing”, International Journal of Sciences: Basic and Applied Research (2013) Volume 10, No 1, pp 01-18
5) Federation of Indian Chambers of Commerce and Industry, Impact of FDI in Retail on Stakeholders, 2012

By Syed Kazim:

On the one end, we have big brand names, big MNCs, big turn overs, big employment generators and what not. But on the other hand, their greed has led them to earn profit by exploiting the resources of the country by bribing the governments. These companies are filthy rich but the greed to earn more and more money does not die. Ethics in business has become a matter of discussion only in class rooms. The million dollar question is, when will it become a reality?

Tata Motors’ Nano plant at Sanand in Gujarat is lying idle. It has utilized just a fraction of the Rs. 2000 crore facility. It has been only two months when Tata Motors utilised more than 25% of its installed capacity at Sanand.

So how did it all begin? Tata built a huge infrastructure for Nano in Singur, West Bengal, which faced tremendous resistance from the locals backed by Mamata Banerjee’s Trinamool. The farmers alleged that their fertile land was forcefully grabbed by the ruling left front. In November 2008, Gujarat CM Narendra Modi offered Tata Motors an eye-popping deal, a deal which convinced the auto giant to choose Gujarat over other states as the alternative for the Tata Nano’s plant. The incentive was Rs 9,570 crore soft loan over 20 years – close to 25% of Gujarat’s annual budget. Tata Motors will repay the loan in 20 years, at 0.1 per cent interest rate and will repay the land price in eight equal annual installments. That’s not all. The state government also provided four-lane road connectivity and exempted Tata’s from electricity duty, registration and transfer charges of land. The state also put up a waste disposal plant, supplied natural gas through a pipeline and provided 100 acres of land near Ahmedabad for a township. As if so much was not enough, Modi used some more public money to give Mr. Tata free publicity for his Nano car when Modi put up hoardings featuring him and Mr. Tata with Nano all over Gujarat.

However, the real deal is still in the dark. Besides appreciating Modi’s investment friendly policies and telling the nation that he is PM material, one might wonder what else Mr. Ratan Tata had to dish out to get this dream deal which might have costed the state in excess of Rs. 30,000 crores for a mere Rs. 2000 crores. Rs. 30,000 crores of public money drained out for a private project whose total worth is less than one-tenth of the money spent. How much money did Mr. Ratan Tata give Mr. Modi for all these favours?

Recently, a protest broke out at the Manesar plant of Maruti Suzuki, the country’s largest car maker. The management had stopped electricity, gave no water and food, no access to medicines and three thousand odd workers were forced to share only one toilet. The worst part was that the labor department too lacked the minimum courtesy to bother about it.

All this began when eleven workers were expelled from the company for their efforts to form a new union, Maruti Suzuki Employees Union (MSEU) as the existing union, Maruti Suzuki Kamgar Union (MSKU) was a puppet of the management. On the other hand, the management had forcibly taken written undertakings from workers that they are happy with the old union. The labourers could not do much as the Government also started speaking the language of the management. Now, what can the laborers do when the law makers support the law breakers?

The villagers of Jagatsingpur district in Odisha have been protesting against land acquisition for POSCO, the South Korean steel giant’s $12 billion steel plant since the last seven and half years. The government is going ahead with the land acquisition process for POSCO, even when the environmental clearance given by the Ministry of Environment and Forests stands suspended by the order of National Green Tribunal (NGT).

POSCO project no longer has a memorandum of understanding with the state government. The state, which clearly has no legal basis to acquire land for the POSCO project, continues to terrorize, attack, destroy livelihood resources, arrest and file charges on the villagers on behalf of a Korean company. ‘Don’t steal in the name of steel’ is what the villagers have to say.

Google, a company knows for giving us answers to all our questions. It earns money by violating your privacy. They go through every word of your personal email so they can target you with ads. Every word of every email. Even the most private ones, like messages about relationships, health care, finances, and more. Even if you don’t use Gmail, Google will still go through emails you send to Gmail addresses in order to sell ads, despite you never having agreed to their terms of service. There is absolutely no way to opt out, whether you use Gmail or not. Can’t Gmail search for an ethical way to advertise by googling on its very own search engine?

Just a few years ago, the situation for workers in Florida’s tomato farms was so bad that one federal prosecutor called Florida “Ground-zero for modern slavery.” With the implementation of the Fair Food Program, we’re now on the verge of eliminating slavery in Florida’s tomato fields.

That’s because the Fair Food Program has made historic progress in tackling forced labour and exploitation. Wendy’s, one of the biggest international fast food chain from US refuses to join the Fair Food Program to ensure slavery is not in its supply chain. If Wendy’s joins the Fair Food Program, their immense purchasing power could help bring the last 10% of farms to the table and ensure the tomato industry never sees another case of modern slavery. Feed the rich at the cost of modern slavery is the order of the day.

Target is one of America’s biggest retailing company. How do they keep their prices so low? Turns out some of Target’s products might be so cheap because they are made with slave-picked cotton from Uzbekistan or purchased from Daewoo International, a company that accounts for approximately 20% of all cotton processed in Uzbekistan. Every year, during the harvest season, over a million children and adults are ripped from their homes, schools and jobs, and forced to work in the cotton fields of Uzbekistan to meet daily picking quotas. They are often threatened and beaten.

Target pledged not to buy slave-picked Uzbek cotton. Now, they’re following up on their pledge by joining the Daewoo Protocol, declining to do business with Daewoo, until it takes serious steps to stop sourcing slave-picked Uzbek cotton. Despite its promise, Target has not yet signed the Daewoo Protocol. A company that takes pride in holding the highest ethical standards for itself and for its business partners has indulged in such an unethical act. Is all this only to earn more money, what is Target targeting at?

Nigeria’s lucrative oil industry is dominated by Shell, a multinational oil and gas company incorporated in the United Kingdom, which in conjunction with the government, controls most of the country’s oil wells. It is also in part responsible for the thousands of spills, many enormous, which have occurred in Nigeria since the 1970s. Sued by some of the people whose lives have been destroyed by the pollution, Shell is still arguing about just how much oil pollution it is liable for, claiming sabotage is behind most.

Debatably, the corporations in charge of an industry are responsible for everything that happens in that industry, regardless of the specifics of each individual case. Shell, of course, is not going to have any of that. However, since the corporation has earned huge profits at the expense of Nigeria’s people and environment, it should at the very least, stop spinning and provide compensation to the victims. With Shell, ‘all is well’ but their attitude is ‘let others go to Hell’.

When Warner Bros., an American producer of film, television, and music entertainment, announced that it was bringing Harry Potter’s favourite chocolate treat to life, muggles throughout the world rejoiced! The only problem is that outside of the wizarding world, Chocolate Frogs have a sinister side, they could be a product of modern slavery. In the Ivory Coast of Africa, children as young as 7 are forced to work long hours collecting cocoa beans, often beaten if they don’t meet their quota. Their supplier Behr’s Chocolates scored 1 out of 48 possible measures to ensure their operations are slavery-free. When Warner Bros. is asked what steps were taken to ensure there was no slavery in Harry Potter Chocolates, they refused to respond. The chocolates might be sweet but the process is dam bitter, why doesn’t Warner Bros. make film on this?

Most of the business management students have a dream to join these big companies. Are they going to support this system after joining them? How effectively and practically are they going to implement business ethics which they studied in their subject? After witnessing all this, one question strikes my mind, are these companies the new rulers of the world? I would conclude with a small poem – ‘greed is on the lead, which many companies are ready to breed, how much do their bellies need and where will all this lead?’

ongc

By Amit Bhandari:

A fierce public debate on the price of extracting and then selling natural gas from an oil well under India’s jurisdiction, borne by the taxpayer, is also causing some confusion in the minds of those trying to get to the bottom of it, at least conceptually.

Officials of the newer Aam Aadmi Party (AAP) shoot off an allegation and Reliance Industries (the company which is drilling for it) or RIL promptly responds to it. Now the Election Commission (EC) has also joined the party —it ordered a long proposed increase in natural gas prices to be delayed till the end of India’s 2014 general elections.

ongc

The heart of the problem is a simple issue — can the same product be sold for two (or more) different prices, a market price and a government dictated or administered price (APM)? In essence, this is what is happening for natural gas. To complicate matters, the APM price gets revised every few years.

Obviously, this creates two vested interests — the gas suppliers and the gas buyers. Both will try to get a decision that favours them, and at least one of them (sometimes both) will be unhappy with the outcome, no matter what it is.

According to a statement made in Parliament, domestically produced natural gas is sold in India from prices ranging from $3.5/unit to $6.79/unit (FY12). Natural gas from RIL’s KG-D6 field is being sold at $4.2/unit. Meanwhile, imported liquefied natural gas (LNG) was priced at $13.4-16.4/unit. The current prices of LNG are even higher, up to $18/unit.

The gas price revision that was due on April 1, 2014, was actually an attempt to simplify this situation. On that date, a formula would kick in to decide gas prices. This methodology had been suggested by the Rangarajan Committee, headed by former Reserve Bank of India governor Dr. C Rangarajan. The key recommendations were:

1) Domestically produced natural gas would have the same price irrespective of source
2) Gas price would be notified on a quarterly basis
3) Gas price calculation would have the following parts:

* Calculation of weighted average price for all Indian imports
* Calculation of world weighted average price for Henry Hub (US), National Balancing Point (UK) and Japan
* The average of above two would give the price for Indian producers

One of the problems with this formula is that natural gas benchmark prices can vary widely as well — since gas cannot be freely traded, unlike oil. Therefore, no matter what the ‘formula’ price is, it will be higher than some of these figures and lower than others. Figures can be selectively picked to show that consumers are either being ripped off or heavily subsidized.

How did it come about?

To use a cliché, it’s complicated. Just like crude oil, India is also short of natural gas. Unlike crude oil however, natural gas cannot be easily imported. Till 2003, the only gas available in India was what ONGC produced. In that era, prices of almost all petroleum products (including natural gas) were dictated by the government, a policy referred to as the Administered Price Mechanism (APM).

Since natural gas was in short supply, use was prioritized. The fertilizer sector was deemed critical and would have top priority. Also, the price was very low — much below the price of natural gas in other markets such as the US. Since the gas was produced by a government owned company (ONGC), it didn’t matter.

Two events that took place 10 to 12 years ago promised to change the situation. In 2002, Reliance discovered natural gas at the KG-D6 field. Then, in 2004, India’s first LNG import terminal was set up at Dahej (Gujarat). LNG imports started in 2004 and these prices were much higher than the APM prices.

Despite some concerns, commercial users picked up as much LNG as could be delivered. This created a problem — the same product, natural gas, was being sold at two widely different prices — APM rate and market rate. Later on, when Reliance started producing natural gas from the KG basin, it got yet another price.

The reasoning was that because Reliance had invested large sums in developing this gas field, it had to be given a fair return on its investment. It is this price that is causing the heartburn.

During 2012, India imported approximately 25% of her natural gas requirements. India’s gas production has fallen in the past 3-4 years because Reliance’s KG-D6 field has run into some complications. Production is now less than half of what it was originally expected to be. That has led to yet another set of allegations about the company deliberately not producing gas, but we are not going to look into that yet.

Perhaps one solution is to free natural gas pricing. Allow customers to freely bid for natural gas and buy it from suppliers. This price, whatever it is, cannot be contested. This mechanism already works very successfully for imported LNG — without any allegations of corruption or crony capitalism. Meanwhile, sensitive sectors such as fertilizer can be provided subsidy to make up for the higher cost of raw material.

Whichever way it goes, it might be difficult to resolve this issue the way things are. Moreover, the current policy also ignores the lesson that was (painfully) driven home by the 2G telecom spectrum scam — natural resources are best auctioned!

This article was originally published by IndiaSpend .

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Photo by Amey Mansabdar

By Aparna Wanchoo:

India’s caste system is an ancient social hierarchy, which places people into different categories by birth. Those born into the lower castes have historically faced discrimination. More than 160 million people in India are considered “Untouchable”–people tainted by their birth into a caste system that deems them impure, less than human. Human rights abuses against these people, known as Dalits, are legion. A random sampling of headlines in mainstream Indian newspapers tells their story: “Dalit boy beaten to death for plucking flowers”; “Dalit ‘witch’ paraded naked in Bihar”; “Dalit woman gang-raped, paraded naked”; “Police egged on mob to lynch Dalits”. But one woman has managed to change this existing status, the multi millionaire Dalit woman, Kalpana Saroj.

Photo by Amey Mansabdar
Photo by Amey Mansabdar

The dark horse, Kalpana Saroj is one woman whose story begs to differ. Hailing from Murtizapura, a hamlet in the interiors of Maharashtra and being born in a low caste Dalit family, she has had her shares of agony and misfortune. But she was one of the rare individuals, who by her sheer hard luck and perseverance, managed to turn the tables around. Today, she is a multi-millionaire. At the helm of a successful company, she rubs shoulders with prominent businessmen and has won several prestigious awards for her professionalism.

The early distressful years of her life:

Even though her father allowed her to get an education, wider family pressures saw Kalpana become a bride at the age of 12. She moved to Mumbai to be with her husband who was 10 years older, but was shocked to find herself living in a slum. But that was not the only hardship she had to endure. She underwent unspeakable torture at the hands of her brother in law and his wife. She finally abandoned the alliance with support from her father, and was taken back to her village. Driven to despair by her wretched circumstances, she attempted suicide, but survived. At that moment, she decided that she would achieve something, and live life on her terms. Determined to make it big, she returned to Mumbai a few years later and stayed with an uncle. Working in a hosiery company, she eked out a living earning a meager Rs 2 a day. But it was in the rough and tumble of Mumbai’s underbelly that she acquired her raw aggression, determination and earthy approach to conducting business.

Her advent in the world of business was born out of misfortune. In the mid-1980s, her second husband passed away, and she inherited a fabrication unit for making cheap tin and steel almirahs. It wasn’t much of a business, but she quickly learnt the ropes. The unit helped her to make ends meet and raise her two children. She even managed to put some money away. It was in the construction industry that Saroj really honed her business acumen. It was a tough business, and she had to frequently confront shady elements and opposition of all hues.

Carving a niche:

Kamani Group’s case was a historic one in India. In 1988, the Supreme Court had decided to make the workers the owners of the company. Due to issues between the workers, union and management, Kamani Tubes went bankrupt and was facing liquidation. Kalpana came into the picture only in the year 2000 when the company had a debt of Rs. 116 crore, 140 litigation cases and two workers unions.

Kamani Tubes had no significant assets to its name. The factory in Kurla (Mumbai) was not operational. Machine parts had been stolen. The office space was occupied by tenants who had been there for years. The four-acre land the factory stood on was divided between Kamani Metals and Kamani Engineering.

She met with representatives of the banks, the Board for Industrial and Financial Reconstruction (BIFR) and the government. Their brief to her was simple–if she wanted to help, she could pay Rs. 2.5 crore and take charge of the company. That is what she did. She had studied the company’s problems and realized that the debt had built up because of interests and penalties. She approached the Finance Minister around 2005 and requested that these be waived off. Her grounds for the request were that if the company goes into liquidation, the banks would get nothing. But since she was trying to turn the firm around, if they were waived, it would be possible for her to pay the debt back.

Her good intentions were noticed. The minister called up the chairmen of all the banks and got them to waive the extra charges off and the liabilities came down to about Rs. 45 crores. This was just one part of the problem with this firm. The other was the 140 litigation cases. They were tackled systematically and the company was finally released from the BIFR in June 2011. She restarted the factory on her own land in Wada (Thane). Gradually, the company limped back to normalcy with a better production and distribution network. It paid off the workers and was able to give back the dues of the original owner, Navinbhai Kamani.

Her awe inspiring, ever increasing progress:

Today, she presides over varied businesses. The single factory Sai Krupa Sakhar Karkhana in Ahmednagar, in which she holds a substantial stake, is graduating to an integrated sugar complex. Capacity has been enhanced to 7,500 TCD (tonnes of sugarcane crushed per day), and a 60 KLD (kilo litres per day) distillery is coming up. They are also building a 35 MW co-generation power plant.

A diversification into steel manufacturing and mining has come about recently. Initial investments of Rs 10 crore for a 100 tonnes per day steel plant has been made at Wada, on the outskirts of Mumbai. A bauxite mining initiative across 1,230 acres in Udgir, along the Maharashtra-Karnataka border, is being drawn out.

Meanwhile, she has also resurrected the Kamani brand in the Gulf through Al Kamani in Kuwait and Kalpana Saroj LLC in Dubai to cater to the huge demand for copper tubes, especially from the water and sanitation sector.

In a nation where Dalits are even now looked upon by many strata of the society, her success story fosters the belief that nothing can stop a person who is willing to fight through all the odds.

vijay

What’s the right attitude for Entrepreneurship? Find out with Vijay Anand, a serial entrepreneur, angel investor, the founder of In50Hrs (a concept weekend that helps great tech ideas become real) and The Startup Centre (which offers residential programmes and angel investment to tech and digital startups).

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gold

By Sukant Khurana:

India is the largest consumer of gold in the world. Not just now but in Athenian councils and Roman senates, a vexing issue used to be the loss of gold coins to India in trade. In fact, now we know that most of gold in both Gupta and Kushana period (that resulted in some Indophiles calling India as the “Golden Bird”) was of Mediterranean origin.

gold

Now that gold is not tied to coinage and currency cost in any way, why is that still today more than 700 kgs of gold is smuggled in India every day? Indians like glitter, bling bling, pomp and well, maybe bit of a safe investment. I am not going to argue against the shine of gold, as I do not think my writing will dissuade those who are goldstruck because of its glitter, but I would like to question the sagacity of gold as a good investment for personal and national economic growth.

First let me ask the smaller question – Is gold all that promising for personal economic growth? Between 2011 to now, there has been a 30% decline in its price and more so in this day and age when there are so many better investment options, then why go for gold? But for the sake of argument, let us say that gold is a safe and good investment for you as a person but here is the big question – Is gold good for the country? Gold or for that matter anything that takes capital out of circulation from the economy is slowing down India’s economic engine. Gold is the kind of investment that does not result in the size of economy to grow. It takes out much needed capital, does not generate jobs and most importantly it does not open new avenues for future growth. We need productive investment back in the society. Gold is simply unpatriotic!

Indians need to explore the Wild West frontiers instead of sitting in the comfort of their homes on piles of gold (well those few of us who have that). The modern equivalent of Wild West frontiers is exploring new ventures in economic and social entrepreneurship. Dynamism instead of the love of glitter put West on the map and is behind the rise of the Dragon in the East. It is time for the elephant of Indian economy to wake up from its sleep, shrug of its heavy golden ornaments and take off.

rupiya

By Rajat Sharma:

It was a bright sunny afternoon of August 28, 2013, when the news channels started flashing the breaking news in their usual ‘Breaking news’ style. The rupee had touched its lowest mark of 68.80 against a dollar first time ever in the history of our economy. My father, who usually refrains from criticizing the administration and governance of our country, commented in certain despair that at the time of independence our rupee was equivalent to a dollar and it required just two rupees to get a Great Britain Pound in our pocket. His comment left me dumbstruck as I could not understand a simple fact that if our finance ministry claims a certain amount of GDP and GNP growth every year then why is it that it takes us more than 60 of our national currency coins to face a single American dollar and that too when once they shared the same level in world economy.

rupiya

The first and foremost reason that accounts for such dwindling is the inability of our country to utilize its abundant natural resources. Once we were known for our iron ore exports to countries such as the U.S.A, Japan, North and South Korea, but now due to excessive judicial and constitutional barriers raised on the mining and exports from Karnataka and Goa ports, our country has incurred a fall of 43.5% on iron ore exports during April-October 2013. Similarly, the coal exports figures that we used to flaunt a few decades back have not just gone down, rather our nation is bound to import coal from countries like Canada, Australia and Indonesia in order to meet its energy requirements.

Furthermore, the increasing disinterest of the foreign investors to invest in our country is another reason for the depreciating value of our currency. The politically charged and unstable environment at the state and national level is a critical reason for such a disinterest as the investors seem to be skeptical about the future of their investments. Change in the foreign and economic policies with the change in the government seems to be a cause of insecurity for these investors as they may have to face an all new set of rules and guidelines that may or may not go in their favor. Ten years back, the IT Consultancy and BPO industry seemed flourishing at a pronouncing and unstoppable rate but today we see the IT and BPO giants investing in countries such as China, Bangladesh, Sri Lanka, Indonesia and so on, for the similar support that once we were boasting of. Even our own IT firms such as TCS, Infosys, and Wipro are investing their human and non-human capital in China at a faster rate as they look for better future prospects there.

Some might cite this due to the cheaper and harder working resources in these countries but the actual reason is the excessive and tedious paperwork and formalities that these investors have to fulfill before starting up their venture on our land. You must be surprised to know that majority of the Motels in United States of America are owned by Gujarati businessmen. If anyone tries to seek the reason that why these people did not invest in their own country but had to rush to the other part of the globe to run such a business then the major reason that would be revealed is the excessive paper work, endless clearances and months of patience (in some cases it may be years as well) that one must be ready with before actually starting the work; and to none’s surprise every paper or file needs certain amount of palm greasing at every level in order to ensure its constant motion to the upper levels.

In addition to it, the over tenderness shown by our political parties while allocating the hefty subsidies appears more to be a vote bank captivation technique rather than a step to support the under-privileged sections of our society. With thousands of crores of subsidies being announced for Food Security, surplus gas cylinders, wavering farmer and industrial loans and so on at the onset of Parliamentary elections reflects that even after 67 years of independence our politics is still revolving around such populist mechanisms in order to woo the voters rather than some core development at grass root level. Whenever the government provides subsidies on various issues, finally that expense is endured by the taxpayer that we refer as ‘Cost to Exchequer’. If our government keeps on luring the voters by providing such subsidies rather than creating and utilizing some sources of sustainable development in future, we must be ready for witnessing much intense and steep depreciation of our rupee.

Satya Nadella, executive vice president of Microsoft's Cloud and Enterprise group, is seen in this undated Microsoft handout photograph

By Pradyut Hande:

The appointment of the widely respected, unassuming in-house “technologist” in Satya Nadella as Microsoft Inc’s new CEO comes at a time when The Redmond, USA based tech giant, struggles to compete on an even footing in an increasingly competitive industry. In what was a predictable turn of events, Steve Ballmer’s 15 year reign came to a denouement with Nadella succeeding him as Microsoft’s third CEO in its 39 year history. Will this change of guard work in the sluggish company’s favour?

For starters, Nadella’s appointment certainly marks a discernible change in Microsoft’s leadership strategy. The marketing genius of Steve Ballmer – a catalyst responsible for much of the company’s early success – will now be replaced by the calm and collected Nadella’s technical brilliance at the top. This may be a harbinger of a plausible return to its halcyon days of breakthrough innovation that set the pace almost two decades ago. With the company having fallen behind newer rivals, Microsoft can ill afford to cede more ground if it is to create an enduring competitive advantage. Having burnt its fingers with the spectacular failure of its Windows 8 Operating System, coupled with the moderate success of its Surface tablets and other associated applications; Microsoft has now bet its future along a new track; and this is where Satya Nadella’s experience and expertise may become a critical factor.

Rapidly morphing consumer sensibilities and shortening product life cycles in an industry that swears by innovation and turns its back at obsolescence, have necessitated Microsoft’s shift in focus from licensed software to mobile telephony, cloud computing and allied services. The fact that Nadella has spearheaded most of Microsoft’s cloud computing and enterprise solution businesses lends itself well to its new strategic course of action. Whether this present gamble pays off in the future remains to be seen. However, having a concrete vision in place is at least a step in the right direction.

Another area of concern is Microsoft’s ambivalence with regards to its mobile handset business. The acquisition of Nokia’s handset business last year had fuelled hopes of an aggressive attempt at countering the growing influence of the likes of Google, Facebook and Apple Inc. to a certain extent. The challenge now is to complement sound hardware manufacturing capabilities with a rugged and yet fluid software framework. All this requires the investment and allocation of significant monetary and non-monetary resources. Nadella’s job will be to strike a balance between stabilising precarious businesses whilst ramping up support to high performing SBUs such as the Xbox and cloud computing divisions.

There are many who believe that a change in leadership at this critical juncture may just breathe new life into an increasingly monolithic organisation that has struggled to remain nimble and responsive to change. Steve Ballmer’s outright, overbearing and outgoing style may have propelled Microsoft to one time Silicon Valley greatness, but it certainly isn’t what “the Engineer ordered“; as the company negotiates a critical bend in the “technology road“. Perhaps Satya Nadella is exactly who Microsoft needs…or perhaps not. Only time will tell.

One thing is for sure though. The new CEO certainly means business and this could be ascertained when he prudently said, “Our industry does not reward tradition. It rewards innovation.” Brace yourselves, for a Microsoft storm may just be coming!

TPP

By Anshika Srivastava:

TPP is an acronym for ‘Trans Pacific Partnership’ which is a ‘free trade’ agreement between 12 countries, spearheaded by the United States of America. Other countries included are Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, Japan, Vietnam, Peru, Singapore and New Zealand. The agreement would seek to bring economic integration and government regulation for nations surrounding the Pacific rim and raise standards of markets providing further opportunity for expansion in future. It is encouraged by giant transnational organisations, for whom TPP will be highly rewarding as it will open up markets, reduce trade barriers etc.

TPP

To know more about TPP, let’s take a little peak into its genesis. The talks regarding the TPP were initiated way back in 2003 by Singapore, Chile and New Zealand to liberalise their trade. Discussions and talks went on and in 2008, the USA took the lead. Since then, talks have been going on with others who have shown interest in joining TPP, Japan being the last in 2013.

We know very well that this is not the first trade agreement to happen under the aegis of the World Trade Organisation, so why is there such a hue and cry against the implementation of this agreement? The most apparent reasons for this are the highly ambitious projects spanning 12 countries which will have serious ramifications for the general population. TPP will be expected to regulate non trade matters like food safety, internet freedom, medicine costs, environmental policies etc. According to the norms, any country that signs the treaty has to conform its domestic policies to the international system of governance.

Another reason that has outraged the public is that these talks were till now obscure, clandestine affairs, held behind closed doors. Thanks to Wikileaks, which has released a partial draft of Trans Pacific Agreement into the limelight of the general population and opened the matter to general public discourse. There are numerous reasons elaborating that adoption of TPP can bring adverse, cataclysmic changes in the life of the ordinary citizens.

1 . Intellectual Property Rights in jeopardy

TPP has confirmed people’s worst fears regarding the matter of IP(Intellectual Property), which aims at bringing stringent copyright laws, curtail internet freedom, infringing online privacy and also impend in the ability to ‘innovate’. These copyright rights that the member nations have to comply with are far more restrictive than any other current international treaty. The signatory countries will by default have to have domestic policies that confirm to these international standards. Countries like Canada, Chile and New Zealand that have liberal intellectual property policies are being sceptical about the TPP and its policies. The lack of transparency is also a questionable factor that is against the true spirit of democracy and human rights.

2. Environmental destruction

TPP is tremendously catastrophic for the environment, as corporations can easily breach the environmental laws and regulations for the prospect of profits. Its going to sabotage the fragile ecosystem of this region which includes the ‘Great Barrier Rief’, and threatening a myriad range of species. Increased trade activity means exponential rise in consumption, especially of non —biodegradable products which will harm the environment. Air pollution, deteriorating water quality and climate change could also be the result of TPP.

3. Some other repercussions of TPP will be increased medicine costs, undermining food safety standards and abysmal working conditions as they would not come under the realm of the International Labour Organisation.

Trans Pacific Partnership

What is most outrageous is the blatant disregard of democratic ideas and principles. The ‘Obama administration’ has been extremely secretive about the whole issue, keeping the media and the public in dark. The US government is aggressively advocating for the TPP to pass. One way of stopping TPP is to obstruct the “Fast Track” agreements. So, what is Fast Track? To put it simply, it’s a bill passed where by the Congress (in America!) will relinquish its authority to discuss the TPP and the White House will have complete power to sign trade agreement without Congress interference.

TPP only emphasises the interests of mighty multinational corporations and selected officials at the cost of digital, internet and personal freedom. It’s time the world woke from it’s reverie and started fighting for its rights, fight for democracy.

bitcoin-silk-road-100213

By John A Raju:

Bitcoins have been in the news for desirable, unreasonable and intriguing reasons for quite some time now. Quite a few articles & opinions are being written on it. But what is this relatively new phenomenon? Is it a gold nugget or garbage or a bit of both among the plethora of new stuff coming up on the virtual world right now?

bitcoin

Wikipedia describes Bitcoins as “a peer to peer payment network & digital currency based on an open source protocol, which makes use of a public transaction log”. All this jargon might be better understood by computer geeks but what it basically means is that Bitcoins is a virtual currency, its control is decentralized i.e. there is no central authority controlling its generation and use, thus making it free from external control and it uses a public transaction log, which is like a huge database which verifies payments and ensures there are no instances of double spending. This huge database is maintained and run by “miners”, who generate the currency and earn bitcoins as well.

The idea of bitcoins came in a scientific paper published under the pseudonym Satoshi Nakamoto. He combined existing knowledge of networking with his own ideas of an inflation proof mechanism and the incentivising feature to create a new electronic cash system.

Its standout features and prominent advantages include encryption enabled anonymity, absence of government/central bank control and is also the cheapest means of transferring cash. What acts as a boon on one side also turns out to be a bane on the other as the above mentioned features are exactly what would aid the black market, money launderers, drug dealers and all such illegal operations. The Silk Route saga is a testimony to this. Silk Route was an online marketplace for illegal drugs which was shut down by the US government, which had extensively used bitcoins to aid its evasion of the government radar. However, the critics say that constant stigmatizing of the Bitcoins with this scandal is unfortunate. Illegal trade and black marketing is carried out even with US currency, but that doesn’t mean we stop the minting of dollar bills, right?

How did the bitcoin use gain prominence? Well it all started with the Cyprus crisis of 2009. With all the inflation ravaging around during the time, Cyprus too experienced a financial crisis (as was the norm for most countries then). This resulted in an unexpected 10% tax on those who had assets of 100,000 euros or more in the bank. With the threat of their earnings falling in government hands, many sought ways to stash away their cash and stumbled upon the nascent Bitcoin. What you basically have to do to earn bitcoins is to create an account in MtGox.com and wire money to it. Based on the exchange rate, you get to purchase bitcoins, and here comes the catch.

The exchange rate of bitcoins can fluctuate erratically. This is because the value of bitcoins isn’t centrally controlled i.e. its value & exchange rate depends on the willingness of other users to buy the bitcoins. During peak demand periods, a bitcoin touched highs of $266 and just as well plummeted to $65 when the demand waned. In this regard, bitcoins behave somewhat like stocks to an extent. This is because of the inherent inflation proof mechanism. The total number of bitcoins in circulation can only be 21 million at a time. So if you are mining bitcoins and there is a huge demand for them, your contribution to the total bitcoin number is reduced. This reduces your savings. On the contrary, you could just as well strike gold when the demand is low but your share to the bitcoin production is larger.

The erratic nature, however, hasn’t prevented popular sites like Reddit and wordpress from accepting it as legal tender. However, its propensity to be used for criminal activities has made governments wary. That even the government requires some perseverance to snoop into bitcoin transactions shows the strength of its encryption programme. Like any financial medium of transactions, especially digital ones, there is huge potential for misuse of this technology and many countries are against its use. The largest private company aimed at making bitcoins more accessible, easy to use and safer is situated in Cyprus, yet the Central Bank of Cyprus or CBC has labeled bitcoins as dangerous. China has issued notices to all its financial institutions stating that bitcoins are no longer recognised as legal tender and cannot be used for financial transactions.

Bitcoins

Despite all the whining about the dangers & risks of using bitcoins, there is no denying that this is a futuristic form of currency. In a world where everything is going virtual, a currency that can ride the waves of inflation and recession, circumvent capital controls and counter international sanctions, is an ultra-superior financial weapon. The weapon may be double edged as any new and progressive endeavour will be. However, I believe that researching, refining and revamping this young virtual soldier can make it a potent and very useful giant in the future.

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