Monday, September 30, 2013


Lalu Prasad Yadav convicted

in fodder scam case

sentence on October 3

The Judgment is out; though the exact quantum of sentence is yet to be out. A special CBI Court in Ranchi today (Monday) held the former Bihar chief minister and RJD president Lalu Prasad Yadav GUILTY in the case related to the fodder scam.

The quantum of sentence in the case will be announced on October 3rd.

Lalu Prasad Yadav faces immediate disqualification as a Lok Sabha member as per the recent Supreme Court order which says  that an MP or MLA would stand disqualified immediately - if convicted by a court for crimes with punishment of two years or more. In the instant case, the punishment is expected to be more than this limit.

The case, RC 20 A /96, involves Lalu Prasad Yadav, another former Bihar CM Jagannath Mishra, JD (U) MP Jagdish Sharma and 41 others, including four retired IAS officer and a former Income-Tax commissioner.

In this case, all these  accused have been held guilty of fraudulent withdrawal to the tune of Rs 37.7 crores  from Chaibasa treasury in the 1990s. Chaibasa was then part of undivided Bihar and is now in Jharkhand. Lalu Prasad was the Chief Minister of the then UNDIVIDED STATE.

All the other accused including another former chief minister of Bihar, Jagannath Mishra, have been convicted in the case.

The Judgment, though belated, must serve as a warning to all  other corrupt Politicians that sooner or later, they will have to serve their time in Jail for the corruption indulged in by them while in Office.

It is noteworthy that the UPA tried  its last ditch effort in the shape of the Ordnance that is utter non sense – as correctly described by Rahul Gandhi. Whatever his detractors might say, Rahul Gandhi deserves ALL PRAISE for his “STRAIGHT FROM THE HEART” comments on the ordnance. In my view, he has grown several notches Higher by putting his foot down though belatedly, on the NONSENSICAL ORDNANCE. This was a hit with a straight bat and nothing concealed beneath it – like other Politicians do. Media men will go on reading between the lines forever, but, there is nothing between the lines, above the lines or below the lines in what Rahul said. What was said was all that he felt and said. And, it was badly needed for Congress and UPA. It was a different thing that congressmen later on were latching on to Rahul Bandwagon, though earlier, many of them were for the Ordnance.

The unfortunate thing however is the dragging on, dragging on and dragging on of investigation of the cases and the lengthy Judicial Process. Given such delays, in most cases, the illegal beneficiaries in such scams can get away without a conviction because of the sheer lapse of time. Assuming that someone commits such a crime at age of 60, he may not face any conviction before his death even at 80. This is totally unsatisfactory. The investigation and Judicial processes must both be speeded up considerably in India, if they are to be effective. It is not the Individuals but the system that is at fault. There must be targets, there must be penalties for delays, there must be independent assessment of the progress of investigation and trial.

All said, despite delays, CBI and the court do deserve grateful thanks from the country. 

But, is it the END OF THE ROAD for Lalu. This may not be. There will be appeals and further legal processes and so on. We certainly need quicker, much quicker, legal processes in India.

If India can’t ensure this, the Guilty can never be punished and the innocent can never be exonerated.

The Supreme court needs our Grateful thanks for putting down the corrupt in their proper place. 

The RIGHT TO REJECT – in respect of Election process is another  significant  decision from the SC in ensuring that the corrupt and the undeserving do not even contest Elections.

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Thursday, September 19, 2013

RBI - Mid-Quarter Monetary Policy Review: September 2013 - AN ASSESSMENT

Mid-Quarter Monetary Policy Review: September 2013

Monetary and Liquidity Measures

A Summary of the RBI”s Monetary Policy Review  dated 20-sep-2013 is here.

On the basis of an assessment of the current and evolving macroeconomic situation, RBI has decided to:

      reduce the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 per cent with immediate effect;

      reduce the minimum daily maintenance of the cash reserve ratio (CRR) from 99 per cent of the requirement to 95 per cent effective from the fortnight beginning September 21, 2013, while keeping the CRR unchanged at 4.0 per cent; and  

      increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25 per cent to 7.5 per cent with immediate effect. 

Consequently, the reverse repo rate under the LAF stands adjusted to 6.5 per cent and the Bank Rate stands reduced to 9.5 per cent with immediate effect. With these changes, the MSF rate and the Bank Rate are recalibrated to 200 basis points above the repo rate.


The RBI’s raising of the  Policy Repo Rate to 7.5%  is the only thing that is a dampener – in this monetary Policy review. This Blog has always maintained that the inflation in India is basically Food Inflation  - which is not in any way affected by the Policy repo rates. Controlling the food inflation basically depends on the supply side measures and administrative measures from the Central and State Governments. While Onion Prices were going through the roof, the Central Ministries were still toying with Onion export, which was bound to exacerbate the Inflationary pressure. There is absolutely no motivation in these Ministries to address food Inflation on a war footing. The only Ministry which seems to be consciously acting, within its limited jurisdiction, against Inflation, is the Finance Ministry under Mr. Chidambaram.

So, what should have been done – and what should now be done by these Ministries concerned with food Inflation?

Given that there is Huge , unjustified Profiteering which is taking place  in the market – one suspects that some Individuals / companies are behind this profiteering – and Government has no motivation to stop this undue profiteering. My strong sense is – there is need to clamp down on this Excessive profiteering in these essential commodities. Probably, Governments (State and Centre) must fix an upper ceiling for the sale price, of not more than Rs.35-40 for onions. This is an example and this principle can be extended to other essential commodities.

Secondly, why is the Government sitting over huge reserves of pulses, to the extent of the pulses rotting and becoming inconsumable finally. It is not wise to wait for the food security Bill for this purpose. The food Inflation right now is too High and there is an immediate need to release the existing stocks with the Government into the Market and bring down the inflationary pressures in the Market. It must be understood that – Food Inflation is the one factor, which directly results in and aggravates Human suffering.

There is also a great need to go in strongly against hoarders. There is also a strong need to suspend all speculation in these essential food grains and food articles immediately – till the inflation comes down to tolerable levels.

The Union food, agri and commerce Ministries must have initiated such supply side and administrative measures – in combination with state Ministries. But, all that we see in the Media is the centre and states blaming each other – instead of coming together for such re-active measures at least, if not pro-active measures.

Good Governance must be Pro-active in such matters. RBI’s measures cannot address FOOD INFLATION which is the main component of present inflation. And, Government only must address it. And, that must come urgently.

There is an Old story. When the thief entered the house, the Dog and the Donkey both saw him. Dog wasn’t barking. Donkey asked him – why are you not barking. Dog replied that it has not happy with the master’s treatment. So, it will not bark. Let the thief steal. Let the master suffer. But, the faithful donkey raised its voice loudly, to alert the Master. But, the master thought, it was disturbing him in the midnight and beat him black and blue. The Dog’s barking would have sent right message. The donkey’s howling set the wrong message – and even as the master was beating the donkey, the thief stole the ornaments and left happily.

The Government is not acting sufficiently – even though, its actions only will bring down Food Inflation, which is the main component of inflation. The RBI is acting – and it acted for over 2 years now – with no effect on food inflation whatsoever – and the Master, the Public, is any way suffering with increasing food Inflation on one side and High interest rates on all sorts of loans etc, on another. Let no one take offence on the allegory of the story – which is just an ancient well known story. The only intent is that Food Inflation must be acted upon by the central and state Governments swiftly.

This is the problem today.

The Market’s reaction – is less reasonable. The Bank stocks have come down. Banks are not going to suffer a wee bit on account of this Monetary Policy. They will maintain their profit margins any way. Also, there is some more liquidity and other easing measures favouring Banks functioning and profits. These must be welcome for the Market. 

But, RBI must be bringing down the Repo rates now – despite the food Inflation. At least, it must calibrate Bank lending rates for specific sectors like Auto, realty and Infra sectors – especially loans for Buyers of autos and houses – which will support growth.

RBI and Government also have another urgent duty. They must together examine the huge rise in the NPAs of public se4ctor Banks and see what really is affecting the performance of the borrowing sectors. Not giving further loans is not the solution. But, ensuring the health of these industries is the solution.

One area of NPAs is Educational Loans. This can easily be solved. Government must make rules – making it obligatory on all employers of these students availing the Educational loans – to deduct the monthly repayment from the salaries ( like they do for a tax deduction ) and remit it to the Bank. Making the giving of Educational loan mandatory is one thing. Making the repayment mandatory is also a part of the deal. This will make it a healthy practice for both sides.

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Monday, September 16, 2013




I like the News that Narendra Modi has been finally declared as PM candidate. 

Modi is a No-nonsense, good governance advocate. No one else seems to be that – in other Parties like Congress. That one qualification is good enough for making him the PM of India for the next five years. 

Indian Electorate should decide to give him the unqualified Mandate – without unnecessary dependence on support from allies. Some of the ills of UPA II are necessarily to be blamed on allies – though Congress itself fared no better in its own Ministries.

We have seen UPA rule for 2 terms. Healthy democratic traditions require that there should now be a change, even for this one reason. Let there be change. Let there be Modi. If he doesn’t perform well, we can always change again.

Will the Gujarat Model be good for India? This talk is meaningless. Every village has its specific needs – and supporting the fulfillment of those specific, genuine needs is what Good Governance is all about. But then, there are specific economic goals which are common for all states.

Industrialization is the foremost. Agriculture is another. If these two are promoted without any reservations or corruption, India can become better than China in next 5 years. I have no doubt about that.

Land acquisition Bill is at least 50 years late. So is Food security Bill. Food security must be ensured for all BPL families. That said, Government must make people perform some productive work – before giving either food or money to them. This requires careful planning. India has so many actual needs that this planning can be actualized with some expert Help. Coupled with some productive work, both NREGA and Food Security Bills could be excellent measures for India. Otherwise not. It is not to say that BPL families do not require support. They do. That is the foremost duty of any Government. That said, this support must come along with productive work too.

Promoting LAZINESS in any one, including BPL families is dangerous for India’s Growth. Therefore, both Food security Bill and NREGA need to be fine tuned to achieve National prosperity. The golden rule is always – produce before you consume. Without production, mere consumption will halt all progress of the country.  Narendra Modi and BJP must look at this aspect. Make every Indian a Proud, honest and Hard working Indian. Let there be work for all. Let there be no Lazy man or woman in this country.

This said – I have no great respect for those who talk of the 2002 riots in Gujarat.  It is very obvious that Modi did not try to protect even his own Ministers from being punished. He did not interfere with the legal process. Many other governments, including the Congress, are openly protecting their own men and women from legal process. This fact deserves kudos of the Highest order for Narendra Modi. Those who criticize him for 2002 must remember the Anti-sikh riots of 1984 – in which no reasonable prosecutions or convictions have taken place so far. The contrast between the two legal processes gives Modi the best Image and the best foot forward as  the Better Leader.

Having said this, I feel, the persecution of the Police personnel by CBI for killing the terrorists needs to be within certain limits. CBI should not be interfering with state Police action in such matters to this level. The abject failure of India in eliminating the Naxalite menace is solely due to such contradictory policies of  governments at the centre and in the states. You can’t deal with Terrorism with kid gloves. The centre is unwilling to even reveal if Ishrat Jehan had or did not have terrorist links. Every encounter is and extra0judicial killing only. That is true. But, how many such encounters took place in Andhra Pradesh, a congress ruled state then under YSR? It used to come in news Papers almost daily. Now, not a single case is taken up by the CBI in these encounter cases so far, though most of these were stated to be done in cold blood, by deceit and are clearly extra-judicial, as per these news paper versions. This differential treatment for what happens in Gujarat vis a vis the congress ruled states does not augur well for Federalism.

Is Modi secular or communal? He is religious. But, he is not communal.  Many people who call him communal are communal themselves. They always look at every Indian from the religious and caste angle only. Secularism consists in desisting from looking at any governance issue from these angles. Justice for all. Progress for all. But, if some people are steeped in religious fundamentalism and do not want to come out of it – they will remain backward in other spheres. We can’t be apologetic that someone who has read only religious scriptures is not becoming collector or commissioner. That is his own doing. Main Stream Education is open for everybody and everybody who goes for it – will progress economically.

But, what are the Pit falls for BJP and Modi? VHP mainly seems to be one factor, both BJP and Modi must be vary of. Their agenda is never above board. VHP also must stick to non-controversial religious agenda.

The Mandir Issue – is another pit fall. It is in fact a senseless Political issue. When the matter is before courts, and only courts can clear Mandir Construction, it is essential for all to leave the issue outside Political arena. Mere political comments on the Mandir Issue only add to suspicion and derision both. They don’t bring votes. They don’t bring development. Modi never talks of such issues. But, others in BJP must also stop talking of it. 

The Hindutva slogan is another meaningless slogan which some people raise. When other religionists do not like to be branded as Hindu – how can someone say, no, no, you are all Hindus; or, must be Hindus? If I write in all my records as belonging to Hindu religion, and others too write their respective religions as Christian, Islam, Sikh etc – let that be so. Let each practice his religion peacefully. Let every Indian be an equal to every one else in these matters.

But, these are all minor aspects – when compared with Good Governance. Modi will surely give India Good Governance. He is definitely not communal. He is definitely not a wavering administrator – whether in economic or Naxalite, or terrorist areas of governmental action. He will deal with all of them firmly. He will deal with friendly states as friend and enemy states as bold, firm, no nonsense negotiator. Where firmness is called for, Modi is the Best choice for India.

And, India needs these qualities now.

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RBI & Government

After Raghuram Rajan took over as RBI Gov, India Inc’s hopes were raised (by India Inc itself) that  he will be a panacea for many ills like Inflation , High Interest Rates and so on. 

But, wholesale Price Index has now climbed to 6.1% in August against 5.79% in previous month. So, if Raghuram reduces interest rates, he will be condemned and laughed at by India Inc itself. The Economic Times Editorial of today says, that keeping high food stocks is treason; Cut food stocks – it advises. This Blog has been saying the same thing for almost 2 years now. 

This Inflation is basically food Inflation – and food Inflation will not respond to High Interest Rates. There is no connection what so ever between the two. Whether Inflation rises or falls, it has nothing to do with the RBI’s monetary Policy, especially in the Indian context.

But yes, it has everything to do with the Ministries of food, agriculture and commerce. If onion prices are rising and yet the Ministries are advocating Exports,  or allowing hoarding of Onions, Inflation in food articles is bound to rise. There seems to be a whole lot of insensitivity to the rise in prices of food articles in the Union and also the state Ministries concerned. 

RBI is helpless, absolutely, utterly, helpless to reduce these soaring prices of food articles through its monetary policy.  But, it is nothing short of treason that the Ministries are doing nothing to control the food article prices. When prices of some articles rise 240%, People are suffering. But, the Ministries and Babus are not seeing that suffering. This  is the tragedy. So, I agree with the Economic Times Editorial in full. Rather, I feel, unknowingly though, Economic Times now agrees with my stand of the last 2 years.

Therefore I advocate 2 things. 

1.  The Ministers and Babus in Food, Agri and Commerce Ministries at Centre and in states must come together and act tough against Hoarders, ensure release of all Inflation prone commodities into the market all over India, even clamp down on prices, and if prices go above a certain level, treat it as act against the country; arbitrarily seize the stocks and sell in the Market at lower prices. Excessive Profiteering in food articles must be prevented at all costs – as this is the primary cause of Human suffering and sorrow. Governments are not there to promote people’s  suffering, at the benefit of hoarders, profiteers, exporters and so on.

2.  RBI must recognize at least now that their Monetary Policy is not the instrument to curb food inflation. Its High Interest Policy had Zero effect on Inflation in last 2 years – because, it is not the medicine for this  Inflation. This inflation remains uncontrolled only because of the inaction of the Ministries concerned. Therefore RBI must bring down the Interest rate structure immediately to promote Growth. Too many sectors are suffering because of the high Interest Rates for last two years or more. Indian Products are becoming uncompetitive in all markets because of this reason. RBI must sternly tell Government that FOOD INFLATION is its baby and advise it to initiate urgent steps to control Inflation -   from their corridors. This Government is angry with CAG, SC, RBI, PAC  and everybody for their criticism of itself – but, it is yet to look at itself. Governments must learn to accept and live with criticism. The lone person who seems to care  – is Mr. Chidambaram. But, food inflation is not in his domain.

3.  There is one more duty for the RBI and the Government. The NPAs of all Banks – especially of Public sector Banks – are rising alarmingly. When will the Government look at what ails all these companies and take steps to redress their problems? If these sectors plunge into their demise because of Government inaction at this point of time, which is already very late, RBI also will have to be blamed for not pointing out to the Government, the enormous problem facing the Economy. The only thing RBI is doing at this point of time – is to ask Banks to play safe in recovery of their loans and in giving further loans. But, that, unfortunately, is not a solution, for the Economy. RBI and Government together are responsible for the Economy – though RBI can do it, in an advisory role and Government can and must actually act.

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