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Saturday, October 13, 2012

Kejriwal for Dummies

Three events in post independent India would be recorded in history as turning points

1)Nathuram Godse killing Gandhi in 1948 and thereby laying the foundation of a deadly partition

2)Indira Gandhi killed by her bodyguards in 1983 and thereby strengthening Indian democracy

3)Rajiv Gandhi's assassination in 1991 thereby paving way for Narismah Rao to takeover

Recent events of the day with Arvind Kejriwal,the anti corruption crusade forming a new political party and taking Sonia Gandhi and family heads on  seem to suggest we might see a possible addition in the list above.There seems to be a confusion around Kejriwal. There is a section which credits him and Anna for bringing a second mass movement since JP.There is a second section that dismissed Arvind as yet another bureaucrat fiddling his hands with politics and power and there is a third section which chooses to just wait and watch as the scene unravails. Whatever be the case one thing is clear:love him ,hate him but you cant ignore him

So what is the Kejriwal movement all about.It is certainly not a mass movement as that of Gandhi or JP,for it is still supported by mostly elite middle class,the people glued to their i pads and blackberrys. The poor in India are too ignorant to be drawn in a movement which has corruption as its foundation.Most have accepted corruption as a way of life .A poor mans day in India starts and ends when he is able to fend for himself and his family a two square meal.He does not have the time and energy  and vision to fight for any cause beyond that.The upper class in India is the one that benefits the most from the business of corruption and hence is the most disruptive of kejrwals movement

On political front,Kejriwal ha a long way to go.He might catch a frame or two on prime time by taking on Vadra by neck or accusation on Congress and their buddy parties but remember we live in a nation where public memory is absurdly short,news media is fully controlled (paid) and last but not the least,the heavens of political parties is decided by a peasant sweating in the sun or a potter  working in the dark :all far away from social media,blogs and unable to read a few headlines that Kejriwal captures now and then.

Politics in India is similar to distribution.You sell only when you are available.It would take Kejriwal years before his workers reach those grass root villages which decide the fate of those 543 people that make laws in India.Kejrawal does not have those financial resources required to work that mammoth organisation;he does not have that reach to make his cause ring the ears of people that vote.He has a good product in anti corruption crusade but sadly lacks the distribution network to sell it.

So is Kejrawal just another bubble like Megha Patkaror Ramdev. Certainly not.Kejrawal has a larger role to play in Indias future than that of a political or mass leader.He would bring the winds of change,the dissatisfaction among people that would lead to formation of a second Indian republic.The next general elections would most probably produce a hung parliament giving powers in hands of Mulayams and Laloos of the day.Incompetence marked with unwillingness would mark the gradual decline of governance in Indian state.Couple this with increasing inflation (which is impossible to contain because we are billion plus people each expecting a better living style) and decreasing wages.Imagine a scenario when India's sovereign rating is educed to junk grade in next five years.FII's and FDI's start pulling out money from India. Suddenly you find an army of unemployed youth along with farmers struggling to recover from a bad monsoon.There is discontent all around and in this discontent Kejrawals lights the sparks of anti corruption crusade with a small grounds force he has built by that time. Isnt this the seeds of revolution.Youth marching and taking control of south block.Nullifying the constitution and laying the foundations of second Indian republic with 360 degree administrative political and judicial reforms.Or maybe a general like VK Singh..playing on popular discontent calling a marshal rule in the state

For good or bad..we cant say but Mr Kejriwal you have a role to play in our future.You would be our next Mangal Pandey but what remains to be seen is whether this third battle of Independence would be won by people of this country or not


Wednesday, August 1, 2012

Beyond Manesar:Of cars,shampoos and ipads

The manufacturing facility at Manesar,Gurgaon belonging to Suzuki motor company of Japan is one which would put Americans,Europeans and Japanese to shame.With an installed capacity of 300,000 vehicles along with an engine production unit and a sea of ancillary manufacturing facilities;it is a perfect example of Japanese mass production facility.However on 18th July 2012,this facility rolled out something other than cars,something which would take the shame away from those Europeans,Americans and Japanese and put it back on the face of  Indians:it rolled out dead and injured bodies,a venom of anger and facts which were for so long being conveniently ignored by the political and  industrial class and bureaucrats alike

While the exact reason for the violence at Manesar plant on that dreaded day is yet to be ascertained.One thing is sure,that there was a general pent up anger among the workers for the inadequate compensation that they were being offered.Workers at Manesar facility were made to work for 9 hour shifts with just two 7.5 minutes break,which were timed to perfection and paid a motley Rs 6000 for this.Apart from this  they were denied medical and other facilities in case of accident and mishaps

The proponents of free market economy (I am a very strong believer in free markets too) along with the  so called active press of this country have put the blame on Japanese management and pointed out the fact that as markets become more free and government loosens its hold over the industry,such incidents are bound to happen.We are reminded of Britain in late 19th century when it too was faced with the dilema of balancing rights of industrialists and workers alike.So is this debate going to lead to preferred path of socialism..NO

While some problems pointed out above are certainly true but we must remember that free market economies cannot be traded for slavery and rampant debauchery of the fundamental rights of poor.Even Adam Smith,the founder of invisible hand theory believed that the state must ensure that sense of justice prevails in society to prevent free markets to be reduced to crony capitalism.

While most people seem to think that what happened at Manesar is a one off incident ,the truth is the unrest is seeping ,nay throbbing in each nook and corner of our economy.I happened to intern with a UK based FMCG player having a prominent presence in India.The conditions there were even more deplorable.Workers were made to work for 12 hour shifts without payment of overtime.Only one set of chemical masks were given to workers working in a factory whose air was intertwined with deadly chemicals.The plant had even done away with the safety officers.The workers "were kept under control" by a team of labor contractors (which was a decent name given by company officials for local thugs) and greasing the palms of concerned government officials.Similarly another Indian auto major with whom I was associated with for some time had a similar policy.Apprentices were brought from across the state and made to work on a salary which was one fourth of a regular workers salary.Further they were not given any medical facilities.Workers who got injured while working (including severe cases ranging from amputation to blindness) had to bear their own costs.Any worker willing to quit was threatened with the fact that the HR would ensure that apprenticeship would never be awarded by any organisation.While these might look gory facts but we must accept them or else it is impossible to come up with a solution

The problem lies with the fact that for long our policy makers have been toying with the idea that low cost production of goods and services is the solution to our economic woes and economic and social upliftment of poor.As numerous examples in economic history of world would prove,sustainable economic development is generated by ensuring a spirit of creativity, entrepreneurship and risk taking ability in society.Any economy founded on basis of low cost theory is bound to fail because sooner or later the workers (blue or white collared) are going to demand a higher pay and at this point the production of goods and services would merely be transferred to some other low cost global locations  by the capitalists of world.China the most prominent beneficary from low cost theory is already facing increased pressure and locals demand higher wages and unrest in economy increases.Closer home our low cost BPO's are already facing heat as our south eastern neighbours start competing with us.

The solution to the problem lies with government and enterprising people making active efforts to move up the value chain.We need to invest a large amount of money at R &D .Government on its part can ensure availability of capital for R&D purposes.This can be done by easing regulation on R&D loans and ensuring less government interference in such matters.It must be clear to us that free markets would force industrialists to innovation only when state tools like police,laws and courts start taking a more neutral approach.When this happens and labour rates climb, industries would automatically take refuge in innovation provided capital is available.Also we can toy with the idea of establishing labor futures on lines of some western countries and let free markets determine wage rates rather than babus with their hands greased with 500 rupee notes deciding that

If above is not implemented,the day is not far when Manesar would become a rule rather than exception.The first half of 20th century belonged to freedom fighters ,fighting against oppression of British rule.The first half of 21st century could belong to freedom fighter,fighting against systematic corruption and police of state trying to make slaves of humans.If we don't open our eyes now a systematic failure of Indian democracy and free markets is just around the corner

Monday, May 14, 2012

Stateless Coup


Last week after getting an oppurtunity to finally get back to civilization ,I got a chance to see the latest Hollywood flick "Avengers".One of the characters there remarks "Humans are designed to be ruled.Freedom just makes them sad...".The statement is so profound that it actually makes you think.While there are numerous examples to prove this,the biggest that comes to my mind is the existence of state itself.

We humans feel comfortable being ruled for we shy away from taking decisions and risks.From the pheros of Egypt and dictators of world war II to the concept of liberal democracies today,it seems that the theme has always remained the same and only intensity has changed.The rulers of yore or the liberal democracies of today are all funded by rich and powerful of the day.The state has existed over time for the protection of rich and powerful under the shroud of a completely opposite pretext

While some of you reading this blog might already be murmuring the word extremist or senseless  to themselves but a closer analysis shows that state actually slows down progress and development and there is no reason for its existence

If you have read Darwins theory of evolution,you would know that survival of the fittest is the rule of existence and its precisely this rule that helps human race to develop at fastest pace.Insecurity and uncertainty although disliked always brings out the best in us humans.

The free markets and their success vis a vis state owned capitalism (called socialism by some ) has clearly proved this point.After Independence,we approached the policy framework with a mistrust towards the private sector.This resulted in a tainted political system with a bureaucracy which is more harmful to the country than the Britishers could even have imagined than themselves to be

Over the last few years ,the Indian state has strategically transferred many of its duties to private companies,resulting not opnly in better services but even lower costs.For example the privatisation of mobile phone industry has resulted in expansion of communication to rural India.Similarly,the privatisation of highways,electercity,airways has hugely increased the availabilities to common consumer.It is perhaps appropriate time for the citizens to demand the ceasure of existance of state and transfer duties to private players

As CK Prahlad argues in his world famous "Fortune at bottom of pyramid" organisations would strive to reach to poor and rural areas to increase their profits,taking the burden away from the satate.Under the current system,the State is nothing more than organised mafia with "tax" being the traditional "hafta" and police force being states "gunda raj".

An obvious question that springs is..Would a free market dominated stateless society be able to ensure liberty and protection of its citizens.However if we look at the performance of police and other protection agencies of the state,we would conclude that they mostly act as licenced preperators of terror in society protecting rich and wealthy.The situation has generated so much that people have even stopped reporting crimes in police stations.A far better solution  would be private defence companies providing detective and security service to communities and individuals.The tax savings from non existance of state can be used to finance such objectives.

The human spirit is enterprenual in nature and hence would always spring with surprises to serve poor and increase profits even in recessionary times.A gradual pullout by state and increased private participation would help make all necessary items at right prices to various sections of society.

Would a private organisation have allowed tons of food to rot while customers die due to famine or would asecurity company allow  its customers to be robbed when they pay for that security itself and there are bunch of firms competing to get the same contract

"I f you really want to help a poor person,teach him how to fish rather than giving him one".Perhaps the ceasure of existance of state is the true definition of human freedom.