Book Review: Non-fiction/Beyond the Crisis State,Edited by Maleeha Lodhi, Rupa Publications/2011, 391 pp; Rs495 {Hardback}
Maleeha Lodhi, a seasoned diplomat and journalist from Pakistan has presented an out of box thinking on her crisis ridden nation. Barring few, the total seventeen essays of this book introduces the readers to an alternative side of Pakistan, which is more humane and less skewed. In the beginning, Ayesha Jalal gives a very fair historical narration of Pakistan through her piece/ The Past as Present…she on her level best proved again that free voices are mean for free flow. Next essay/ Why Jinnah Matters by Akber Ahmed is the single biggest blunder of this book…his relying on Jinnah’s virulent ideas stands against the idea of this anthology. Feroze Hassan Khan’s Pakistan as a nuclear State, Munir Akram’s Reversing Strategic ‘Shrinkage’ and The India Factor by Syed Rifaat Hussain disappoints with the surprising assertion of stereo typed misconceptions that have been dampening factors for Pakistan as a modern nation state.
The lead essay written by Maleeha succeeded to form a new kind of overview on Pakistan where emphasis have accorded to the areas hitherto been neglected in the realm of social research and even literature. Rest essays are routes through similar conceptions and highlight another face of Pakistan, beyond its notorious feudal structure and undefined democracy. Stress on the untapped or under tapped potential of Pakistan’s economy and its elite educated middle class reminds that all the Pakistani’s are not in romance with “enigma of terror”, rather they are closer to the reality and aspiring for a life based on well searched trajectories. This optimism is incorrigible, even though it manifests the will of a chunk of Pakistan’s population that’s sophisticated and knows the plight of living in anti-modern political/military climax!
Sixty-four years back, Lord Mountbatten accomplished the India’s brutal division on communal line and placing the contemporary political action in the desired cage of hibernation and reactionism. The immediate fallouts came with a toll of life around half million people and civilisations most traumatic human displacement that permanently fixed the hatredness as a central locale in South Asia. An ill conceived nation, Pakistan, even damned its self more in the further course with consistent military misrules and inconsistent democratic interventions. Idea of economy and human developments were backyarded for engaging India in strategic race…all that have been happening at the cost of undermining India’s vibrant fundamentals and its voyage as a nation in making with impressive economies of scale.
This book atleast shows the way, where to make changes that can reestablished the confidence of those citizens who weighs normally more than the cacophony of rulers with no moral ground. Most of the contributors of this work have international recognition in their own sphere, so sharing of candid ideas will be sure proliferate rational understanding on Pakistan. Ahead, the discourse should be lead to a point, where apart from middle class, the will of higher and bottom classes could be judged through an optimum standard-democracy or destabilization? Pakistan must have to follow a normal path instead being a wayward wayfarer of China, as U.S has already started displaying its maximum apathy to Pakistan’s perilous dualism on terrorism…also noticeably, China should not be expected to eclipse the strategic dominance of U.S in short or medium run. This time, Pakistan is at the crossroad and has no pathfinder that could show it the way of course correction…like a nasty teenager, unwillingly but finally Pakistan has to be fit with a universally acceptable character. Integrated worlds demand it and Pakistan can’t show any more hitches on behavioural side.
Though implicitly, voices heard from this book streamlines the Pakistan’s potential ideal agenda by following the path of progress and targeting the goal of human development over the foolish programming of bomb and weaponry maximization. Besides, there is also no reason, why Pakistan can’t engage India as the most essential ally…alone a progress on this particular issue will solve the sizable adversities of Pakistan. Delinking from Kashmir and trustable partnership with the neighbours will give Pakistan a prominent position in the subcontinent and that will be millionth time better than the parasiteness on U.S dollars. Pakistan: Beyond the Crisis State, is a forceful intervention for much needed change to the betterment of ongoing suffering prospects in the backdrop of Pakistan’s incessant misadventures with its basic existence. Pakistan and the world together, should admit that the incubation of terror always pays dividend and obviously in very bad and high scale. Optimism for ones nation is fine enough, so shall be the following actions…ahead of lip services!
Atul Kumar Thakur
October 25, 2011, New Delhi
Email: summertickets@gmail.com
Tuesday, October 25, 2011
Monday, October 17, 2011
Routes of Alternative Finances
Peter Drucker said “Because of its purpose is to create a customer, the business has two and only two functions: marketing and innovation. Marketing and innovation produce results. All the rest are costs”. Indeed once we are looking on the alternative finances for small and medium scale businesses, we found innovation and its skilled marketing as only way out for reaching a desirable end. Barring the finances from banks/ Venture Capitalists/ Private Equity, there are only few institutional routes of business financing…afterall, even we can’t rely on highly suspicious routes of Sovereign Wealth Funds {SWF} and Participatory Notes {PN}, which bears no accountability and simply creates a myopic illusion of something better!
But world is not without choices. Improving access to Community/Co-operative finance for SMEs, especially in their initial investment and the infusion of equity among its stakeholders could be a healthy way for SMEs to tap into its growth and innovative potential. However, a large number of SME may face an equity gap. When their initial funds will be exhausted, entrepreneurs have to obtain external finance to develop their project. Financing SMEs is, often considered a risky investment on account of the low rates of return; specifically during the seed phase. In India, lack of serious business angels is another dampening factor which otherwise could invest in young innovative SMEs. The inability to obtain early stage investment, narrowing down many SMEs reaching a size;where they can attract expansion capital. This restrains their growth. Despite these serious odds, SMEs as sources of innovation and employment generation can be the catalyst of India’s growth. So giving them the opportunity to start up, develop and accomplish their potential outcome will make a vital contribution to the quest of Indian economy.
In last few years, obsessions for giant monolith businesses have lowered in India, which is encouraging for economy size businesses. Overarching effects of this transcendence is visible in many crucial areas, so naturally financing also poising for twists with innovations. Complexities of institutional finances, particularly flawed handling of Priority Sector Lending {PSL} by most of the Indian banks except Regional Rural Banks, necessitate for SMEs to also look on alternative sources of finance. On existing networks of co-operative institutions, a sizable number of farming based small and medium businesses have been thriving, here a think for more professionalization in these activities can let an unprecedented opportunities to the aspiring SMEs. First of all, there is need for overhauling of regulatory structure in Co-operative institutions, besides increasing focus on improving the governance inside its functional ambit.
In its working mechanism, Co-operative action relies on community participation. An individual considered here a constituent of community and a stakeholder of collective action directed for productive enterprises. It’s true, Co-operative movements have never touched its true potential in India because of inside malfunctioning and political interference in its administration albeit this will be still unthinkable to denounce its intrinsic qualities. Stable and inclusive motives of its action simply endow Co-operative action to broaden the community based businesses. In more than hundred years of its history in India, Co-operative businesses have performed very well in the states of Gujarat, Maharashtra and also once in states of U.P and Bihar. Afterall, who can forget that AMUL had started as SME in ANAND/Gujarat, under the abled leadership of great Varghese Curion…and all credit of this success goes to this man who trusted and dared for an out of box thinking by relying upon the local communities for production/financing under the umbrella of Co-operative. Today, AMUL is the most profound assertion of community lead business in all over the world; time is ripe now to move forward with the similar replications. SMEs have golden opportunities to revive a symbiotic working relation with Co-operative institutions to tap its real potential.
At initial level, concentration of capital would be infact low or near about the optimum level which will be needed a frugal management practices for SMEs to make their way forward in limited resources. But the positive factor will be the member/stakeholders very close entitlement with the venture…that means, sharing of common interest will be an unique characteristics of this model will be smoothly allow a sustainable business. Such business model on social/community action is not unheard of in India, only it needs a new pattern of execution and diversity in its expansion from primary sector businesses to secondary and tertiary as well.
Beyond the formal mode of financing, community business seems the most appropriate option for SMEs in India. As we can’t expect SMEs being funded with endowments like the Ivy League institutions of U.S or the public funding of BBC in U.K, so an equity based community model will be the best suitable route for Small and Medium Businesses {SMB} to attain their genuine goal. In India, community lead businesses have striking similarities with the Co-operative enterprises, that obviously accord reliable and proven routes for SMEs to get financed and dwell with a stable model capable of giving long term feasibility in business. A business with sound prospects must be given a fair chance…adequate remodeling of the existing Co-operative laws and improving professional governance will allow SMEs a sound alternative of financing and will also give a much needed lease to the dwindling Co-operative institutions. Excessive idealism or extreme hardening of profit motives are equally bad for a business…SMEs are increasingly doing good in India but their real potential will be realise once, they will get the multiple channel of financing. Government and industry bodies must have to come forward on this very crucial issue.
Atul Kumar Thakur
October 17, 2011, Monday, New Delhi
Email: summertickets@gmail.com
But world is not without choices. Improving access to Community/Co-operative finance for SMEs, especially in their initial investment and the infusion of equity among its stakeholders could be a healthy way for SMEs to tap into its growth and innovative potential. However, a large number of SME may face an equity gap. When their initial funds will be exhausted, entrepreneurs have to obtain external finance to develop their project. Financing SMEs is, often considered a risky investment on account of the low rates of return; specifically during the seed phase. In India, lack of serious business angels is another dampening factor which otherwise could invest in young innovative SMEs. The inability to obtain early stage investment, narrowing down many SMEs reaching a size;where they can attract expansion capital. This restrains their growth. Despite these serious odds, SMEs as sources of innovation and employment generation can be the catalyst of India’s growth. So giving them the opportunity to start up, develop and accomplish their potential outcome will make a vital contribution to the quest of Indian economy.
In last few years, obsessions for giant monolith businesses have lowered in India, which is encouraging for economy size businesses. Overarching effects of this transcendence is visible in many crucial areas, so naturally financing also poising for twists with innovations. Complexities of institutional finances, particularly flawed handling of Priority Sector Lending {PSL} by most of the Indian banks except Regional Rural Banks, necessitate for SMEs to also look on alternative sources of finance. On existing networks of co-operative institutions, a sizable number of farming based small and medium businesses have been thriving, here a think for more professionalization in these activities can let an unprecedented opportunities to the aspiring SMEs. First of all, there is need for overhauling of regulatory structure in Co-operative institutions, besides increasing focus on improving the governance inside its functional ambit.
In its working mechanism, Co-operative action relies on community participation. An individual considered here a constituent of community and a stakeholder of collective action directed for productive enterprises. It’s true, Co-operative movements have never touched its true potential in India because of inside malfunctioning and political interference in its administration albeit this will be still unthinkable to denounce its intrinsic qualities. Stable and inclusive motives of its action simply endow Co-operative action to broaden the community based businesses. In more than hundred years of its history in India, Co-operative businesses have performed very well in the states of Gujarat, Maharashtra and also once in states of U.P and Bihar. Afterall, who can forget that AMUL had started as SME in ANAND/Gujarat, under the abled leadership of great Varghese Curion…and all credit of this success goes to this man who trusted and dared for an out of box thinking by relying upon the local communities for production/financing under the umbrella of Co-operative. Today, AMUL is the most profound assertion of community lead business in all over the world; time is ripe now to move forward with the similar replications. SMEs have golden opportunities to revive a symbiotic working relation with Co-operative institutions to tap its real potential.
At initial level, concentration of capital would be infact low or near about the optimum level which will be needed a frugal management practices for SMEs to make their way forward in limited resources. But the positive factor will be the member/stakeholders very close entitlement with the venture…that means, sharing of common interest will be an unique characteristics of this model will be smoothly allow a sustainable business. Such business model on social/community action is not unheard of in India, only it needs a new pattern of execution and diversity in its expansion from primary sector businesses to secondary and tertiary as well.
Beyond the formal mode of financing, community business seems the most appropriate option for SMEs in India. As we can’t expect SMEs being funded with endowments like the Ivy League institutions of U.S or the public funding of BBC in U.K, so an equity based community model will be the best suitable route for Small and Medium Businesses {SMB} to attain their genuine goal. In India, community lead businesses have striking similarities with the Co-operative enterprises, that obviously accord reliable and proven routes for SMEs to get financed and dwell with a stable model capable of giving long term feasibility in business. A business with sound prospects must be given a fair chance…adequate remodeling of the existing Co-operative laws and improving professional governance will allow SMEs a sound alternative of financing and will also give a much needed lease to the dwindling Co-operative institutions. Excessive idealism or extreme hardening of profit motives are equally bad for a business…SMEs are increasingly doing good in India but their real potential will be realise once, they will get the multiple channel of financing. Government and industry bodies must have to come forward on this very crucial issue.
Atul Kumar Thakur
October 17, 2011, Monday, New Delhi
Email: summertickets@gmail.com
Sunday, October 16, 2011
Reckoning OECD Reports!
More than the fear of cyclical recession and failure of financial institutions, the biggest worry for the global economy in the twenty-first century is that all OECD economies, which shaped, dominated and furthered the growth of global trade in twentieth century appears to have lost their edge and steam for the first time in modern period. The three major economies zones-US, EU and Japan are expected to entwine with a long-term low growth trap with additional risk of periodic recessions. The OECD reports of 2011 simply acknowledges the impending grim prospects in its constituent economies and projecting the emerging economies, especially India, China and Brazil as new engines of growth in twenty-first century. It’s indeed an unprecedented privilege for India to respond these new international trade fundamentals which can make advance it prospects at many levels.
Report on Economic Policy Reforms: Going for Growth, underlines it more resolutely as “India continues to achieve one of the highest rates of GDP per capita growth in the world. Nevertheless, the income gap with OECD countries remains large, primarily reflecting low levels of labour productivity, calling for further reforms to support rapid and inclusive growth". Incremental reforms of administrative regulation introduced by governments at all levels have led to some improvement in the operating environment for business. However, more fundamental reforms are needed in specific sectors. Obviously recommendations have referring for more liberalisation with lesser regulatory intervention. That simply forward a “dichotomous scenario” with the kind of “reforms”, India has been carrying in last two decades. This particular report is unable to broaden the distinct choices of economic reforms, which emerging economies can pursue in the days ahead. So with concentrating on better prospects, India should rely on its own model of reform instead following the bandwagon of saturated economies!
OECD Economic Outlook {No.89, May2011} presents the overall picture of global economy with special coverage of ongoing slowdown. It wrongly articulates that the global recovery is becoming self-sustained and more broad based but then why unemployment remain high across most of the OECD countries? Rather as policy recommendations, stress should have strongly oriented towards structural reforms which could play a key role while taking into account of country-specific needs and institutional features. In emerging economies too, structural reforms could make growth more sustainable and inclusive while contributing to global rebalancing and enhancing long-term capital flows. Ofcourse inflation will be remain a cause of concern in the emerging economies which will be remain a cause of concern in the emerging economies which will need judicious monetary policies for addressal, not for blindly making action on what OECD reports suggests! It will be also wrong to follow that fiscal consolidation and prudence shall be alone confined with the advanced economies; rather it should be equally concern the nations aspiring to be significantly slotted in world trade. Apprehension of this report is now very much in action as downside risks are on the verge of interaction in US/EU, and their cumulative impacts could weaken the recovery substantially, it may also lead to stagflationary developments in some of the advanced economies. Moreover, it will be a blunder to believe that higher inflation could address debt sustainability. Even it could perilously flirt with inflationary expectations, with the outcome that interest rates would soon increase more than inflation. This knowledge paper is somehow closer to the ground realities but not without missing and confusing some of the major challenges of sustainable growth.
OECD Economic Surveys: India {June, 2011}, highlights the risk of inflation and volatile capital flows, which are indeed the most formidable challenges for India’s uninterrupted growth story. Report acknowledges well that fiscal consolidation has resumed and new frameworks may help. It’s true, prior to 2008, nice progress had been made in reducing large fiscal deficits at the central and state levels under targets set out in the Fiscal Responsibility and Budget Management Act {FRBMA, 2003}. In the mean years, government finance had sharply down yet few quintessential welfare subsidies on oil, debt writes off, enhanced salaries provisions, tax cuts etc, in the response to slowdown are tolling pressure on fiscal discipline. Here, is a need of new policy measures that can balance the chord of welfare expanses and fiscal discipline.
Chapter-1{Sustaining growth and improving living standards}, emphasizes that expansionary macroeconomic policies cushioned the downturn and domestic demand led the recovery. It’s also true, private investment which benefitted from ongoing liberalisation and high private saving was a vital source of growth. But not to forget also the pre-crisis period was also characterised by a high degree of macroeconomic stability, reflecting benign economic conditions in advanced economies. Comparatively, India weathered the global downturn well like other emerging economies. India also suffered as liquidity constrained firms and banks in advanced economies reduced foreign asset holding to shore up their balance sheets which witnessed sharp capital outflow…that’s still an ongoing concern of international market. On the contra side, another fearsome possibility is that strong capital inflows could put upward pressure on the rupee, raising the prospect of worsening competitiveness and a further widening in the Current Account Deficit {CAD}, which is already high by historical standards. Since mid 2010, the nominal effective exchange rate has gradually depreciated but with relatively high inflation, albeit the real effective exchange rate has been relatively stable. The exchange rate policy has evolved and the capital account has continued to open up gradually, even though progress has been uneven and it remains relatively closed. Post Asian crisis in 1997, the rupee was linked closely to the dollar which influenced the further course. Though RBI has been promoting counter-cyclical macro prudential policies but it needs be more active and practical now to show the intent and commitments of finance ministry into the action. At this juncture, financial sector reforms needs a speedy push, especially licensing of the new banks in private sector. This report stressed that, the rapid economic growth has reduced the incidence of poverty, it’s to an extant agreeable but not without the serious persisting flaws in growth agenda. As a solution, welfare measures have to be reachable and accessible to the all targeted beneficiaries. Despite citing administrative and other bottlenecks, this part of report suggests that the India is continuing to catch up its goal.
Chapter2/ Fiscal Prospects and Reforms, considers India’s fiscal consolidation programme a partial success, which is true. The period of fiscal restraint lasted in 2008 for domestic compulsions and overwhelming world growth that fuelled up energy and commodity prices, the government raised public expenditure markedly. In the current policy debate, a new framework for fiscal policy is the need of hour. FRBMA has already expired years back. So, the central government’s goal to reduce Gross Fiscal Deficit to 4.1%of GDP by 2012and 3.5% the year after, urgently requires a proper policy maneuvering. In this direction, the Finance Commission {2009} report on fiscal relations between the central and state governments appears rational. It recommended that the Central government should go further and reduce its fiscal deficit to 3%of GDP by 2014. The Commission also recommended 2.4%deficit for the states, bringing a combined deficit at both levels of government to 5.4%.; down from its 2010 level of 7.2%of GDP. On taxation, OECD recommendations are completely stereotypical with having single aim to promote the greed’s of corporate world by ignoring the progressive fundamentals. Here needs a careful approach in pacifying its extreme policy recommendations.
Chapter3/ Phasing out Energy Subsidies, presents contentious and dubious viewpoints on India’s energy management. Report mandates that “India’s petroleum subsidies are economically and environmentally damaging”, which is an overt escaping of realities that is persisting over the world. It’s partially right on Coal market reform but again slips while recognising Public Distribution System {PDS}/Oil subsidies and electricity subsidies as impediments before the development of oil and energy sector. This shows the denial of distinct political characteristics of Indian economy which has its own set of working model and couldn’t solely rely in any cases on the western model of development.
Chapter4/Financial Sector Reform in India: Time for a second Wave? ,it’s intriguing reviewing the last Union Budget and reading this report, it seems that finance ministry is subscribing almost all OECD recommendations on financial reform! Reports suggests the speedy implementations for the institutions like, National Treasury Management Agency {NTMA}, Pension Fund Regulatory and Development Authority {PFRDA}, Financial Sector and Development Council {FSDC}and Financial Sector Law Reforms Commission {FSLRC}. Surprisingly, in the lieu of giving greater freedom/competency to banking operations, reports suggests some incomprehensible measures, like setting out a plan for ending Priority Sector Lending {PSL}, rapid liberalisation of interest rates on deposits, gradual reduction of the proportion of government bonds to be hold by the banks, widening of the scope of trading through Credit Default Swaps {CDS}, introduction of standard terms for Corporate Bonds, reducing of KYC requirements and transaction taxes etc. OECD should clarify, if do they have only a uniform model of financial reform that has already shattered the world’s most exotic and exciting financial market of US/EU. India either must ignore the stereotypical prophecy or simply turn down any reckless model of financial liberalisation without having touch of the commitments for its policy. Moreover, it shocks to read that the RBI should sell its electronic government bond market and the clearing house to the private sector and NABARD should be sold to the government that means RBI should cease to have its stake in NABARAD…both are unworthy suggestions and points out on the dubious intent of OECD’s reporting on India’s economic growth. Only solace is, report acknowledges well the financial health of India’s banks and found them competent enough for complying with the BASEL-III norms. But even this not without of suspicion and citing privatization in PSBs, instead of showing a different course for private banking and making them core competent with the Public Sector Banks/ Regional Rural Banks/Co-operative Banks.
Chapter5/ Building on Progress in Education, report recommends of maximum withdrawal of regulatory intervention and maximum allowance of private capital in higher education. Besides “Improving incentives for stronger performance by making funding less input based. Tie funding to accreditation and assessment outcomes and increase share of project based funding for research”. In less technical terms, reports enters with its recommendation as it handles a plain capitalist market, and not the world’s most vibrant democracy where policy can’t be altered from the maximum welfare of peoples. This section is even more disappointing as it fails to even canvass, what’s the real hindrances of the education sector that hammering its growth and the potential policy formulations?
There will be no denying the fact that, India’s growth momentum is the outcome of its judicious experiment with the mix of regulation and reform in its economy. Since the1991, India has improved its overall fundamentals in economy, also successfully crossed the very troubling recession. Despite these positive scenarios, India’s growth is less than its potential and needs better governance and regulatory control to end the frills of free and fair businesses. And ofcourse, without making its Public Sector less competent and less happening. OECD reports are reminder of the concern that India must follow its own path, based on intrinsic compulsions and welfare the peoples instead of Corporations. Only then, RBI Governor will be remain smarter and cheerful than the other Central bankers from across the world and even our Mint Street will be less greedy than the re-doubtful Wall Street…alas, where “greed is still good “and its evangelists are incorrigible with Ivy Leagues business degrees!
Atul Kumar Thakur
October 16, 2011, Friday, New Delhi
Email: summertickets@gmail.com
Report on Economic Policy Reforms: Going for Growth, underlines it more resolutely as “India continues to achieve one of the highest rates of GDP per capita growth in the world. Nevertheless, the income gap with OECD countries remains large, primarily reflecting low levels of labour productivity, calling for further reforms to support rapid and inclusive growth". Incremental reforms of administrative regulation introduced by governments at all levels have led to some improvement in the operating environment for business. However, more fundamental reforms are needed in specific sectors. Obviously recommendations have referring for more liberalisation with lesser regulatory intervention. That simply forward a “dichotomous scenario” with the kind of “reforms”, India has been carrying in last two decades. This particular report is unable to broaden the distinct choices of economic reforms, which emerging economies can pursue in the days ahead. So with concentrating on better prospects, India should rely on its own model of reform instead following the bandwagon of saturated economies!
OECD Economic Outlook {No.89, May2011} presents the overall picture of global economy with special coverage of ongoing slowdown. It wrongly articulates that the global recovery is becoming self-sustained and more broad based but then why unemployment remain high across most of the OECD countries? Rather as policy recommendations, stress should have strongly oriented towards structural reforms which could play a key role while taking into account of country-specific needs and institutional features. In emerging economies too, structural reforms could make growth more sustainable and inclusive while contributing to global rebalancing and enhancing long-term capital flows. Ofcourse inflation will be remain a cause of concern in the emerging economies which will be remain a cause of concern in the emerging economies which will need judicious monetary policies for addressal, not for blindly making action on what OECD reports suggests! It will be also wrong to follow that fiscal consolidation and prudence shall be alone confined with the advanced economies; rather it should be equally concern the nations aspiring to be significantly slotted in world trade. Apprehension of this report is now very much in action as downside risks are on the verge of interaction in US/EU, and their cumulative impacts could weaken the recovery substantially, it may also lead to stagflationary developments in some of the advanced economies. Moreover, it will be a blunder to believe that higher inflation could address debt sustainability. Even it could perilously flirt with inflationary expectations, with the outcome that interest rates would soon increase more than inflation. This knowledge paper is somehow closer to the ground realities but not without missing and confusing some of the major challenges of sustainable growth.
OECD Economic Surveys: India {June, 2011}, highlights the risk of inflation and volatile capital flows, which are indeed the most formidable challenges for India’s uninterrupted growth story. Report acknowledges well that fiscal consolidation has resumed and new frameworks may help. It’s true, prior to 2008, nice progress had been made in reducing large fiscal deficits at the central and state levels under targets set out in the Fiscal Responsibility and Budget Management Act {FRBMA, 2003}. In the mean years, government finance had sharply down yet few quintessential welfare subsidies on oil, debt writes off, enhanced salaries provisions, tax cuts etc, in the response to slowdown are tolling pressure on fiscal discipline. Here, is a need of new policy measures that can balance the chord of welfare expanses and fiscal discipline.
Chapter-1{Sustaining growth and improving living standards}, emphasizes that expansionary macroeconomic policies cushioned the downturn and domestic demand led the recovery. It’s also true, private investment which benefitted from ongoing liberalisation and high private saving was a vital source of growth. But not to forget also the pre-crisis period was also characterised by a high degree of macroeconomic stability, reflecting benign economic conditions in advanced economies. Comparatively, India weathered the global downturn well like other emerging economies. India also suffered as liquidity constrained firms and banks in advanced economies reduced foreign asset holding to shore up their balance sheets which witnessed sharp capital outflow…that’s still an ongoing concern of international market. On the contra side, another fearsome possibility is that strong capital inflows could put upward pressure on the rupee, raising the prospect of worsening competitiveness and a further widening in the Current Account Deficit {CAD}, which is already high by historical standards. Since mid 2010, the nominal effective exchange rate has gradually depreciated but with relatively high inflation, albeit the real effective exchange rate has been relatively stable. The exchange rate policy has evolved and the capital account has continued to open up gradually, even though progress has been uneven and it remains relatively closed. Post Asian crisis in 1997, the rupee was linked closely to the dollar which influenced the further course. Though RBI has been promoting counter-cyclical macro prudential policies but it needs be more active and practical now to show the intent and commitments of finance ministry into the action. At this juncture, financial sector reforms needs a speedy push, especially licensing of the new banks in private sector. This report stressed that, the rapid economic growth has reduced the incidence of poverty, it’s to an extant agreeable but not without the serious persisting flaws in growth agenda. As a solution, welfare measures have to be reachable and accessible to the all targeted beneficiaries. Despite citing administrative and other bottlenecks, this part of report suggests that the India is continuing to catch up its goal.
Chapter2/ Fiscal Prospects and Reforms, considers India’s fiscal consolidation programme a partial success, which is true. The period of fiscal restraint lasted in 2008 for domestic compulsions and overwhelming world growth that fuelled up energy and commodity prices, the government raised public expenditure markedly. In the current policy debate, a new framework for fiscal policy is the need of hour. FRBMA has already expired years back. So, the central government’s goal to reduce Gross Fiscal Deficit to 4.1%of GDP by 2012and 3.5% the year after, urgently requires a proper policy maneuvering. In this direction, the Finance Commission {2009} report on fiscal relations between the central and state governments appears rational. It recommended that the Central government should go further and reduce its fiscal deficit to 3%of GDP by 2014. The Commission also recommended 2.4%deficit for the states, bringing a combined deficit at both levels of government to 5.4%.; down from its 2010 level of 7.2%of GDP. On taxation, OECD recommendations are completely stereotypical with having single aim to promote the greed’s of corporate world by ignoring the progressive fundamentals. Here needs a careful approach in pacifying its extreme policy recommendations.
Chapter3/ Phasing out Energy Subsidies, presents contentious and dubious viewpoints on India’s energy management. Report mandates that “India’s petroleum subsidies are economically and environmentally damaging”, which is an overt escaping of realities that is persisting over the world. It’s partially right on Coal market reform but again slips while recognising Public Distribution System {PDS}/Oil subsidies and electricity subsidies as impediments before the development of oil and energy sector. This shows the denial of distinct political characteristics of Indian economy which has its own set of working model and couldn’t solely rely in any cases on the western model of development.
Chapter4/Financial Sector Reform in India: Time for a second Wave? ,it’s intriguing reviewing the last Union Budget and reading this report, it seems that finance ministry is subscribing almost all OECD recommendations on financial reform! Reports suggests the speedy implementations for the institutions like, National Treasury Management Agency {NTMA}, Pension Fund Regulatory and Development Authority {PFRDA}, Financial Sector and Development Council {FSDC}and Financial Sector Law Reforms Commission {FSLRC}. Surprisingly, in the lieu of giving greater freedom/competency to banking operations, reports suggests some incomprehensible measures, like setting out a plan for ending Priority Sector Lending {PSL}, rapid liberalisation of interest rates on deposits, gradual reduction of the proportion of government bonds to be hold by the banks, widening of the scope of trading through Credit Default Swaps {CDS}, introduction of standard terms for Corporate Bonds, reducing of KYC requirements and transaction taxes etc. OECD should clarify, if do they have only a uniform model of financial reform that has already shattered the world’s most exotic and exciting financial market of US/EU. India either must ignore the stereotypical prophecy or simply turn down any reckless model of financial liberalisation without having touch of the commitments for its policy. Moreover, it shocks to read that the RBI should sell its electronic government bond market and the clearing house to the private sector and NABARD should be sold to the government that means RBI should cease to have its stake in NABARAD…both are unworthy suggestions and points out on the dubious intent of OECD’s reporting on India’s economic growth. Only solace is, report acknowledges well the financial health of India’s banks and found them competent enough for complying with the BASEL-III norms. But even this not without of suspicion and citing privatization in PSBs, instead of showing a different course for private banking and making them core competent with the Public Sector Banks/ Regional Rural Banks/Co-operative Banks.
Chapter5/ Building on Progress in Education, report recommends of maximum withdrawal of regulatory intervention and maximum allowance of private capital in higher education. Besides “Improving incentives for stronger performance by making funding less input based. Tie funding to accreditation and assessment outcomes and increase share of project based funding for research”. In less technical terms, reports enters with its recommendation as it handles a plain capitalist market, and not the world’s most vibrant democracy where policy can’t be altered from the maximum welfare of peoples. This section is even more disappointing as it fails to even canvass, what’s the real hindrances of the education sector that hammering its growth and the potential policy formulations?
There will be no denying the fact that, India’s growth momentum is the outcome of its judicious experiment with the mix of regulation and reform in its economy. Since the1991, India has improved its overall fundamentals in economy, also successfully crossed the very troubling recession. Despite these positive scenarios, India’s growth is less than its potential and needs better governance and regulatory control to end the frills of free and fair businesses. And ofcourse, without making its Public Sector less competent and less happening. OECD reports are reminder of the concern that India must follow its own path, based on intrinsic compulsions and welfare the peoples instead of Corporations. Only then, RBI Governor will be remain smarter and cheerful than the other Central bankers from across the world and even our Mint Street will be less greedy than the re-doubtful Wall Street…alas, where “greed is still good “and its evangelists are incorrigible with Ivy Leagues business degrees!
Atul Kumar Thakur
October 16, 2011, Friday, New Delhi
Email: summertickets@gmail.com
Saturday, October 8, 2011
The Punjab Story!
Book Review: Non-fiction/The Punjab by Ishtiaq Ahmed, Rupa Publication/2011, 754 pp; Rs995 {Hardback}
Now another work on the partition history tries to unravel multiple narratives of partition survivors and refugees on both sides of Punjab. So far, plights of Punjab has been confined in the textual debates as seeing the contentiousness and intra feuds, India remained a conscious yet timid player on the whole issue. Other foremost thing, that cornered any potential wayout of better cultural/civil exchange between the both side of Punjab was the Kashmir issue, its substantially backyarded the Punjab from the bilateral strategic concern of Indian and Pakistan. Rest the formation of Bangladesh in 1971 and India’s pertinent role in it opened the second most vital strategic point, now the issue of Punjab was slipped notch below.
Remarkably, British succeeded with their strategic plan to handover two strife ridden countries…that happened. Unfortunately this part remained missing in most of the work on partition…at some point, Ishtiaq refers for real origination of violence but finally he let down those observation for community led violence as the major destroyer of peaceful socio-religious fabric. On judging the end, he is absolutely right; with putting details of newspapers, journals, government reports and personal accounts of different set of peoples gives extra edge to his stand. Although his own concern on forced migration, ethnic cleansing/genocide needs to reckoned with the wider possibilities that were given passage by the immoral political planks of British. A dangerous by-product of colonialism-partition, requires more meticulous handling of what colonizers wants? And how they moved up with their nasty strategic planks?
The best thing that comes out of this book is details of real sufferers on both the side of Punjab. Founding place for Malerkobla state in east Punjab where unlike Patiala, Muslims escaped annihilation could be regarded a good put although stereotypical account “The Rape of Rawalpindi” could have mentioned less overtly. Notes on The Sikh Plan {pages xxxviii-xxxix, A Sikh plan to eradicate all Muslims from east Punjab} seems a reprising exercise as instead foretelling, what happened exactly, it’s better to admit that violence needs no logic or even worst, can thrive bad logic. The March Riots: Rawalpindi and adjoining rural areas (pages 226-230} reminds the worst of sectarian violence, Ranjit Singh Bhashin’s account of Thamali village is one among countless cases where centuries old co-existential bond of neighbourhood suddenly turned into the nightmarish ground of butchering. Unfortunately hatred routed in most of cases through the complex handling of political scenario and enforcing its failures to the religious life of desperate communities. Further on pages 380-381 {The Punjab disintegrates} presents the liveliest narration of tragedies in west Punjab {Pakistan}, Giani Mahinder Singh and Sardar Baldev Singh’s dialogue with Patel and his insensitive remarks to retaliate the Muslims shows the mishandling of entire issue by the political class. The crux of this book gives ample insights, how Muslim League ceased to handle the violence impartially and how weak was the demographic/social understanding of the leaders of Congress and Muslim League.
Focus on Lahore Division {pages 416-418} is very vital; Dr. Prem Sobti’s {personal physician to the President of India} recalling of turning Lahore from a paragon of communal peace and harmony to open battleground strengthen the positive motives of this work. And finally mentionable details on pages 519-20 {Amritsar and three Tehsils of Gurudaspur} with the account of Lahore based writer, A.Hameed adds to the realistic horror stories that unfortunately was the case during partition in 1947.
Ishtiaq Ahmed’s The Punjab is a well intentioned and richly detailed work on the partition…overall, it provides the sublime gesture of people’s history. Relying more on the victims instead on the ruling elite’s game plan is both the strength and weakness of this book. However, there will be no denying that whenever the tells of partition will be grounded; mention of this book will become essential. Ishtiaq has spent years working on this project and that becomes quite evident through progressing on the pages of The Punjab. Readers will be enlighted after reading this book. Only reading has to be careful enough!
Atul Kumar Thakur
October 8, 2011, Friday, New Delhi
Email: summertickets@gmail.com
Now another work on the partition history tries to unravel multiple narratives of partition survivors and refugees on both sides of Punjab. So far, plights of Punjab has been confined in the textual debates as seeing the contentiousness and intra feuds, India remained a conscious yet timid player on the whole issue. Other foremost thing, that cornered any potential wayout of better cultural/civil exchange between the both side of Punjab was the Kashmir issue, its substantially backyarded the Punjab from the bilateral strategic concern of Indian and Pakistan. Rest the formation of Bangladesh in 1971 and India’s pertinent role in it opened the second most vital strategic point, now the issue of Punjab was slipped notch below.
Remarkably, British succeeded with their strategic plan to handover two strife ridden countries…that happened. Unfortunately this part remained missing in most of the work on partition…at some point, Ishtiaq refers for real origination of violence but finally he let down those observation for community led violence as the major destroyer of peaceful socio-religious fabric. On judging the end, he is absolutely right; with putting details of newspapers, journals, government reports and personal accounts of different set of peoples gives extra edge to his stand. Although his own concern on forced migration, ethnic cleansing/genocide needs to reckoned with the wider possibilities that were given passage by the immoral political planks of British. A dangerous by-product of colonialism-partition, requires more meticulous handling of what colonizers wants? And how they moved up with their nasty strategic planks?
The best thing that comes out of this book is details of real sufferers on both the side of Punjab. Founding place for Malerkobla state in east Punjab where unlike Patiala, Muslims escaped annihilation could be regarded a good put although stereotypical account “The Rape of Rawalpindi” could have mentioned less overtly. Notes on The Sikh Plan {pages xxxviii-xxxix, A Sikh plan to eradicate all Muslims from east Punjab} seems a reprising exercise as instead foretelling, what happened exactly, it’s better to admit that violence needs no logic or even worst, can thrive bad logic. The March Riots: Rawalpindi and adjoining rural areas (pages 226-230} reminds the worst of sectarian violence, Ranjit Singh Bhashin’s account of Thamali village is one among countless cases where centuries old co-existential bond of neighbourhood suddenly turned into the nightmarish ground of butchering. Unfortunately hatred routed in most of cases through the complex handling of political scenario and enforcing its failures to the religious life of desperate communities. Further on pages 380-381 {The Punjab disintegrates} presents the liveliest narration of tragedies in west Punjab {Pakistan}, Giani Mahinder Singh and Sardar Baldev Singh’s dialogue with Patel and his insensitive remarks to retaliate the Muslims shows the mishandling of entire issue by the political class. The crux of this book gives ample insights, how Muslim League ceased to handle the violence impartially and how weak was the demographic/social understanding of the leaders of Congress and Muslim League.
Focus on Lahore Division {pages 416-418} is very vital; Dr. Prem Sobti’s {personal physician to the President of India} recalling of turning Lahore from a paragon of communal peace and harmony to open battleground strengthen the positive motives of this work. And finally mentionable details on pages 519-20 {Amritsar and three Tehsils of Gurudaspur} with the account of Lahore based writer, A.Hameed adds to the realistic horror stories that unfortunately was the case during partition in 1947.
Ishtiaq Ahmed’s The Punjab is a well intentioned and richly detailed work on the partition…overall, it provides the sublime gesture of people’s history. Relying more on the victims instead on the ruling elite’s game plan is both the strength and weakness of this book. However, there will be no denying that whenever the tells of partition will be grounded; mention of this book will become essential. Ishtiaq has spent years working on this project and that becomes quite evident through progressing on the pages of The Punjab. Readers will be enlighted after reading this book. Only reading has to be careful enough!
Atul Kumar Thakur
October 8, 2011, Friday, New Delhi
Email: summertickets@gmail.com
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