The Indian stock market has literally been flying, but it appears that there are precious few who have developed any air sickness. What is going on, and how long can the free flight last? Not very, if the signs are anything to go by, not to mention that the market may have in large part adjusted to the new Indian reality – a reality that has GDP growth above 7 percent as the norm, and industrial growth crossing 8 percent.
The first year of Congress party rule has ended, and most analysts have given it a thumbs down. The coalition that Congress runs is composed of the left, the confused, and the moral. But more problems reside within the Congress – especially via the anti-reform and anti-sense policies advocated by the Congress left. Thus, very few people bought the story that the PM, Mr. Manmohan Singh, had not been a reformer because he had been constrained by coalition politics.
The long awaited change in the Chinese currency, the yuan, happened yesterday. Not over the weekend when all markets would have been closed, but just an hour before the US market opens. Subtle. The amount of the revaluation, 2 %, was of a magnitude that would not affect the price of anything, let alone tomatoes. Estimates of the undervaluation of the yuan ranged from about 10-15 % to about 40 to 60 %. Of course, there were some who said that China should not move from a fixed exchange rate, but even these experts felt that the yuan was undervalued – and/or that the Chinese had been playing the mercantilist trade policy for a bit too long.
In an article entitled “Loot for Work Programme”, (Times of India, July 2, 2005) National Economic Council member and prime designer of the Employment Guarantee Scheme (EGS) Jean Dreze reports on a survey of how such schemes have worked during the last year. This survey covered six districts in six states. “The picture emerging from this survey is alarming”, Mr. Dreze boldly and candidly states; corruption is rampant. “The national food for work programme (NFFWP) clearly states that the muster rolls should be available for public scrutiny. This is very important since fudging of muster rolls is the principal method through which funds are siphoned off from public employment programmes” (emphasis added).
Sachs documents the end of poverty scenario with passion and conviction. It is a universal dream, much like the dreams encapsulated in rock music, from the Beatles to U2. Sachs makes three major points in defense of the dream that now is the time poverty can be ended. First, that the aid provided by donor countries in the past was inadequate; second, that the way the aid was channeled was inappropriate for the “end of poverty”; and third, that “new” policies, detailed in the book, are necessary.
It was perhaps just a decade ago when there were twin concerns of the Indian electorate, and the international investor: government mis-governance and corporate mis-behavior. Today, there is only one concern – government as Enron. This is a view of almost everybody – from the Prime Minister Dr. Manmohan Singh to the elected Left leaders in West Bengal. But there is a vast minority that thinks otherwise, and this minority is very influential. This minority is very left in it’s thinking and comprises the so-called liberal elite – doyens of the media, NGO’s, the CPM Politburo, the National Advisory Council of Ms. Sonia Gandhi, and appointed political leaders in the Rajya Sabha.
The year started with great expectations. Manmohan Singh, reformist former Finance Minister, intellectual, immensely decent and superbly honest, accidentally became India’s Prime Minister. It wasn’t an accident to some; I had forecast as early as 1998 that the developing world was wanting technocrats as Prime Ministers, not conventional politicians, and that hence Manmohan Singh was the ideal candidate to be India’s next PM!(Business Standard, May 14 , 2005)
Recent torture events have highlighted the strength of sleep deprivation as an instrument of torture. As those who have experienced jet lag know, one of the strongest pulls is that of jet lag. When jet lag commands, few can disobey the order to sleep. Surprising as it may seem, there is another power with an equal "command" effect - ideology. Here is where the analogy is complete. Apparently, otherwise sane people go berserk when sleep deprived - or when possessed by ideology.( Business Standard, August 7, 2004).
In 1947, India gained independence from the colonizers who had ruled us for over a hundred years. While Jawaharlal Nehru's love affair with the British was touching, and psychologists can help explain this obsession, it is still a mystery as to why Mr. Nehru did not take the economic policies of the master. Instead, he somersaulted to the exact opposite of what the masters believed in and embraced the economic framework of Russia. Why, if we bought the political freedom (democracy) line from the British, and loved them for imparting this freedom to us, did we also not buy the notion of economic freedom from them. Instead, almost literally, we bought the Russian/Stalinist model of deep and mindless control over economic freedom.(Outlook, Special Independence day issue, 2004)
The first reaction of most (including myself) to the Budget presented by the Finance Minister, Mr. Chidambaram, on Feb. 28th was that it was a very sensible Budget, and one fit for the times. However, on reading the fine print (actually boldly stated in the Finance Bill but with only a hint in the Speech) it appeared that there was more to the tax and spend proposals than reform of personal income taxes and feigned? concern about "outcomes".
