Kanimozhi conundrum - Act 2

Will be on vacation with sparing access to internet until 31st of May(Mai).

So, after a long wait Ms.Kanimozhi now gets to spend some quality time with Mr.Raja. What does DMK do now? Given the glacial pace of the Indian judicial system and the legendary arm twisting of coalition partners , there is still a fair bit of scepticism about meaningful sentences being handed out to any of the biggies.

Have to wonder what kind of a legacy Prime Minister Manmoham Singh will end up with when all is said and done.

Two decades of economic reforms- income inequality

The vast gap between the rich and poor hits you in the eye when you visit any major city in India. It leads you to question the economic model of the country. You would also have to ask, did the economic reforms exacerbate the problem?

Blaming the problem of inequality on economic reforms alone would be unfair. The partial opening up of the economy allowed educated middle classes to command higher wages for their skills. Rampant cronyism and decades of protectionism in the Industry meant that incumbents enjoy a massive first mover advantage. Almost non-existent prosecution of corrupt politicians and bureaucrats has created a thriving plutocracy. Some say there are even signs of oligarchy in Indian businesses.

Unfortunately, opening up of the economy was not coupled with equally potent reforms in education, increased transparency in governance, improvement in the rule of law and adequate upgrades to physical infrastructure.This ensures that only a tiny minority of the country enjoy the fruits of a booming economy. It is hard to believe this would be sustainable in the coming decades.

Two decades of economic reforms

Almost 20 years have passed since the start of big ticket economic reforms in India. The pace of reforms through the last two decades has been uneven and there is still a long list of items that need urgent attention.I thought it would be interesting to look back and see what has changed since 1991. The most universal benchmark, growth in GDP is a good data point to begin with.

GDP (current US$)

Data from World Bank

Although the absolute base is still very low, growth in GDP has been impressive. When you start looking at some of the other indicators, the picture gets complicated. Poverty rates, child malnutrition, education , infant mortality, infrastructure development are some of those that come to mind.

This is the start of a series which will take a comprehensive look at all the major development indicators for India since 1991.

Business as usual?

The impact of corruption scandals on yesterday's election results will be a matter of raging debates. In each of the states, there may have been many factors including the issue of graft. However, it would be interesting to know what the incumbent leaders are thinking.

Politicians who occupy high positions are a paranoid lot. They ought to think that the endless coverage of scams had an impact on the election results. You would think there would be some course correction, especially by those who are already in tricky situations. Unfortunately for the common person on the street, harboring any such hopes looks foolishly optimistic.

Activists must keep up the relentless pressure for accountability in public life. In any functioning democracy, this is a struggle that never stops.

The roof caves in

A long awaited and richly deserved drubbing for the Left. Good riddance for now.

Would this make the left move more to the center of the ideological spectrum? There are sufficient grounds to believe they would not. If they do, they may still have some meaningful role to play in Indian politics.

The Kanimozhi conundrum

Ms.Kanimozhi is having to spend more time in Delhi than she would like to lately. Then there is Mr.Raja who is yet to be sprung out of the hospitality of Tihar. The rest of the week is bound to be even more eventful for Ms.Kanimozhi.

Indians should feel reassured to see the well healed being hounded by the justice system. However, unless guilty are convicted and punished they are right to be cynical about the system.

For the moment, the 2G affair would pose a few more problems for DMK. What if they receive a drubbing in  the May 13 election results? It is hard to see them having any leverage with their senior partners in UPA after that.

Reminds you of some of the politicians wallowing in self pity after electoral debacles.

Update: The election results are now out and the bail plea is to be heard today. Makes you wonder, what incentive does the Congress party now have to protect the DMK's accused leaders.If anything they have a point to prove by letting the guilty face the consequences. This has to be a good litmus test for UPA.

Urban discontent Vs Rural largesse

Tamil Nadu has seen a high voter turnout in 2011 assembly elections. Conventional wisdom suggests that a high percentage of voting is always bad for the incumbent party.Some exit polls seem to indicate trouble for DMK.

Over the weekend i had a conversation with someone who has a reasonable grasp of TN politics. His view was that the results may be much harder to predict. This election has turned into a battle between educated urban voters who were angry about the 2G scam and those in the rural areas that were big beneficiaries of the DMK's freebies.

DMK may be feeling a bit more confident about the loyalty of their rural vote bank, while AIADMK must be hoping for the backlash from educated voters to counter that.

With increasing swaths of the population getting better eduction and living more in urban areas, old fashioned rural vote bank politics is bound be less of a factor in elections. To what extent this is true in the current election cycle is to be gleaned from the results to be announced on May 13.

New dawn in West Bengal?

Most polls are now predicting a humiliating rout for the communist party in West Bengal. For many political junkies, this is the end of an era. Many Indians have never seen West Bengal being ruled by any other party in their lives. There is talk of a fork in the road of West Bengal's political history.

The election results are yet to be announced. Assuming that the exit polls are accurate, it would be worth our while to ponder about the future of WB under a new Chief Minister.

The alternative to the misule of communist party happens to be Mamata Banerjee's TMC led coalition.They say it's never a good idea to compare two bad options. Considering the populist inclinations of Mamata Banerjee, one has to wonder if this would be a step in the right direction for WB.

On the bright side , i hope she relinquishes her current job as railway minister. And hopefully, that usher in badly needed reforms to the railways sector under a new minister. Hopefully..

The infrastructure deficit

The problems with infrastructure in India cannot be emphasized enough. This is not a complaint of someone living outside the country about the overcrowded roads and frequent power shortages. Take a look at this news item about a study from McKinsey on urban infrastructure.

The study suggests a need for investment of $1.2 trillion(about 54 lakh crore rupees) by 2030 in India's urban infrastructure. The sheer numbers are already staggering. Consider one of the other great rebuilding exercises undertaken in the late 20th century. The German reunification. Some studies suggest it has already cost about $1.9 trillion to rebuild East Germany.

This may not be an exact comparison. But most of India does look an awful lot like pre-1989 East Germany. For India's infrastructure to be brought to developed world standards ,we may be looking at several trillions of dollars in investment over multiple decades.

The circus gets more entertaining!

Regardless of your driver and team allegiances yesterday's Turkish F1 GP was full of action.There were a lot of overtaking moves and pit stops with varying strategies. The combination of new Pirelli tyre compounds , the DRS system and return of KERS have made F1 very entertaining this year.

F1 is seen as a pioneer in automotive technology, but with KERS they were somewhat behind the curve in bringing it to the sport. Hopefully, it's role gets bigger and with the new engine spec in 2013, we will see a massive wave of innovations in engines.

A difficult neighbour

Pakistan finds itself in a bit of a pickle trying to explain the former residential address of OBL. The US does feel genuinely aggravated. Relations had already soured in the last few months for various reasons. Hard questions are being raised about the financial aid provided by the US to Pakistan. In these circumstances, ticking off your chief financier would not be seen as a wise move. It is not clear that Pakistan is taking this bit of conventional wisdom seriously.

This begs the question, going forward how should India handle it's prickly neighbour? Isolation, lack of engagement and outright hostility will not lead to any reasonable outcomes. All these options have been tried in the past. Prime minister Manmohan Singh's approach to this seems more appropriate.Steps like increasing trade relations, supporting more people to people contacts, restarting cricketing relations should all be pursued vigorously.

There are no guarantees this approach would yield any results. Most Indians would instinctively tell you that no good would come of any of these steps. And some would dismiss this as naive.We should all know,  better alternatives are hard to be found.

The non Non Returning Indians!

More Indians who recently moved to the US it seems are planning on moving back home. This is a great turnaround from the days when work and study oriented migration was largely a one way move.

High rates of migration between the world's two of the largest and most vibrant democracies can only be good for both nations.However, you have to believe this is more of an advantage for India.

From anecdotal evidence and personal experience , it is very clear that most Indian immigrants who arrive in the US are young and with relatively short work experience if any at all. Most of them are ready to step out of the comfort zone of their home country.They come here to the US , expand their horizons both cultural and professional.

Many of them are very entrepreneurial, they start businesses and a fraction of them spark brand new ideas. When they decide to go back , they are much more mature and well rounded individuals who can do a lot of good for their native country. They bring fresh perspectives , first world business practices and a good lot of capital. India should be doing everything to keep the rate of returning Indians steady.

Here's wishing for more direct flights and more non Non Returning Indians(NRI's) in the business class sections of  brand new 787's.

RBI steps on the brakes

With inflation remaining stubbornly high, the RBI raised the rates again today. This was necessary and was widely predicted . It also is unfortunate. High interest rates will dampen demand. Sales of cars which were growing at a healthy rate in the last few months have seen a slowdown for the month of April. Home loans are sure to get dearer.

Today's high inflation in India has nothing to do with loose monetary policy. It is just the result of a surge in demand from a rapidly recovering economy.Most of the reasons for inflation are out of RBI's control anyway. Trouble in the middle east causing a spike in fuel prices, a dilapidated supply side causing food price rises hardly have anything to do with the interest rates.Despite the rate hike, RBI doesn't see things getting better really soon.

The supply side issues such as prevention of food wastage, creaky infrastructure which stands in the way of a nimbler food retail business will take several years if not decades to solve. The results of poor policy responses and lack of good governance in the last few decades are becoming evident with every passing month.

If we are lucky, we will start tackling these problems more effectively now. And maybe in the decade of 2020's we will see a stabler inflation outlook.

Corporate sponsors for sport

VW, Citibank and Vodafone are some of the promotors/sponsors of 2011 IPL. It makes you reflect on how far cricket as a sports industry has come in India. There was a time when Pan Masala and shaving cream makers were the sharp end of sports endorsement.

Source : iplt20.com

One only wishes some of this money could shower it's attention on other sports. It's a 1.2 billion strong nation.

Genie out of the bottle?

The Anna Hazare inspired fight against corruption is gathering rapid momentum on the social media. Can  the public discontent be channeled to demand for tangible results?

You do get the sense that this process is not reversible any more. More procrastination by the political class in the hope that this will fade away may not be a good ploy.

The "nano" wave !

Tata Nano has hit the 10000 car sales mark for the month of April 2011. This is a significant recovery from November 2010 when they sold only about 500 units. The jury is still out on the success of the car.

However, what is absolutely clear is the fortune at the bottom of the pyramid (PDF). If you are interested in reading more, "The Fortune at the Bottom of the Pyramid" is an excellent work by the late C.K.Prahalad. Many companies in India are embracing this philosophy with a great deal of success. Tata motors has been opening up showrooms in many parts of the hinterland.  With per-capita incomes doubling every seven years , businesses in India can ride the "nano" wave with considerably success.

Along the way they are sure to reinvent the way products are built and marketed. Tata Nano could only be a tip of the iceberg in frugal innovation.