1. When two people meet, the prize always goes to the one with the most self-insight. He will be calmer, more confident, more at ease with the other.
2. Never permit the behavior of other people to tell you how to feel.
3. Pay little attention to what people say or do. Instead, try to see their innermost motive for speaking and acting. (Now, apply this very same rule to yourself and you become an enlightened person!)
4. Any friendship requiring the submission of your original nature and dignity to another person is all wrong.
5. Mystically speaking, there is no difference between you and another person. This is why we cannot hurt another without hurting ourselves, nor help another without helping ourselves.
6. When we are free of all unnecessary desires toward other people, we can never be deceived or hurt.
7. You take a giant step toward psychological maturity when you refuse to angrily defend yourself against unjust slander. For one thing, resistance disturbs your own peace of mind.
8. You understand others to the exact degree that you really understand yourself. Work for more self-knowledge.
9. Do not be afraid to fully experience everything that happens to you in your human relations, especially the pains and disappointments. Do this, and everything becomes clear at last.
10. The individual who really knows what it means to love has no anxiety when his love is unseen and rejected.
11. If you painfully lose a valuable friend, do not rush out at once for a replacement. Such action prevents you from examining your heartache and breaking free of it.
12. Do not be afraid to be a nobody in the social world. This is a deeper and richer truth than appears on the surface.
13. Every unpleasant experience with another person is an opportunity to see people as they are, not as we mistakenly idealize them. The more unpleasant the other person is, the more he can teach you.
14. You can be so wonderfully free from a sense of injury and injustice that you are surprised when you hear others complain of them.
15. We cannot recognize a virtue in another person that we do not possess in ourselves. It takes a truly loving and patient person to recognize those virtues in another.
16. Do not mistake desire for love. Desire leaves home in a frantic search for one gratification after another. Love is at home with itself.
17. There are parts of you that want the loving life and parts that do not. Place yourself on the side of your positive forces; do all you can to aid and encourage them.
18. You must stop living so timidly, from fixed fears of what others will think of you and of what you will think of yourself.
19. Do not contrive to be a loving person; work to be a real person. Being real is being loving.
20. The greatest love you could ever offer to another is to so transform your inner life that others are attracted to your genuine example of goodness.
Wednesday, August 13, 2008
Thursday, August 07, 2008
Friday, July 25, 2008
SOME REAL PEARLS...
You are strong...when you take your grief and teach it to smile.
You are brave...when you overcome your fear and help others to do the same.
You are happy...when you see a flower and are thankful for the blessing.
You are loving...when your own pain does not blind you to the pain of others.
You are wise...when you know the limits of your wisdom.
AND
You are true...when you admit there are times you fool yourself!!
You are brave...when you overcome your fear and help others to do the same.
You are happy...when you see a flower and are thankful for the blessing.
You are loving...when your own pain does not blind you to the pain of others.
You are wise...when you know the limits of your wisdom.
AND
You are true...when you admit there are times you fool yourself!!
Thursday, July 24, 2008
Subsidy by Shankar Acharya
Shankar Acharya:Subsidies to perdition
A PIECE OF MY MIND
Shankar Acharya / New Delhi July 10, 2008, 0:48 IST
Recent months have seen much concern and calls for action to contain the burgeoning subsidies for food, fertilizer and fuel. For 2008/9 these subsidies are projected at 1, 2 and 3 (at least) percent of GDP, respectively (see my last column in BS, June 26). You could call it the "other" 1-2-3 agreement of the political executive! Actually, our penchant for subsidies is not a recent phenomenon. The habit is nearly six decades old and thrives despite pretty overwhelming evidence on its ruinous economic cost and general ineffectiveness. Just consider the following.
Electric Power:Subsidies for power have been a hardy perennial. Despite all kinds of executive and legislative efforts to minimise them, gross subsidies on electricity sales by state electricity boards rose to over Rs. 43,000 crore in 2007/8 or nearly one percent of GDP. Over two-thirds is accounted for by sales to agriculture and the rest is for domestic use. And what has the long history of power subsidies got us other than financially parlous power utilities, weak state finances and over-priced supply to industry and commerce? Well, the other unfortunate results include: the tortuous history of guarantees and counter-guarantees (remember Enron-Dabhol?); perennial power deficits, including a record peak power deficit of 15 percent in 2007/8; massive disruption to medium and small scale industry and commerce; over-use of groundwater and sinking water tables; and routine "load shedding" all over the country, including in the capital city of this "emerging economic super-power".
Irrigation: The second largest subsidy item in most state budgets is for irrigation water. Except for Gujarat and Maharashtra, water charges in irrigation schemes cover only a fraction of O&M costs, let alone the massive investments undertaken over decades in dams and canals. As a result, maintenance is poor and the irrigation potential of existing schemes is seriously under-utilised. Combined with sinking water tables, much of Indian agriculture is subject to water stress, leading to low productivity and weak growth. And, as we all know, these problems are hitting home this year through higher inflation.
Urban Water Supply: Under-pricing and subsidies are rampant here as well. Unlike in most of the world, Indian cities and towns are unable to supply water from the mains 24x7. Water and sanitation utilities are chronically under-financed, under-repaired and under-invested. The well-to-do invest in tanks and pumps to solve the supply problems and filter/boil to improve quality. Slum-dwellers are lucky if they can access piped sources and still suffer the health hazards of contamination. Many buy water from "informal" water-sellers at high prices. So, most of the subsidy goes to the rich and middle classes.
Fertilizers:Another hardy perennial in India's subsidy jungle, this one is borne by the central budget and is mostly focused on urea. Despite the recommendations of a long and distinguished lineage of "High-Powered Committees", the price-control-cum-subsidy regime has persisted. So has the severe damage to soil quality from over-use of nitrates relative to potassium and phosphates. It has also discouraged new investment, with hardly any new capacity being created in the last 20 years. This leads to serious problems in periods of global scarcity, as at present.
Higher Education:Public universities and related institutions subsist on government subsidies, since absurdly low fees have not been revised in several decades. The predictable results have been inexorable decline in physical infrastructure and the quality of faculty. The problems are compounded by caste-based reservations. The rich have opted out of the system and send their youngsters to foreign universities (charging fees many multiples higher) or a small number of private, "non-profit" institutions. The less well-off have no option. Reform has been blocked by vested interests and misguided political leadership. Overall, the system is in crisis and bodes ill for India in this knowledge-based century.
Petroleum Products: The story of the huge oil subsidies needs no retelling. Aside from the massive damage to public sector oil companies and ballooning fiscal deficits, the price-subsidy structure is encouraging excessive "dieselization" of the economy, rampant adulteration of diesel with even cheaper kerosene (with resultant damage to the environment) and delayed adjustment to the inevitable.
Foodgrains:Arguably, the PDS-related food subsidy has had some successes, especially in its early years, in enhancing consumption and welfare of the urban poor. But, as the PDS administration has worsened over time (in step with the general administration), diversion, pilferage, mis-targeting and other forms of leakage have mounted. In any case, the distribution system only works moderately effectively in perhaps five states, which exclude the poorest and most populous, such as UP and Bihar.
There are many other examples. But the general point is clear enough. Some of India's worst performing sectors are those marked by the witches' brew of public supply, price controls and subsidies. It's impossible to think of a major sector with high subsidies which is performing well. In sharp contrast, just consider some of India's best performing sectors such as IT, telecom, pharmaceuticals, auto components, two-wheelers and entertainment (TV, films, etc.). None of these rely on subsidies. Most of the Indian manufacturing sector depended on "subsidies" of a different kind for several decades up to the early 1990s. High tariffs and import controls protected manufacturing units from cheaper imports and the Indian consumer paid the "subsidy" through inflated prices for domestic manufactures. As trade protection was gradually and systematically reduced throughout the next 15 years, these "subsidies" disappeared. Indian industry didn't collapse. On the contrary, it became much more efficient, resilient and dynamic. Again the lesson is clear: wean sectors off their subsidy crutches and they perform much better.
The different histories of two infrastructure sectors, power and telecom, is also instructive. The prolonged history of a subsidy culture (and virtual state monopoly over distribution) ensured the permanent semi-crisis in India's electric power sector. In contrast, the equally long-standing telecom public monopoly was not associated with a subsidy culture (except for a limited number of netas and babus). So, when the sector was opened up in the mid-1990s to private players and new mobile technologies, there was no burden of a subsidy culture blocking its progress. And we have all benefited from the astonishing growth and technical change ushered in by Indian entrepreneurs and companies in this key infrastructure sector.
The lesson is clear: subsidies (usually linked to public provision) pave the road to perdition. If we want to rescue India's poorly-performing sectors, we have to free up prices, phase out subsidies and allow free entry. It has worked before. It will work again.
The author is Honorary Professor at ICRIER and former Chief Economic Adviser to Government of India.
A PIECE OF MY MIND
Shankar Acharya / New Delhi July 10, 2008, 0:48 IST
Recent months have seen much concern and calls for action to contain the burgeoning subsidies for food, fertilizer and fuel. For 2008/9 these subsidies are projected at 1, 2 and 3 (at least) percent of GDP, respectively (see my last column in BS, June 26). You could call it the "other" 1-2-3 agreement of the political executive! Actually, our penchant for subsidies is not a recent phenomenon. The habit is nearly six decades old and thrives despite pretty overwhelming evidence on its ruinous economic cost and general ineffectiveness. Just consider the following.
Electric Power:Subsidies for power have been a hardy perennial. Despite all kinds of executive and legislative efforts to minimise them, gross subsidies on electricity sales by state electricity boards rose to over Rs. 43,000 crore in 2007/8 or nearly one percent of GDP. Over two-thirds is accounted for by sales to agriculture and the rest is for domestic use. And what has the long history of power subsidies got us other than financially parlous power utilities, weak state finances and over-priced supply to industry and commerce? Well, the other unfortunate results include: the tortuous history of guarantees and counter-guarantees (remember Enron-Dabhol?); perennial power deficits, including a record peak power deficit of 15 percent in 2007/8; massive disruption to medium and small scale industry and commerce; over-use of groundwater and sinking water tables; and routine "load shedding" all over the country, including in the capital city of this "emerging economic super-power".
Irrigation: The second largest subsidy item in most state budgets is for irrigation water. Except for Gujarat and Maharashtra, water charges in irrigation schemes cover only a fraction of O&M costs, let alone the massive investments undertaken over decades in dams and canals. As a result, maintenance is poor and the irrigation potential of existing schemes is seriously under-utilised. Combined with sinking water tables, much of Indian agriculture is subject to water stress, leading to low productivity and weak growth. And, as we all know, these problems are hitting home this year through higher inflation.
Urban Water Supply: Under-pricing and subsidies are rampant here as well. Unlike in most of the world, Indian cities and towns are unable to supply water from the mains 24x7. Water and sanitation utilities are chronically under-financed, under-repaired and under-invested. The well-to-do invest in tanks and pumps to solve the supply problems and filter/boil to improve quality. Slum-dwellers are lucky if they can access piped sources and still suffer the health hazards of contamination. Many buy water from "informal" water-sellers at high prices. So, most of the subsidy goes to the rich and middle classes.
Fertilizers:Another hardy perennial in India's subsidy jungle, this one is borne by the central budget and is mostly focused on urea. Despite the recommendations of a long and distinguished lineage of "High-Powered Committees", the price-control-cum-subsidy regime has persisted. So has the severe damage to soil quality from over-use of nitrates relative to potassium and phosphates. It has also discouraged new investment, with hardly any new capacity being created in the last 20 years. This leads to serious problems in periods of global scarcity, as at present.
Higher Education:Public universities and related institutions subsist on government subsidies, since absurdly low fees have not been revised in several decades. The predictable results have been inexorable decline in physical infrastructure and the quality of faculty. The problems are compounded by caste-based reservations. The rich have opted out of the system and send their youngsters to foreign universities (charging fees many multiples higher) or a small number of private, "non-profit" institutions. The less well-off have no option. Reform has been blocked by vested interests and misguided political leadership. Overall, the system is in crisis and bodes ill for India in this knowledge-based century.
Petroleum Products: The story of the huge oil subsidies needs no retelling. Aside from the massive damage to public sector oil companies and ballooning fiscal deficits, the price-subsidy structure is encouraging excessive "dieselization" of the economy, rampant adulteration of diesel with even cheaper kerosene (with resultant damage to the environment) and delayed adjustment to the inevitable.
Foodgrains:Arguably, the PDS-related food subsidy has had some successes, especially in its early years, in enhancing consumption and welfare of the urban poor. But, as the PDS administration has worsened over time (in step with the general administration), diversion, pilferage, mis-targeting and other forms of leakage have mounted. In any case, the distribution system only works moderately effectively in perhaps five states, which exclude the poorest and most populous, such as UP and Bihar.
There are many other examples. But the general point is clear enough. Some of India's worst performing sectors are those marked by the witches' brew of public supply, price controls and subsidies. It's impossible to think of a major sector with high subsidies which is performing well. In sharp contrast, just consider some of India's best performing sectors such as IT, telecom, pharmaceuticals, auto components, two-wheelers and entertainment (TV, films, etc.). None of these rely on subsidies. Most of the Indian manufacturing sector depended on "subsidies" of a different kind for several decades up to the early 1990s. High tariffs and import controls protected manufacturing units from cheaper imports and the Indian consumer paid the "subsidy" through inflated prices for domestic manufactures. As trade protection was gradually and systematically reduced throughout the next 15 years, these "subsidies" disappeared. Indian industry didn't collapse. On the contrary, it became much more efficient, resilient and dynamic. Again the lesson is clear: wean sectors off their subsidy crutches and they perform much better.
The different histories of two infrastructure sectors, power and telecom, is also instructive. The prolonged history of a subsidy culture (and virtual state monopoly over distribution) ensured the permanent semi-crisis in India's electric power sector. In contrast, the equally long-standing telecom public monopoly was not associated with a subsidy culture (except for a limited number of netas and babus). So, when the sector was opened up in the mid-1990s to private players and new mobile technologies, there was no burden of a subsidy culture blocking its progress. And we have all benefited from the astonishing growth and technical change ushered in by Indian entrepreneurs and companies in this key infrastructure sector.
The lesson is clear: subsidies (usually linked to public provision) pave the road to perdition. If we want to rescue India's poorly-performing sectors, we have to free up prices, phase out subsidies and allow free entry. It has worked before. It will work again.
The author is Honorary Professor at ICRIER and former Chief Economic Adviser to Government of India.
Wednesday, July 23, 2008
From Jiddu - Pleasure always brings pain;
I have to read this multiple times to understand
Pleasure always brings pain; it is a fact There is a vast difference between pleasure and love. Consider it for a minute. All our relationships between man and woman, between ourselves and each other, is based on pleasure. And, pleasure always
brings pain;
it is a fact. And, where there is pleasure, there is no love. Love is not a process of thinking; love is not the result of a thought, whereas pleasure is. If you understand that—not intellectually, verbally reasoned out — if you see the fact that pleasure destroys love, and where there is pleasure there is no joy; if you see very clearly that you function on pleasure, that all your activity, all your thinking, all your
being — including your gods — everything is based on pleasure which is the result of thought; if you see that it is thought which gives continuity to pleasure, which is desire; and, if you see this whole structure, then
where does fear come in at all?
:::::Collected Works, Vol. XVI – 62 – Jiddu Krishnamurti.
Pleasure always brings pain; it is a fact There is a vast difference between pleasure and love. Consider it for a minute. All our relationships between man and woman, between ourselves and each other, is based on pleasure. And, pleasure always
brings pain;
it is a fact. And, where there is pleasure, there is no love. Love is not a process of thinking; love is not the result of a thought, whereas pleasure is. If you understand that—not intellectually, verbally reasoned out — if you see the fact that pleasure destroys love, and where there is pleasure there is no joy; if you see very clearly that you function on pleasure, that all your activity, all your thinking, all your
being — including your gods — everything is based on pleasure which is the result of thought; if you see that it is thought which gives continuity to pleasure, which is desire; and, if you see this whole structure, then
where does fear come in at all?
:::::Collected Works, Vol. XVI – 62 – Jiddu Krishnamurti.
Friday, July 18, 2008
subsidy by shankar acharya
Shankar Acharya:Subsidies to perdition
A PIECE OF MY MIND
Shankar Acharya / New Delhi July 10, 2008, 0:48 IST
Recent months have seen much concern and calls for action to contain the burgeoning subsidies for food, fertilizer and fuel. For 2008/9 these subsidies are projected at 1, 2 and 3 (at least) percent of GDP, respectively (see my last column in BS, June 26). You could call it the "other" 1-2-3 agreement of the political executive! Actually, our penchant for subsidies is not a recent phenomenon. The habit is nearly six decades old and thrives despite pretty overwhelming evidence on its ruinous economic cost and general ineffectiveness. Just consider the following.
Electric Power:Subsidies for power have been a hardy perennial. Despite all kinds of executive and legislative efforts to minimise them, gross subsidies on electricity sales by state electricity boards rose to over Rs. 43,000 crore in 2007/8 or nearly one percent of GDP. Over two-thirds is accounted for by sales to agriculture and the rest is for domestic use. And what has the long history of power subsidies got us other than financially parlous power utilities, weak state finances and over-priced supply to industry and commerce? Well, the other unfortunate results include: the tortuous history of guarantees and counter-guarantees (remember Enron-Dabhol?); perennial power deficits, including a record peak power deficit of 15 percent in 2007/8; massive disruption to medium and small scale industry and commerce; over-use of groundwater and sinking water tables; and routine "load shedding" all over the country, including in the capital city of this "emerging economic super-power".
Irrigation: The second largest subsidy item in most state budgets is for irrigation water. Except for Gujarat and Maharashtra, water charges in irrigation schemes cover only a fraction of O&M costs, let alone the massive investments undertaken over decades in dams and canals. As a result, maintenance is poor and the irrigation potential of existing schemes is seriously under-utilised. Combined with sinking water tables, much of Indian agriculture is subject to water stress, leading to low productivity and weak growth. And, as we all know, these problems are hitting home this year through higher inflation.
Urban Water Supply: Under-pricing and subsidies are rampant here as well. Unlike in most of the world, Indian cities and towns are unable to supply water from the mains 24x7. Water and sanitation utilities are chronically under-financed, under-repaired and under-invested. The well-to-do invest in tanks and pumps to solve the supply problems and filter/boil to improve quality. Slum-dwellers are lucky if they can access piped sources and still suffer the health hazards of contamination. Many buy water from "informal" water-sellers at high prices. So, most of the subsidy goes to the rich and middle classes.
Fertilizers:Another hardy perennial in India's subsidy jungle, this one is borne by the central budget and is mostly focused on urea. Despite the recommendations of a long and distinguished lineage of "High-Powered Committees", the price-control-cum-subsidy regime has persisted. So has the severe damage to soil quality from over-use of nitrates relative to potassium and phosphates. It has also discouraged new investment, with hardly any new capacity being created in the last 20 years. This leads to serious problems in periods of global scarcity, as at present.
Higher Education:Public universities and related institutions subsist on government subsidies, since absurdly low fees have not been revised in several decades. The predictable results have been inexorable decline in physical infrastructure and the quality of faculty. The problems are compounded by caste-based reservations. The rich have opted out of the system and send their youngsters to foreign universities (charging fees many multiples higher) or a small number of private, "non-profit" institutions. The less well-off have no option. Reform has been blocked by vested interests and misguided political leadership. Overall, the system is in crisis and bodes ill for India in this knowledge-based century.
Petroleum Products: The story of the huge oil subsidies needs no retelling. Aside from the massive damage to public sector oil companies and ballooning fiscal deficits, the price-subsidy structure is encouraging excessive "dieselization" of the economy, rampant adulteration of diesel with even cheaper kerosene (with resultant damage to the environment) and delayed adjustment to the inevitable.
Foodgrains:Arguably, the PDS-related food subsidy has had some successes, especially in its early years, in enhancing consumption and welfare of the urban poor. But, as the PDS administration has worsened over time (in step with the general administration), diversion, pilferage, mis-targeting and other forms of leakage have mounted. In any case, the distribution system only works moderately effectively in perhaps five states, which exclude the poorest and most populous, such as UP and Bihar.
There are many other examples. But the general point is clear enough. Some of India's worst performing sectors are those marked by the witches' brew of public supply, price controls and subsidies. It's impossible to think of a major sector with high subsidies which is performing well. In sharp contrast, just consider some of India's best performing sectors such as IT, telecom, pharmaceuticals, auto components, two-wheelers and entertainment (TV, films, etc.). None of these rely on subsidies. Most of the Indian manufacturing sector depended on "subsidies" of a different kind for several decades up to the early 1990s. High tariffs and import controls protected manufacturing units from cheaper imports and the Indian consumer paid the "subsidy" through inflated prices for domestic manufactures. As trade protection was gradually and systematically reduced throughout the next 15 years, these "subsidies" disappeared. Indian industry didn't collapse. On the contrary, it became much more efficient, resilient and dynamic. Again the lesson is clear: wean sectors off their subsidy crutches and they perform much better.
The different histories of two infrastructure sectors, power and telecom, is also instructive. The prolonged history of a subsidy culture (and virtual state monopoly over distribution) ensured the permanent semi-crisis in India's electric power sector. In contrast, the equally long-standing telecom public monopoly was not associated with a subsidy culture (except for a limited number of netas and babus). So, when the sector was opened up in the mid-1990s to private players and new mobile technologies, there was no burden of a subsidy culture blocking its progress. And we have all benefited from the astonishing growth and technical change ushered in by Indian entrepreneurs and companies in this key infrastructure sector.
The lesson is clear: subsidies (usually linked to public provision) pave the road to perdition. If we want to rescue India's poorly-performing sectors, we have to free up prices, phase out subsidies and allow free entry. It has worked before. It will work again.
The author is Honorary Professor at ICRIER and former Chief Economic Adviser to Government of India.
A PIECE OF MY MIND
Shankar Acharya / New Delhi July 10, 2008, 0:48 IST
Recent months have seen much concern and calls for action to contain the burgeoning subsidies for food, fertilizer and fuel. For 2008/9 these subsidies are projected at 1, 2 and 3 (at least) percent of GDP, respectively (see my last column in BS, June 26). You could call it the "other" 1-2-3 agreement of the political executive! Actually, our penchant for subsidies is not a recent phenomenon. The habit is nearly six decades old and thrives despite pretty overwhelming evidence on its ruinous economic cost and general ineffectiveness. Just consider the following.
Electric Power:Subsidies for power have been a hardy perennial. Despite all kinds of executive and legislative efforts to minimise them, gross subsidies on electricity sales by state electricity boards rose to over Rs. 43,000 crore in 2007/8 or nearly one percent of GDP. Over two-thirds is accounted for by sales to agriculture and the rest is for domestic use. And what has the long history of power subsidies got us other than financially parlous power utilities, weak state finances and over-priced supply to industry and commerce? Well, the other unfortunate results include: the tortuous history of guarantees and counter-guarantees (remember Enron-Dabhol?); perennial power deficits, including a record peak power deficit of 15 percent in 2007/8; massive disruption to medium and small scale industry and commerce; over-use of groundwater and sinking water tables; and routine "load shedding" all over the country, including in the capital city of this "emerging economic super-power".
Irrigation: The second largest subsidy item in most state budgets is for irrigation water. Except for Gujarat and Maharashtra, water charges in irrigation schemes cover only a fraction of O&M costs, let alone the massive investments undertaken over decades in dams and canals. As a result, maintenance is poor and the irrigation potential of existing schemes is seriously under-utilised. Combined with sinking water tables, much of Indian agriculture is subject to water stress, leading to low productivity and weak growth. And, as we all know, these problems are hitting home this year through higher inflation.
Urban Water Supply: Under-pricing and subsidies are rampant here as well. Unlike in most of the world, Indian cities and towns are unable to supply water from the mains 24x7. Water and sanitation utilities are chronically under-financed, under-repaired and under-invested. The well-to-do invest in tanks and pumps to solve the supply problems and filter/boil to improve quality. Slum-dwellers are lucky if they can access piped sources and still suffer the health hazards of contamination. Many buy water from "informal" water-sellers at high prices. So, most of the subsidy goes to the rich and middle classes.
Fertilizers:Another hardy perennial in India's subsidy jungle, this one is borne by the central budget and is mostly focused on urea. Despite the recommendations of a long and distinguished lineage of "High-Powered Committees", the price-control-cum-subsidy regime has persisted. So has the severe damage to soil quality from over-use of nitrates relative to potassium and phosphates. It has also discouraged new investment, with hardly any new capacity being created in the last 20 years. This leads to serious problems in periods of global scarcity, as at present.
Higher Education:Public universities and related institutions subsist on government subsidies, since absurdly low fees have not been revised in several decades. The predictable results have been inexorable decline in physical infrastructure and the quality of faculty. The problems are compounded by caste-based reservations. The rich have opted out of the system and send their youngsters to foreign universities (charging fees many multiples higher) or a small number of private, "non-profit" institutions. The less well-off have no option. Reform has been blocked by vested interests and misguided political leadership. Overall, the system is in crisis and bodes ill for India in this knowledge-based century.
Petroleum Products: The story of the huge oil subsidies needs no retelling. Aside from the massive damage to public sector oil companies and ballooning fiscal deficits, the price-subsidy structure is encouraging excessive "dieselization" of the economy, rampant adulteration of diesel with even cheaper kerosene (with resultant damage to the environment) and delayed adjustment to the inevitable.
Foodgrains:Arguably, the PDS-related food subsidy has had some successes, especially in its early years, in enhancing consumption and welfare of the urban poor. But, as the PDS administration has worsened over time (in step with the general administration), diversion, pilferage, mis-targeting and other forms of leakage have mounted. In any case, the distribution system only works moderately effectively in perhaps five states, which exclude the poorest and most populous, such as UP and Bihar.
There are many other examples. But the general point is clear enough. Some of India's worst performing sectors are those marked by the witches' brew of public supply, price controls and subsidies. It's impossible to think of a major sector with high subsidies which is performing well. In sharp contrast, just consider some of India's best performing sectors such as IT, telecom, pharmaceuticals, auto components, two-wheelers and entertainment (TV, films, etc.). None of these rely on subsidies. Most of the Indian manufacturing sector depended on "subsidies" of a different kind for several decades up to the early 1990s. High tariffs and import controls protected manufacturing units from cheaper imports and the Indian consumer paid the "subsidy" through inflated prices for domestic manufactures. As trade protection was gradually and systematically reduced throughout the next 15 years, these "subsidies" disappeared. Indian industry didn't collapse. On the contrary, it became much more efficient, resilient and dynamic. Again the lesson is clear: wean sectors off their subsidy crutches and they perform much better.
The different histories of two infrastructure sectors, power and telecom, is also instructive. The prolonged history of a subsidy culture (and virtual state monopoly over distribution) ensured the permanent semi-crisis in India's electric power sector. In contrast, the equally long-standing telecom public monopoly was not associated with a subsidy culture (except for a limited number of netas and babus). So, when the sector was opened up in the mid-1990s to private players and new mobile technologies, there was no burden of a subsidy culture blocking its progress. And we have all benefited from the astonishing growth and technical change ushered in by Indian entrepreneurs and companies in this key infrastructure sector.
The lesson is clear: subsidies (usually linked to public provision) pave the road to perdition. If we want to rescue India's poorly-performing sectors, we have to free up prices, phase out subsidies and allow free entry. It has worked before. It will work again.
The author is Honorary Professor at ICRIER and former Chief Economic Adviser to Government of India.
A View About Life
A group of alumni, highly established in their careers, got together to visit their old university professor. Conversation soon turned into complaints about stress in work and life. Offering his guests coffee, the professor went to the kitchen and returned with a large pot of coffee and an assortment of cups porcelain, plastic, glass, crystal, some plain looking, some expensive, some exquisite - telling them to help themselves to hot coffee.
When all the students had a cup of coffee in hand, the professor said: "If you noticed, all the nice looking expensive cups were taken up, leaving behind the plain and cheap ones. While it is but normal for you to want only the best for yourselves, that is the source of your problems and stress. What all of you really wanted was coffee, not the cup, but you consciously went for the best cups and were eyeing each other's cups.
Now if life is coffee, then the jobs, money and position in society are the cups. They are just tools to hold and contain Life, but the quality of Life doesn't change. Some times, by concentrating only on the cup, we fail to enjoy the coffee in it."
Don't let the cups drive you... Enjoy the coffee instead
When all the students had a cup of coffee in hand, the professor said: "If you noticed, all the nice looking expensive cups were taken up, leaving behind the plain and cheap ones. While it is but normal for you to want only the best for yourselves, that is the source of your problems and stress. What all of you really wanted was coffee, not the cup, but you consciously went for the best cups and were eyeing each other's cups.
Now if life is coffee, then the jobs, money and position in society are the cups. They are just tools to hold and contain Life, but the quality of Life doesn't change. Some times, by concentrating only on the cup, we fail to enjoy the coffee in it."
Don't let the cups drive you... Enjoy the coffee instead
Monday, July 14, 2008
Elephant and Fly
A disciple and his teacher were walking through the forest. The disciple was disturbed by the fact that his mind was in constant unrest.
He asked his teacher: "Why most people's minds are restless, and only a few possess a calm mind? What can one do to still the mind?"
The teacher looked at the disciple, smiled and said:
"I will tell you a story. An elephant was standing and picking leaves from a tree. A small fly came, flying and buzzing near his ear. The elephant waved it away with his long ears. Then the fly came again, and the elephant waved it away once more".
This was repeated several times. Then the elephant asked the fly:
"Why are you so restless and noisy? Why can't you stay for a while in one place?"
The fly answered: "I am attracted to whatever I see, hear or smell. My five senses pull me constantly in all directions and I cannot resist them. What is your secret? How can you stay so calm and still?"
The elephant stopped eating and said:
"My five senses do not rule my attention. Whatever I do, I get immersed in it. Now that I am eating, I am completely immersed in eating. In this way I can enjoy my food and chew it better. I rule and control my attention, and not the other way around."
Upon hearing these words, the disciple's eyes opened wide and a smile appeared on his face. He looked at his teacher and said:
"I understand! If my five senses are in control of my mind and attention, then my mind is in constant unrest. If I am in charge of my five senses and attention, then my mind becomes calm".
"Yes, that's right", answered the teacher, " The mind is restless and goes wherever the attention is. Control your attention, and you control your mind".
He asked his teacher: "Why most people's minds are restless, and only a few possess a calm mind? What can one do to still the mind?"
The teacher looked at the disciple, smiled and said:
"I will tell you a story. An elephant was standing and picking leaves from a tree. A small fly came, flying and buzzing near his ear. The elephant waved it away with his long ears. Then the fly came again, and the elephant waved it away once more".
This was repeated several times. Then the elephant asked the fly:
"Why are you so restless and noisy? Why can't you stay for a while in one place?"
The fly answered: "I am attracted to whatever I see, hear or smell. My five senses pull me constantly in all directions and I cannot resist them. What is your secret? How can you stay so calm and still?"
The elephant stopped eating and said:
"My five senses do not rule my attention. Whatever I do, I get immersed in it. Now that I am eating, I am completely immersed in eating. In this way I can enjoy my food and chew it better. I rule and control my attention, and not the other way around."
Upon hearing these words, the disciple's eyes opened wide and a smile appeared on his face. He looked at his teacher and said:
"I understand! If my five senses are in control of my mind and attention, then my mind is in constant unrest. If I am in charge of my five senses and attention, then my mind becomes calm".
"Yes, that's right", answered the teacher, " The mind is restless and goes wherever the attention is. Control your attention, and you control your mind".
Tuesday, June 10, 2008
An Employer's Consciousness
A person had an extremely devoted servant. One day, a pen accidentally slipped from the hand of the servant. It fell to the ground and broke. The man got very upset and said, "See what you have done? This pen was presented to me by a dear friend." The servant did not say anything. He went out and started to clean the hallway. He was extremely saddened about what had happened.
A little later, the man called the servant in. He held his servant's hand and said, "You serve me well with all your ability. I could not live without your help. Today, for a small mistake, I became so angry. Please forgive me."
The servant was dumbfounded. What was his 'master' saying! He was surprised and said, "Babu, I made a mistake. You were right in getting angry at me."
The master's eyes were filled with tears. With great difficulty, he said, "I will not let go of you unless you forgive me." Hearing his master's words made the servant's heart heavy, and he started to weep like a child. He wiped the tears from his master's eyes and said, "Babu, please do not be sorry. I forgive you."
The 'master' was the first President of India, Dr. Rajendra Prasad, and the servant was Sita Ram. Needless to say, the relation between them was like a father and son.
Wednesday, May 14, 2008
The Rules of Being Human
1. You will receive a body. You may like it or hate it, but it will
be yours for the entire period.
2. You will learn lessons. You are enrolled in an informal school
called Life. Each day in this school, you will have the opportunity
to learn lessons. You may like the lessons or think them irrelevant
and stupid.
3. There are no mistakes, only lessons. Growth is a process of trial
and error. Experimentation. The "failed" experiments are as much a
part of the process as the experiment
that ultimately "works".
4. A lesson is repeated until learned. A lesson will be presented to
you in various forms until you have learned it. You can then go on
to the next lesson.
5. Learning lessons does not end. There is no part of life that does
not contain its lessons. If you are alive, there are lessons to be
learned.
6. "There" is no better than "here." When your "there" has become
a "here," you will simply obtain another "there" that will again look
better than "here."
7. Others are merely mirrors of you. You cannot love or hate
something about another person unless it reflects something you
either love or hate about yourself.
8. What you make of your life is up to you. You have all the tools
and resources you need. What you do with them is up to you. The
choice is yours.
9. Your answers lie inside you. The answers to Life's questions lie
inside you. All you need to do is look, listen and trust.
10. You will forget all this.
Sai Baba
be yours for the entire period.
2. You will learn lessons. You are enrolled in an informal school
called Life. Each day in this school, you will have the opportunity
to learn lessons. You may like the lessons or think them irrelevant
and stupid.
3. There are no mistakes, only lessons. Growth is a process of trial
and error. Experimentation. The "failed" experiments are as much a
part of the process as the experiment
that ultimately "works".
4. A lesson is repeated until learned. A lesson will be presented to
you in various forms until you have learned it. You can then go on
to the next lesson.
5. Learning lessons does not end. There is no part of life that does
not contain its lessons. If you are alive, there are lessons to be
learned.
6. "There" is no better than "here." When your "there" has become
a "here," you will simply obtain another "there" that will again look
better than "here."
7. Others are merely mirrors of you. You cannot love or hate
something about another person unless it reflects something you
either love or hate about yourself.
8. What you make of your life is up to you. You have all the tools
and resources you need. What you do with them is up to you. The
choice is yours.
9. Your answers lie inside you. The answers to Life's questions lie
inside you. All you need to do is look, listen and trust.
10. You will forget all this.
Sai Baba
Wednesday, May 07, 2008
I feared by UNKNOWN
I feared being alone Until I learned to like Myself.
I feared failure Until I realized that I only Fail when I don't try.
I feared success Until I realized That I had to try In order to be
happy With myself.
I feared people's opinions Until I learned that People would have
opinions About me anyway.
I feared rejection Until I learned to Have faith in myself.
I feared pain Until I learned that it's necessary For growth.
I feared the truth Until I saw the Ugliness in lies.
I feared life Until I experienced Its beauty .
I feared death Until I realized that it's Not an end, but a beginning.
I feared my destiny, Until I realized that I had the power to change
My life.
I feared hate Until I saw that it Was nothing more than Ignorance.
I feared love Until it touched my heart, Making the darkness fade
Into endless sunny days.
I feared ridicule Until I learned how To laugh at myself.
I feared growing old Until I realized that I gained wisdom every day.
I feared the future Until I realized that Life just kept getting
Better.
I feared the past Until I realized that It could no longer hurt me.
I feared the dark Until I saw the beauty Of the starlight.
I feared the light Until I learned that the Truth would give me
Strength.
I feared change , Until I saw that Even the most beautiful butterfly
Had to undergo a metamorphosis Before it could fly.
I feared failure Until I realized that I only Fail when I don't try.
I feared success Until I realized That I had to try In order to be
happy With myself.
I feared people's opinions Until I learned that People would have
opinions About me anyway.
I feared rejection Until I learned to Have faith in myself.
I feared pain Until I learned that it's necessary For growth.
I feared the truth Until I saw the Ugliness in lies.
I feared life Until I experienced Its beauty .
I feared death Until I realized that it's Not an end, but a beginning.
I feared my destiny, Until I realized that I had the power to change
My life.
I feared hate Until I saw that it Was nothing more than Ignorance.
I feared love Until it touched my heart, Making the darkness fade
Into endless sunny days.
I feared ridicule Until I learned how To laugh at myself.
I feared growing old Until I realized that I gained wisdom every day.
I feared the future Until I realized that Life just kept getting
Better.
I feared the past Until I realized that It could no longer hurt me.
I feared the dark Until I saw the beauty Of the starlight.
I feared the light Until I learned that the Truth would give me
Strength.
I feared change , Until I saw that Even the most beautiful butterfly
Had to undergo a metamorphosis Before it could fly.
Friday, May 02, 2008
You Never Know by Sri Sri
You Never know
how And When
The Existence Will Start
Using You For Its Purpose
You Never Know
How And When
You Will Be Filled With
Abundance
And You Will Start Raining
Quenching The Thirst of Many
You Never Know
How And When
You Will Be Full Of
Fruits And Shade
And Travelers Will Take
Shelter And Food From You
You Never Know
How And When
You Will Be Full With
Love And Light
And You Will Start Spreading
The Fragrance of Beauty To Everyone
You Never Know
How And When
The Death Will Come
And Make You Deathless
And Life Will Start
Flowing Out Of You
You Never Know
How & When....Really !
~Sri Sri
how And When
The Existence Will Start
Using You For Its Purpose
You Never Know
How And When
You Will Be Filled With
Abundance
And You Will Start Raining
Quenching The Thirst of Many
You Never Know
How And When
You Will Be Full Of
Fruits And Shade
And Travelers Will Take
Shelter And Food From You
You Never Know
How And When
You Will Be Full With
Love And Light
And You Will Start Spreading
The Fragrance of Beauty To Everyone
You Never Know
How And When
The Death Will Come
And Make You Deathless
And Life Will Start
Flowing Out Of You
You Never Know
How & When....Really !
~Sri Sri
Friday, April 04, 2008
Saturday, March 08, 2008
Part 6: Friendly Conclusion ( final)
Sometimes it takes a small talk with a friend to trigger an event that gave me the courage to write in a blog. So thanks to my Friend. So here is the previour part 5: Lessons from US.
To those who want read from the beginning, here is Part1
It does not make difference who gets the credit as long India and Indians are benefited, of course it is politicacally imperative for sonia Gandhi to give importance to her family. Though I cannot avoid, I have to mention Media is biased and we give proper credit to people who deserve.
There are lot of problems facing India and we need a good leaders to solve them.
1) India's total debt is at 770 bn ( whole of India is 1000 Billion USD loan) somebody is going to pay this bill
2) Becoz of poor power supply and transportation, most of the business is in middle of a city . making properties very costly, Inflating the land prices and out of reach even middle class families. If you compare this with US, US has very low land inflation till 2003 for most regions outside, SFO, LA, NY and Miami City. becoz of good suburban roads.
For every million rupees spent, roads raised 335 people above the poverty line, and R&D 323. Every million rupees spent on education reduced poverty by 109 people, and on irrigation by 67 people. The lowest returns came from subsidies that are the most popular with politicians - subsidies on credit (42 people), power (27 people) and fertilisers (24 people).
3) Development of transportation can develop suburbans and reduce land prices
4) 60-70% of Indians can only be employed in low skill factory jobs. We need massive industrialisation and large factories
5) we need Capital account convertibility, India will be easily able to export its inflation becoz of its size and depth. http://business-standard.com/common/storypage_c.php?leftnm=10&autono=315201
6) Government needs to stick itself to Security, foriegn policy ,law and order, without interfering much in economics.
7) Whenever Inflation increases, it means somebody is missing their food, shelter, so RBI should stick to manage Interest rates and not worry about acccumlating foriegn currency or managing sovereign wealth
8)Whenever fiscal deficit decreases, it leads long time system stability ( no major skew by govt expenditure)
9) Technology is always welcome
10).
Notes:
- Government is always powerful. never mind what freedom you think you have.
- The total Global (world wealth at current technology) GDP is around 50Bn USD and USA is 12Bn USD. There is 300 Million People in US. that is 40,000 USD per US citizen. India has 1.1 Bn, to reach US standard of living of 40k USD, Indian economy has to grow from Current 1 Trillion to 40.4 trillion for current living population. India was 300 Billion in 1991, it took us 16 yrs to treble to 1trillion. At current growth rate it will take us atleast 45 yrs to reach 40 trillion, and in these 45 yrs, India population will be 2bn atleast. so it will take us 100 yrs to reach current US standard of life. ( note: We do not know where US will be in 100 yrs.)
So, India and Indians needs lot of luck just to survive.
Further reading
1)A tale to gladden the heart of economic liberals
2)Battling the babu raj
To those who want read from the beginning, here is Part1
It does not make difference who gets the credit as long India and Indians are benefited, of course it is politicacally imperative for sonia Gandhi to give importance to her family. Though I cannot avoid, I have to mention Media is biased and we give proper credit to people who deserve.
There are lot of problems facing India and we need a good leaders to solve them.
1) India's total debt is at 770 bn ( whole of India is 1000 Billion USD loan) somebody is going to pay this bill
2) Becoz of poor power supply and transportation, most of the business is in middle of a city . making properties very costly, Inflating the land prices and out of reach even middle class families. If you compare this with US, US has very low land inflation till 2003 for most regions outside, SFO, LA, NY and Miami City. becoz of good suburban roads.
For every million rupees spent, roads raised 335 people above the poverty line, and R&D 323. Every million rupees spent on education reduced poverty by 109 people, and on irrigation by 67 people. The lowest returns came from subsidies that are the most popular with politicians - subsidies on credit (42 people), power (27 people) and fertilisers (24 people).
3) Development of transportation can develop suburbans and reduce land prices
4) 60-70% of Indians can only be employed in low skill factory jobs. We need massive industrialisation and large factories
5) we need Capital account convertibility, India will be easily able to export its inflation becoz of its size and depth. http://business-standard.com/common/storypage_c.php?leftnm=10&autono=315201
6) Government needs to stick itself to Security, foriegn policy ,law and order, without interfering much in economics.
7) Whenever Inflation increases, it means somebody is missing their food, shelter, so RBI should stick to manage Interest rates and not worry about acccumlating foriegn currency or managing sovereign wealth
8)Whenever fiscal deficit decreases, it leads long time system stability ( no major skew by govt expenditure)
9) Technology is always welcome
10).
Notes:
- Government is always powerful. never mind what freedom you think you have.
- The total Global (world wealth at current technology) GDP is around 50Bn USD and USA is 12Bn USD. There is 300 Million People in US. that is 40,000 USD per US citizen. India has 1.1 Bn, to reach US standard of living of 40k USD, Indian economy has to grow from Current 1 Trillion to 40.4 trillion for current living population. India was 300 Billion in 1991, it took us 16 yrs to treble to 1trillion. At current growth rate it will take us atleast 45 yrs to reach 40 trillion, and in these 45 yrs, India population will be 2bn atleast. so it will take us 100 yrs to reach current US standard of life. ( note: We do not know where US will be in 100 yrs.)
So, India and Indians needs lot of luck just to survive.
Further reading
1)A tale to gladden the heart of economic liberals
2)Battling the babu raj
Friday, March 07, 2008
Part 5:- As it is in US
Previous Part 4: PC & BJP
in 1992 US economy was $4trillion and when Bill clinton become president, he tightened govt expenditure and reduced its debts to zero, by the end of 2000 US economy was $10 trillions.
It is like your income growing from $100k to 250k in 8 yrs. Not only yours but all of the people, you know. But once the current govt came in 2000 and started spending and deficit increased economy grow from 10 to 13 tns in 8 yrs. Note US can export its inflation becoz of trade is in dollars. Like it can print more dollars and let foreign countries accumlate them. India can do same thing becoz of its size.
The current news ( feb-2008) is US inflation is 7%, it is related to Iraqi surge of 30k troops, who needs additional clothes, food, shelter, equipments and so ..on from the mainland, Note in 2003 ,when the war started , US was in recession and the economy grew out of that stimulated has war created. but in 2006 economy is strong but the politically correct surge, created high inflation. If not for surge, US might have had a soft landing becoz of housing problem.
Next : Part 6 Friendly Conclusion
in 1992 US economy was $4trillion and when Bill clinton become president, he tightened govt expenditure and reduced its debts to zero, by the end of 2000 US economy was $10 trillions.
It is like your income growing from $100k to 250k in 8 yrs. Not only yours but all of the people, you know. But once the current govt came in 2000 and started spending and deficit increased economy grow from 10 to 13 tns in 8 yrs. Note US can export its inflation becoz of trade is in dollars. Like it can print more dollars and let foreign countries accumlate them. India can do same thing becoz of its size.
The current news ( feb-2008) is US inflation is 7%, it is related to Iraqi surge of 30k troops, who needs additional clothes, food, shelter, equipments and so ..on from the mainland, Note in 2003 ,when the war started , US was in recession and the economy grew out of that stimulated has war created. but in 2006 economy is strong but the politically correct surge, created high inflation. If not for surge, US might have had a soft landing becoz of housing problem.
Next : Part 6 Friendly Conclusion
Thursday, March 06, 2008
Part 4: P Chidambaram and BJP
in 1997 PC did what is called a dream budget, what he did is simple but profound
1) he reduced government expenditures
2) he reduced Government revenue
by cutting taxes across the board and led a tight government for next 2 yrs
Luckily for India, BJP govt for next 6 yrs did the same thing, no populist measures.Yashwant Sinha under Chandrasekhar govt was the original architect of fiscal discpline. During the same period from 1997-2002, the GDP growth was only 4% , it is becoz Indian government was always mover/spender in economy but here government is cutting itself down. Poverty also fell faster becoz inflation was also very low around 3-6% during these last 12 yrs. it proves that low inflation in western countries like 1-2% is also the reason for their very low steady poverty. (Assuming Population growth is also below 2-3%. During 1950-1962, India experienced similar growth)
In 2003, Poverty rate touched like 25% way down from 50-60% seen in 80's. Jaswant Singh Introduced two important laws one for tough laws for capturing non-performing loans of banks and two to refinance the state governments old debts, low inflation rate led to low interest rates, indeed some of the state government borrowed "hundred" crores in 1970's at 30-40% interest rate and it was still paying for in 2001. Govt in 2001 introduced $5bn USD bond and cut interest payments and freed additional funds of state governments by 60-80%.
This led to more funds for state governments, so govts borrowed even less and that means banks had more money from both loan recovery and less govt borrowing. Banks also did VRS , which improved their productivity. this led to robust growth rate of 8% from 2003, this is driven by people taking loans from banks to finance homes, cellphones, cars ...etc. thereby creating more employment and low inflation.
NEXT As it is in US government
Wednesday, March 05, 2008
Part3 :101 Basic current economies
Part2: Why I disagreed with my friends
Before I can go to next 3 articles, I need to mention Basic economies on which India, and USA and most of the world is operating and what they mean. They are 4 important pillars in a free market economy
1st one is of course government, do you know what is your biggest monthly expenditure? It is financing the government thru income tax and all other taxes you buy when you eat, shop, see movies. Government is the richest and is the Emperor of the village. US govt is the Monarch of all these emperors
2nd most important is Inflation. there are lot of concepts of Inflation, but when you hear the word inflation ,it always means two things
- Government is spending more than others ( this is the true meaning of inflation)
- price are not stables, that means people who live on the borders, have to provide more for food or shelter , that means people are going to become poor.
Indeed it can proven mathematical at stable price and stable price increase ( say 1%) , poverty rate falls faster.
Tools to control inflation are a) interest rates, govt squeezes peoples spending b) capitail convertability or floating the currency, you export your inflation like US is doing to gulf countries/Indian Outsourcing firms/China
3rd most important is called fiscal deficit in India or balanced budget in USA/most other countries
- When Government borrows, as it is soveriegn , it gets the most money and it skews the whole systems
and when government spends , it skews the systems , for eg if government decides to buy a mobile phone, it buys them in millions (and not one or two like in a family ) that means a million "similar" lcd display, million "similar" keys, million "similar" sim cards and are all going to be required over night, that is going to create a major shortage and short term price hike or inflation in that particular product lines. compare it to million or even 1000 of people/organizations, it will all be different. Some go for style , some for features, some for price, increasing depth of the market.
4th most effective tool in current economic situation to remove poverty as been technology, indeed technology has played the greatest leveling factor in poverty allevation across centuring. Technology has been often replaced by words like education and militrary power,
But Government is always poor follower of technology, Being a behemoth , it is never nimble to advance/exploit technology. Technology is best exploited by risk takers, individuals, private enterprise. As you can see, In Regimes of less freedom, generally dictators pay the price for poor technology.
like USSR failed to convert their technology and had high poverty
while Saudi arabia,Iran has no new technology and has high poverty , unemployment inspite of record exports
while the reverse is true in korea, singapore, australia
Even china is no front runner in exploiting new technology nowadays.
NEXT :part 4 PC and BJP
Before I can go to next 3 articles, I need to mention Basic economies on which India, and USA and most of the world is operating and what they mean. They are 4 important pillars in a free market economy
1st one is of course government, do you know what is your biggest monthly expenditure? It is financing the government thru income tax and all other taxes you buy when you eat, shop, see movies. Government is the richest and is the Emperor of the village. US govt is the Monarch of all these emperors
2nd most important is Inflation. there are lot of concepts of Inflation, but when you hear the word inflation ,it always means two things
- Government is spending more than others ( this is the true meaning of inflation)
- price are not stables, that means people who live on the borders, have to provide more for food or shelter , that means people are going to become poor.
Indeed it can proven mathematical at stable price and stable price increase ( say 1%) , poverty rate falls faster.
Tools to control inflation are a) interest rates, govt squeezes peoples spending b) capitail convertability or floating the currency, you export your inflation like US is doing to gulf countries/Indian Outsourcing firms/China
3rd most important is called fiscal deficit in India or balanced budget in USA/most other countries
- When Government borrows, as it is soveriegn , it gets the most money and it skews the whole systems
and when government spends , it skews the systems , for eg if government decides to buy a mobile phone, it buys them in millions (and not one or two like in a family ) that means a million "similar" lcd display, million "similar" keys, million "similar" sim cards and are all going to be required over night, that is going to create a major shortage and short term price hike or inflation in that particular product lines. compare it to million or even 1000 of people/organizations, it will all be different. Some go for style , some for features, some for price, increasing depth of the market.
4th most effective tool in current economic situation to remove poverty as been technology, indeed technology has played the greatest leveling factor in poverty allevation across centuring. Technology has been often replaced by words like education and militrary power,
But Government is always poor follower of technology, Being a behemoth , it is never nimble to advance/exploit technology. Technology is best exploited by risk takers, individuals, private enterprise. As you can see, In Regimes of less freedom, generally dictators pay the price for poor technology.
like USSR failed to convert their technology and had high poverty
while Saudi arabia,Iran has no new technology and has high poverty , unemployment inspite of record exports
while the reverse is true in korea, singapore, australia
Even china is no front runner in exploiting new technology nowadays.
NEXT :part 4 PC and BJP
Tuesday, March 04, 2008
Part2 : Why I disagreed with My Friend
Part 1: Angst With a close friend
Manmohan singh is through professional. being economist in Government , most of his reforms was in government Economics.
During 1991-96 period ,
- opening of India to FDI and FII and more importantly NRI accounts Foreign Currency relaxed( individual can have 7 yrs foreign currency account w/o tax)
and current account convertibility ( an individual who stayed abroad for 6 mnths can convert his foriegn currency to any other foriegn currency or use it to buy any foreign property)
- Export & Import control relaxed and customs duty relaxed
- complete removal of license raj, industrial laws
- Monopolies Restrications (MRTPC) was changed to allow to companies to consolidate ( in the case of HLL, India become of the export hub employing many many more people in multiple shifts)
- Major slashes in Income tax, corporate tax, excise and customs duties.
Major achievements was
- GDP growth picked up 6%
- Foreign currecny reserve crossed $30Bns
- exports/imports increased
- IT sector started growing
- Disinvestment in public sector to make up for loss in above taxes
Major failures
- High inflation around 15%
- poverty rate was still around 50%
- no reforms in non-economic arena like industries,land laws, agricultural,transportation, labor laws, judicial laws, election reforms
As a footnote, ManMohan singh after his term as a Governor of RBI, took charge of finance adviser for BARC and DRDO before he become the finance minister, it is that experience that helped garb the INDO-US nuclear deal. and he knows that he is doing a historic accord.
Part3:-Next 101 Basic current economies
Manmohan singh is through professional. being economist in Government , most of his reforms was in government Economics.
During 1991-96 period ,
- opening of India to FDI and FII and more importantly NRI accounts Foreign Currency relaxed( individual can have 7 yrs foreign currency account w/o tax)
and current account convertibility ( an individual who stayed abroad for 6 mnths can convert his foriegn currency to any other foriegn currency or use it to buy any foreign property)
- Export & Import control relaxed and customs duty relaxed
- complete removal of license raj, industrial laws
- Monopolies Restrications (MRTPC) was changed to allow to companies to consolidate ( in the case of HLL, India become of the export hub employing many many more people in multiple shifts)
- Major slashes in Income tax, corporate tax, excise and customs duties.
Major achievements was
- GDP growth picked up 6%
- Foreign currecny reserve crossed $30Bns
- exports/imports increased
- IT sector started growing
- Disinvestment in public sector to make up for loss in above taxes
Major failures
- High inflation around 15%
- poverty rate was still around 50%
- no reforms in non-economic arena like industries,land laws, agricultural,transportation, labor laws, judicial laws, election reforms
As a footnote, ManMohan singh after his term as a Governor of RBI, took charge of finance adviser for BARC and DRDO before he become the finance minister, it is that experience that helped garb the INDO-US nuclear deal. and he knows that he is doing a historic accord.
Part3:-Next 101 Basic current economies
Monday, March 03, 2008
Part1: Angst with a close friend
Recently on a dinner outage with a close friend, he mentioned that it is Rajiv Gandhi government which introduced economic refroms in India (I thought he really sounded like Sonia Gandhi ). it was a such a shock for me as he is from India and he lived in India as a teenager under Rajiv's rule and he has in college during Manmohan-Narasimha Rao stewardship. Unfortunately he is not only guy who said such things about India govts before 1991 , I heard things like that when Indira Gandhi nationalised banks, it helped poor people. ( joke is less than 35% of todays Indians have banks accounts and even in those nationalised banks, private sector IT employees had difficulties openings bank accounts 10 yrs back. Indira Gandhi nationalised banks and Insurance becoz it allowed govt borrow money at their low interest rates). My friends and others comment made think that I atleast attempt to correct this wrong so I decided to write about 6 part article on economics
Before 1991 reforms , following is the economic conditions in India
- Foreign Currency control ( all persons have to surrender foreign currency on landing in India) and that also means no FDI and FII investments
- there is passport and visa restrications/advanced permissions requirements for foreign travel
- Export control ( nothing can be exported without Govt permission)
- Import control ( nothing can be Imported without Govt permission)
- Production control ( govt thru excise duty controls how much product is produced like there is always a shortage of RIN, surf or kwality/Arun ice creams before 1990, like for eg. no more than 100 bars of RIN can be produced per day per factory)
- Monopolies Restrications (MRTPC) for example HLL owned RIN,SURF, lakme, fair and lovely they are different companies, leading to low hourly wages, poor distribution of managerial skills and so on
- Most of the jobs were in Govt and public sector
- tought labor laws mean very few recruitments and also layoffs
- License raj, govt permission required to start any business
- Small scale industries reservations, many products were reserved for small scale industries.
- Banks hardly lend to public, people bought houses on their savings or thru employee thrift funds
- Money lenders profited
- restrications of export mean among others gold, foriegn currency were smuggled illegally and it led to the development of Mafia in Bombay thru the Gulf-singapore route
-Ration shops thru Food corp of India bougth most of the rice and wheat meant that 80% of India which "still" has no ration shops faced food shortage and increased poverty. (Govt created poverty and food shortages thru ration shops)
- Inflation was 15% during Rajiv Gandhi period ( slighlty better than 20% during post-1962 period)
- GDP Growth was 8% ( but average for 1950-1991 is still 3%)
- Income tax was very high around 55%
- Poverty rate was close to 60%
- Foriegn Debt went from 15Bn USD to 75 bn USD ( that eventually led to 1990/1 foriegn current crisis on account of US invasion of Iraq)
and so on it is such a pain to even write about all these. None of these changed till Manmohan singh was appointed as Finance Minister
What Rajiv Gandhi really did are and succeeded
- New Education policy - which led to private colleges and good quality Navodaya schools
- Telecom policy - Govt relaxed export of electronic goods , which allowed BSNL and MTNL to export routers, switches and fiber cables, which led to a dawn of digital telephone in India
- Computerization of Government, his government favored computerization of government ( note there is no support for private sector)
- Panchayati Raj introduction
- Consumer act law
- His government prepared papers of election reforms, judicial reforms, education reforms, Labor reforms, liberalsation reforms, privatisation reforms, globalization reforms.( BUT he IMPLEMENTED NONE in spite of having 400 MPS in Lok sabha)
Where Rajiv Gandhi really failed
- He and his govt slept thru collapse of communism ( compare to Nehru or even Indira)
- Bofors - his failure is not in bofors corruption, but after exporting bofors guns, he cancelled all business deal with bofors, resulting in those guns having no bombs, those guns one of the best in mountain terrains like kashmir lived empty for over 13 yrs before kargil forced the govt to buy the bombs from Israel for emergency and then from Bofors
- HDW submarine, HDW is a West Germany company which was building submarines in bombay with transfer of technology to India, but becoz of bofors and another round of corruption accustions, Govt cancelled the contract. HDW packed up. The end result even after 23 yrs, India has no capability to build submarine even today.
- Having huge majority in parliament , he did not go ahead with 33% women reservation nor he allowed pachayats to raise their own tax.
MY next article will be " Part 2:- Why I disagreed with My Friend" It will be in general in What Manmohan singh did and did not achieve during 1991-96
Before 1991 reforms , following is the economic conditions in India
- Foreign Currency control ( all persons have to surrender foreign currency on landing in India) and that also means no FDI and FII investments
- there is passport and visa restrications/advanced permissions requirements for foreign travel
- Export control ( nothing can be exported without Govt permission)
- Import control ( nothing can be Imported without Govt permission)
- Production control ( govt thru excise duty controls how much product is produced like there is always a shortage of RIN, surf or kwality/Arun ice creams before 1990, like for eg. no more than 100 bars of RIN can be produced per day per factory)
- Monopolies Restrications (MRTPC) for example HLL owned RIN,SURF, lakme, fair and lovely they are different companies, leading to low hourly wages, poor distribution of managerial skills and so on
- Most of the jobs were in Govt and public sector
- tought labor laws mean very few recruitments and also layoffs
- License raj, govt permission required to start any business
- Small scale industries reservations, many products were reserved for small scale industries.
- Banks hardly lend to public, people bought houses on their savings or thru employee thrift funds
- Money lenders profited
- restrications of export mean among others gold, foriegn currency were smuggled illegally and it led to the development of Mafia in Bombay thru the Gulf-singapore route
-Ration shops thru Food corp of India bougth most of the rice and wheat meant that 80% of India which "still" has no ration shops faced food shortage and increased poverty. (Govt created poverty and food shortages thru ration shops)
- Inflation was 15% during Rajiv Gandhi period ( slighlty better than 20% during post-1962 period)
- GDP Growth was 8% ( but average for 1950-1991 is still 3%)
- Income tax was very high around 55%
- Poverty rate was close to 60%
- Foriegn Debt went from 15Bn USD to 75 bn USD ( that eventually led to 1990/1 foriegn current crisis on account of US invasion of Iraq)
and so on it is such a pain to even write about all these. None of these changed till Manmohan singh was appointed as Finance Minister
What Rajiv Gandhi really did are and succeeded
- New Education policy - which led to private colleges and good quality Navodaya schools
- Telecom policy - Govt relaxed export of electronic goods , which allowed BSNL and MTNL to export routers, switches and fiber cables, which led to a dawn of digital telephone in India
- Computerization of Government, his government favored computerization of government ( note there is no support for private sector)
- Panchayati Raj introduction
- Consumer act law
- His government prepared papers of election reforms, judicial reforms, education reforms, Labor reforms, liberalsation reforms, privatisation reforms, globalization reforms.( BUT he IMPLEMENTED NONE in spite of having 400 MPS in Lok sabha)
Where Rajiv Gandhi really failed
- He and his govt slept thru collapse of communism ( compare to Nehru or even Indira)
- Bofors - his failure is not in bofors corruption, but after exporting bofors guns, he cancelled all business deal with bofors, resulting in those guns having no bombs, those guns one of the best in mountain terrains like kashmir lived empty for over 13 yrs before kargil forced the govt to buy the bombs from Israel for emergency and then from Bofors
- HDW submarine, HDW is a West Germany company which was building submarines in bombay with transfer of technology to India, but becoz of bofors and another round of corruption accustions, Govt cancelled the contract. HDW packed up. The end result even after 23 yrs, India has no capability to build submarine even today.
- Having huge majority in parliament , he did not go ahead with 33% women reservation nor he allowed pachayats to raise their own tax.
MY next article will be " Part 2:- Why I disagreed with My Friend" It will be in general in What Manmohan singh did and did not achieve during 1991-96
Sunday, February 03, 2008
Saturday, January 26, 2008
Love , Respect and Why I dislike socialism and Communism
If Love is a river which it should be , everflowing , than respect is the banks. where the bank breaks, river disappears. Respect is always earned and has never been given free. Respect is always earned, when a human or humans show their skills and IMPROVES on it. Improvement or progress is the keyword. That is exceed the expectations by setting expectations.Nobody expects anything from a lazy person. Not much from a poor person. Poor deserves sympathy or compassion but not friendship.
Former soviet union is a great example many russians`are extremely skilled in maths and science but when they are paid same as poor peasants , innovation died. poverty rose and USSR collapse.Similarly in a family, if skilled and hard working persons are not respectd in a family, that family/society falls into poverty. Indeed many rich families in the 2nd generations fall into poverty with poor skills, as they spend more money and time on luxury and lavish parties. Downside of this higher respect for earning member are mother-in-law vs Daughter-in-law fight. When both of them have low skills, low confidence creeps in with gossip, jealousness and lazy,sloppy house work, they definitely pick up more fight. if among them, when one of them is hardworking, earning and creative. things eventually turn out to be different. Hardwork is a attitude, those who are dedicated to what they do, will do anywork and achieve higher skills. they tend to have higher self-confidence and will always turn out to be lucky.
Socialism and communism even though favors work, they discourage initiative, individualism.Love and respect are very individualistic, it is very difficult love everybody, even more difficult to respect people, you may appreciate people but hardly you can respect them
Even though Roger federer lost in 2008 Aus. openSemifinals, his skill, style and power is more due to his hardwork and the dedication. History is full of lessons but Many Many people refuse to believe and accept that hardwork alone (even w/o money) will make one eventually a skilled, happy, rich person and well respected.
If Love is a river which it should be , everflowing , than respect is the banks. where the bank breaks, river disappears. Respect is always earned and has never been given free. Respect is always earned, when a human or humans show their skills and IMPROVES on it. Improvement or progress is the keyword. That is exceed the expectations by setting expectations.Nobody expects anything from a lazy person. Not much from a poor person. Poor deserves sympathy or compassion but not friendship.
Former soviet union is a great example many russians`are extremely skilled in maths and science but when they are paid same as poor peasants , innovation died. poverty rose and USSR collapse.Similarly in a family, if skilled and hard working persons are not respectd in a family, that family/society falls into poverty. Indeed many rich families in the 2nd generations fall into poverty with poor skills, as they spend more money and time on luxury and lavish parties. Downside of this higher respect for earning member are mother-in-law vs Daughter-in-law fight. When both of them have low skills, low confidence creeps in with gossip, jealousness and lazy,sloppy house work, they definitely pick up more fight. if among them, when one of them is hardworking, earning and creative. things eventually turn out to be different. Hardwork is a attitude, those who are dedicated to what they do, will do anywork and achieve higher skills. they tend to have higher self-confidence and will always turn out to be lucky.
Socialism and communism even though favors work, they discourage initiative, individualism.Love and respect are very individualistic, it is very difficult love everybody, even more difficult to respect people, you may appreciate people but hardly you can respect them
Even though Roger federer lost in 2008 Aus. openSemifinals, his skill, style and power is more due to his hardwork and the dedication. History is full of lessons but Many Many people refuse to believe and accept that hardwork alone (even w/o money) will make one eventually a skilled, happy, rich person and well respected.
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