Wednesday, March 18, 2015

032 Run-of-the-Mill rhetoric by IMF Chief during 2015 visit to India

Photo courtesy

Ms. Christine Madeleine Odette Lagarde  is re to have certified that Indian Monetary Policy rests in good hands.

Another great quote attributed to Ms. Christine Lagarde:

"...He is the one who steered the Indian economy to safer waters after it was hit by the market turmoil following the ‘taper tantrum’ episode of mid-2013. ..."

“India’s monetary policy rests in good hands. So I am very pleased to say that, in a very short time span, India successfully contained its domestic and external vulnerabilities more than in many other emerging economies,”

“I am fascinated by the vibrancy I see wherever I go in India. The world is looking to India to lead the path to higher, sustainable, and inclusive growth,”

ybrao-a-donkey's perspective 

How to define a good hand and a bad hand?

While Ms. Lagarde might have expressed her personal opinion or probably the opinion of the I.M.F., in giving credit to Mr. Rajan for India's emerging out of the market turmoil of 2013, reality may be different.  There may be a complex mix of factors acting concurrently which enabled India to temporarily overcome the market turmoil.  In my opinion, India is riding a tiger, while depending on foreign investments for meeting its imports, and balance of payments needs.  India is successfully rotating its funds like a  landlord who borrows heavily in the neighborhood, incurring new loans to repay old loan.  The landlord's balloon will burst someday or other, but when , where, how, nobody knows.  But, 'why' it is bound to burst, we can foresee.  It is nothing but lack of international monetary resource management prudence.   (Note: The samething which U.S.A. is also doing by acting as 'Reserve Country' for depositing surplus reserves of nearly the whole world.)

India's internal and external vulnerabilities remain what they were, what they are and what they will be.  This is because, India's population is exploding, the population is learning new lavish consumption habits, there are no exportable surpluses of commodities and manufactured goods.  The ugliest thing is, prior to 1991, India used to at least make a serious attempt to correct its balance of trade deficit, and keep its balance of payment current account deficit within manageable limits.  Now, it appears that India is not keen on such corrective  efforts.  Present strategy seems to be, just beg for foreign investments, offering tax sops, vast swathes of lands etc.

Fascination about vibrancy wherever the IMF Chief goes, -- it is nothing but run-of-the-mill rhetoric to please the hosts.

Anyway, India needs no certification from IMF.

Thursday, February 28, 2013

#031 Budget 2013 will not make any difference

Budget 2013-14 presented by Indian Finance Minister Mr. P. Chidambaram, in Indian Parliament, on the 28th February 2013, will not make any difference for the people or for the country.

Indian Economy is already moribund. The decay started, the moment, Mrs. Indira Gandhi started steering the country as India`s Prime Minister.

Of course, Mrs. Gandhi, blamed the Chinese invasion and the Indo-Pak War 1965, as reasons for the dilapidation of the Indian Economy. This is only about 10% true.

Not that there was no corruption during the tenures of first-Prime Minister Jawaharlal Nehru and 19-month Prime Minister Lal Bahadur Sastry. But, during their tenures, corruption did not become respetable.

What is wrong with the 2013-14 Indian Budget?

Ans: We should ask 'What is not wrong with the 2013-14 Indian Budget.

Question: Give one example. Are you not too pessimistic and skeptical?

Ans: I am writing this comment, with full knowledge of what happens on the country-side. For example, the Central Government will allow a subsidised loan interest rate of 4% p.a. to only those farmers who repay the loans in time.

Most Banks and Agricultural-Co-operatives extend their loans only to big-land-owners, in whose names title-deeds and land-records stand, as owners (paTTAdArs) and cultivators (kAstudArs). Even where loans stand in the name of small and marginal farmers, very often, they tend to be either benAmis (proxies or surrogates) or fictitious.

Most absentee-landlords do not till their lands. They lease out their lands for fabulous rents , informally, without getting reflected in land-records. They live in cities. The agricultural loans taken by them will be invested elsewhere, such as purchase of gold or gold-trading-schemes, or for hoarding agricultual commodities, to sell in black-market during scarce-season. The landlords living in villages also do not lag behind. They use the agricultural loans borrowed from Public Sector Banks @4% p.a., for relending to tenant-farmers or small and marginal farmers in the village @24% p.a. Thus they earn a profit of 20% p.a. without doing anything, at the cost of Central Government and the small-marginal-tenant-farmers.

The small-marginal-tenant-farmers have to repay their loans to the landlords, irrespective of droughts-floods-and-pests. All the benefits such as agricultural-debt-relief, msp-minimum-support-price, input- subsidies, crop-insurance-claims, etc. are all cornered by the landlords.

Unable to bear pressure from landlords-cum-money-lenders, marginal-small-tenant-farmers are driven to commit suicides by consuming pesticides.

Tuesday, May 15, 2012

What will Wallmart give?

I am, of late, fully engaged in writing investigative studies of vAlmIki rAmAyaNa and vyAsa mahAbharata, both the Sanskrit versions. Hence, I could not do much justice to this blog, which is very dear to my heart.

I do not believe in fate or providence, as an atheist and Marxist. But today, as though to make me believe in providence or to remind me about my duty to take care of my Indian Economy blog, Walmart.Com draggedme towards it.

Google search. I have been searching for 'pariyatra mountains', as a part of my search for the location of kishkindha and lanka in the Central and East-Central India.

I typed in the search window: pariyatra mountain.

I got 3810 results from the Google. The ninth result on the very first page is

Pariyatra Mountains -
You +1'd this publicly. Undo
Items 1 - 16 of 1651 – Shop for Pariyatra Mountains at and save.

I got curious. What the heaven or hell I have to with, when searching for pariyatra mountains of rAmAyaNa or mahAbharata?

I clicked the result link, of the walmart just out of curiosity:-
Here is a part of the search made by walmart in their store, on my behalf:

We found 431 results for "
party tray mountains
" in All Departments
We found 0 results for "
Pariyatra Mountains
" in any department
All Items (431)
Show Store Items
Online Items (410)
Best Match
Price: Low to High
Price: High to Low
Best Sellers
Customer Rating: High to Low
Title: A-Z
Title: Z-A
Sort by
Items 1- 16 of 431 total
16 32 Per Page
List View Grid View
Previous 1 2 3 4 5 ... Next
Your Selected Store Has Been Saved

When you browse, you'll see products available online and in the [city name] store. This store is also saved for the Store Finder feature and your Local Ad.
Pick Up Today
New Feature – Pay Online and Pick Up Today
Place your order on and we'll have your order ready at your selected store for you to pick up later.

Please note: If you have Pick Up Today items in your cart, the pickup store has been changed to this new location. Please review your cart – the availability of your Pick Up Today items may have changed.

New - Walmart Express
We've opened a smaller Walmart store in your neighborhood. Place your order online, then pick it up - closer to home!
Your Selected Store Has Been Saved

When you browse, you'll see products available online and in the [city name] store. This store is also saved for the Store Finder feature and the Local Ad.

You can change this store anytime using the View Products in Your Store feature or by using Store Finder or the Find in Store feature throughout the site.

New - Walmart Express
We've opened a smaller Walmart store in your neighborhood. Place your order online, then pick it up - closer to home!

Shop our site and view available products that can be ordered on and picked up in your [city name] store.

You may change your selected store at any time.

Shop our site and view available products that can be ordered on and picked up in your [city name] store. [city name] has also been preselected as your Site to Store location when you choose that shipping option during checkout.

You may change your selected store at any time.

New - Walmart Express
We've opened a smaller Walmart store in your neighborhood. Place your order online, then pick it up - closer to home!
Shop for items labeled home free. When you spend $45 on Home Free items, you'll get free shipping on those items.
Shop for items labeled home free. When you spend $45 on Home Free items, you'll get free shipping on those items.

Wayborn Party Tray
Wayborn Party Tray Wayborn Party Tray

Out of stock online

Sold & shipped by Wayfair
Features: -Material: Cedar plywood.-Rectangle shape.-Strong and durable.-Do not use inside microwave. Color/Finish: …

Out of stock online
Not sold in stores

Sold & shipped by Wayfair

5-Piece Oblong TV Tray Set
5-Piece Oblong TV Tray Set 5-Piece Oblong TV Tray Set

Free shipping to store

Free shipping to store
This handy set includes four folding TV trays and a stand for storing them.
......(cut--by me to make this quote short).

What "pariyatra mountain" have got to "party tray mountain"?

I know my readers can easily solve this riddle.
I shall continue with my remarks:

Our Prime Minister Mr. ManmOhan Singh and the Finance Minister Mr. praNab mukherjee are very keen on introducing foreign retail chains into Indian Markets. I must say that they do not know the consequences of their actions.

Our India is a country, 90% of whose citizens do not have money to buy a loin cloth, when it is badly needed. 10% of the people may probably need 'mountain party trays'. The 90% of the people may prefer to buy cheap liquor and postpone their purchases of loin cloths. The 10% of the people may also already own posh cars and also mountain party trays. They may also own hundreds of schotch whisky or cobra wine bottles. They may even have sufficient number of party tray mountains.

Thus, do we need a to remind us that 431 items are available online and in stores?

Friday, March 16, 2012

Indian Budget 2012-13

p>Question: Can you comment on the budget presented by Mr. PraNab Mukherjee today in Parliament?

Answer: People get the Government they deserve.

Winston Churchill was reported to have said:

"Power will go to the hands of rascals, rogues, freebooters; all Indian leaders will be of low calibre & men of straw. They will have sweet tongues & silly hearts. They will fight amongst themselves for power & India will be lost in political squabbles. A day would come when even air & water would be taxed in India."

Churchill might have been an India hater and a racialist. Britain too may have high taxes and corruption.
But how, could Churchill predict so correctly?

Saturday, July 9, 2011

Multiple Choice Questions on Indian Economics

You can correct your answer any number of times before and after you click 'get score' at the bottom. This test is very flexible.

1.Ecology studies
resources environment fauna NOT

2.Malthusian Theory relates to
poverty statistics progressions populations

3.Chetan Anand is associated with
archery badminton cricket discus throw

4.Not a State which had General Elections in 2011
Bengal Kerala Karnataka Tamil Nadu

5.Sania Mirza-Vesnina Women's doubles pair, in 2011 Wimbledon, reached upto
second round quarters semis finals

6.India's economic growth during 2010-11 was
8.5% 9% 9.5% 10%

7.Which of the following is NOT officially a problem in attracting FDI
environmental clearance land acquisition corruption lack of infrastructure

8.DGEN index is a stock-market index in
Bangla Desh India Pakisthan Sri Lanka

9.Kirit Parikh Group 2011's report is about
direct tax reforms indirect tax reforms prices of petroleum products special economic zones (SEZ)

10.India's largest two-wheeler maker
Bajaj TVS Hero Honda Yamaha

11.Indian State with the longest coast-line
A.P. Gujarat Maharashtra Tamil Nadu

12.India's first Land Acquisition Act was made in
1881 1894 1931 1948

13.'Research In Motion (RIM)' is associated with
android iphone blackberry Ubuntu

14.Apart from the increase in global prices of petroleum, the principal cause for high prices of petroleum products in India, is high
refining costs transport costs indirect taxes NOT

15.'Go' and 'no-Go' area restrictions apply to
coal fields thermal power stations irrigation projects all

16.India's fiscal deficit as a percentage of GDP is in the range of
1 to 5% 6-10% 11-15% 15-20%

17.PPP model in development envisages
Private People's Partnership Public Private Partnership Public People's Partnership PUblic Private Participation

18.'IIIT' full form is Indian Institute of
Industrial Technology Innovative Technology Information Technology Institutional Technology

19.India's total irrigated land is in the range of
100000 to 500000 sqkm. 500000 to a million sqkm. 1 million to 5 million sqkm. 5 million to 10 million sqkm.

20.Median age of an Indian is
16 yrs. 26 yrs. 36 yrs. 46 yrs.


Sunday, May 29, 2011

The Story of Arab Shaik and his Camel

The Hyderabad Shamshabad International Airport insisting upon prepayment of landing charges by Air India, can serve as the best example of the proverbial axiomatic tale 'The Arab Shaik and his Camel'.

A desert. An Arab Shaik was camping in a tent. Night time. It was extremely cold outside. His camel was shivering outside the tent. The Shaik took pity on his camel and allowed it to project its head slightly into the tent, to save itself from the cold and hot winds.

The camel used the opportunity to gradually intrude into the tent, first by inserting its left foreleg, then the right foreleg, the left hind leg and finally its right hind leg.

The Shaik started, even in his sleep, to feel that something was pushing him out by neck. He woke up alert, and found to his surprise that the intruder was none other than the camel itself.

The Shaik, with all his energy, dragged the camel out and tightened the tent strings and closed all entrances. He also kept a guard with instructions to watch the camel carefully.

Air India and the Indian Airlines Corporation were the principal carriers of Indian Nation in sixties and seventies.

Indian Railways run their own rail stations and terminals. State- Run Road Transport Corporations and Undertakings (e.g. A.P.S.R.T.C.) build and run their own Bus Stations. On the same analogy, Air India should have been allowed to build and run Internatinal Airports. Indian Airlines could have been allowed to build and run Indian Airline should have been allowed to build its own domestic airport.

The Andhra Pradesh Government procured land from the poor peasants of Rangareddy District and allocated to the Private Airport Builder at prices lower than the market prices. Both the Central and the State Governments have extended numerous tax concessions to the Airport builder to make his project economically viable.

The user charges levied by the Airport on the passengers as well as the Airlines are also very heavy.

Air India is gasping for breathe, as it has a plethora of problems to attend to.

Tuesday, October 20, 2009


I went to some banks and some gold shops today, to enquire about buying and selling of gold coins. A friend asked me to buy some gold coins on his behalf with his money and send him.

I enquired from the Banks' staff and shop salesmen, out of curiosity, whether they will buyback the gold coins they sell and if so at what rate. Everybody outrightly rejected the idea.

It may be true that Banks are forbidden from buying gold by some Reserve Bank of India guidelines. The Banks may be acting as Commission Agents (middlemen) when they sell gold to public. They do not undergo or undertake any risk when they do not trade on their own and maintain positions. The Banks are already dealing in shares and securities, sometimes on their own account in spite of the associated risk, and sometimes on behalf of their customers. Gold is a less riskier commodity, when compared to shares and stocks. The Banks may, on behalf of their reputed gold dealers, undertake buying gold from public and earn some commission in the process.

Market-making involves a two-sided activity, i.e. a market-maker has both to buy and sell. He charges his profit on both legs. The market-maker need not maintain positions or speculate. It will be sufficient that he keeps his total purchases and sales on everyday nearly equal. This type of cover operations, Authorised Dealers in Foreign Exchange do every day and Reserve Bank of India has some guidelines. Similar guidelines mutatis mutandis may be issued to Banks, when they handle gold.

Traditional gold buying was for ceremonial purposes like weddings. Indians are on a gold buying spree today, to protect themselves against erosion of Indian Rupee. A person, who keeps his money in Banks, at very low rates of interest, becomes a fool. The Prime Minister and the Finance Minister consider that interest rates in India are still high and they needs further pruning. The Heads of Banks do not agree, because they know the market realities. The Government wants to please the industrialists and the lobbying MPs. The Banks reluctantly yield to RBI guidelines.

The 1962 Finance Minister of India, Mr. Morarjee Desai, tried to mobilise gold from Indian public by issuing gold bonds, so as to use the gold for meeting foreign exchange payment needs. This type of foreign exchange stringency does not exist today, because India is sitting on piles of US Dollars received in the form of foreign investments, and the Central Bank of the country, finds it a headache to maintain the exchange reserves without erosion. Dollar has lost 11% of value during the last six months, according to market reports. Reserve Bank's policy of allowing liberal imports of gold, we may have to view, under this focus.

Indians importing gold, appears to be more prudent, when compared to importing liquors and luxuries. Such indulgence, which we normally see in the economies of the Gulf countries, is gradually seeping into Indian economy also.

The unwillingness of Corporate and big gold dealers in India, to buyback the gold coins minted by them/sold by them is not understandable. Do they sell gold coins of lesser purity?

Monday, December 3, 2007



After much mental exercise, I arrived at the list of ten items we can buy, if we have only one Indian Rupee in our pocket:

1. One small piece of Idli at some wayside eatery carts.

2. One small piece of samosa (wheat flour cooky stuffed with onions) in some Indian trains.

3. One small chocolete.

4. One Comfit Ball pen - disposable.

5. One inferior shampoo satchet.

6. Two A-4 sized white papers.

7. A pinch of curry leaves or a half-fistful of green chillies.

8. A half fistful of popped rice.

9. A small piece of cut-raw-mango.

10. A small lime fruit.


1. Water (satchet of/glass of, not necessarily purified/mineral water).

2. A Salt packet.

3. A Pocket comb.

4. A vernacular newspaper.

5. A Toilet Entrance ticket.

6. A Railway Platform ticket.

7. A Hand curchief.

8. A milk packet.

9. A tablet for headache or fever.

10.A packet of rodent's poison, if a person wants to commit suicide.

Wither the 3.5% inflation rate announced by Government of India! Finance Minister Chidambaram is worried that Financial Reforms are not progressing at the desired rate!

Wednesday, November 28, 2007


DT: 26-11-2007.

Reproduced below, is a text of the speech of the President of India on the 26th Nov. 2007, kind courtesy, the President's Website.

The President said "... Pandit Nehruji, said that he wanted to "convulse" the nation with cooperatives ... ".

DICTIONARY MEANING OF CONVULSING Unabridged (v 1.1) - Cite This Source
1. to shake violently; agitate.
2. to cause to shake violently with laughter, anger, pain, etc.
3. to cause to suffer violent, spasmodic contractions of the muscles.

[Origin: 1635–45; < L convulsus ptp. of convellere to shatter, tear loose, equiv. to con- con- + vul- (var. s. of vellere to pull, tear) + -sus, var. of -tus ptp. suffix] TEXT OF PRESIDENT'S SPEECH

I am happy to be associated with the inauguration of the 9th All India Conference of Urban Cooperative Banks and Credit Societies, especially as I have been associated with the working of NAFCUB. The theme of the Conference "Financial Inclusion Through Urban Cooperative Credit Institutions" is topical and timely. I would like to pay homage to Sawai Singh Sisodia whose statue I just unveiled. He came on the scene when the cooperative movement was suffering a crisis. His passing away is a great loss to the movement.

The urban cooperative credit movement in India is a century old. There are over 20 million members of urban cooperative banks in India making it, in terms of membership, the largest cooperative system in the world. It is a vast sector comprising over 1,850 urban banks and around 40,000 credit societies. The reserves of urban cooperative banks aggregate to over Rs.1.1 lakh crore. Though the share of the cooperative banking sector in the entire banking system in India is about 5 percent, it is an important segment considering the number of consumers availing of its services.

Visualizing the importance of cooperatives in the development process, the first Prime Minister of India, Pandit Nehruji, said that he wanted to "convulse" the nation with cooperatives. He had an abiding faith in the cooperative system, the objective of which was to give small traders, artisans, factory workers and others access to institutional credit, instead of them going to the private moneylender and then often meeting with disastrous consequences. By catering to the credit requirements of people with limited means in the urban and semi-urban centers, the urban cooperatives seek the financial inclusion of people who are economically disadvantaged and this is extremely important for the equitable growth in the country.

In a fast globalizing world order and growing competition, the challenge is to has a strategy for the urban cooperative banks who have the resilience to adapt to new requirements. A small number of cooperatives have grown to be big entities and are in a position to meet competition, but a number of others need support for their survival.

The strength of the cooperative movement is in its collectivity. Cooperative institutions, particularly small urban cooperative banks and credit societies find it difficult to face competition from bigger players in the field, as the latter have at their command resources, technology and managerial competence, far greater than what cooperative banks have. For the individual banks and societies to be competitive, the sector as a whole must be strong and each unit should be backed by collective strength. The urban banks ought to seriously consider ways of networking amongst themselves and aggregating their resources as well as their requirements so that they have the advantage of size while approaching the financial markets and dealing with larger entities. Such systems and structures exist in many countries, where a single strong apex body is providing the expertise and resources for the grassroots level banks to operate. The possibility of this could be examined in the Indian context. It is equally important to make use of new management systems and technological advancements to modernize the urban cooperative sector. They may also consider mobile banking to reach out to their clientele.

The unprecedented growth of our economy, year on year for the last few years, is also bringing about huge demographical changes. Rapid urbanization through migration is now resulting in a significantly large section of the population in urban areas being financially excluded. To bring them under the institutional fold for their financial and banking requirements is a challenge but it is also a tremendous opportunity for the urban cooperative banks and credit societies. Organizational strengths such as committed leadership, efficient use of resources, transparency in operations and involvement of members are, however, pre-requisites for the cooperatives to be able to take advantage of the opportunities. Improvement in overall governance should strengthen cooperatives and equip them to become premier vehicles of financial inclusion.

The rate of growth of credit by cooperative banks is not keeping pace with the rate of growth of credit by the rest of the banking sector. The share of cooperative banks, both in the agricultural and in the urban sectors, appears to be progressively shrinking. This could, in the long run, have an adverse effect on credit to marginal farmers, artisans and weaker sections of society. It is, therefore, imperative that cooperative banks are strengthened to be in a position to take up financing for the less privileged sections of society. It will be equally important for the co-operative banking sector to set targets and work out innovative strategies to achieve them. The innovative strategies should essentially aim at improving the income levels of the beneficiaries, so that they do not fall into a debt trap.

The banking and the financial sector are essentially based on trust of the depositors and the public. The urban cooperative credit sector must look at all avenues of increasing this trust. Aberrations that may have crept up over a period of time need to be addressed at the earliest. The country has a stake in self-help economic entities like cooperatives.

Economic empowerment of women and involvement of youth is very essential for any meaningful growth. The financial sector in the post-reforms period in the country has been laying great emphasis on young financial professionals managing key posts in the sector. In fact, some of the highest paid professionals in the banking sector are young women. On the other hand, there is no such initiative in this direction by the cooperative banking movement. Youth, as experience has shown, is attracted to and motivated to work in those areas where there is challenge, dynamism, an enabling environment and returns which are commensurate with their efforts. Cooperative leaders will have to do some self-analysis as to whether they are sincerely making efforts to provide all this to the youth so as to attract them. Otherwise, there is a distinct possibility of young professionals ignoring the sector altogether in the days to come. Urban credit societies, along with agricultural societies, can become a significant base for providing a range of activities with the involvement of youth for the creation and equitable distribution of wealth.

Insofar as supporting efforts to improve the economic position and empowerment of women are concerned, there is no route that is better than that of cooperatives and Self Help Groups. Women Cooperative Banks are better acquainted with the situation and requirements of women. They can help channelise the capacities and talents of women and can become important instruments of economic betterment. Women Cooperative Banks, therefore, must be encouraged. Urban cooperative banks should also have special programmes for women. I would be very happy if the management of the movement considers increasing the representation of women on the Boards of cooperative banks and credit societies, to certain minimum levels through changes in their bye-laws, so that economic empowerment of women gets support at the grass-roots level.

I hope that this Conference will rejuvenate the spirit of the urban cooperative credit sector and that the Central Government and the Reserve Bank of India create a sense of confidence among the institutions to meet in whatever way possible the huge challenges ahead and also to make use of the opportunities that the resurgent Indian economy has to offer. With this, I inaugurate the 9th All India Conference of Urban Cooperative Banks and Credit Societies.

Monday, November 26, 2007


In US there are 8000 banks. Three banks failed after 2004. According to Forbes, the three years between 2004 and is the longest BANK FAILURE FREE period since the depression of 1930.

In India, whenever there is a Commercial Bank failure/sickness/incipient sickness, a merger takes place. Sweeping the dust to under the carpet!

If there is a Co-operative Bank failure, it will be the funeral of the depositors and the respective State Governments.

Sunday, November 4, 2007


Colossal loot and plunder of public money

Indian Banking Industry works without transparency. Orissia is a dark State, just as Africa is a dark Continent. Nobody knows and cares to know what happens in Orissa.

Here is a link to the Statesman, Electronic Edition dated Nov. 5, 2007.

The CPI (Communist Party of India) is urging our Prime Minister, Shri Manmohan Singh, to investigate into what is happening in the Debt Restructuring Scheme for ICCL (Indian Charge Chrome Ltd.). According to CPI, banks are goging to suffer a loss of Rs. 2,300 crore (Rs. 23 billion or nearly half a billion dollars).

The amount is quite sizeable. The Central Government cannot aquiesce to what the Consortium of Banks led by IDBI is doing?

Whether Public Sector Banks in India function autonomously or not, when huge amounts are written off, the Union Cabinet ought to have discussed and thereafter placed the papers befoe the Parliament. Why it is not happening? The Union Finance Minister, washed off his hands indicating that he was not a party to the merger.

Wednesday, October 17, 2007


Our Finance Minister, to be on safe side, is engaged in cautioning small investors against the booming Sensex.

He must first caution himself . He seems to be under an erroneous impression that funds are flooding into the Stock Exchanges by true foreign institutional investors. They may as well be true Indian funds ciphoned by bureaucrats, politicians and industrialists re-remitted through Mauritius or other tax havens. Surplus funds of Public Sector Undertakings and Provident/Pension Funds, or even working funds of Public Sector Banks may be finding their way into Stock Exchanges.

The truth will come out when Stock Exchange bubbles burst. Stitch in time saves nine later.

Wednesday, September 12, 2007


The US wants us to go for Nuclear Energy and import their outdated nuclear plants. We blindly take them. I am constrained to suspect that our officials and politicians were bribed to accept the nuclear fuel and the plants. Otherwise, why the PM and the Officials ignore the Indian Parliament? Why they are in such a hurry? One only hopes that our getting sold out is not true.

Now, let us see how US is promoting the use of solar energy by its citizens, though theirs is a cold country and there is scarcity of sunshine. Here is the link to Forbes:

How aggressive the solar energy programmes are! The residences generating surplus power can even sell it to the Grid and earn US Dollars. There is a straight 30% tax concession on the capital investment.

Why we do not emulate good things from US? WHEN WILL WE LEARN?

Sunday, September 9, 2007


Prime Minister Shri Manmohan Singh used the platform of the birthday celebration of Shri Balram Jakhar, former Union Minister of Agriculture, to drive home indirectly, that we should not dither from the 123 Indo US Nuclear Agreement.

"... If we remain divided, defensive, disruptive in our discourse, our children and our grand children will not forgive us. They will find us wanting in the scale of history for not having had the courage to grapple with the real challenges of our time.

That is what leaders like Indiraji and Rajivji tried to do and in whose attempts men like Jakharji played a vital role. They led India forward through difficult times of uncertainty and change. We must all seek inspiration from their effort and courage and not shy away from dealing with the challenges that lie ahead. Our people expect great things from us, for that is why they still have faith in the institutions of democracy. The world is looking at India with renewed hope, as it did in the first decade after Independence. This is, I believe, is India’s moment, let us not dither; let us not shy away in fear of some ghosts in our mind so that India may truly make its tryst with destiny. ..."

He tried to praise Mrs. Indira Gandhi and Rajiv Gandhi like any other petty Congress leader.

About children and grand children not forgiving: They may not forgive the PM for ditching India into a unilateral agreement which does not even provide for arbitration in case of disputes.

About ghosts: PM must reply why US did not honor the 1963 Indo US Nuclear Agreement unilaterally?

If the PM really wants that future generations to remember him with gratitude, he must gather all the CSIR and Indian Institute of Science fellows, IIT beards before him and venture to produce 25,000 mw of solar power by 2020. They are squandering thousands of crores of people's money without any real service to the Nation. If Thomas Alva Edison can light an electric bulb after a thousand failures, why Indian scientists cannot do it even after 60 years of independence?

I furnish below a link to PM's speech referred to above for those who are interested.

Wednesday, September 5, 2007


The SEBI has directed the closure of Hyderabad Stock Exchange for its failure to demutualise its shares.


This seems to have left the shareholders of Companies which listed their shares only at HSE, in a lurch.

With the development of Computerised Online Trading at BSE and NSE, nowadays investors or brokers do not seem to patronise the fifteen or so Regional Stock Exchanges in the country. Ultimately, the Regional Exchanges may have to dissolve themselves in BSE or NSE Network. In this context it is difficult to expect non-broker uninterested investors to pay for investment in Regional Exchanges. Water does not flow upstream. SEBI has to find alternative solutions without diluting its original intentions.


The news reports indicate that Mr. Mukesh Ambani is the highest salary earner in India with Rs. 247.8 million p.a. or about USD six million.


1. Separately, he and his inter-corporate investment Companies earn millions of Rupees as dividends. The salary of six million dollars he gets may be a pittance for his income. But it leads to competition among CEOs of other Companies run by family princes.

2. Mr. Mukesh Ambani is only a family scion who succeeded to his father's throne. Though the Board of Directors might have elected him as the Chairman, and the shareholders might have approved his remuneration, it is difficult to say that the shareholders might have deliberated in length and applied their minds. Public Financial Institutions have substantial stakes in giant private sector companies and they send their representatives to Board and Shareholders Meetings. It is difficult to say whether they would have spoken out their minds and what was the brief given to them by the Govt. or the Govt. Institutions.

3. In Sultanates and Moghul empires, Princes used to be sent as Governors to the States and their mettle used to be tested in suppressing rebellions by Sardars and local fiefs. In business empires also, princes and princesses who complete their Business Degrees from prestigious schools are immediately inducted into their family Companies as executives or executive trainees with an ostensible purpose of learning the tricks of the trade and also assist the father and uncles.

4. Will paying high wages to CEOs and directors, reduces their tendency to cut corners or receive under the table commissions in purchases by the Companies? This is a multi-billion dollar question. Will their associate Companies stop robbing the Group Companies in handling contracts granted to the associates? This is only a question of speculation, because none of the group Companies will disclose nor the Government will care to check. If Corporate corruption could be minimised by approving open payments, there will at least be a facade of transparency.

Saturday, September 1, 2007


This is in continuation of my Review No. 14.

I furnish below a link to the full speech of the Prime Minister at the Valedictory Function of the Textile Millers Meet.

Excerpts from the speech: "It is a misnomer that handlooms have a bleak future. In fact, as incomes rise, handlooms can carve out a niche space for themselves, generating better returns for our weavers. The challenge is to improve them technologically, to provide greater design inputs and to have improved marketing channels. Private industry can be a major partner in enabling this transition of handlooms from low value to high value products. The Ministry can work out appropriate Public Private Partnership models for enabling this transition. "

This blogger's comments:

This part of PM's speech for the handloom sector is only a lip-sympathy filler. He wants the handloom weavers to wait with starving stomachs till the incomes of the people rise and they have the capabilities to buy handloom goods. He wants the Private Sector to make them technologically uptodate. Will they do? In the meantime, if the weavers die? Handloom/Khadi Sector's future is going to be extremely bleak, notwithtanding PM's promises.

The PM speaks of billions of Dollars. Excerpt:

" ... In addition, I am told that the Ministry of textiles plans to create Investment Regions for the Textile Sector. The phenomenon of agglomeration is quite visible in textiles. Such investment regions can reduce transaction costs and enhance competitiveness. Concentrated, contiguous regions with high quality infrastructure and covering the entire value chain can help obviate, to an extent, the burden imposed by multiple levies, high power costs, bottlenecks in shipment and delays in legal clearances. They can become textile hubs with billions of dollars of investment - both domestic and foreign. Developing such regions in a Public Private Partnership mode will enable leveraging of government investments in these regions. The Ministry should finalise this proposal at the earliest. ..."

This writer's comment:
We can see the PM's eagerness for the Investment Regions -- to pump billions of dollars. Naturally, there will be gifting away of agricultural lands to the industrialists both domestic and foreign. There will be abundant tax concessions and more sops to them. Empires are to be created, built and given to them. Otherwise they will not come. But the poor weavers will have to wait, because there is nobody to lobby for them. Here, the PM does not say "at the earliest". That means, the Textile Ministry can sleep in peace.

Quote from the PM's speech:

"...Our government is committed to facilitating the long term growth of the Textile sector. We have reformed the domestic taxation system to encourage growth and value addition within the country. The fiscal duty structure has been rationalized and excise and customs duty rates have been reduced. Except for the mandatory excise duty on man-made fibres, the entire value addition chain has been given an option of excise exemption. We have de-reserved the garments, hosiery and knitwear sectors from SSI restrictions. ..."

This blogger's comment:

Assurances galore. Will the Textile Mills be satisfied?


RBI jubiliantly announced that inflation rate during the week ended Aug. 18, 2007 was just 3.94%. It found that prices of fruits have gone down by 0.6%.

Does RBI know the grass roots and ground realities?

RBI's principal function is to enforce Banking Regulation Act and Reserve Bank of India Act. A Joint Hindu Family Business in Andhra Pradesh which is not authorised to collect deposits from public as per the law, mobilised nearly Rs. 2500 crore through its offices in more than one State and lost Rs. 1200 crore in accumulated losses. RBI did not know or did not chose to act! This may be function of a Department which is different from the Department which collects price statistics. But then, if there is

perfunctoriness in the main function itself, can we expect meticulousness where extreme exactitude is not expected?


Dr. Rangarajan, Chairman, PM's Economy Advisory Board is in a lecturing and preaching mood, as ought to be for a former RBI Governor.

The Ministry of Textiles and the Textile Industry conducted a brainstorming session to discuss the falling trends of Indian Textile Exports, in the context of appreciation of external value of Indian Rupee. Naturally the Textile Millers expected some sops.

Shri Rangarajan advised them to use the appreciation of Rupee as an opportunity for importing modern machinery and technology. A la the IMF way, he found some structural disabilities in the textile industry's functioning.

The following problems P1 to P6 and solutions S1 to S6 are this blogger's views. These are not the views of Dr. Rangarajan.

The Economic expert does not discuss the real problems of the textile environment in this country, like a seasoned bureaucrat.

P1. Half the people of this country do not have money to buy two pairs of shirts and trousers for males, or two sarees for females. (It forced Mahatma Gandhi to move like a half-naked fakir).

P2. Thousands of weavers in the country die of starvation, but the Economic Advisor is not worried.

P3. The economic adviser is worried about the withdrawal of safeguards in the textile importing countries.

P4. Powerloom sector is also facing crisis.

P5. China dumps its textiles into India indiscriminately.

P6. Indian lifestyles have changed. In spite of giving good rebates/discounts/subsidies by the Government, the people are not likely to buy Khadi/handloom goods. It is a hard reality and harsh truth that handloom/khadi textile sector has to die slowly.


S1. Mill Sector should absorb the handloom/khadi workers by training them. In case of very old untrainable workers, Mills should contribute to a Pension fund and pay SUBSISTENCE to the starving. Mills make profit at the cost of weavers, hence they have a corresponding duty to feed them.

S2. Govt. has a duty to protect the Mills by banning textile imports from China.

S3. Notwithstanding what the WTO or GATT or some other multilateral agreements may say, the Govt. must ban textile imports from all countries.

S4. The Govt. should buy all the cloth produced by domestic mills and sell to the poor Indians at cost price + reasonable profit.

Dr. Rangarajan should first serve the Indian poor, Indian weavers and domestic mills. His duties to the WTO and IMF can be performed later.

Thursday, August 30, 2007


Consequent on the fierce bomb explosions at Gokul Chat (an eating house) and Lumbini Vanam (A park and Laser Show Theater) in Hyderabad on 25th Aug. 2007 in which nearly 40 people were killed by terrorists, the Malls in the City are having shivers. The estate owners and business owners nowadays have sleepless nights.

The Government Officials, Builders and Real Estate Promoters are afraid that the explosions will have a fierce negative impact on fresh arrivals of investments into the City.

ADDED ON OCT. 21, 2009
Pubs and wine shops are doing great business in India, notwithstanding the explosions. Shiver and drink! Drink and shiver!


The Indian Stock Markets cry on and cry off. When they cry off, they quote the reason "GLOBAL SUB PRIME LOAN CONTAGION" .

This is just passing on the blame to somebody else.

--Withdrawal of funds by foreign investors by selling scrips, because they require them to fill their losses in the Sub-Prime Loan sector.
--As if the sub prime market loans are the exclusive preserve of only the American institutions. Financial institutions all over the world including Europe and India have sub-prime market loans. Globally, losses take place quite naturally.

In India also, the position is not different. Indian Banks classify their large industrial and trade loans as prime, as per their custom. Their losses in the large trade and industrial portfolio could be quite significant, albeit they may be undiclosed. For the same reason they shifted to retail personal lending, particularly in Housing Sector. But the Banks which lent heavily to housing should face the problem of inflated estate prices. The inflated prices of house-plots and flats is a viscious circle and bank funds could be locked up when the borrowers fail to pay because rental incomes are low and there may be nobody to buy finished houses/flats owing to high registration fees and taxes. Besides, Indians blindly believe in vastu (pronounced vaastu - a concept that a house plan can give auspicious results depending on size dimensions and directions of rooms, amenities like fire, toilet, water, dust bin etc.)and do not prefer second hand properties as they rarely match the vastu needs, unless the properties are sold at extremely low prices in relation to market. Hence there is a danger of bad and doubtful debts, whenever lending is made at inflated prices, notwithstanding the spiralling increase in real estate values. However, the retail house loans are better than industrial loans in terms of quality of recoveries. In case of industrial loans, particularly the working capital loans, the repayments are only book adjustments made by enhancement of loan limits. In a strict sense, they are never recovered. Even term loans can be shown as recovered by granting fresh working capital advances and adjusting a part of it towards servicing the term debt.

Indian Stock markets should, therefore, try to stand on their domestic legs rather than clamoring for foreign buyers and investors. Indian investors both small and large, should learn to invest for dividends. By forming associations they have to participate actively in the management of the Companies, sending their representatives to the Board of Directors. They should not become buyers and sellers of sameday type . By becoming oneday investors for a Company, they will be behaving like those visiting brothel houses. Modern customers and prostitutes do not have lasting relationships. It is the bane of Indian Stock Markets.

ADDED ON OCT. 21, 2009
Markets are glowing now. They take the credit for themselves. Of course, the Government also will claim credit for its policy initiatives.

Tuesday, August 21, 2007


The SEBI (Securities and Exchange Board of India) has a proposal to start a Self-Regulatory Organisation (S.R.O.) for Financial Advisors (Broking Houses, Financial Advisory Firms, Finance Media etc.). What for? Anyway, the idea will not work.

It only shows that SEBI is trying to soft-pedal and shirk its own responsibilities. The GOI established SEBI because the Reserve Bank of India failed to regulate the Financial Advisers facilitating frauds by unscrupulous brokers like Harshad Mehta, Ketan Parekh. The Company Law Board, RBI, SEBI, Enforcement Directorate and numerous other organisations have sharp teeth to bite the Financial Advisors when the fraudsters are on the prowl. Yet, nobody does anything. A new institution is started whenever a scam takes place.

Associations and Chambers in India are like gambling houses dominated by big operators. Do they have any traits of self-regulation? They neither like self-regulation or regulation by others. Mr. Manmohan Singh has promised them de-regulation.

Friday, August 10, 2007


The US President, George Bush urged the Congress to concentrate on discussing budget and finance.

The powers of the American Congress are mostly limited to cutting allocations. And Bush is asking them to look into the budget. In Indian Parliament, the Accounts of different Ministries get guillotined as a matter of routine (they are treated as passed without discussion or voting). No MP will insist on discussions of accounts of Ministries, except a perfunctory look at tax concessions. The MPs do not bother about the people's money.

Tuesday, August 7, 2007


The Government of India claims that India is experiencing negative inflation.

Zimbabwe is known to Indians more for its cricket. It has recently unveiled its Zimbabwe Dollar 200,000 currency note. Said to be Approx. equal to USD 13/- approximately enough to buy a few necessities. The fate of Indian Rupee is also same. With just one hundred Indian Rupee note in our pocket what we can buy today? Someday we may need an Indian Rupee 200,000 currency note in our pocket. Anyway, not far away indeed!

Thursday, August 2, 2007


According to a McKinsey Global survey, Corporate outsourcing from low price economies will fall and a Companies may source from the country in which the Companies' Head Quarters are located.

If this really takes place, the asymmetric growth which has taken place in the economies of Andhra Pradesh and Karnataka will taper out, and the economies of the two States will reorient.

ADDED ON OCT. 21, 2009
Andhra Pradesh and Karnataka are experiencing loss of revenue from registration fees and value added tax. Reason: Slow expansion of IT units and stagnation in the salaries of IT employees, resulted in slow down of real estate business.

Thursday, July 26, 2007


The US President Bush proposes to amend their tax code allowing more tax concessions for health insurance. He is worried about high health care costs of uninsured persons.

Indian Cities like Bangalore, Chennai, Hyderabad, and Tiruvanantapuram have well developed private health services and infrastructure. US citizens can use them at 25% of the costs in US. Instead of nuclear energy co-operation which lacks mutual trust, the Indo-US co-operation in healthcare sector offers amelioration to aging American population and employment to poor Indians. India is developing highly uptodate medical education and hospitals with latest equipment.


French President Sarkozy is worried about under valuation of the Chinese Currency Yuan. He wants to hold talks with China.

Did India allow external value of Indian Rupee to go up, under pressure from France? Has the G-8 interview with Manmohan Singh been used to armtwist him and comply?

Saturday, July 21, 2007


The Telegraph reports that India is building 50 million sq.ft. of mall space.

India is suffering from "MALL-ARIA" . The Marxist ruled Bengal cannot be an exception to the malady. Kolkata must be "MALLed".

ADDED ON OCT. 21, 2009
The organised retail Cororates are reporting hectic sales and profits. This is natural in an inflationary environment, where the Corporates can indulge in hoarding and black marketing.


Business Standard reported that Bank of Baroda is planning to acquire a Bank in South Africa.

Has Bank of Baroda done its work properly in India?

Friday, July 20, 2007


The Finance Minister is very confident that he can bridge the revenue deficit in Indian budget.

The heavenly miltch cow "kamadhenu" Service Tax is there. No need to worry. Even otherwise, he can levy a donkey service tax on washermen or a monkey entertainment tax on a beggar. There are the pot-bellied IAS Babus and the Consultants to guide.

ADDED ON OCT. 21, 2009
The 2009-10 budget showed that F.M. is keen on spreading the net of service tax on more activities.

Monday, July 16, 2007


In the Financial Express July 16, 2007, Shri Varun Jaitly's report "Post Harvest Credit is the new buzzword" appears.

Apart from what appears there, additional discussion:

1. Post Harvest Credit is not new to Banks in India. The Imperial Bank of India, the predecessor of the State Bank of India, made good profits by making produce loans against grain stored in warehouses. In the post-nationalisation era of banking (after 1969), produce loans became complicated owing to introduction of Selective Credit Controls. Besides, the Lock and Key System of lending adopted in those days, though safe for banks from one angle, the supervising Officers found that they were likely to be caught if the borrower played a fraud by stealing from godowns or stored some dummy bags/tins under a heap of genuine bags/tins. There is also a danger of borrower storing inferior goods of low worth while borrowing huge amounts by declaring exaggerated values. For example, he can fill some edible oil tins with water while the first layer of the lot are filled with oil. Physical checking even on random basis is sometimes not practicable. For high value advances, the Banks seem to think that physical verification of stocks is of little relevance and they use a system what is commonly known as "Special Hypothecation" where the borrower is allowed to have control of the goods and sell them in the normal course of business. Many large borrowers including industrialists who are hailed as "great today" have misused the system and diverted bank loans to inter-corporate investments, speculation, hoarding of other commodities, gold and real estate transactions.

2. India though ostensibly shows a rate of inflation of about 5% in its official bulletins, the actual rate of inflation is very high and spiralling. People find their income shrinking every month with little to spare for essentials. Now, the post harvest credit is an opportunity for hoarders and black-marketeers to play with commodity prices. If post harvest loans are given to real farmers by linking them to the crop loans (pre-harvest loans) and rural godowns, the small and marginal farmers will benefit substantially. The private and foreign banks will never go to villages and finance extremely large number of small and marginal farmers. Simply, it is not their business goal of making huge profits with limited staff. Besides, they cannot use private collection agents to forcibly realise the loans from small and marginal farmers. It will result in a countrywide uproar and the Collection agents will also not come forward for low value-high volume business.

3. The lending by the foreign and private banks is going to be only at large Centres to wholesalers and hoarders who can build or hire godowns, show security, know the value of Bank loans for their aggrandizement and enrichment. They can satisfy the Bank Managers and their bosses in several ways and also help them in mobilising deposits from large family business houses.

There is, of course, a benefit or bane as one may view. Food Corporation of India will be gradually relieved from the burden of carrying huge buffer stocks of food grains. The Govt. also seems to have a vision of gradually disentangling itself from the burden of food subsidies. On the flip side, people will be at the mercy of the hoarders. The foreign and private banks can boast and gloat about their fulfilling the priority sector lending targets.

Thus there is nothing really great to coo about the post harvest credit.

Sunday, July 15, 2007


Indian Stock Exchanges are reaching soaring heights day by day, the Sensex having crossed 15000. Though it is somewhat an obscene term, there is a phrase in Sanskrit and Telugu which reflects the current position. Paraspara kuca mardanam which on approximate translation means two persons massaging and pressing the breasts of one another to get mutual satisfaction.

Swelling stock exchanges attract float funds from abroad with investments being made on short term for speculative purposes, without considering the production and marketing strengths and weaknesses of Indian businesses. This pushes the indeces further.

The brokers and the speculators operating in the Indian Stock Exchanges (both the Indian and the foreign) keep the share prices artificially high.

The speculators borrow heavily from Indian Banks ostensibly for industrial and commercial purposes, but divert the funds to the Stock Markets, as there is no proper supervision.

The Banks in turn owing to good demand for credit, keep interest rates high both on deposits and advances.

When Banks in India pay high interest rates, NRI and PIO funds flow to India abundantly. Besides foreign institutional funds rush into India. This raises the demand for Indian Rupee and the Indian Rupee appreciates independent of the export competitiveness of Indian exporters. The Petroleum Sector importers such as Reliance will also be happy because a strong Rupee reduces costs of their imports. A stage may reach when it will pay more to import than produce indigenously.

Then we cannot expect RBI to keep interest rates artificially low. Thus Indian stock and money markets are caught in a vortex of a typhoon.

The small investors have to be cautious while buying and concentrate more on fudamentals and physicals.

ADDED ON OCT. 21, 2009
The markets have completed full circle.