Change of Guard at RBI

Urjit Patel’s untimely resignation throws up more questions than it answers. The government’s handpicked replacement to Raghuram Rajan has left midway after a widely reported conflict with the government. His replacement is already being vilified for being an MA in history, as if economics is a part of STEM and not humanities. The usual suspects who painted Patel as a government crony during demonetization have now painted him as the Neelkantha who finally said no to poison. After Viral Acharya’s public acknowledgement of a rift, the financial press has had a busy couple of months speculating and vilifying the government for undermining the independence of the Reserve Bank. Unnamed sources are given more weight than official government spokespersons in order to make for juicy headlines and doomsday predictions.

change of guard

The truth though may be a lot more nuanced and a lot less forthcoming. Former RBI governors and deputy governors have acknowledged how spats between Mint Street and North Block are not unique. The novelty is the public nature of the row this time around which has given the financial press a lot more to speculate about. Urjit Patel’s resignation is no doubt a loss for the nation of a very capable economist and central banker who will leave a rich legacy for his actions on bank cleanups and taming inflation. Yet it should not be used as an excuse to gloss over any shortcomings.

It was going to be a tough task for anyone to replace the larger than life persona of Raghuram Rajan. Rajan was a very effective communicator, an ability which is very much valued for a central banker. Urjit Patel on the contrary was reticent and media-shy. He was touted as perhaps not the best communicator which led to speculation about government’s frustration at not having the ear of a trusted lieutenant. He was also accused of being unavailable to India Inc. which always makes markets jittery. But perhaps a more serious charge was a faulty inflation forecasting mechanism which has been overestimating inflation. Central bankers are often disparaged if inflation exceeds forecasts but in a developing country like India the contrary must also be viewed as a significant policy failure. The need for growth and jobs means that a calibrated tightening stance of RBI, when unwarranted, could spell doom. In a democracy, nobody gets away without oversight. Independence and accountability are two sides of the same coin. The Monetary Policy Committee’s most dovish member, Ravindra Dholakia, has long been critical of RBI’s inflation forecasting mechanism. Case in point being the recent loss of state elections for the BJP which can also be attributed to low rural inflation leading to depressed rural wages.

Amid this sentiment comes the 25th RBI governor, Shaktikanta Das who prima facie appears to be a yes-man appointment by the government of the day. Yet his credentials are promising and to write him off as a stooge seems premature and motivated. The markets have cheered his appointment with the Sensex posting heavy gains and the 10 Year GSec yield also falling in hopes of a change from calibrated to neutral stance of RBI and a rate cut as early as next year over falling CPI and economic growth. The rupee though has lost some of its value after Patel’s resignation. Fuel prices continue to stay benign even after cuts announced by OPEC. Narendra Modi must consider himself lucky if the trend continues a few more months as it will effectively ensure lower inflation and a smoother path to re-election.

There is wide ranging speculation as well on extensive farm loan waivers and bailout packages for rural India being brought about in an election year which can lead to slippages on the fiscal front. The government though has so far seemed confident of reaching its fiscal math; so much so that it had already reduced borrowing targets during the first half of the fiscal. Indian politicians have long been guilty of distorting farm economics and handling agriculture with a short term view that has meant more pain for farmers. Farm sector reforms have always seemed elusive for fear of alienating any number of vote banks. The current regime too has failed to bring about effective farm reforms that can ensure that market dynamics play a bigger role in Indian agriculture than upcoming democratic compulsions. They must now not slide down the path of populism like their predecessors did, which ultimately led to double digit inflation. Sensibility must prevail in spite of friendly faces at the helm of RBI and in advisory roles as CEA.


Will The Real Indian National Congress Please Stand Up

The Indian National Congress (INC) is branded as India’s Grand Old Party owing to the crucial role it played during India’s pre-independence era. Its leaders were the primary representatives of India’s populace desiring independence from their British masters. It attracted leaders from various walks of life, from various religions, various backgrounds, various castes and various religions. Its Presidents have been Bengalis, Britishers, Parsis, Muslims, Hindus, Brahmins, Men and Women. It had time and again shown that it represented a variety of interests and they all converged to the same goal – the betterment of the nation.

Yet one wonders, as to why a party with such a rich legacy has become nothing more than a rallying point for sycophants of the Nehru-Gandhi clan. Why is it that keeping all merits aside, the party is unable to look beyond a 47-year old youth leader, with at best a patchy electoral history. The answer is simpler than you think.

The fact is that the INC of the day is not the INC of yesteryears. It is not the Indian National Congress that had leaders like Subhas Chandra Bose, Sardar Patel, Dadabhai Naoroji, Lala Lajpat Rai and many more. The party has split time and again and the current version was founded by none other than Indira Gandhi. In 1969, Congress party President S. Nijalingappa expelled Indira Gandhi from Congress which prompted Ms. Gandhi to launch her own version of Congress called the Congress (R). In 1978, she further split this political party to form Congress (I), notably, the ‘I’ stood for Indira. When Gandhi first split the party in 1969, the original party under S. Nijalingappa was declared as Congress (O). This group later merged with the Janata Party in 1977. The Janata Party struggled after its government fell and was led by Subramaniam Swamy who in 2013 merged it with the Bharatiya Janata Party (BJP). The Election Commission decided to declare the Congress (I) as the original Congress prompting them to drop the ‘I’ since there was no other Congress party at the time in existence.

So what we now know is that the original Congress party split into two groups. One was converted into a personal fiefdom by Indira Gandhi and later by her family barring a few years when its leadership was not with the Gandhi clan (which the current leaders despise and refuse to acknowledge) and the other group merged with the BJP. So in some way, BJP may have as much claim to the INC legacy as much as the current Gandhi fiefdom has. But let’s forget for a moment as to who is carrying the torch of the real INC.

The issue is that the current INC is not a political party that was founded on principles of internal democracy. It was, from its inception (in 1978 and not in 1885) the brainchild of Indira Gandhi and has been used as a hand-me-down by the family ever since. There is no space for dissent or alternate views as it is controlled by the promoter family, so why should they have internal democracy. The BJP may not be an ideal democracy but at least it recognized the merit of an erstwhile tea-seller to make him the Prime Minister.

India’s Tryst with Cows and Lynching

The India of the day is viewed by many observers, within and outside the country as a Hindu Pakistan; ergo a nation founded on the false belief of the supremacy of a religion. We are now viewed as violent cow worshipping heathens who will do anything in the name of an animal. The truth though is hidden beneath layers of fiction and prejudices. Multiple new age left-aligned blogs and newspapers have come up that serve the sole purpose of portraying the BJP as a downright communal party for its avowedly pro-Hindu stance and portray Muslims as the victims of Hindu violence post the election of Modi.

There have been attempts to gloss over violence of Muslims against Hindus, as in widespread riots in Bengal, and the role played by other political parties in stoking communal tensions and delving into appeasement politics. The point being that Hindus are no more violent than they already were before the BJP came in neither are Muslims being victimized more than they were before. The public will always react to a narrative that the media creates. Blogs and websites that come up by touting noble ideals of freedom of speech are nothing but openly left aligned mouthpieces that are out to convince you that India has descended into an Emergency and that the nation has been overrun by criminal cow worshippers who will lynch you if you eat beef. By equating a nation that upholds its constitution and judicial values to a nation that has descended into Emergency, the journalists are either propagating their stupidity or are trying to convey their anti BJP credentials.

Fact is that cow-related violence is nothing new in the subcontinent. A vast majority of Indians (93.4 % to be precise) as per NSSO 2011-12 data are non-beef eaters. Cows are revered in Hinduism not only on account of their religious significance but also their economic utility. According to Martin Harris, an American anthropologist, India’s rural economy is dependent on cattle. Cows provide milk, their dung when dried serves as fuel, and they are in Harris’ words “Indian peasant’s tractor, thresher and family car combine”. Cows can survive in drought conditions and are symbols of wealth. More than being a symbol of Hinduism, cows are a source of economic wealth for any person who owns them, regardless of religion.

There have been well documented cases in Indian history of illegal smuggling of cows across state and national borders. It is this illegality that elicits a response from cow worshippers who are often distressed by the hurt caused to an animal they hold so dear, which is noble if done by an American animal rights organization (read PETA) but intolerant if done by poor rural Indians. No one denies that there are cases of violence, but these occur in the garb of cow worship and often called as alleged cow related violence perpetrated by Hindu mobs on Muslims with no hard evidence and only hearsay. Mob violence is an ugly truth in India and by linking it to cows, the media is doing the nation no favors. It is stoking a communal flare that refuses to die down.

What angers the populace is the one-sided reporting and the creation of a larger narrative that looks over other aspects of governance. When riots in Bengal erupted because of a facebook post that Muslims found blasphemous, no one talked about freedom of speech but when AIB puts snapchat filters of a dog on Modi’s image we are well reminded of our constitutional liberties and rights to expression. How come after attacks on Charlie Hebdo, Indians were quick to change their profile pictures to Je Suis Charlie, but at home, the recent riots in Bengal are covered as a conflict between Modi’s man (the Governor of the state) and Mamta Banerjee and not in the nature of violence perpetrated by Muslims on Hindus. How come an attack on Amarnath Yatris or that of lynching of Kartik Ghosh does not invite as much as condemnation from the popular media? The fact that you are sitting there scratching your head as to who is Kartik Ghosh proves the biased reporting. Where are the #NotInMyName protestors now? Are they against lynching in general or against lynching of Muslims only? The nation is no nearer to being a Lynchistan than it was before. The nation is no more intolerant than it was before.

Muslims and Hindus are victims of violence all the same. But by promoting a narrative that India is witnessing Hindu terrorism due to the BJP or Narendra Modi is lynching of the truth.

Are you ready for a Dutch Trump?

The general elections of Netherlands, scheduled to be held on the 15th of March, 2017, may seem unimportant, yet the Dutch hold the key to unleashing greater hatred and intolerance in the so called ‘civilized’ western world. Liberalism is to the Dutch what oil is for the US. Netherlands is literally the embodiment of liberal democracy with the country having legalized prostitution, abortion and euthanasia. They have a free drug culture and were the first nation to legalize same-sex marriage.
Yet, for a country marked by so many liberal firsts, it comes as a surprise that one of the favorites for the elections is a hardcore right winger, Geert Wilders of the Party for Freedom (PVV) who holds the distinction for comparing mosques to Nazi temples and the Quran to Mein Kampf.

The Dutch elections aren’t that complex. It involves elections to the House of Representatives comprising of 150 seats. The Dutch have decided to count the votes by hand after alleged hacking attempts by Russian groups. There are a striking 82 parties vying for these 150 seats making an outright majority for one particular party improbable, if not impossible. The Dutch hold the unenviable distinction of no cabinet having finished their term since 2002.

The belief that Wilders might get elected is indicative of a populist turn in the European politics that began with Brexit. It seems that the Europeans are tired of their capitalist, immigrant friendly societies. A potential Wilders prime minister, howsoever unlikely it may seem (even a Trump presidency was unlikely), could be the next step in the wars against globalization that have swept the West.

This resentment against immigrants is nothing new. Such resentment might actually be able to trace its roots to the Native Americans who must’ve been pissed off by the arrival of Columbus. However, after the acceptance of Donald Trump, it most likely isn’t politically incorrect to keep out immigrants. While the United States is a country of immigrants, the Netherlands has a significant native population which may feel that it is well off without immigrants. It is this ideology that is gaining acceptance around the Western world leading to greater popularity of right wing leaders like Geert Wilders. To be honest, Geert Wilders does have several characteristics that remind you of Trump. While he may not have talked about building a border wall, he does have a pathetic hair-do that is the only identifier that he needs. Wilders has proposed leaving the EU and the euro if he’s elected, leading to further fragmentation and break-up of the European Union that is already unstable owing to several nations vying for an exit.

If the opinion polls are anything to go by, it is the PVV that is poised to emerge as the single largest party. However, due to its unnerving anti-Muslim propaganda, it may not be able to stitch together a steady coalition. Riding under his own version of “Make America Great Again” i.e. “The Netherlands is ours again” Mr. Wilders has been rubbing the other parties the wrong way. Several parties have now outright rejected a coalition with Wilders’ PVV. If history is anything to go by, the PVV buzz always fizzles out on the Election Day. Yet, Mr. Wilders is not perturbed and has been vocal in his agenda to ‘de-Islamize Netherlands. What may calm the Dutch though is the fact that most polls conducted in December predicted the PVV to win around 37 seats. However, their current tally as per the polls seems to have leveled around 29-33 seats.

The current coalition of the conservative People’s Party for Freedom and Democracy (VVD) and the Labor Party (PvdA) under the Prime Minister of VVD’s Mark Rutte seems unlikely to take on an emboldened PVV. In the improbable scenario that they do manage to chalk up a coalition, keeping the single largest party (most likely the PVV) out of the coalition might be seen as going against the will of the people. It is PvdA, i.e. the Labor Party that is poised to emerge as the biggest loser as it will cede territory to the PVV and other pro-European parties.

If Wilders does end up winning the majority vote, an alternate coalition (one excluding the PVV) will be a complex one having no less than 5 parties, as suggested by Rem Korteweg, senior research fellow at the Centre  for European Reform (CER). Yet, not all is well, as the far left Socialist Party, which is apparently the third largest party in Parliament, has ruled out working with VVD due irresolvable differences. The increasing threat of Islamic terrorism posed by migrants is resonating with the voters of Netherlands who are already in acquiescence with Wilders’ propaganda.

For now though, it falls on the undecided voters to realize whether they are ready to fall in line with an anti-Muslim venom spewing candidate or maintain the status quo, which an increasing number of voters find unsavory.

-First seen on The Economic Transcript

Demonetization – The Rights and the Wrongs

As the nation comes to grip with the fact that their money has overnight become virtually worthless, one can’t help but wonder about the origins and consequences of such a move. By effectively wiping out 86% of the cash in circulation, the Narendra Modi government has created a cash crunch so terrible that it may take months for growth to bounce back. This is where the media opinion has acted as the executioner by looking at the problem from a short term and naïve perspective, not realizing the wide ranging ramifications it can have.

First of all let’s understand the basic reason for this move. As touted by the Modi government, this move is a fight against black money and fake currency induced terrorism. Note how the Kashmir unrest that was at its peak died down instantly with no purported truce between parties concerned. This is the greatest achievement of this move and some might feel everything after this will go downhill. Now the fight against black money is a lot more complex than any of us can imagine.

It’s been said that the money is not a stock but a flow and this is not an effective way to target black money. However, one must realize the amount of political capital that Narendra Modi has at stake due to this move. This move hits hard at the middleclass traders whose businesses are essentially undergoing a recession as people begin to postpone conspicuous consumption. This is the principal vote bank of Narendra Modi and this move has the ramifications to upset this class and turn them against this government.

If Narendra Modi has effectively gambled on his chances of getting elected again, one must realize the amount of planning and thought that could have gone into the action. The government is not stupid. It has the vast experience and knowledge of the tax authorities and the Reserve Bank at its disposal. It would be childish to assume that the government has no idea about the loopholes in this action. As I hear from the community around me, people with reach have effectively managed to convert this money into gold, real estate etc. Others have found ways through commission agents to convert their old notes into new notes by paying the same amount as they would have if they had honestly paid their taxes before. Therefore, even though they get to keep their money, it is still unaccounted and they have ended up losing as much as they would have if they had been honest about it. Also it can come back to nip them in the bud.

Chances are we shall soon see action against other means of stashing this illicit wealth. If that does not happen, this move could be considered a mediocre success as far as curbing black money is concerned. Then again, politics is a game of optics and illusion whereby Modi is showing that he has the balls to take action against black money whether that happens or not is a completely different issue. This sole display of a 56 inch chest can garner him several followers.

Let us now move ahead to the way this move has been received by the country at large. Several media reports talk of the situation as an economic emergency. Almost all sources of media have decided that this move is anti-people and anti-poor. What they fail to grasp is that while they try to win this battle, the government has already run away with the war. No matter how many interviews, testimonials and alleged deaths are shown, the fact remains that the populace has at large taken this as a sacrifice for the greater good and a large majority has supported this move wholeheartedly in spite of the hardships faced. A major reason for the poor people supporting this move is the feeling of schadenfreude that they get as they for the first time see the rich industrialists running around to save their money.

This brings us to another problem in the Indian economy. The fact that a poor person can experience joy due to the suffering of the rich in spite of the fact that he himself must bear the pain for no fault of his speaks volume about the hatred and dislike of money. If India wants to project itself as a vibrant and open place of business, it must take note of the socialist behaviors of its masses. If the rural poor abhor their richer counterparts so much, one wonders whether we can really industrialize ourselves. What this schadenfreude shows us is that the rural and poor India despises the ugliness of a richer lifestyle and this has proven to be the primary impediment to our growth in recent times. We must shed this leftist idealism and root out populism if we are to realize the dreams of the aspirational India.

Several people have blamed the government for ineffective planning and faulty execution. For this move to have any significant impact, the element of surprise was of foremost importance. If anyone got wind of such a move, it would crash before taking off. Not to mention the government would be unable to postpone it as the common man would have already got an advance warning. By recalibrating ATMs in advance or by bringing about a sudden spurt in printing of new notes, the government would have risked rumors breaking out.

Another criticism is that by bringing in the Rs. 2000 note before the Rs. 500 note, the government made a massive error since no change could be found for the higher denomination note. Yet if you think about it, by printing in advance a radically different 500 rupee note when another note of the same denomination was in circulation, the government would risk rumor mongering. The same cannot happen with a brand new 2000 rupee note. Also, it takes the same time and effort to print a single note, whatever denomination it may be. By introducing a note of higher denomination first, the government can bring liquidity in the market faster as it can print 4 times the value in the same amount of time by printing a 2000 rupee note. So instead of having no money due to ATMs running dry people face only a little hardship because they cannot find change. At least they have valid and legal tender money. As far as the move to introduce a new 2000 rupee note is concerned, even I have my reservations. Although economically it makes sense as the cost of the note will be several times lower than its face value.

Finally to round it out with the medium and long term benefits. Real estate prices are sure to see a drop due to reduced liquidity leading to preference for banking transactions. The economy will definitely see a drop in inflation as people run out of hard cash to make purchases. It promotes and inculcates a habit of engaging in digital transactions for as many people as possible. It also ends up as a valid successor to the Jan Dhan Yojana so if you did not open a bank account voluntarily, the government is forcing you to open one now. Also the money that doesn’t come back to the banking channel effectively reduces the liability of RBI, although I shall not go into the technicalities of it as it is still vague as to whether this can be transferred as dividend to the government or not. Terror funding has definitely taken a hit and the menace of fake currency has been halted.

In hindsight, one must say that this move must have been planned long back. The government started with promoting bank accounts for all, Aadhar cards for all and mobile transactions. The JAM trinity was a precursor to this move and one cannot ignore, that if you had been a part of this, you would not have suffered right now.

Is the NDTV Ban = Abolition of Free Speech?

If you’ve seen the news these past few days, you must be aware about the ban by the government on NDTV’s Hindi news channel. Yet another example of intolerance and an indication of the impending emergency under newly christened, Hindu India. It has been alleged that the government is restricting free speech and by controlling the media, it is restricting free speech in the vibrant democracy that is India. This charge is nothing new for the Indian government; it has faced numerous such allegations in the past over such “high-handedness”. But let’s examine the facts a little more clearly.


Diving a bit deeper into the issue, one is forced to ask whether the issue really is about free speech or not? The charge against NDTV India is of causing security concerns by airing live-coverage of the counter terrorism operation undertaken by the Indian forces against the terrorist attack on Pathankot air force base. It is the Cable TV Network (Regulation) Act under which such an action has been taken by the government. The charge that the order was arbitrary seems made up. The government followed due process by issuing a show cause notice to the channel and then forming an inter-ministerial committee to look into the charges. The channel’s representatives were given a fair chance to put forward their case to the committee before such an order was passed.

The first issue at hand is how did this entire issue become about free speech? It is the Indian Constitution that disallows such an act and it is purely related to security reasons and has no relation whatsoever to free speech. NDTV has received support across media circles and the media has effectively changed the narrative by focusing on free speech rather than national security.

NDTV then goes on to argue how information that it displayed was not harmful to national security and was already available in the public domain. It goes on to justify its stand by making petty arguments about how it revealed only vague details and in no way harmed national security. I’m sorry but since when has NDTV assumed the role of the nation’s national security advisor? Since when did we give power to mike-wielding TRP hungry reporters to determine what is and what is not harmful to the lives of the nation’s soldier? If NDTV feels that it has adequately analysed that its disclosures were not harmful to the nation’s security, why doesn’t it approach the honorable Supreme Court and attain a stay order on this ban? If it feels that it is being single out when actually all other channels were displaying the same information, it has all the powers of the constitution (the same constitution that mandates this ban) at its disposal to appeal against this “tyrannical” order by the government.

I doubt whether the government is engaging in a witch-hunt and has decided to punish NDTV just for the heck of it. One must examine the reason behind the constitution of such a law. This law was mandated by the botched up job that the esteemed Indian media did during the 26/11 terror attacks. Terrorist handlers from Pakistan saw the action on live TV and directed the terrorists towards actions that generated panic and positions of the security forces. A local politician trapped in the attack gave a live interview to a news channel thus compromising the hiding position of all those with him.

Such botch-ups clearly reveal that the media is incompetent to decide on whether it conducts itself in a manner that upholds national security or not. There is no iota of responsibility in these so-called journalists and any attack or criticism on their profession is seen as an attack on free speech and democracy itself. If the media desires to be the fourth pillar in the democracy and the upholder of values of free speech and expression, it must look into this word called Responsibility. It is their hunger for TRP that makes them bloodhounds trying to find a story. If the Indian security forces had allowed any reporter to enter the air force base during the attack I believe the reporters would have found a terrorist and interacted with them in their clichéd Takiya Kalam, “Aapko abhi kaisa mehsoos ho raha hai?” If free speech is important in a democracy, a rider must be imposed on its upholders.

The media must understand that it is not above oversight in any case.

Yes we suffer from Brain Drain. Here’s why it can be good.

As Indians, brain drain or more euphemistically called human capital flight, is something we come across quite significantly. Owing to our high fascination for reproduction, emigration was always going to be a big issue for us. More troubling is the emigration of a highly skilled workforce. However, such actions are rarely unjustifiable. People leave the nation for better educational and employment opportunities which is their right.

A large number of Indian migrants pick the United States as a favored destination, ‘The land of the Free and the Home of the Brave’. The Indian-American community has established a niche for itself and counts among several model minorities. “A model minority is a minority group whose members are perceived to achieve a higher degree of socioeconomic success than the population average.” It is principally the Indian Americans who are considered to be the most educated and wealthy of the Indian immigrants. And it is this diaspora which can contribute much more to India than it ever can by reversing this brain drain.

Indian Americans occupy chief spots in politics such as Louisiana Governor Bobby Jindal and South Carolina governor Nikki Haley (both of them being the most notable). Indian Americans also occupy key spots in international tech giants such as Microsoft and Google (Alphabet Inc.). A Pew Survey found that the median income of Indian American household is higher than any other Asian subgroup at $88000 against a national average of $49800. We Indians take a lot of pride in throwing around names like Satya Nadella, Sundar Pichai, Indra Nooyi, Nikesh Arora, etc. Yet it is time we ask how most of these IITians can give back to the nation. It is time the Indian American community contributes to India what a robust Jewish American community contributes to Israel.

Being a shade under 3.5 million, the Indian American community has a significant clout in academia and government. Yet just as the Jewish American community identifies solely with Israel, we Indians lack a unifying identity towards India. What works in our favor though is that most of these Indian Americans still have a large amount of folks back home and the Indians, wherever they maybe, pride themselves in having a highly rooted family culture.

It is primarily this soft power which Narendra Modi attempted to target in his Madison Square Garden address. Just like a robust Jewish lobby, the Indian expats must work towards forming an active Indian lobby. While such lobby groups do exist, such as the US-India Political Action Committee, their success has been limited considering the economic might of the Indian Americans. In contrast, Jewish lobbies have significantly influenced American policy making towards benefitting Israel in the Middle East. One cannot emphasize enough how such a lobby can benefit Indian interests now that India is vying for a bigger role on the global stage.

The Indian diaspora abroad can contribute significantly to the Indian economy as well by investing in India and sending back remittances. It is time that the government provides significant incentives to this community to mobilize the soft power it holds such as a dialogue on dual-citizenship for the expats making life significantly easier for them. The time has gone for right-wingers like Subramaniam Swamy to question the patriotism of Indian Americans like Raghuram Rajan. While the nation may still feel let down by the massive scale brain drain, effective lobbying for Indian interests is the best way the Indian diaspora can contribute to our growth story. To quote a cheesy cliché, “You can take the Indian out of India, but you can never take India out of the Indian”.

Raghuram Rajan: The latest casualty of Indian Politics?

As the Indian economy decides to take a leap of faith from the throes of sub-par growth to an era marked by stupendous growth, it is the rock and roll central banker that stands in the way. Or does he?


Raghuram Rajan, the awe-inspiring central banker is staring at the end of his term in September of this year with no evidence of an extension in sight. He took over the reins at the Reserve Bank of India in August of 2013 when inflation was sky high, growth prospects were well-nigh dead, the Rupee was in a tailspin and our hopes in a revival were as slim as the chances of a Donald Trump presidency. Since then, the wholesale price index has touched historic lows, the nation’s foreign exchange reserves have scaled historic highs and we have seen approval for eleven payment banks. The banking sector is churning for the better and hopes in a revival now look well founded.

It would be stupid to give credit for all this to Mr. Rajan. A lot of the credit goes to the Congress Party and Rahul Gandhi for being stupid enough to not get re-elected and for Modi to just show up on the scene.

Lately though, the Raghuram Rajan fanclub seems to be diminishing with the finance ministry being conspicuous by its absence. The BJP has unleashed its favorite bloodhound on Rajan, Mr. Subramaniam Swamy and I’m pretty sure Rajan’s not one to bite back. If all goes as per plan, Rajan might return back to the University of Chicago as a professor and Modi will get to put in another of his yes-men at the helm of the banking sector.

Mr. Rajan is not your everyday nationalist who is willing to put everything at line for the Indian economy. Yet, who is Subramaniam Swamy to put a question mark on Mr. Rajan’s nationalist credentials. One has no idea how the wheels of governance churn. It is not Mr. Rajan’s prerogative to stay here and fight the current regime tooth and nail. He should and will return to his cushy post abroad once the dust settles over his re-election. The question is, whether Modi and Jaitley want him to stay?

The stock market will show the nation that Raghuram Rajan is good news for the economy once it falls on the day a new central banker takes over. The autonomous Rajan is set to lose his job over his own opinions and refusal to fall in line with the government’s reading of what the economy needs. While disagreements are a good sign and no one wants conformity for the sake of it, but unleashing a hound like Swamy was a low blow from the government. While I derive utmost pleasure from the antics of Mr. Swamy in dealing with the Congress party, employing such tactics against a non-political technocrat who the government badly needs depict a lack of sensibility on the part of the government. It is unreasonable to think that Swamy is acting on his own motion. What has happened here is a tacit signaling from the BJP central command that Rajan is persona non grata and his handling of the economy is not in line with the government’s. To be honest, Rajan has had his job longer than Jaitley and Modi have and it was Rajan’s actions that have brought about a principal change in the banking sector and the economy at large before the Modi-Jaitley duo got a look in.

If Rajan decides to stay after the Swamy-show, it will be out of his big-heartedness. All that is possible if only the government realizes that Rajan is an integral part of India’s rise to being the next economic superpower and it is the combined efforts of a Modi-Rajan duopoly that will be required and not to forget an absolute absence of our left of centre friends, i.e. Congress, Kejriwal, Nitish, Mamata and whosoever harbors Prime Ministerial ambitions in the current political scenario.

Reservation for the Unreserved?

There used to be a time in this nation, or rather before we were a nation, when being from a backward caste would mean a destitute life deprived of even the most basic amenities. Alas, the tables have turned! Being a backward caste today has its fair share of benefits. Reservation in jobs, educational institutions as well as promotions is ingrained in the Indian system.


Indians have more or less accepted this as the norm and are grateful to the Supreme Court for capping the reservations to a maximum of 50%. Because when votes are concerned, equality and fairness conveniently disappear. Yet, this is nothing new for us. We have always been lackadaisical and have found our own ways to deal with this. Then there was this 22 year old lad that took the Gujarat political sphere by storm.

Gujarat is a widely diverse state, like any other in India, with numerous castes and religions. Among Gujaratis, Patels or Patidars are at the forefront. Traditionally being engaged in agriculture, Patels have been succeeding in various fora, be it business, politics or immigration. Today, this community is economically, socially and politically among the most powerful communities in Gujarat, if not the most. The Chief Minister, numerous MLAs and MPs are Patels. Their sheer population has meant that governments have risen and fallen based on their support. So it seems a little strange as to why this community is demanding inclusion in the OBC quota when they have everything any community could aspire to have. Mind you, if the Patels fall under backward caste, no other Gujarati community can claim to be forward or upper caste. So if Sachin Tendulkar was rated as a mediocre batsman then can Ishant Sharma be called a good one? In no parallel universe can a Patidar possibly be backward class however, that doesn’t mean that there are no economically challenged people in the community who maybe deserve certain benefits available to OBCs, but not the community as a whole. If Patidars acquire the status of OBCs tomorrow, what’s to stop other communities who are as it is not as advanced as the Patels to demand such a status? The precedent would then state that everyone else deserves it. So if everyone were supposed to get reservation then would that mean that effectively no one got reservation?

Now the facts of the case are simple. Patels, largely an agrarian and business community, have realized that education will be tomorrow’s currency. However, not only Patel youth but all general caste communities have seen their deserving and meritorious students missing out on educational and job opportunities due to the long overdue scrapping of the anomaly that is reservation. As a state policy, caste-based reservation has failed to fulfill the needs of the vast populace and has instead bred hatred and led to violence. The Patels are the first ones after a long time to have risen against this issue, however their stand currently is impractical and their methods violent.

The show of strength and sheer numbers that the Patels are showing has effectively said that they are a majority with might, so on what basis do they deserve reservation? Hardik Patel, the leader of the movement is effectively holding the government hostage in terms of re-election which threatens to give rise to more vote-bank politics. Violence in any form must be avoided and the destruction of property has tarnished the sanctity of peaceful protest. If the government capitulates, it will open a Pandora’s Box. The precedents would have wide-ranging effects not only for Gujarat but the nation as a whole with more and more demands from various communities. The ramifications of this protest, whether successful or not, will show that reservation’s sell-by date has gone. Caste based reservation was as it is faulty and wrought with issues aplenty. Maybe reservation on an economic basis makes sense but since that would effectively end discrimination and vote-bank politics, it represents a conflict of interest for the politicians of the day. The methods and demands of the Patels maybe questionable but the issue they raise is an important one, that which has prompted caste-based discrimination in this nation for decades.

Pakistan’s Peace Paradox

Pakistan’s obsession with Kashmir has meant that the valley has always remained a flashpoint over the decades. Peace has eluded Kashmir ever since independence and repeated blows have been dealt upon Kashmiris who require nothing more than peace and tranquil. In this turf war between these two nations, the sole sufferers are the people. While both nations allege violation of UN statutes by each other, the gunfire continues abated.

Over the years politicians from both sides have tried to establish friendly relations but in vain – most infamous being Atal Bihari Vajpayee’s trip to Karachi and the subsequent Kargil war, for which the erstwhile BJP government drew flak. Every time an Indian leader puts a hand of friendship forward, he runs the risk of being bitten by the snake that is the Pakistani Army. Talks often break down and the two nations often chide each other in public after such incidences.

Even after innumerable instances, India has not registered the fact that the civilian government in Pakistan is more for show than for actual ruling. Civilian governments come and go as the army pleases and while these governments may genuinely want peace, it is not at all in the interest of the army or the ISI. No matter how many peace accords one may sign with the government of the day, it is but a faux pas. The army always has the last laugh in Pakistan and if a Prime Minister fails to go along with the army’s wishes, they’ve got a coup on their hands.

The bonhomie displayed by Modi and Sharif at Ufa shows how Indian governments have no other choice but to participate in such photo-ops for the rest of the world to see that we’re trying to resolve our issues though mutual dialogue when actually covert actions have become the norm. As often quoted, most nations have an army, while in Pakistan it is the army which has a nation. Pakistan has never acted like a nation, for the benefits of its citizens but is a breeding ground for terrorists and anti-India activities. In these circumstances, peace with Pakistan is for fools. With ceasefire violations becoming more and more frequent, Pakistan has its priorities laid down. It is for us to decide whether we like to be treated like a tennis ball, being bounced on either side of the court, or we wish to hold the racquet once in a while just to see what it feels like!

For too long, Indian leaders have fallen prey to this cycle of appeasing Pakistani politicians, only to be backstabbed by the army. Then again efforts to reconcile take place ignoring the giant elephant in the room a.k.a. Pakistan’s sponsor of terrorism. Why must we continue with this pathetic little charade? The answer is simple. India is trying to orchestrate itself as the big brother in the neighborhood and that image won’t go out unless Pakistan remains unhinged. Dialogue with Pakistan is fruitless and will be. We must ensure that we do not give up our dignity in the hope for some reciprocation of peace.