The state of food security in India..

India has always been a country where the main occupation of the people has been agriculture. Still, India remains a country second only to the United States in the amount of land under cultivation. With such a great statistic it is expected that it should be able to at least feed its own population, if not be a net exporter of food. But it is not so. We are far from secure in terms of food. A litigation in the Supreme court of India prompted it to reprimand the government on the state of food security in the country. While huge amounts of food grains rot every year, still our country has the dismal record of having the highest number of malnourished people in the world.

The National food security bill (NFSB) which has been presented by the UPA government, and suggestions for amendments have been made by the standing committee is a good step. It mandates the government to provide guaranteed food to 75% of rural households and 50% of urban households. These households would be further divided into priority households and general households. While priority households will be entitled to 7kg rice/wheat per member, the general household will be entitled to 3kg of the grain per member. The bill also provides provision for hot cooked meals for the homeless, migrants and destitude. A special provision has been added for mandated nutritional meals for pregnant women. It would be worthwhile here to mention that the root cause for the malnourishment of a child happens when the mother does not get enough nutrition during the pregnancy. This provision of the NFSB seeks to correct that.

The standing committee on food has made certain suggestions to this bill. While certain suggestions have been made like doing away with the prioritizing of the households, and alternatively 5kg of grain to be provided to 75% of rural and 50% of urban households have been made, which are laudable, certain other suggestions like doing away with the hot cooked nutritious meal for the homeless, migrant, destitude and the provision for the nutritious meal for pregnant women, should not be accepted. The government should use its own discretion and be selective of which provisions of the standing committee are to be accepted.

Another criticism of this bill is that it does not address the root causes of food insecurity. While sweeping subsidies for food are being suggested, nothing is being done to nip the problem in the bud. The practices like biodiverse farming and watershed construction can really help a lot, they should be implemented in all states. The stores for organic farming products in Maharashtra should be an example for all. Decentralized farming and growing nutritive crops like millets should be practiced. Such practices will not only enable us to achieve the aim of food security, it will also make our farming more sustainable.

To sum up, a country having 217 million malnourished people is in dire need for food security. Although the NFSB is a good start, it is not enough. It should be supplemented with practices which perpetuate sustainable farming which does not deteriorate the quality of the soil. And the government should establish transparent systems like a computerized and modernized PDS. All transactions should happen in the most transparent manner under the watch of CCTV cameras. We need food security and we need it now. If  we are ever to make advantage of our demographic dividend, we need to to feed it first.

PSUs HAVE OUTLIVED THEIR NECESSITY AND SHULD BE DISINVESTED??

When India became a republic on 26^th January, 1950, the first Prime Minister of India, Pandit Jawahar lal Nehru had a vision for the Indian economy which later came to be known as Nehruvian Socialism. After 200 years of suffering at the hands of a foreign power, who came to the country masquerading as businessmen, he envisaged a socialist economy in which there will be barriers for the entry of foreign firms, the government will do most of the production with public money, and the benefit will go back to the people. It looks good on paper. But as the years went on, it became increasingly clear that the economic paradigm of Nehruvian Socialism had problems. No competition for the PSUs, less job creation, underutilization of resources and faulty allocation of taxpayer money came to be associated with it. But the public sector grew organically. By 1970s it was about one fifth of the total GDP and by 2004 one fourth of the total GDP. The number of PSUs has now increased to 242, with a massive total investment of Rs. 2,74,114 crore.

As time went on it became clear that there were a lot of businesses in which the government had no social goal to fulfil and it should exit those businesses. A lot of PSUs have been privatised since. But a lot of other PSUs have not been privatised. There are a lot of factors which may work against the logic of privatisation. There are social goals which a PSU can fulfil. One of those is keeping the prices in check. A PSU in any sector would ensure that if the other private companies form cartels and try to sell at higher prices, there will be at least one company to go to. There are a lot of sectors like banking, steel, coal in which the government operates not with the motive of making profit, but with the motive of fulfilling social goals. The government wants banks to set up branches in rural areas where the profitability might not be high enough to attract private players. There it needs PSU banks. Government needs guaranteed coal for the power plants even at the cost of making less profit. Thus it needs PSUs like CIL, which it can control by issuing presidential directives! It needs financially disciplined insurance companies to serve the needs of the people. Thus it needs insurance companies in both life and general insurance segment.

Given these social goals, the government will not want to exit from some of the sectors. But given the inefficiencies and non competitive environment which some of these PSUs operate in, is the resource and factor allocation really optimal? Should a private company, which operates more efficiently, is very competitive, gets more work done with less labour and capital, not get preference for the allocation of labour and capital? The truth is that a lot of PSUs survive on  bailouts which the government keeps providing them time and again. Air India is a case in point. A 30,000 crore bailout has been doled out to the erstwhile Maharaja last year, with no guarantee that the airline will operate efficiently. PSU banks are recapitalized time and again by the government. All this also creates a distortion in the sector where the private players are disadvantaged vis-a-vis their PSU counterparts.

The government had set a target of 30,000 crore to be raised through divestment this fiscal. So far it has been able to raise about 6,900 crore. In 2011-2012 fiscal year in order to complete its disinvestment targets the government tried a share auction of ONGC. Since during the whole day of the auction there was not much buying in the auction, the government had to summon LIC to pump in Rs. 11,426 crore and pick up a 4.4% stake in the company. Now one could easily make out that this is transfer of money from one hand of the government to the other. This fiscal too the government is going to set a target of 30,000 crore. It may achieve higher than the previous year because of the market rally. But still a lot of companies which the government has put up for disinvestment are not expected to attract too much attention from the investors. In such a situation what the government is left with is clever manoeuvring like the ONGC fiasco. Just recently 3 coal mines have been returned to NTPC ahead of its 12,000 crore disinvestment plan. How much these manoeuvres yield results remains to be seen. In September 2012, disinvestment has been approved in four PSUs; MMTC, Hindustan Copper, Nalco and Oil India.

So that brings us to the question. Is disinvestment such a big urgency that it has to be done irrespective of the prices expected? Well possibly no. Although it may so happen that in the next 20-25 years we may feel the need to privatise all the PSUs because they would not be able to compete with the private firms in their industry, but now is not the time for that. Also, the process of disinvestment has to be carefully planned. The PSUs have some social goals to fulfil. But when these huge behemoths are divested, conflicts of interest may arise between the interest of the shareholders and the purported social goals. The CIL v/s TCI spat is a case in point.

To sum up, disinvestment of PSUs can bring more efficiency into their functioning, but there are social goals which a government has to fulfil. So, the disinvestment process has to be done strategically by carefully selecting the sectors and the impact of the disinvestment on these sectors in terms of the conflicts of interest that might arise. Also, these huge behemoths hold a lot of resources and capital. If managed efficiently, these can actually earn a lot more revenue for our fiscally starved government.

OUR EDUCATION SYSTEM IS KILLING CREATIVITY AND INNOVATION

The purpose of education in a person’s life is to empower him, enable him and make him somebody who can contribute to the society. An education system which focuses on just facts and figures and ignores the creative instinct of the people would result in a world that is static in terms of progress and which lacks the resources the ever increasing population will need. In a country like India where providing even the basic primary education to all children is a challenge, the RTE (Right to education) act has come as a ray of hope. But given the size and scale of our country and the numbers of kids to be educated, the real challenge would be to establish an education system which not only provides literacy and knowledge, but also fosters creative and critical thinking among the students.

Even after growing at close to 9% for so many years, India has still not been able to create a system in which it is possible to provide free and compulsory education to all children. By World Bank figures United States of America spent 5.4% of its GDP on primary education in 2009 while India spent 3.4%. Given this huge difference in spending on education, it is not surprising that India lags behind in terms of innovation and technology. If the students are not given the basic primary education in the first place, they can never dream of becoming innovators. Not only is the primary education a problem, but the education that is given is also too focussed on facts and figures. Students are trained to pass exams, not to become innovators. The blame goes to the parents too. From an early age there is an enormous amount of pressure put on a child to score good marks and to outscore his peers. This puts an enormous pressure on the child to study for passing the exam and for scoring well. Even the laboratory infrastructure in most government schools is so dismal that the students hardly attend laboratory sessions. If India has to become a technological powerhouse, the change has to occur at the level of government schools. 70 % of the schooling in India happens in government schools, while the number is as high as 84% for rural areas. The RTE mandates all private schools to enter 25% students from families making less than Rs. 100,000 an year. But the real change has to happen at public schools which are plagued by teacher absences, poor infrastructure and lack of facilities.

Given the first condition of a good primary education is fulfilled, a student would need a good higher education. There is no dearth of engineering colleges in India. A lot of private engineering colleges are being opened with the intention of making profits, but a lot of them lack in terms of infrastructure and laboratory facilities. Even for those students who are interested in research and do pursue research, 40% have to go abroad for the dearth of facilities and research environment in our country.  Along with that, India does not enable its scientists to make revenue through intellectual property rights. Another indicator which shows our dismal record is the number of scientists in our country. While India has 7.8 scientists / 1000 of the population, the number is 180.66 for Canada, 53.13 for South Korea and 21.15 for the US. This shows that there is an urgent need for fostering a thriving research and development climate in our country.

The bulk of the spending for research and development has to come from the government. While R&D spending as a % of GDP is a dismal 1.25% for India, the figure is 3.1% for the United States. And the United States is a 16 trillion dollar economy in comparison to a 1.5 trillion Indian economy. So the amount of deficit that R&D in India faces is a big handicap and it is only natural that the bright minds would have to move to places where their efforts would bear more fruit. A Thomas Reuters study has shown that only 3.5 % of the global research output in 2010 came from India. According to the study, India ranks abysmally low in key sectors such as mathematics, engineering, computer sciences and agriculture. This is despite the fact that India has been an argi-based economy for too long, and now when it is supposed to be a service based economy, it is supposed to score better on computer sciences.

So the million dollar question is: Has the time come for our government to invest heavily in our innovators? Given the facts the answer can hardly be in the negative. Given the demographic dividend of our country, it is imperative to spend in education , R&D and vocational training very heavily. It is high time the government stopped doling out unproductive subsidies to people who do not need, and redirect that money for creating real assets in our country.

Our country needs a robust educational system at the school and university level, and to complement that it needs a strong research infrastructure to retain the minds within the country. Industry too has a big role to play. It can be involved at various level with the universities: in setting the curriculum, providing scholarships, investing in research infrastructure in top universities to name a few. Special zones can be created where Industry and relevant research facilities can be created along with incentives from the government in terms of tax exemptions and subsidies. Thus our industry expertise in areas like agriculture, computer science and technology can be successfully harnessed.

To sum up, a developing country can become a developed country only if it enables and empowers its citizens to learn, innovate and create, uses that innovation for real progress. Although we may lag behind some other countries right now in those areas, but with will and resolve we can overcome all hurdles and become a truly great nation of truly creative and innovative people.

GIVE AGGRESSION A CHANCE....

India was born on 15th of August, 1947 with the tag of a pacifist and peace loving nation. We had the values of Gandhi and the idealism of Nehru in our veins. A little bit of aggression was also there in our body in the form of Mr. Patel, but it was completely smothered under the "white" blood cells of pacifism. Given this tag we were always the ones who would respond in a war. Barring one 1971 when Indira Gandhi went all guns blazing, we were never the ones to start a war. We wanted to annex Kashmir and we did do that in the end, but not because of our own aggression but because of the aggression of our bete noire, which tried to do the same and provoked us. We have always needed that provocation and brinkmanship of our pugnacious partner to shake us out of our slumber.
Do we have that provovation now? Recently two Indian soldiers were killed in the Poonch area in Kashmir when a unit of the Pakistan army crossed the LOC, killed two of our soldiers, decapitated one of them, and took his head as trophy for themselves. Are we provoked?
Well we surely are. We are very provoked. How dare they come inside our country and do such a thing. We would never do such a thing. What should we do now? Well let's do what everybody says we should. Let's stop talking with them. We are very very angry. And well. Who talks with bad people? They are bad bad people.
So... can stopping the dialogue process be the only form of aggression we think of? Or wait. I thought of another one. Let's not play cricket with them. Bulls eye. This should work. It has always worked. Or has it?

We have at so many times in the history not been talking with Pakistan, not been playing cricket with them, sending them dossiers, condemning them for not acting against the perpetrators of acts of terrorism in our country and doing all sorts of pacifist stuff and what?  Here we are. One terror attack. A few years of no cricket and no talks. A resumed dialogue. And two soldiers killed. One dead and the other dead and beheaded. And what nationalists are suggesting us to right now? "Stop the dialogue process". surprise surprise.
So what do we do now? May be this is the time we started thinking out of the box with Pakistan. I was just reading some article in "The Hindu" which talks about giving some disincentives to Pakistan from comminting such acts. Something which would make them regret later that they did such a thing. For one we can rescind the "MFN" (most favoured nation) status which we gave them 16 years before they reciprocated. And what more? We can divert/ stop the flow of Indus river to Pakistan for a short while and provide them with a very big disincentive in case they attempt such a venture the next time. Well that would be the violation of Indus waters treaty which was signed between the two countries in 1960. But is violation of the ceasefire which was signed in 2003 not a similar thing? Well an eye for an eye does not necessarily mean a head for head. let's make it a violation for another violation.
What else can we do? Let's talk tough. We have been pacifist too long and man we are tired of it. Let our Prime Minister and Home Minister speak some very tough words on the international fora. Let us name and shame Pakistan. Of course one can always argue than we cannot possibly shame that nation anymore, but then still, we have been sick and tired of being conciliatory and diplomatic.
What about denying some of their cricketers/ singers/ artists visa when they want to come to India for playing/ working? Well I am not saying that we must completely ban their entry into India, but it is high time we had become both the employment provider as well as a punching back for Pakistan. Let us make them realize that we provide them with employment and they better fall in line if they want the status quo to continue.
There can be a lot of things which can be done. The same article that I read today in "the hindu" talked about building a "covert tactical armoury". What I have tried to suggest is very much inspired by that and is about my understanding of what a "covery tactical armoury" is. A tough stand with Pakistan is the need of the day. We can hardly sustain decapitated soldiers anymore. But the dialogue must continue and we must not go on a war, but we must also not appease a nation so malignant and sick. What we need is to send strong signals that it better cure itself and fall in line or there will be consequences. Not in the form of retaliation. But probably worse.

Early elections?

The last few days have been the most turbulent for the UPA 2 government. While the government seemed determined to push through with the reforms, all the other political parties were opposing them for their own reasons, which hardly overlapped.
Let's start with our own beloved BJP. BJP as a party would not want early polls. For one their leadership is deeply divided. A cold war between all the top leaders is on. Who is going to become the prime ministerial candidate is the million dollar question among the party cadres. While Modi has an appeal among the educated middle class, he is a polarizing figure which is going to shun away the secular allies like Niteesh Kumar who depend on minority votes.Well he may not depend on the minority votes so much but who would not like to get more votes and get a secure victory?? LK Advani would desperately want early polls so that he can fulfil his dream of becoming a prime minister. He would be 86 in 2014 and a young country might not want to be governed by a 86 year PM. So, he wants to do it at the age of 84 so that the country can accept him. Or so he hopes. Sushma Swaraj and Arun Jaitley (both more capable than the other 2 gentlemen) are not mere spectators either. Nitin Gadkari hopes that he might become the dark horse in this battle.
Now let's come to Momtadi's Poschimbanga... Or whatever.. Given Momtadi's wide appeal among hoi polloi, the opposition i.e. the CPM would be doing a political suicide if it pushes a third front right now along with SP and other smaller parties. The WB congress would want to place itself as the lone liberal centrist party in a state which has been so dominated by the leftist ideology and would possibly relish a breather from marxism/mamtaism.
A mid term poll would be Mulayam Singh's dream. (andha kya chahe do aakhe). But alas! Bhenji's here to spoil his party. And would he want his bete noire, Bhenji, to get closer to the Congress? hell no. Congress is all they have until an elusive third front finally obliges them. And given the political favours that they themselves need from the congress it is in their own interests to be in their good books. To add to that Bhenji would not want a mid term poll either.
And TDP?? Are you kidding me? They failed to win even a single seat in the recent Andhra bypolls while YSR congress teared into both the Congress and the TDP. So, that shows that the possible lead architects of a third front viz. Mulayam, Karat and Naidu would not either want a mid term poll or would want to be in the ruling Congress' good books. So, where in the hell did the third front come from? Well it is now very clear that any third front is not feasible right now.
A few parties would definitely want early elections. JD(U), SAD, TMC would desperately want to convert the popular support which they have seen in the assembly elections into LS seats. But given the political scenario in the country right now, that does not seem to be happening.
So, it appears we are stuck with the UPA. And fortunately a UPA - TMC is going to be a much better scenario than a UPA + TMC. And given Manmohan Singh's and P. Chidambaram's previous stints as finance ministers, they have showed their proclivity towards market reforms. It does not seem to be such a bad choice to stay stuck with them. Does it?

The reactive Indian

We have always identified our country as mother India. We have historically been a country bestowed with feminine attributes of peace, non-violence and tolerance. Even in modern Independent India we have not been able to escape that blessing or anathema, whatever one may call it. But that has instilled in Indian psyche an attribute of being reactive to the circumstances. The identity of being peace loving and tolerant has made the ordinary Indian too tolerant and accommodative.(yaha sab chalta hai). An Indian today is happy and satisfied, with corruption, with hunger and with delayed justice. He only wakes up when the last straw has been cast and the situation has become terribly unbearable to the limits of life and death.
The economic reforms of 1991, LPG as we might call them, changed the economic landscape of our nation and paved the way for us to become the second fastest growing economy of the world. But was it like that we suddenly came to terms with the economics of liberalization in 1991? No. It wasn’t the case. In fact the fastest growing economy in the world today i.e. China reformed its economy 24 years before 1991 in 1967, when it opened up its economy and dropped tariff boundaries. So, why did it take a huge BOP crisis to do those reforms in India? Why did it take something of such a large scale that we had to pledge 67 tons of our gold to the Union Bank of Switzerland and Bank of England to get a bailout deal from the IMF? The answer is simple. India is a democracy and in a democracy the majority opinion has to be reflected in the acts of the leaders, however competent, qualified and good intentioned they are. And the general psyche of an Indian does not permit him to act until and unless his daily bread and butter is not at stake.
We also have more recent examples to corroborate this observation. If India were given one single wish which could be fulfilled by a genie, there can be no doubt what India would opt for. Yes. We all want the corruption to go. We’ve always wanted the corruption to go. We’ve always wanted that genie. And well some might argue (including me) that we have got that genie now in the form of Anna Hazare who is going to lead us to become a corruption free country. But what did it take ? It took a 1.76 lakh crore 2 G spectrum scandal, 70,000 crore commonwealth scam, an adarsh housing society scam and a potential antrix deal scam for the good intentioned men of our country to say that they’ve had enough, and the people who have done these scams are going down. But then, is corruption new to India? Were these 2 G spectrum and CWG scams the first cases of corruption in the history of India. The answer is indeed no. But it took obscene proportions of scams to finally wake our good men up from their slumber.
We have always been aware of the presence of tainted people in Indian politics. This is not limited to any single political party. There can hardly be any party which can claim that no cases have been framed against any of its MPs or MLAs. In 2010, 11 MPs were caught in a sting operation on camera accepting bribes for asking questions in the parliament, of which 6 were from the BJP, 3 were from the BSP and one each from congress and RJD. We’ve had people like Pappu Yadav, who were accused of murder, contesting and winning elections until they were finally convicted and debarred. So what about the electoral reforms? That is still not on our list of upcoming legislations for the winter session. How long are we going to wait for that? Are we waiting for the day when there would be nobody to sit in the parliament and all our leaders will be behind bars, accused and waiting conviction?
An average Indian who is mainly concerned for his “roti, kapda and makan” can hardly be sympathetic to the airlines which are portending bankruptcy. But still that does not reduce the magnitude of the problem. All our public and private airlines have piled up huge debts, which has been a result of regressive aviation policies of the government. The aviation fuel prices, the airport parking charges and also the taxes on the aviation fuel are among the highest in the world, and which is crippling our airlines. But we might have to wait for a major collapse of a major airline, either public or private, to finally make our politicians to act.
So is it all doom for us? Is there no hope? Well fortunately there is. In this age of interconnected and globalized world where information flows freely, our young generation have showed first signs of activism. It was this activism which made the Anna Hazare movement such a huge success. It is this activism which now makes the government uneasy over every single piece of paper leaked form government offices because it knows that the young India is not going to take this anymore. Finally the first signs of a shift are visible from a passive and reactive India to an active and proactive India. And this opportunity should not be lost. This opportunity cannot be lost. We, the young generation, have to persist and not accept. We will not accommodate anything anymore. (yahaan kuch nahi chalta)

COAL INDIA AND BEYOND....

The government had set a fiscal deficit target of 5.5% for this year. But after the recent events in the market viz., 3G spectrum auctions and the IPOs of C.I.L. (coal India limited) and other Public sector undertakings to follow, the government may well achieve a lot better than that. The coal India IPO received such an overwhelming response from the investors that it baffled even the most optimistic. Such a response from the investors has set the stage for a very eventful 2011 in terms of IPOs and FPOs.
Initially the move of the government of pricing the share at 225-245 per share received a mixed response. While some were very happy from the price others were finding it to be too high. But then the price turned out to be just right attracting huge amount of bids. While Coal India intended to make 15,450 crore from the IPO, it received applications for 2,40,000 crores, 15 times of what it asked for. The government is hopeful of achieving its target of 40,000 crores this fiscal, of which it has already reached the half-way mark. Now, the government is contemplating disinvestment plans for 3 blue-chip companies viz. SAIL, IOC and ONGC. It may happen in the last quarter of this fiscal year.
While the correct and attractive pricing did the trick for government in this IPO, the pressure will be on the government to price the coming IPOs attractively and still correctly. This kind of fair pricing by the government will help in luring the investors who have been shying away from the market for so long as majority of IPOs in the recent times listed below the issue price and some now also quoted below the issue price. As per the Crisil Equity Research estimate there are at least 179 companies listed in the stock exchange where the float is less thn 25 % mark. At current prices, these firms may have to raise Rs 1.6 lakh crore if promoters sell their holdings and if they do so through sale of new shares, they may raise Rs 2.1 lakh crore, says Crisil’s estimate.
For a company divesting more than 25% of its share, 3 kinds of investors may bid for it. These may be Qualified Institutional buyers(QIB) including mutual funds and FIIs, High Networth individuals and Retail investors. They have a quota of 50%, 15% and 35% respectively. This is especially good for retail investors. SEBI has hiked its cap on investment from Retail investors from 1 lakh to 2 lakhs. For investing, the investors should mainly look at the P/E ratio of the company. If it is too high, then it means that the shares are priced high with respect to the earnings of the company. So IPO space is set for lot of action in the coming days but at the same time retail investors will have to be lot more cautious before they choose to invest on an IPO or FPO.