Slanted Journalism !

 

Slanted Journalism !

 

The business of a journalist is to distort the truth, to lie outright, to pervert, to vilify , to fawn at the feet of mammon and sell his country and race for his daily bread of what is about the same – his/her salary. You know this, I know it, what tom foolery to be toasting an INDEPENDENT PRESS ! We are the fools and vassals of rich behind the scenes. We are jumping jacks. They pull the strings and we dance. Our time our talents our lives our possibilities are all the property of other men. We are intellectual prostitutes.” John Swinton editorial writer of the NYT during 1860s.

-----

Mr.T N Ninan’s outburst is understandable. He is a celebrity journalist who is clearly not favourably disposed to the Modi government. In fact few Delhi celebrity journalists are. Therefore, diatribes are not uncommon. But ideally such vitriolic criticism needs to be backed by facts. Ninan’s essay ( https://theprint.in/opinion/why-modi-govts-rs-6-lakh-crore-monetisation-plan-is-a-walk-in-a-minefield/723564/ ) is bereft of research rigour and is riddled with information deficits, bordering on outright misinformation.

1. Ninan’s point is that this government has missed the disinvestment target. Point taken . But isn’t disinvestment a form of asset stripping ? So which government, corporate entity or individual resorts to assets stripping? Isn’t it only cash strapped entities that resort to asset stripping or in modern jargon – disinvestment ? Can targets really be assigned to such sell offs? Targets are after all an expression of value, whatever be the method of valuation, isn’t it? Doesn't expressing a target imply attributing a constant value for the assets? Sellers without exception are biased to a higher value. So are accusations of targets shortfalls really tenable, especially so when the author belongs "free markets" cult ?

However, Ninan’s point is fair, in the sense that the Rs 6 trillion or Rs 6 lakh crore in monetising public assets is a challenging target. But is it really? Seen from the telecom scam of 2008, when the public exchequer was duped of Rs 1.76 lakh crore in an airwaves auction or the spectrum auction, is it really a tall order?

Yet Disinvestment may be easier for governments. After all isn’t it easier to sell land than cultivate it and make it yield? This en effete is disinvestment.

Monetisation on the other hand would imply improving the return on assets. So it could essentially mean that the freebie regime that has been in existence for a long time goes. That includes free junkets, tax breaks , and toll exceptions including an end to all forms of economic elitism ! It, monetisation, is a regime of economic discipline. It implies that every rupee invested in the economy pays for itself, which could either be in the form of financial returns or economic returns.

Monetisation though is not a new. It began sometime ago, in case Mr.Ninan did not notice. If he is paying tolls, isn’t that monetisation? (But the preferred mode is digital. For far too long project operators that enjoyed political patronage or cronyism refused to remit collections into the banks that had lent money and imposed a charge on the revenues. Cash tolls allowed siphoning away off funds. The result was burgeoning of non performing assets. Digitisation of toll payments ensured collections are used to first settle bank dues as opposed to bleeding public funds. What was really outright pilferage of depositor from helpless PSU banks was choked in one go. But digitisation also ensured that the benefits of monetisation begin accruing as lenders recover their dues.

In the case of airports or ports sovereign assets were leased (BOT, BOOT, BLT and many more gobble de gook jargon), default risks are less. In ports and airports, governments collect a lease rental or a share in revenues. Land ownership remains sovereign. So is Rs 6 lakh crore a big target or is it really modest? One suspects it is the latter ! But if Ninan wanted to pick holes, here is one : For a Rs 225 lakh crore economy, isn’t Rs 6 lakh crore monetisation a scandal?

2.Ideally disinvestment option is beneficial only if there is value realisation. But was there any value realisation, past disinvestment when the monies were used to amortise current expenses? Governments hand hold, curate and then exit from enterprises once value is added to the nation. However when disinvestment was made even at less than international peers then to investors that included foreign institutional investors, was it a garage sale or a fire sale ? Didn't Editors like Ninan and his peers then hail the government effort as a great privatisation effort ?  Ninan refers to Air India : But is it really a failure or a reluctance to sell at a low value? 

Ninan needs to rejig his memory a little on Kingfisher. In 2010, KingFisher(KF) had a bloated paid up equity base of close Rs 4000 crore, without owning a sq foot of fixed assets! All of KF fleet was leased barring Mallya’s own executive aircraft .

Yet, when the KF carrier sought debt restructuring, it was done at Rs 64 a share although the airline had then already wiped its paid up equity clean, SBI had then opposed the terms of restructuring, but wasn't it Chidambaram ( Ninan’s and N Ram’s friend) and some in PMO who supported that valuation ? In a nut shell aren't they technically complicit in the Mallya heist of PSU bank depositor funds?

Given that kind of history of airline funding, should AIr India be subjected to that spurious method of "free market price discovery?" Air India after all already had an operating fleet of 123 aircraft less than 10 years old and a paid up equity half of what KF had in 2009.  So should govt go ahead with garage or distress AI sale and say “ Eureka “simply to proclaim disinvestment a success in the media?

Isn't understanding the reason for losses more important than putting up taxpayer PSUs for sale? Where one agrees with a PSU divestment is that governments need to stay out of micromanaging or operating businesses unless they are natural monopolies. Across the world isn't that the norm?

3.Ninan’s point on railway privatisation is interesting. Are there instances of railway infrastructure privatisation? The mistake most often quoted is British Rail. In the British rail privatisation, only the rolling stock, Trains were allowed to be owned/operated by the private sector. Some fixed assets were monetised for maximising rental collections. In BR privatisation model, The permanent ways or backbone remained firmly in government hands. Amtrack or French Railways remain firmly in public sector, with every small private equity components. Yet despite the so called private sector operational efficiencies, if Ninan had bothered to look at global railway systems with positive operating (OR), IR ranks among the few still with positive ORs.

In Konkan Railways, disinvestment is an option. If those who commented had even bothered to go through the website they, would know that IR holds only 51 per cent equity. The remaining equity is shared between Maharastra, Karnataka, Goa and Kerala. All these states have the rights to sell their respective stakes if they choose to do so. They haven’t done it because, KRC is a cash cow with huge hidden reserves. Besides any sell off of a portion of the equity will land up only with IRCON or IRFC, both cash rich organisations. Unlikely that foreign investors will ever be solicited. But is that what is worrying the so called private sector apologists or the reformists battalions?

As for the Depreciation Reserve Fund, isn’t it an above the line charge on IR revenues? So shortfalls in DRF are supplemented with fiscal funds, (that shows up as capital at charge increases in the IR finances) for creation of a public assets. For asset renewals and creation of new asset, IR were consistently asked to seek private sector intervention or through IRFC/IRCON (internal and extra budgetary resources) ! However allocation of tax payer funds are resisted for new infrastructure investments new rail networks citing fiscal concerns. Allocations for current expenditure ( pay commission hikes, absentee legislator salary hikes) though are cleared without so much as a squeak and no editor even sees any breach of fiscal discipline. It is called fiscal fundamentalism by left wingers, when it was nothing short of grand larceny!

Well a shift to the DRF charge from a historical cost basis to a replacement cost was suggested. This suggestion itself is about 50 years old. Yet that shift is fraught with risks. How does on assess the value of a future asset, perhaps a new generation locomotive that is still conceptual ? Besides what about the economic and financial fallout of a shift to replacement cost depreciation charge? There is a risk of negative Operating ratios. But if passed through directly could translate to freight or passenger fares hikes with an inflationary impact. Not to mention editorials on managing or mismanagement of inflation. The alternative would be an escalation in fiscal charge by way of transport subsidies!

Accusations of malfeasance make nice headlines, but how come none of these were mentioned before 2014? Ignorance or Collusion?

5. The reference to Vizhinjam port in Sothern tip of Kerala is interesting and in fact very amusing. Ports are in the concurrent list in the Constitution of India. The centre’s jurisdiction therefore applies only to the 12 major ports. Vizhinjam comes in the definition of minor ports and therefore within the jurisdiction of the Kerala state government. That makes Kerala the lessor , doesn’t it ? Isn’t it the lessor who is responsible for the lease terms then?

But then tendentious stories and half truths are hallmarks of India’s English language journalism, both general, and economic. Hollywood star Denzil Washington and one of the few actors endowed with a very sharp intellect once answering question said, “If you don’t read the newspaper you are uninformed, if you do read it, you are misinformed !” That in essence captures Indian journalism !

----

Reference : 

Ministry  of Railways, Explanatory Memorandum

–
The writer is a former journalist who washed his hands off the profession a while ago and shifted to the mountains. He now prefers to watch and enjoy the media circus!

 

General Smedley Butler in War is a racket :


“The bankers control the security marts. It was easy for them to depress the price of these bonds. Then all of us -- the people -- got frightened and sold the bonds at $84 or $86. The bankers bought them. Then these same bankers stimulated a boom and government bonds went to par -- and above. Then the bankers collected their profits. But the soldier pays the biggest part of the bill.”
------
The India-China stand off at India’s northern border near Sikkim, Doklam officially ended on August 27. At least that is what we are told by both parties. It may bring relief to many, but was it really a serious situation or a sham created to divert attention from other issues? There were enough reasons that point to the latter. But first, the prelude to the 'conflict'.

Media manipulation

The media build-up was considerable. During the last three months the Indian public, and maybe the Chinese public as well, were bombarded with videos, news reports and photographs circulating on social media and WhatsApp of soldiers glaring at each other, liberally spiced with fear and warmongering.

The crisis also overnight gave birth to international defence analysts putting out posts on blogs and media sites each day on respective military capabilities of China and India, about whose geographies they have little awareness. Some even went on to emphasise that China would come out on top in the event of a conflict. Others responded that the military capabilities were evenly matched. The discourse descended to obscene levels of warmongering. But at the end of 73 days, analysts were disappointed and maybe TV anchors were dismayed at being denied TRPs. Still newsmedia got their headlines, as both sides had backed off from the brink of a 'conflict'!

Ha Ha ! We took care of the journalists !

Was there ever a crisis in the first place? Soldiers glaring at each other are not uncommon. Perhaps soldiers pelting stones at each other were a little out of place, incorrect from the real politik perspective, when they should have been exchanging missiles! Yet what seems to have emerged is that both sides were actually exchanging Rum bottles (The Old Monk Rum made by Mohan Meakins brewery is a favourite among Chinese Military).

What really tells us that Doklam was pretty much nothing at all was the astonishing response of the financial markets to the stand off. There was no capital flight from the country either India or China. Normally one critical event that precedes a conflict is capital flight particularly into the U S dollar that is globally presently accepted as a safe haven. The elite money bags are the first to flee at the first hint of trouble. They move their wealth out into safe havens. Such Capital flights reflect in the official and unofficial  currency exchange rates.

Rupee response

First, the foreign exchange markets. The Indian Rupee actually gained strength against the US dollar at the peak of the so called crisis. This was despite repeated threats of conflict from Chinese government media. It was Rs 63.75 to the US dollar on August 2. A year and half ago, precisely in January 2016, when President Xi and Prime Minister were still shaking hands and exchanging pleasantries, the exchange rates had plunged Rs 69.

Many would argue that the official exchange rates could have been managed by the Reserve Bank of India. But unofficial rates too were at on a par with the official rates last month. Non-deliverable forward rates ( NDF - off shore markets for non-convertible currencies like India’s rupee) were priced at Rs 63.75, almost on par with the official rate. In January 2016, the NDF rate for the rupee ranged between Rs 69 and Rs 70.

Would the currency markets have been so cool in the event of a genuine conflict with a superpower? Rupee exchange rates would normally have plunged all the way down in unofficial market, or the NDF.

Derivatives trade

Second, we come to the derivatives markets. Most institutional investors cover their loan delinquency and default risks, especially after burning their credit portfolios in South America, Asia and Russia during the 90s.

Institutional investors use derivative products, especially credit default swaps (CDS) to hedge thier risks and is a form of insurance against delinquency or default by borrowers. These are financial products over which neither North block’s mavens nor the gnomes of the Reserve bank of India have any control.
The numbers are actually thought-provoking! In April 2012 the premium for covering a risk of $10 million ranged between $300,000 and $330,000. In August 2017 the CDS spreads were between $ 80,000 and $140,000. Since India has no direct international sovereign bond issues, issues by the State bank of India and the EXIM Bank reflect sovereign risk. The outer range is for the private sector and non-sovereign backed entities, especially ICICI Bank.

So the CDS spreads dropped, when they should have actually widened past 2012 levels, especially since conflicts escalate sovereign credit risks. Obviously few foreign portfolio investors expected any sovereign risks in the India-China staring or media slanging match. And it was not just credit risk insurance premiums that remained soft.

Shipping premiums 

A third indicator, shipping insurance premiums, also stayed soft. A conflict would have resulted in a jump in premiums, as insurers/reinsurers cover for potential losses from claims.

Since all the leading indicators stayed benign, the implied inference was that global financiers, who normally profit from such conflict situations, expected the situation to fizzle out. The reasons were quite obvious. Neither country was shopping or stocking weapons, fuel or commodities, which is what happens on the eve of a conflict.

Yet the media missed all these indicators and instead preferred to subsist on the spin and disinformation from “informed sources” or “highly placed officials”.
Who gains from this disinformation campaign and contrived crises? Was the Doklam crisis a media diversion for another looming financial or economic catastrophe? There are reasons to believe that the crisis was a contrivance created to divert attention of both countries simultaneously by an outside entity.

Dollar games

Here's the larger context. For the first time since the history of the dollar, US government borrowings have reached a level of 120 per cent of the Gross domestic product (GDP), meaning that the debt stock at $22.5 trillion is more than the national output. Who funds those debts? Close to $1.4 trillion is held by China (including Hong Kong) or about 6 per cent.

For China that asset trove is about 20 per cent of its GDP. The US debt unfortunately does not necessarily go fund capital expenditure in the home country. Instead, goes to fund wars around the world.

Redemption of the debt would mean adding liquidity into the dollar system inundating the world. A roll over of maturing debt, on the other hand essentially means replacing old debt with new debt instead of redemption, would mean that countries holding dollar treasuries are trapped in a domestic liquidity trap, with treasury holdings losing value. That would trap China, India, Russia and a slew of other nations in deep financial and economic chaos to ensure continued bondage to the dollar or in other words, destroy all potential challengers, (the Shanghai Cooperation Council?). The beginnings of a “Managed chaos.”

Amen !

An encounter with Urjit Patel

Shivkumar C

IT was a chance encounter in 1994. The venue, the office of the Discount and Finance House of India (DFHI), an institution created to provide liquidity to India’s money market instruments. (DFHI was taker over by the State Bank of India in the early 2000s ). The DFHI office was located in the Reserve Bank of India’s building, Rafi Marg, New Delhi. I was then a journalist with the Business Standard. I had gone to DFHI to meet the chief dealer.
 
I normally had a free wheeling conversation on bond yields, forward premiums and other mundane topics with the chief dealer with whom I enjoyed a friendly rapport, that continues to this day. It was also the aftermath of India’s near insolvency that was averted by an IMF Structural adjustment facility loan in 1991. India was still repaying that loan, though government prepayments had exerted liquidity pressures in the money market.

It was while talking on these topics that Mr. Urjit Patel, the newly appointed governor of the Reserve Bank of India, then resident representative of the IMF walked into the DFHI office with a prior appointment. It was exactly at that time that several public sector banks had entered the money market looking to raise rupee liquidity. The spike in the yeilds occupied the attention of the Chief Dealer. Obviously, for the Chief Dealer, his job that sustained his family came first.

The young Mr. Patel, armed with IMF employment, was unmindful of those sensitivities. Perhaps for Yale trained IMF carbineries, exceptionalism is the rule, disrespect and arrogance are virtues. Few are sensitive to the rest of the country’s occupations and professional predicaments of working people. That being the predisposition, he proceeded to interrupt and remind the chief dealer, who was on the telephone dealing, “ We have a prior appointment.”

Mr Patel’s meeting was for one purpose. “I need to know about treasury bills!” The chief dealer was stunned. An IMF representative wants to know about treasury bills ! But still the  the chief dealer took a few milliseconds to react and pointed to me. “You can speak to him on treasury bills and he will give you the back ground and the lotus yield calculations. Let me conclude this transaction.”For the uninitiated, Lotus 123 was the DoS equivalent of Microsoft Excel in the 90s. Mr Patel introduced himself as the resident representative of the IMF. I, as a journalist from Business Standard.

My credentials as a journalist did not go too well. He fumed, “ I did not come here to speak to the press.” The temptation to retort was strong, but then I gestured to the Chief Dealer, my departure and signaled I would meet him later. I left the Chief Dealer to the mercies of the IMF and the World bank.

That meeting with Mr Patel left an indelible impression. His appointment as Deputy Governor into the RBI confirmed my fears. His appointment as governor reinforced those apprehensions. The direction of the RBI is clear. It will most likely be steered, not by the RBI policy makers but by leadership from behind. That means financial interests take over. It could be foreign — perhaps Goldman Sachs or the Rothschilds ? It may even be domestic after all wasn’t Mr Patel was also once closely associated with Reliance group ? Public interest priorities be damned. This is happening even as the rest of the world is making strenuous efforts to exit clear financialisation of national economies. So what is next on the agenda ?

IMF and Goldman Sachs trained, Rajan and the present governor of the RBI ensured that banks have more bad loans on their books. He converted depositors into villians, fleecing the banks.Borrowers, big borrowers, were the new heroes. Never mind Vijay Mallya whose larceny has left banks with a gaping hole Rs 9000 crore or $ 1.5 billion dollars, all money that belongs to small savers. Mr Patel, his successor as Governor, comes from the same can.
Sycophants in MSM presstitute houses are already baying shrilly, “Reforms, Reforms and more Reforms without barely understanding or appreciating the repercussions. So, could bail-ins make their way in to the country? We need to wait and see.

The Central banker's Moor moment!

The Reserve Bank of India governor, a former International Monetary Fund economist, Raghuram Rajan, has claimed that the India is prepared for an eventual hike in the U S interest rates. He was quoted in the Times of India on August 31, 2014 saying, "My sense is that even when the Fed withdraws, people after an initial bout of withdrawal, may consider India a good place to leave their money. We have plenty of reserves, but I see reserves as a second or third line of defence."

(Raghuram Rajan is also professor of Finance of Chicago University. This is the same university that gave Chile's military dictator Augusto Pinochet, the Chicago Boys a band of economists that led the country to insolvency in 1982.)

A hike in interest rates by the U S Federal Reserve Board means, an uptick in the U S federal funds (Fed Funds) rate from the present level of 0.25 per cent. This is the rate at which American banks lend or borrow overnight reserve funds from each other. The Federal Reserve Board uses this rate as its monetary policy instrument to signal all rate changes in the U S banking system, in reality across all the dollar linked economies of the world.

So are RBI governor Rajan's claims tenable?

Fact 1 : India has a large holding of U S government securities. A large component of India's reserve ares parked in U S treasuries securities that include treasury bills, Treasury notes (securities of tenors up to 10 years) and Treasury bonds ( securities of tenors of 10 years and above).

As on June 30, this year, the holdings of U S Treasuries amounted to $ 72.9 billion¹ comprising 25 per cent of the country's currency reserves. Since  Raghuram Rajan took over as RBI governor, the increase was $ 16 billion. Predecessor Duvvuri Subbarao had actually made efforts to bring down the exposure. Between June and September 2013, the RBI sold $ 4.4 billion worth of U S treasuries, brought down the exposure to 22.91 per cent of the currency reserves. That's it ! Subba Rao ceased to be RBI governor effective from September 2013. For Subbarao situation was similar to the Moor in Fredrick Schiller' play, Fiesco's conspiracy at Genoa. "The Moor has done has job. The Moor can go."

 

Source: Reserve Bank of India, U S Department of Treasury.

Fact 2 :  The increased investment in the U S treasuries have not earned the RBI any returns. In fact, the effective returns on such increased investments have actually shrunk for the RBI, a reality admitted by the RBI annual report of 2013-14². The RBI's returns on the investments that include, interest, discount and trading income was down Rs 197.68 billion (19768 crore) from Rs 207.46 (20746 crore) . Interest income implies interest/coupon payments on bonds. Discount is earnings when securities are picked at prices lower than face value, but redeemed at face value. Trading income implies profits from purchase and sale of securities).  That means the effective yield realized on all its foreign investments fell to 1.21 per cent from 1.45 per cent. But hold a sec! Aren't traders supposed to ride the yield curve, sell when security prices are high (low yields) and buy when prices are low ( when yields are high)? So why was the RBI buying U S treasuries when prices were high ?

Indian mainstream corporate media doesn't speak all these facts, since journalists or whatever they call themselves now are purveyors of faf to readers than fact! The primary occupation of newspaper editors and financial analysts is marketing Rajan, as the rockstar of financial sector reforms!

Fact 3:  In the event of a FED hike in rates, RBI's will actually lose money, since depreciation on those securities would have to be provided. The RBI marks to market all its foreign dated securities each month. Losses or gains are transferred in and out of the investment revaluation reserve. In the last financial year, RBI has seen its assets appreciate as reflected in investment revaluation account. That account was Rs 3791 crore (37.91 billion) or a Rs 1306 crore (13.06 billion) increase over the previous year. A Fed rate hike could very well reverse this account.
  

That is unless there is a mad rush to buy up dollars.  For now, though Uncle Sam and Comrade Russie are just fiercely staring each other. Comrade Russie blinks, the dollar rockets and RBI's dollar assets soars. Uncle Sam blinks, RBI is in trouble. It could very well sink the Rockstar Rajan's ratings !

Fact 4 : Most of RBI's balance income came from domestic sources. Income from high coupon securities contributed Rs 47000 crore (470 billion). Trading in domestic securities, (read sale of reissue securities) contributed another Rs 33137 crore. Then there was liquidity support to the banks purchase and sale back of securities. The overnight transactions are called Liquidity Adjustment Facility (LAF) that provided cash or removed cash from the banking system. LAF allowed banks to borrow by pledging the surplus holdings of government securities over and above the mandated Statutory Liquidity Ratio. Overnight lending gave the RBI Rs 5902 crore (59.02 billion) for 2013-14, a Rs 577 crore (5.77 billion) drop over the previous year. But MSF that allows banks to borrow up to 2 per cent of their deposits with a waiver on their mandated government security holdings. The cost of this borrowing higher, or for the RBI it rakes in more income. And the RBI earned Rs 1745 crore(17.45 billion) against Rs 11 crore (110 million).

So when the U S federal does reverse stance and begin hiking rates, it does not mean more interest income from foreign securities' holdings. The benefit of those higher returns would be restricted to only incremental additions. That means the benefit of higher interest incomes would be available only new securities' purchases. But the increased income would be hardly be sufficient to cover depreciation costs of existing securities holdings.

But a Fed Hike also raises the risk of a tight domestic liquidity conditions. This is because domestic liquidity is tied to foreign currency reserves. High foreign reserves means greater domestic cash. At the same time foreign asset depreciation restricts the ability of balance sheet expansion.

Unlike India's BRICs partners, reserves have been built by borrowings and increased liabilities in the form capital flows, that included borrowing by foreign borrowings by domestic corporate houses. The rest of the BRICs have built reserves with current account surpluses. That makes India the BRICs' outlier!

Rajan's marketing pitch notwithstanding, the reality is that India is vulnerable. Even government borrowing costs are closely linked to the Fed's action that could rise sharply.   Markets have already factored a potential increase evident from the hardening of the ten year Indian government security yields to 8.5 per cent an increase of 0.6 per cent over the corresponding period of last year. That means any Fed move clearly limits the ability of further reductions in the Statutory Liquidity Ratio. Unless, of course, India’s corporates badger the Government into ‘fiscal prudence’ so that it can continue to play around with cheap funds.

Should the RBI still go ahead and reduce the cost of cash and then will Rajan really be able to sustain Rs 52700 crore to the Government that it paid last year? That is precisely what could bring the Moor moment for Rajan!  

---

Fundamental question: The RBI has consistently spoken about fiscal displine. But why is the RBI financing the U S fiscal deficit, after all it is funded by the Indian tax payer? Buying into U S Treasury bills, notes or bonds, after all, amounts to funding American expenditure, including defence. India's debt stock to GDP is 66 per cent and U S is 101 per cent. The answer obviously lies in the fact that most of India's foreign exchange reserves have been built through capital flows and therefore prone to extreme volatility.

-0-

1. U S Department of Treasury- Treasury International Capital System

2. Reserve bank of India Annual Report, 2013-14.

-----

A war on reform dissension

For the world's investment bankers used to pumping up bubbles, India remains a land of economic, or rather, financial promise. That pitch however masks the mounting social unrest that covers at least 40 per cent of the country’s geographical area.

India has opted to treat the unrest as "Maoist uprisings", though that is beginning to unravel as a highly simplistic, if not distorted, approach to the problem – one that fails to appreciate the economic dimensions of the unrest. Instead, the Maoism label allowed the state to use "heavy handed" methods.

Over the decades, the issues raised by the rebels, led by the CPI (Maoist), were never taken seriously by the state governments of central India and the central security establishments. The issues range from land alienation in favour of industry to human rights violations in tribal-dominated regions. Add to this general scenario of deprivation of rights, the relentless price rise in food items and rising unemployment and the situation is obviously desperate. Is it a matter of surprise that the desperation finds a violent expression?

However, state governments are slowly beginning to think, only think, changes may be necessary. In January this year India's former Minister for Rural Development Jairam Ramesh, an alumnus from the Massachusetts Institute of Technology, a former World Banker and one of the leading proponents of Enron power project in Maharastra during the 90s, is a prime mover of the new land acquisition statute. He claimed, "The new law that has been formed for land acquisition which has recently been passed in the Lok Sabha and Rajya Sabha, if implemented properly and with honesty will reduce a factor that has been spreading Maoism and it will provide the government a effective weapon against Maoists and it will help indigenous communities." The new bill proposes that farmers and landowners be paid up to four times the market value for land acquired in rural areas, and two times the market value in urban areas. The new ruling coalition led by the BJP that swept to power in June this year may just step up the pace of forced land displacement.

Yet the high prices are just a façade. Rural poverty caused by high food price inflation and low wages remains unaddressed. In fact, the government in India has failed to recognise the parallels of the Arab spring and the expanding unrest in India. Japan's Nomura Global Economics did an interesting study in 2011. Nomura compiled a food vulnerability in index for world economies. The Nomura index looks at food prices and how much food expenditure eats into household spend. In 2011, rising food prices pushed up consumer inflation in Egypt to 9 per cent and household spending on food was 49 per cent of the incomes. Hosni Mubarak lost his job! In Tunisia and Algeria, household spending on food was 36 and 53 per cent, providing a trigger a point for uprisings. In the U S and even Russia, food expenditure remains just about 8 to 15 per cent of household incomes.

In India, consumer price inflation has remained steadfastly high. In 2013 alone, consumer price inflation has accelerated to 12 per cent. That means household spending on food is closer to 65 per cent (elaborate on the relationship.) But the problem is worse in the states. Presently, the per capita income in states like Orissa, Chattisgarh, West Bengal, Bihar and Jharkhand is barely about Rs 40,000 a year or $1.76 a day at present dollar exchange rates and half the price of the cheapest Subway sandwich in the US. Even these figures conceal another reality. Per capita income is only an average. Therefore a large majority of the people in the regions earn far less wages.

The low incomes in these states, in turn translated into household spend on food of 80 per cent. That meant the bulk of a family's income was spent only for meeting food consumption, leavings little for savings or non-food consumption. In Jharkhand and Chhattisgarh, the situation is little different. But in Chhattisgarh, efforts have been made at state intervention or increase in food subsidies. Those measures, though, have had little impact, given the low wages in the region.

In India, high food prices are something of an oddity: the country has been reporting record foodgrain harvests year after year. So, the reasons for high food prices are not necessarily due to low farm productivity. The reasons lie elsewhere, an issue that the state refused to address, or even discuss. Take the case of rice that is one of the largest consumed cereals in the country. Farm gate price of rice is about Rs 15 per kilogramme (US cents 25). The wholesale price is Rs 25 (US cents 40) and the final average retail price Rs 30 (US cents 49), a price loading of 100 per cent. This is a national average, with region-wise discrepancies. The least price loadings are in Punjab and Kerala. The highest loading is in states like Orissa, West Bengal, Chattisgarh, Bihar and Jharkand, all states with high food spends, and food inflation.   

The results of this runway food inflation are apparent. Orissa has 20 districts under the influence of the rebel groups affiliated to Maoists. But rebel influence has been spreading around the country. The new regions under rebel influence include the Kerala's Wynad district and Karnataka's Chikmagalur and Kudremukh regions. These are also regions where unemployment and underemployment have increased during the last years.

In all these regions, the focus of the state has been to treat rebel violence, not as protests against economic oppression but rather as a law and order problem. The protesters, tribals and farmers on the margins of the economy, are dubbed as ‘anti-development’. The development, though, in these regions implies large-scale mining and deforestation, taking over large tracts of forest and farm land and depriving local populations of their livelihood. The projects that have come up on tribal land include those promoted by Vedanta aluminium project, South Korea's POSCO steel project, Utkal Alumina, Essar Steel and GMR's coal and power projects in Chattisgarh.

Despite the one-sidedness of the development process,former  economist Prime Minister Manmohan Singh went so far as to call the protesters or "Maoists as the biggest security threat to India." Incidentally there were however dissensions over the Congress party's former =Prime Minister's inferences. Indian government's Planning Commission report chaired by D Bandopadhyay observed " "it should not cause surprise that a large section of the people are angry and feel alienated from the polity. It is in this context that it has become necessary to identify the variety of causes of discontent and to seek ways by which the State could answer them in a humane, caring and democratic way. If the emphasis of this exploration is on the Naxalite phenomenon it is not because other modes and forms of agitation are less important but only because the method of struggle chosen by the Naxalites has brought the problem to a head." 

Ironically enough, few of the protesters are even aware of Maoist ideology! Documentary film maker Deba Ranjan who produced "At the Crossroads" -- a film on tribals of western Orissa being targeted by security forces for being ‘Maoists’ -- says, "When they resist corporate land grab for mining and industrialisation, they are called Maoists. Maoism is used as an excuse to target democratic struggles."   

An activist in Andhra Pradesh involved in counseling affected people said, "The state is simply unwilling to recognise the extent of economic despair and distress among population affected by severe poverty. The distress does not necessarily translate into discontent as in the case of Arab spring. Rural population faced with distress loses the will to survive."

This meant more affected by poverty and high food prices have chosen to commit suicide. Approximately 370 people commit sucide each day, most of them at young age in the country and more than half of the suicides are in states where unrest is high. Every 30 minutes a rural or agricultural worker commits suicide in India. These suicides conceal the numbers that have succumbed to state sponsored repression.

But then in any investment banker driven reforms, economic oppression is the reality. The inevitable fallout is tragedy. Has the country reached the tipping point? Doubtful! Instead, India appears firmly glued to Naipaul’s state of Million Mutinies!

-Ends-

Book Review : Ticket to the Moon

By Radha Naresh

160 pages, Rs 1339.87

Writing for scientific journals is Dr Uthaya Kumar's regular bailiwick. Still his first foray into short story writing has resulted in an eminently readable treasure.

Ticket to the Moon, a collection of short stories is that maiden effort. Episodes in the stories are not all fiction. They are inspired by Uthaya Kumar's own life and times in a remote little village in India where he once lived, and the people he once knew intimately. He has since migrated to America, and through these stories he has recreated the larger than life personalities who profoundly influenced and moulded him in in his growing years and to whom he continued to be drawn inexorably. 

The author assumes the role of the village vet as the narrator of the stories. The vet in any village has a vital role to play in the wellbeing of livestock which is the precious asset of each homestead. Here in the village of Muvirundali, he also doubles as family physician, thereby making him privy to their most intimate secrets, which form the fabric of the stories.

As each story unfolds you get the sense of the extraordinary lives of these deceptively simple folk From the rural canvas emerge a protagonist for each story; the vegetable vendor, the child born into wealth, the forlorn widow, the brave wife of a soldier, the new bride and her borrowed jewellery, or the beggar with a mysterious past who can give Boo of To Kill a mockingbird a run for his money. Each story revolves around one such individual and their secret stories can warm the cockles of your heart.

The anonymity that one enjoys in cities is not present in villages. Nobody is a stranger to anyone else and anything that needs attention in one family is the concern of the rest of the village. There is the barber whose duty it is to play MC at funerals. The postman not only delivers letters but also reads them aloud to the recipient and writes out the replies as well. There is Natarajan, the man for all seasons.  A Good Samaritan and a guardian angel, he surfaces whenever there is a serious problem to be solved.

The characters are ordinary people whom we come across, whose simple faith, quiet courage and fortitude, and unswerving devotion to their principles is not only endearing but worthy of praise.

 A humble vegetable seller in Debt, clings on to her life for three years braving old age and illness, determined to repay a debt of forty rupees and forty paise.”I would rather die of hunger than have a debt on (sic) my life” she says, a day before she has finally paid her dues and bid adieu to life.

The Necklace is about the new bride in the village and how her integrity is put to the test when accused of stealing a necklace.

Legends of Veeran describes a heroic act of supreme sacrifice. Heir is the story of a person tormented with questions of his parentage.

The March is about the triumph of a woman who sends her husband to the warfront and waits stoically for his return..

Silence is paradoxically about the constant and loud repetitive jabbering by Murmurer who is an embarrassment to the village. However, it is Murmurer the seeming village idiot who saves them from being struck down by lightning and when illness threatens to silence Murmurer forever, the whole village rises as one to pay for his treatment.

Untouchability harks back to the days when this pernicious social system was practised and about one villager who bravely decided to defy the rules nobody dare challenge or violate.

My personal favourite story is The Postman’s Dilemma which amply describes the plight of postmen who have to bear bad tidings in a telegram. There are some interesting twists in the tale which is about a girl whose horoscope is supposed to have caused her own father’s death just one week after she is born.

The Gooseberry tree captures the pangs of separation that parents feel when their young ones leave the nest to seek better fortunes in foreign lands, as well as the distress of such children who cannot visit their parents at will.

All the stories end on a happy note. Woven into each story are nuggets of wisdom and amusing tidbits about customs, rituals, superstitions, deeply entrenched values, attitudes and practices. You also get to relive the celebratory mood of a newly independent nation and get glimpses of those heady times and to sense the impact of man’s stupendous leap into the future resulting from America’s Moon walk.

With the progress of each narrative, you are treated to a lot of interesting   village trivia. In Debt, there is mention of the ‘good death’ that comes from having lived a fulfilled life. The village barber taking charge as master of ceremonies at the funeral, placing of a coin on the forehead of the departed person who rides to his grave in a sitting position and never taking leave when departing from a funeral home.

In Santhosam’s riddles and Untouchability, the child of the town gets to experience the immeasurable fun to be had in watching birds or laying traps to catch them, listening to tales of the intrepid, riding a bull to cross a fjord, playing gilli in the wild open fields and coming home to a refreshing potful of millet gruel with a dab of pickle to go with it.

In the end, you realise that this is no second hand NRI experience. The good vet has not only tended to ailing animals, but also listened to many a human heart and checked many a human pulse.

-----
Radha Naresh is a traveller who spent time in Switzerland. She has chosen to settle in Coimbatore, Tamilnadu, India. She is now a book reviewer.