I would predict a runaway boom

Billions from ageing countries SWAMINATHAN S ANKLESARIA AIYAR

The Times of India April 18, 2004

In the longer run, emerging markets like India appear irresistible for western investors. For starters, successful developing countries grow much faster than mature ones like the US. More important, demographic change will drive billions of dollars from West to East. The population in several rich countries is shrinking or is about to shrink because women increasingly have stopped having children. When the fertility rate (births per woman) drops below 2.0, there are not enough kids to replace oldies. In several rich countries, the fertility rate has dipped to 1.3 or less. The resulting population implosion is sometimes but not always offset by immigration. Besides, with improving medicine, old people are living longer and longer. The net result: the proportion of oldies is rising and that of youngsters of working age is falling.

Traditionally, old people have been supported by workers. What happens when the proportion of workers keeps shrinking and that of retirees keeps rising? Western countries have traditionally taxed their workers to pay pensions and medical benefits to the aged. But this will increasingly become difficult as workers shrink and retirees expand. An enormous pensions crisis looms over rich countries. America's unfunded pension liabilities are estimated by experts at $10.5 trillion, more than its entire GDP. In some European countries, unfunded pension liabilities are 250% of GDP. What is the way out? Western countries know the days are gone when they could tax an increasing workforce to support a small number of retirees. So they are shifting from fixed pensions to funded pensions.

In funded pensions, workers and employers contribute to a pension fund, which invests the money. The better the returns from investment, the higher are the retirement benefits of the aged. The shift from fixed state pensions to funded pensions will shift trillions of dollars into pension funds, a shift of tectonic proportions. Yet, this will not entirely solve the problem. Traditionally, pension funds have invested in their home country, something regarded as safe. But in future, extracting returns from domestic investment will mean, one way or another, extracting more and more from a shrinking workforce to support the aged. Funded pensions are better than unfunded ones, but the underlying demographic problem remains. Rising productivity is unlikely to offset demography totally. Investing at home in ever-rising amounts will typically lead to diminishing returns.

This will mean a steady reduction in retiree benefits. And this will not be politically sustainable in countries where the aged constitute a rising (and very vocal) share of voters. Solution? Invest abroad. Traditionally, most rich countries have invested in one another, not in developing countries (which have been regarded as risky). But no country with a ageing problem can find a solution by investing in other countries which also have an ageing problem. Willy-nilly, they will have to invest in countries with growing populations, backed by productive policies. That means countries like China and India. These countries are on a strong growth path, unlike African ones. Their populations are expected to rise to 1.5 billion each by 2050, up from 1.2 billion in China and 1.0 billion in India today. Their expanding workforces exhibit rising productivity.

A recent article in The Economist summed up the matter succinctly. To pay pensions, ageing countries can no longer depend on taxing their own people. Nor can they tax people in developing countries. But they can invest in efficient developing-country industries. There lies a solution. A distant prospect? No, the process has begun. A huge US pension fund like Calpers is already investing in some emerging markets, though not India (which it still views as too risky). Sooner rather than later, India will cease to look risky. At that point, the inflow of foreign funds will explode, and so will the Indian stock market. The bottom line: I have no idea whether the stock market will go up or down in the next eight months. But looking at an eight-year horizon, I would predict a runaway boom.

Gain from an invest-and-hold strategy

The boom show has just begun PUNEET JAIN

The Economic Times MONDAY, JANUARY 12, 2004

India is beginning to discover a new bull market. The all-important question at this point could be: How long will the good times last? While a definitive answer is difficult, at present one could say that the immediate future appears pretty promising. We could also look at the behaviour of other major markets to decipher what the future might hold. Indian market's movement is similar to the patterns exhibited by more developed markets like the US where Dow Jones Industrial Average (DJIA) saw an almost secular and uninterrupted bull run from a level of 800 points in June '82 until it crossed high of 11500 points in January 2000. This was an almost 15-fold rise in the index.

Interestingly, the DJIA stagnated at the sub-1000 level for almost 16 years preceding this period of boom. Compare this with the Indian situation where we have seen the BSE sensex stagnate for the past 10 years. If the markets do get a re-rating, then the recent two-fold rise may be only the beginning of a long boom. However, investors need to remember that we are talking of markets over a long span of time. In the very short term, as stock indices trend higher, volatility in markets will increase. Thus, short-term trading will become more hazardous, while long-term investors could gain from an invest-and-hold strategy. The trigger for the current boom is provided by improved corporate fundamentals and huge money being poured into India by foreign investors. Both the props are fairly solid and can sustain the uptrend in the market for long time.

A big positive about the FII participation in Indian markets is that we are witnessing very large turnover by these institutions. The FII trading volumes over the past few days have been almost 30% of the total cash market volumes. The buying and selling is equally vigorous indicating that there is healthy profit-booking by those FIIs who had bought stocks earlier. Buying is led by new money pouring into the markets. Such a smooth exit for early investors will induce higher confidence among investors and should attract more money in the months ahead. The large FII turnover now suggests that the depth of the market has increased handsomely and more players can participate in the markets. Therefore, it appears that the outlook remains fairly bright for the next few months, atleast.

Stock markets continue their gravity-defying climb even as most old-fashioned academicians would warn you of the dangers lurking behind every barrel of crude. This disdain with which equity markets repeatedly demolish every shade of conventional wisdom is what gives them a special status among all financial markets. puneet.jain@timesgroup.com MONDAY, OCTOBER 11, 2004

There is plenty of headroom

Blast from the past PUNEET JAIN
The Economic Times MONDAY, DECEMBER 27, 2004

There are many important lessons to be learnt from the last rally after the bull run that began in 1988 (sensex 410) and lasted six years until 1994 (sensex 4000), this is the first time in our recent history that the Indian stock markets have risen significantly for two consecutive years. The BSE sensex rose 80% in 2003 and another 12% in 2004. Is the history trying to tell us something? Well, the romantics and old-timers in the market believe that the current bullish tone will ape the last big rally. They believe that the elements are all right for a sustained rally and short-term mishaps, like the May 17 episode, would not be able to derail it.

The index rose 10 times in those dream six years. It has barely doubled in the last two. Therefore, historically speaking, there is plenty of headroom. The last bull run (1988-94) was led by and led to the creation of some big names in the market. Some of these great names like Harshad Mehta perished in the great turmoil created by such churning of wealth. Some others like Nemish Shah have come to be revered by those who survived. The current run too has thrown up an early list of winners and it would be interesting to see who all last until the last mile in this marathon.

There are other interesting lessons to learn from the last big rally. The most important being - volatility and sharp ups and downs are an integral part of such a run. And the volatility would only increase as the sensex scales new heights. According to old-timers, May 17 type of episodes are very much a part of rather than exception to the script.

• Therefore, longevity and caution becomes a critical trait of those who hope to come out the winners in the race.
• Patience too is a virtue in such situations. Though rare among most equity traders, patience has been the hallmark of most successful investors.
• Excessive portfolio churning often leads to lost opportunities and increased frustration.

However, such sentiments may be somewhat lost in this age of super-qualified analysts and information overload on TV channels. The byte-a-second experts sometimes cloud the big picture.

• Another important lesson from the last rally is that there could be an odd year or so when the returns are not particularly high. We had huge returns in 2003 and a relatively modest 2004.
• In such markets, the sectoral leadership may change and some laggards may come back to hog the limelight.

While the tidings appear favourable for investors, caution remains the most important ally of successful investors. Copious liquidity flows and a favourable tax regime are the cornerstones of this bull build up. If any of these were to seriously change, bulls' hopes will come crashing down.

Get over the paranoia about FIIs

M. K. Venu
The Economic Times December 6, 2005

• A lot of Indian money is coming back because India is now seen by the rest of the world as the long-term growth story.
• There is no reason to fear that there could be a massive flight of capital from India

Don’t be shy about FII

ILA PATNAIK
The Indian Express Thursday, April 28, 2005

India attracts about one-fourth of the world’s portfolio flows and barely 3 per cent of the world’s FDI. Is this something to worry about? FII inflows to India in the last six months have exceeded US $8 billion. FDI flows have been less than one third of this amount. Very often arguments are made that this is not good. Instead of having so much portfolio investment, India should have been attracting more FDI. However, contrary to this common belief, research suggests that attracting FII may be a sign of good health and attracting FDI, a sign of bad health of the economy. In contrast to the commonly held unfavorable view of FII flows, evidence suggests that countries with good institutions and markets attract more FII, while countries with poor laws and institutions attract more FDI.

FDI is problematic for foreign investors because it means bringing into a country managerial capacity and organisation. In contrast, FII is easy. Only money needs to be invested for earning returns. No effort is required to build organisational capacity for operating in that market. But if a country does not have a well-developed stock market, foreign investment has limited choices. In the well-developed markets of Europe, for instance, the share of FII in total capital flows is high. In contrast, in the countries of Africa, FDI is the dominant form of foreign investment flows. However, too many investors do not want to venture into poor countries so the total foreign private inflows are small.

In the poor countries of Africa, often the share that goes into the primary and extraction sector — such as mining and oil — is high. In rich OECD countries the share of FDI in total capital flows is low at barely 12 per cent. As countries develop, the total capital flowing to them goes up with the increase in per capita income. However, the share of FDI in it goes down. Foreigners learn to trust their markets and institutions and do not feel the need to go there physically to earn returns. That is why economists in Latin America have been getting concerned about the rise in the share of FDI in total flows. The share of portfolio investment has collapsed and this is seen to be a loss of confidence in their markets and institutions.

In the light of the above evidence, it is not surprising that the share of FII in total capital flows to China are very low. It is an indication of the bad accounting, bad corporate governance, market design problems, and the fundamental inconsistency between communism and the stock market. India should not be embarrassed about attracting portfolio flows. This in fact reflects its success in building sound companies and a well-designed equity market. It is a sign of good health. But what about the impact upon the economy, of FDI versus FII? In the conventional argument, there are two reasons why FDI is preferred to portfolio investment.

• First, it is believed that FDI will stay in India in the event of a currency crisis and,
• second, it is believed that FDI has a greater impact on growth. The dominant view is that FDI is “bolted down” as it involves investment in physical plants and equipment and these are very hard to get rid of.

Studies of currency crisis usually compare the stability of FDI with that of debt, particularly short-term debt, and in comparison with short term debt, FDI has indeed been found to be more stable. But that does not mean that FDI cannot move. Latin American economist, Ricardo Hausmann, has argued that there are important mistakes that flow from problems of measurement. In a country’s balance of payments, FDI flows are defined as the increase in the equity position of a non-resident owner who holds more than 10 per cent of the shares of a firm. It also includes the loans received by a local company from the parent owner. About 20 per cent of FDI takes the form of loans from the parent company.

Moreover, since the firm is merely a set of assets that are “owned” — in other words, financed — by creditors and shareholders, we must not think of FDI as the firm and its assets. Instead, it is just one of the sources of financing for the firm. FDI is not bolted down, machines are. At the time of a crisis, the foreign company can either sell its equity or take a loan against physical assets and take money out of the country. Indeed, economists Graham Bird and Ramkishen Rajen have found that despite the bulk of capital inflows into Malaysia being FDI, there was a currency crisis.

The argument that FDI raises the growth rate of a country also finds only mixed support. FDI is not found to raise growth when it goes into the primary sector. The impact is ambiguous in the case of services. When it comes to manufacturing, cross-country evidence does suggest that FDI raises growth. But, here again, growth can remain limited to the specific industry in which the FDI went. Worse, it may even remain limited to the firms with FDI. The spillover effects of technology, management and corporate governance that is often expected to accompany FDI is not automatic. The growth impact of FDI is thus not automatic. It is only countries that have good institutions, skilled labour, openness to trade and well-developed financial markets that gain from FDI. In the absence of these, even if a country attracts FDI, its usefulness is limited.

The message for India is clear: instead of trying to increase FDI flows artificially, and restrict FII flows artificially, India must focus on improving markets, institutions and the regulatory framework to encourage investment — whether domestic or foreign. Domestic investment is largely responsible for growth in any economy. Whether foreign investment comes or not should be a side show. Policies should focus on creating a healthy well-functioning market and world-class infrastructure.

FII inflows aren't hot money

SWAMINATHAN S ANKLESARIA AIYAR

The Times of India January 18, 2005

The plain fact is that FII inflows are not hot money. Just see what happened during the Asian financial crisis. In the first year of the crisis, 1997-98, there was a large FII net inflow of $1,828 million. In the second and worst year, 1998-99, there was a tiny outflow of $68 million. And in the last year of the crisis, 1999-2000, there was again a net inflow of $3,024 million. This money was not hot, it was astonishingly cool.

FIIs are not soft-hearted do-gooders wanting to save us. They stayed put in India during the crisis for a hard business reason: they could not exit without paying a penalty so huge that exit looked riskier than staying on. Let me explain that. There are five types of foreign capital inflows: foreign direct investment (FDI) in factories; FII investment in shares; FII investment in bonds; long-term forex loans; and short-term forex loans. Of these, FDI is not hot at all. Foreigners cannot pick up a factory and flee. The second coolest inflow is FII investment in shares.

FIIs would love to sell at high prices and exit during a panic, but find this impossible. As we saw last week, even a small net sale of $100 million by FIIs caused the Sensex to sink 10%, and mid-cap shares to sink by 20%. Indian buyers are few and fragmented, and do not buy in crashing markets. The total FII investment in India is over $35 billion. If FIIs try to dump even one-tenth of this - $3.5 billion - there will be no buyers and the stock market will crash by 80% or more. FIIs find it cheaper to stay put than exit at such a huge loss. The bond market represents somewhat hotter money. Bond prices also fall in a panic, but less than shares. FIIs are very modest purchasers of bonds, and such purchases are capped anyway.

Long-term loans are hotter money, because the markets do not levy a penalty on exit: loans are repaid at full face value on maturity. Long-term loans cannot suddenly be recalled. But old loans mature week after week, and lenders can refuse to renew them. The mere refusal can steadily drain the forex reserves. Hotter still are short-term forex loans. These mature quickly and can be withdrawn as quickly. When these short-term inflows stop, countries can go bust. Dependence on this sort of hot money must be avoided: everybody agrees on that. But the hottest money of all, paradoxically, can be that owned by citizens. This is not so in India: Indians cannot freely convert rupees into dollars. But in south-east Asian countries, citizens can freely buy dollars with few restrictions. They rushed to do so in 1997, draining their national reserves. Large forex reserves can defend a country against exit by foreigners, but nothing can defend a country against mass exit by its own citizens.

Why did India survive unscathed in 1997? Because Indians were absolutely forbidden to convert rupees into dollars. By contrast, foreign investors had complete freedom to exit. Yet, they did not leave. India's policy was based on the implicit assumption that foreigners could be trusted with freedom to exit, but Indians could not. Nobody dared put it quite so baldly: it would have been a slur on our patriotism. But this "unpatriotic" policy was a thumping success. The lesson is clear. We do not need to cap FII inflows, since they constitute cool money. But, even as we liberalise dollar purchases by Indians in good times, we should retain the option to clamp controls in an emergency. In a panic, nothing will be hotter than Indian money.

Look for the fundamental issues

James J.C. Birch

BusinessWorld Nov 22, 2004

I don't think you want to go crazy and do what the Japanese have done - build roads for the sake of building roads. Even the Chinese have probably built too many highways and too many airports. And they've built them because constructing things creates employment opportunities. I'm not suggesting you do that. The most important thing is that the economy grows and companies do well. You shouldn't worry... the money in the end will find equilibrium.There's a great paranoia in the Indian markets about whether the FIIs (foreign institutional investors) are buying or selling? You should take a longer view. In the end, money will come in if things are good and it will go out if it's bad. FII inflows or outflows are caused by fundamental issues.

So look for the fundamental issues rather than trying to catch the FII moves. In times of high tension, people take money out of risky markets and India, to date, is being treated as a risky market. So there are two angles. Is India fundamentally a good place to invest in the long term? The answer is yes. Is today, 5 November, a good time to buy? It's a tricky and a less important question. I think China has a smaller number of shareholders than India. A lot of people have the money to buy shares, but they don't have a long history or understanding of the market. Your savings rate is quite high but all of it goes into bank deposits and gold. There is a big opportunity for locals in both countries to invest in stocks. It can only grow from here.

Much ado about FII flows

T T RAM MOHAN

The Economic Times THURSDAY, OCTOBER 07, 2004

The popular perception that international investors create instability in emerging markets is not borne out by studies on the investment pattern of US mutual funds. The studies suggest that neither shareholders nor portfolio managers behaved in a manner that could exacerbate volatility in emerging markets. Redemptions by shareholders tended to be modest. And portfolio managers did not reallocate assets in ways that could have caused prices to plummet. A remarkable finding of the East Asian crisis was how stable portfolio investment was during the period; the mischief was created entirely by debt outflows. In India itself, over a decade of twists and turns in economic policy, FII flows have been negative only in one year.

• One reason could be that pulling out funds would be prohibitively costly for portfolio investors. Investors face a double whammy in exiting a market: a fall in stock prices and a steep depreciation in currency.
• Secondly, investment in emerging markets is dictated by the principles of portfolio diversification. Once an optimal portfolio has been arrived at based on long-term data, it would not make sense to exit a market unless the risk-return profile of the market was perceived to have changed drastically.
• Thirdly, emerging markets account for just around 14% of total assets of international investors; Asia’s share is 9%; India’s is probably under 1%. For dedicated emerging market or country funds, it may make sense to track policy pronouncements closely. Not so for what are called “crossover” investors — investors for whom a given emerging market is just one of a number of assets in the portfolio.

So, here is a message for TV pundits. The next time you are asked how FIIs would react to a ‘no’ to privatisation of airports or an increase in the FDI limit for telecom, please could we see some sanity in your responses? (The author is a professor at IIM, Ahmedabad)

Internal democracy

Chitta Baral

chitta@gmail.com Date: Tue, 15 Nov 2005

I think the political system in India has not quite evolved yet. The democracy within a party is sorely lacking. No matter what party it is, it is not Delhi's (meaning the supremo in Delhi) business to dictate who should be the leader at a state level. But that is what is done. Delhi also decides who will run for MLA and MP in Kendrapra or Berhempur. Again that should not be Delhi's business. Until that changes anyone who disrespects the party supremo (or says negatively about her/him), no matter what party, has no chance to succeed in the party. They could be thrown out of the party. This is true for all Indian polotical parties, although there seem to be a little more (not a whole lot) internal democracy in BJP. This needs to change.

As an example, in the US, there are two main parties Democratic party and Republican party. Who will run for an elected office at any level is not decided by the party leader in Washington. There is a primary for both parties. In the Democratic primary several democrats run and registered democrats vote to decide who should be the democratic nominee. Different states have different rules on this. In some other states in the primary many people run, multiple ones from each parties. After that the top two vote getter have a contest. During the primaries most of the times the party leader of the state or the party leader in Washington normally do not openly support one candidate of their party over the others. (There are exceptions.)

I hope at some point India's political system will evolve to something like that.

Advantage Korea

Look east, find friend: The Economic times EDITORIAL THURSDAY, OCTOBER 07, 2004

Korea is important to India as a source of investment and jobs, as a growing market for iron ore, fine chemicals and software and as a potential ally in the region for India’s quest for a larger role in world affairs. But Korea’s appeal goes beyond the merely utilitarian. Korea is living testimony to the potential for development, enrichment and popular empowerment inherent in broadbased capitalist growth. It is the first country from among the ranks of poor, backward countries liberated from colonial rule by World War II to become a member of the rich countries’ club, OECD. The roots of Korea’s dazzling development go back to land reforms and expansion of primary education carried out under American guidance immediately after the War.

But the miraculous saga of industrial growth that made Korea the premier tiger economy started in the early ’60s, when that country’s per capita GDP was $60, comparable to the then Indian per capita GDP. India’s per capita GDP today is around $470, while Korea’s is close to $10,000. Korea’s growth was neither free market driven nor socialist. The state and planning, complete with cheap, directed credit, played a major role in transforming agrarian Korea into an industrial powerhouse. However, the state benchmarked corporate performance against the global best, by forcing all companies to compete in the global marketplace.

Korea has developed also in politics. From authoritarianism, Korea has progressed to a thriving democracy that tried its last military ruler and sent him into exile in a matter of 18 months. In India, Korean firms showed aggression while Japanese majors remained finicky. After overtaking established Japanese brands in market and mind share in consumer durables and electronics, Korean companies have commenced serious investment. Globally, they seem well set to move on to higher rungs of the value chain, making space for volume players from China and India and creating new and huge opportunities for India’s IT industry as well.

There are no short-cuts to making money

SUCHETA DALAL
The Indian Express: Monday, December 05, 2005

People frequently write to me with a list of shares asking if they should hold them or sell. Some ask if I will manage their portfolios. Most of them are unimpressed when I write back saying journalists are not qualified investment advisors and not supposed to dispense portfolio suggestions or tips. Such investors usually turn to Internet message boards or business television channels to find their ‘‘investment gurus’’ or leaders. Take a look at any message board, and you will see some bulls, the rare bear and a whole flock of sheep that seem happy to follow complete strangers who are often logged-in under pseudonyms. Others hang on to technical analysts, astrological predictions, number sequences or computerised systems that tell them when to buy or sell a stock without the hard work of research and analysis.

There is no shortage of investment wisdom on the Internet, available at the click of a button. But the best investment brains in the world that made millions of dollars on the stock market are not dispensing hot tips or making stock calls. Instead, they are telling people that there are no short-cuts to making money. First, you have to do the hard work of researching stocks and know where to find correct information before buying it; then comes the hard part of knowing how to keep your greed in check and book profits without wanting to catch the very top. suchetadalal@yahoo.com

India growth story is likely to continue

Let Einstein guide you in stock market PUNEET JAIN

The Economics Times MONDAY, DECEMBER 05, 2005

For equity investors in India there was never a more interesting time than the present. Never before has a market broken the previous peaks so many times within such a short span. We are now in completely uncharted territory and the only advice can be that investors must remain on their toes. Analysts brought up on a diet of past experiences and lifeless lines have been completely unable to decipher the mood of this market or its trajectory.

The key factor driving the market right now is the surge in global liquidity and flow of funds from debt to other assets like equities, gold and real estate. This is a worldwide phenomenon and rather inexplicable as rising interest rates were supposed to make debt more attractive. However, global investors continue to prefer other asset classes even though riskier. Also the huge shift in money from developed economies to developing economies on account of trade imbalances is creating consumption and economic growth in areas like China and India.

Therefore, one can safely conclude that the India growth story is likely to continue for a many more years. Therefore, the rally in stock markets can be seen as a structural bull market that would last many years and scale new heights. Given the global trend it appears that equities will remain very rewarding in India, however risk management becomes most important from now on.

The other worlds

Sri Aurobindo passed away 55 years back, on December 5, 1950. He is perceived as a great soul but his writings have yet to earn the reception they deserve. The vast body of his work and the difficult diction he employs, may be the reason to deter the common reader; but even the scholar is not enamoured enough of them. The most plausible factor that seems to be responsible is Sri Aurobindo’s insistence on spirituality while discussing secular themes such as politics, poetry, the arts, or education.

The convenient demarcation between secular and the sacred suits the academic approach. But for Sri Aurobindo this is a faulty notion because the causal aspect is eclipsed. The linkage between the two is less of the manner of an umbilical chord and more in the nature of interpenetrating imbrications. If our sensory and scientific construct of the world fails to accommodate such a picture, it must be understood as a lack.

Astronomy as an ancient passion has helped us to know about the outer universe. Astrology, too, by talking of stars and planets attunes us to their subtle influences. The different abodes of gods as described by various mythologies, also, permit us certain familiarity of the other worlds. But we rarely take their effect on our lives any seriously. And the task of Sri Aurobindo is to hammer the modern mind so as to rid it from secular superstitions.

The inner and the other worlds are a consistent theme in his poem, Savitri. Composed through the years from Quantum mechanics to nuclear holocaust, this modern epic puts a stamp of authority on the unseen fecund worlds and their inhabitants who are inextricably linked to our motions and emotions. To recognize this reality seriously, is what Savitri demands from its readers.

The different parts of our being and consciousness, as delineated by Sri Aurobindo in his Integral Yoga system, are nothing but the other worlds. We can well imagine our plights as puppets when disparate worlds are very much in the play to pull the strings. Somewhat similar to the insight offered by Baudrillard that it is the object which uses and employs us and not the other way round that we ordinarily perceive. But then, how do we benefit by this concept in our practical life?

That there runs a perpetual consonance between the seen and the unseen, might seem, at times, hard to digest, but a poetic impression can be allowed to swim aloft. The process should further deepen in the realm of creative imagination leading to a faint intellectual recognition. Since the notion runs counter to our egoistic autonomy, it is bound to take a long time to percolate down to the distant and defiant impulses. And regular recitation of Savitri helps here; its mantric effect casting its reach down to our body cells.

Group-souls

Sri Aurobindo

A spiritualised society would treat in its sociology the individual, from the saint to the criminal, not as units of a social problem to be passed through some skilfully devised machinery and either flattened into the social mould or crushed out of it, but as souls suffering and entangled in a net and to be rescued, souls growing and to be encouraged to grow, souls grown and from whom help and power can be drawn by the lesser spirits who are not yet adult.

• The aim of its economics would be not to create a huge engine of production, whether of the competitive or the co-operative kind, but to give to men - not only to some but to all men each in his highest possible measure - the joy of work according to their own nature and free leisure to grow inwardly, as well as a simply rich and beautiful life for all.
• In its politics it would not regard the nations within the scope of their own internal life as enormous State machines regulated and armoured with man living for the sake of the machine and worshipping it as his God and his larger self, content at the first call to kill others upon its altar and to bleed there himself so that the machine may remain intact and powerful and be made ever larger, more complex, more cumbrous, more mechanically efficient and entire.
• Neither would it be content to maintain these nations or states in their mutual relations as noxious engines meant to discharge poisonous gas upon each other in peace and to rush in times of clash upon each other's armed hosts and unarmed millions, full of belching shot and men missioned to murder like hostile tanks in a modern battlefield.
• It would regard the peoples as group-souls, the Divinity concealed and to be self-discovered in its human collectivities, group-souls meant like the individual to grow according to their own nature and by that growth to help each other, to help the whole race in the one common work of humanity.

And that work would be to find the divine Self in the individual and the collectivity and to realise spiritually, mentally, vitally, materially its greatest, largest, richest and deepest possibilities in the inner life of all and their outer action and nature. (p.241) Extract from SABDA Catalogue

Political Gandhi or the Whole Gandhi?

By Tom Weber

TFF Associate, January 28, 2004

Swaraj - not only political self-rule. Satyagraha - one of three gifts

Gandhi's talk of swaraj, that is independence or freedom, is generally interpreted merely as independence for the Indian nation from British rule. However, for Gandhi political activism had a more elemental role. It was to a large degree educative, helping to train the soul and develop character so as to aid the quest for individual perfection. Swaraj means self-rule and to limit this to political self-rule is to largely miss the point.

The Kingdom of God and the Constructive Program: Gandhi's second gift

Gandhi held before himself, and attempted to place before the masses, a picture of an ideal society that was to be the goal of collective endeavour, as the approach towards Truth was to be the goal for the individual. This vision was summed up in the word "Ramrajya", the "Kingdom of God," where there were equal rights for prices and paupers, where even the lowliest person could get swift justice without elaborate and costly procedures, where inequalities that allowed some to roll in riches while the masses did not have enough to eat were abolished, and where sovereignty of the people was based on pure moral authority rather than coercive power.

Gandhi's third gift: the eleven vows

Desai points out that there was a third gift from Gandhi: his eleven vows, a set of rules which established the code of conduct for his ashram inmates and which are key to understanding Gandhi's religious quest.

Gandhi became relatively one-dimensional, a political actor who, stripped of his more confusing trimmings, became palatable for American audience, Gandhi's moral jiu-jitsu having been replaced by a political one where, instead of the moral balance being shifted, the political power of the opponent was undermined. Gandhi's method of political struggle is often referred to in writings on the lives of the likes of Martin Luther King, Jr., Nelson Mandela, Aung San Suu Kui and others, however Gandhi has also made a substantial contribution, not commonly commented upon, in areas that are outside the narrowly defined political arena. He also had a large influence on important branches of the disciplines of ecology, peace research and economics through his profound influence on leading figures in the disciplines, such as Arne Naess, Johan Galtung and E.F.Schumacher.

For example, where there is any awareness of them at all, cow protection and khadi (hand-spun, hand-woven cloth) production may have seemed even more anachronistic and irrelevant (and indeed bizarre) to western audiences than they did to some of Gandhi's English educated political co-workers. Ironically these very practices, or at least the philosophy behind them, were examined rather than discarded out of hand by some and even touched profound chords in western thinkers such as Næss and Schumacher, and went into the formulation of what is now known as "deep ecology" and appropriate technology and human-centred "small is beautiful" economics. Even if we just look at Gandhi the political activist or Gandhi the saint we still see someone with great power to influence others. While George Orwell thought that Gandhi's basic aims were reactionary and that his political methods could not have worked against extremely repressive regimes, he still managed to conclude that, "regarded simply as a politician, and compared with other leading political figures of our time, how clean a smell he has managed to leave behind!"

If, however, we look at the whole Gandhi, instead of just Gandhi the clean smelling politician or beyond reproach saint, we see a person struggling very publicly to discern the meaning of life, someone who not only knew that there was something more to human existence than the mundane, but had the courage to reach out for it and admit to failure. Perhaps the importance of Gandhi is best characterised by Louis Fischer when he perceptively remarked that it "lay in doing what everyone could do but doesn't", and George Woodcock when he noted that the Mahatma, "with an extraordinary persistence ... made and kept himself one of the few free men or our time", rather than by merely pointing out that he helped to disband the greatest empire ever known and was instrumental in freeing a large section of humanity from colonialism. The Transnational Foundation for Peace and Future Research expresses a vision and is an experiment in applied peace research and global networking.

Vinoba: harmony in thought

By Thomas Weber

Vinoba explained that with the progress of science and the creation of nuclear weapons humanity faced ultimate destruction. In order to neutralise this force of violence and to arouse the world's conscience Gandhi's nonviolence had to take on "more subtle and finer forms." Satyagraha could no longer afford to "create agitation or tension in the minds of the opponent," it had to avoid a "collision of minds and seek harmony in thought." Until change was brought about through understanding and acceptance, rather than through imposition, "the seeds of violence, imperialism and world wars would not be rooted out."

Consequently, Vinoba declared that Jesus' concept of "resist not evil" and Gandhi's "nonviolent resistance" were no longer adequate and what now had to take their place was "nonviolent assistance" in right thinking. Without this all that could be achieved was legislative reform, and that could never lead to total revolution. Vinoba saw the use of political structures as a method of solving problems as doomed to failure: "When one problem appears to be nearing a solution, ten others crop up", and when a solution appears to have been achieved "soon it raises its head again." With Bhoodan, the land-gift movement, he had already provided the classical example.

The transformation to a sarvodaya social order was to be accomplished without directly challenging the legitimacy of the state, for, after all, in a democratic system, power had been entrusted to the state by the people. However, it could not be achieved through the ballot which Vinoba saw as either a farce that left real power in the hands of the few, or as a formula for disruption. Vinoba's aim was to create conditions which would "do away with the need to use even the power of the State." The achievement of this anarchist polity was to come about gradually - he was not anti-state; he hoped to bypass the structures on which the state rested and thus allow it to whither away. Vinoba was fond of saying that politics disintegrates and spirituality unites. He made it clear that for him there could be no outward revolution without a corresponding internal one, without a change in mental attitude: "All revolutions which take place, whether they are social or economic, have their roots in spiritual ideas. At first there is a change in spiritual values and later on social, political and economic values undergo change."

Given his activist background, it is not surprising that at the time of this intellectual reassessment, JP's analysis of the political situation and his understanding of satyagraha would mature into something substantially different from Vinoba's, that unlike Vinoba he would embrace the position of Gandhi the politician over Gandhi the saint. JP noted that although Vinoba seemed to hold that "systematic change in the political order could be brought about without a struggle, even a peaceful struggle," after twenty years of effort nowhere had success been achieved. JP's primary concern was the achievement of real democracy and a society devoid of inequalities where all lived in a state of freedom. His concerns, like Vinoba's, were centred on the problems of the human condition - freedom of the human personality, of the mind and of the spirit - but his quest was a political, not a spiritual one. He was searching for the form of social organisation which would provide the masses with the maximum freedom, and the most appropriate way of bringing it about.

JP was for a partyless democracy but he saw that there was no alternative to parties in the short term, not until a lengthy process of mass political education had managed to eradicate the distinctions of class and caste. Rather than merely allowing the state to wither away he saw danger for the future if anti-democratic tendencies in power politics were not tackled. His rejection of the Vinoba's "positive" satyagraha came from his realisation that it was inadequate to produce the psychological climate necessary to bring about the social revolution he desired. Ostergaard makes the point that whereas Western anarchism is "immediatist", Indian anarchism is "gradualist". JP was more anarchistic in the Western sense, reverting to active struggle and "negative" satyagraha. Unlike Vinoba, he was also anti-state, pitting people's power against that of the state. Vinoba, on the other hand, was a gradualist, far more concerned with the purity of the means than with any immediate ends that may be achieved.

Remove massive poverty of Indian masses

About IIPM > Dean's Message: We need to understand that sustainable growth can be achieved only by committing ourselves to macro level growth strategies that would encompass the bottom 80% of the population and not just the top 20%. This conscientious approach would make a growth rate of 12% per capita per annum possible. Professor Arindam Chaudhuri, renowned management guru & economist; Dean, Center for Economic Research & Advanced Studies

In the light of globalization of the Indian economy and capitulation of Indian brands, it is imperative for tomorrow's leaders to be aware of the above mentioned facts, so that they can face the emerging global challenges of international markets with confidence, while remaining committed to remove massive poverty of Indian masses within a generation. While some wealthy nations enjoy the luxury of material of plenty, the fact remains that more than twice the number of people killed in the 2nd world war die every year of hunger and curable diseases. And yet we fail to realize that unrestricted satisfaction of all desires is not conducive to human well being! Nor is it the way to happiness, or for that matter, even maximum pleasure!!

When the wealthy nations today talk of 'being one' with the rest of the world, and of concepts of global village, their talks simply border on hypocrisy. The time has come for India to lead the way in showing that this carnage can be stopped with the help of determined leadership and long term committed vision. The Indian managers need to develop a strong vision for their companies, and most importantly, for the people who work for them, apart from having a terrific sense of commitment for the country, great motivational skills and leadership qualities.

A growth rate of 12% per capita per annum would imply that India can beat U.S.A. in terms of purchasing power parity within the next 25 to 30 years and become economically the strongest country in the world. For this, the Government of India needs to support the Indian organizations with suitable pro-people & pro-India policies, which would help Indian organizations in becoming stronger to compete in the world market successfully. Future leaders must be aware of this and not remain intellectually handicapped.

Dislike Bush Love Marx Globalise Gandhi

Prof. Arindam Chaudhuri B & E Editorial

Volume 1 Issue 1, 12 August - 25 August 2005

Every, simply every Indian, Pakistani or Bangladeshi residing in America I happen to meet, seems to dislike Bush. My friend from IIPM, who at one time loved staying in the intellectual capital of the world – Boston – today feels “definitely alienated” as a brown in America.

• “We are always being looked at with suspicion,” she says. Her gym instructor talks about “outsourcing” in a sarcastic tone when they meet. And other Americans still feel bad to see browns earning more than the whites – her husband being a doctor.
• The wife of a Pakistani friend of mine – a doctor himself – is deliberately asked more than once by other women coming to pick up their children from a New Jersey school, if she is the kid’s maid servant.
• And my Bangladeshi friend who stays in one of the most upscale localities of New York, is asked by her neighbours, deliberately again, whether she is the new janitor.
• All my friends feel that this discrimination, though always prevalent, was much lesser earlier; and that it’s not worth staying in the US anymore (not to talk about rising prices and a growing difference between the ‘haves’ and ‘less haves’).

The bottom- line is very clear. Bush is pathetic for all of them; and for about half of the US who didn’t vote for him. Those who voted for him are not half as passionate about him, as those who are against him. Never perhaps in recent history has a President of the world’s most admired country been so disliked across the world, and been looked down upon as a role model to the young ones.

Interestingly, on the other hand, in a poll conducted by BBC (post 7/7), Karl Marx got voted as the world’s greatest ever philosopher, getting more than 29 percent votes out of the 30,000 odd votes, leaving the next in the race way behind at 12 percent. This, despite a huge campaign by the pro-Bush media against voting for Marx. The growing love for Marx was earlier given credence, when none other than George Soros, after spending years in the stock market, said that Marx and Engels were perfectly right in their analysis of capitalism. Marx’s thoughts on globalisation are today being looked upon as startlingly relevant by leading economists around the globe.

Venezuelan President Chavez recently handed over hundreds of idle companies to worker cooperatives, and stated, “Revolutionary democracy is the transition, the bridge, the path towards ‘socialism of the 21st century’, one that is Bolivian, Venezuelan, and Latin American.” He also floated ‘Telesur’, the Latin American television channel, to counter the “cultural imperialism” that was occurring thanks to the CNN/BBC kind of lopsided reporting, which ignored developing country perspectives.

A friend’s nine year old son, who was born in the US, wants to become the first American President with Indian roots. His reasoning is simple: The Americans need to learn the most invaluable Gandhian principle of ‘non-violence’, and only an Indian can teach them that. As the hatred for Bush grows, whether the world will see the revival of Marxism might still be debatable, but the globalisation of Gandhian ideology is surely the need of the hour. Else, we might have to live with Bush’s warring methods – a time proven symbol of typical capitalist greed ‘For A Few Dollars More’.

The regional lords it over the national

IIPM Knowledge Centre Local is not down market anymore. While regional brands are gaining acceptance, big national players often lose touch with aspirations at the grassroots level. By SUTANU GURU

Most po­litical pundits lamented the supposed fact that there was no alternative to the Congress and how the grand old party’s stranglehold over power was harmful for the Indian democracy. With a nationwide network of workers and patronage and a huge war chest of funds to fight elections, the Congress would continue to deny smaller political parties their day in the sun. Or so it was believed. And what really happened?

If illusions were horses, pundits would ride them forever. Look at the tumultuous Indian political landscape; peep into the incestuous world of Indian media; and glance at the snooty world of Indian marketing in contemporary times and you simply cannot escape the startling con­clusion that has proven all manner of pundits wrong: the regional lords it over the national. Be it politics or media or consumer products and services, ‘regional brands’ have refused to be beaten into submission by the much bigger national brands.

• The STAR network may rule the Indian skies with a range of programming that straddles news, saas-bahu potboilers and sports. Yet, in Tamil Nadu, it simply hasn’t been able to dislodge the Sun network which is the undisputed number one. Despite taking over rival Tamil channel Vijaya and spending millions on pro­gramming and promotions, STAR is a distant second and sometimes third in the market.
• The Sony network may have taken STAR head on in the national sweep­stakes with programmes like Jassi Jaisi Koi Nahin and The Indian Idol. Yet in Andhra Pradesh, it is the home grown Eenadu network that calls the shots.
• The Times of India may claim the status of being a ‘super brand’ as the largest selling English daily in the world and a strong presence in virtually all major Indian cities. Yet when it comes to the newspaper markets in West Bengal and Kerala, ‘The old lady of Boribunder’ (As old tim­ers fondly describe The Times of India) runs far behind market leaders Ananda Bazaar Patrika and Malayala Manorama, respectively.
• Hindustan Levers, Procter & Gamble, ITC and Tata Tea may be veritable giants that hold sway not only in the Indian market place, but also boast of a significant presence in global markets. Yet, in many consumer product categories, to quote The Hindu Business Line: “Despite slick packaging, attempts at differentiation and well-orchestrated advertising campaigns, players have found it difficult to shake off the legacy of a commodi­tised business… consumers look for cheaper options in regional and local brands.”

So, whether it is market share, vote share or mind share, regional brands have displayed amazing chutzpah in holding their ground against the more powerful na­tional brands. Some analysts say that this phenomenon reflects how diverse and fragmented a nation India is. When it comes to consumer products, cultural variations and differences in preference patterns are dished out as reasons why national brands find the going tough in many product categories.

Yet, such facile presumptions about the impact of cultural and societal diversities tend to hide a big weakness of the major national players, be it in media, politics or consumer products. The primary function of a successful organisation is to fulfil the aspirations of consumers. The national players often lose touch with aspirations at the grassroots level, allowing local and regional players to sneak in and deliver a telling market­ing punch. There is also a huge change in the mindset at work here. With growing prosperity, middle class Indians who are no longer fluent in English are no longer awed by the ‘firang’ image.

Till 1977, the combined circulation of English newspapers in India exceeded he combined circulation of newspapers in all other Indian languages, including Hindi. In what can be a landmark year in 1978, Hindi newspapers overtook English dailies for the first time and the latter has steadily lost ground since then. According to the latest available data from the National Readership Survey, 2003, not a single English newspaper figures in the top ten lists of largest selling dailies. Every single one is a regional brand. There is little doubt that regional brands have given the national brands sleepless nights.

To come back to the transformation in the Indian mindset, the success of regional brands with an earthy appeal also reflects the growing confidence of the Indian consumer; a growing equanimity about the Indian identity and a significant drop in the Indian inferiority complex related to English and all things ‘phoren’.

• Till the late eighties, in upscale college canteens, board rooms, parties and discothèques, it was infra dig and downright downmarket to converse in Hindi or any other Indian language. You could avidly see Bollywood movies and enjoy them; but it was sacrilege to admit it in front of peers. The standard practice was to ridicule Bollywood movies while gushing about the offerings from Hollywood. Most importantly, the host of a party or a discothèque would be banished to the never land of social acceptability if any Hindi songs were played.
• All that changed in the 1990s. The satellite channel boom ensured that ‘Hinglish’ became socially acceptable, and even fashionable. “Thanda matlab Coca Cola” and “Yeh Dil mange More” are just two examples of how far Indian marketers were travelling to woo the new Indian consumer.
• And, it all started with pretty people dancing to singer Daler Mehndi’s Bhangra beats in discothèques. By now, ‘item’ and Hindi pop numbers rule the dance floors. MTV first came to India as a channel that would lure the youth with ‘English’ songs and disdained Hindi songs in a lofty manner. By the late 1990s, all that MTV was playing were Hindi songs.

Pundits should not worry about this ‘fragmented’ nature of the Indian market. On the one hand, regional ‘brands’ in politics are forcing the bigger national players to pay more attention to voters. That is the power of democracy at work. On the other hand, regional consumer brands are forcing the bigger national players to not become complacent and take the consumer for granted. That is the power of the market place at work.

Glocalization

IIPM Knowledge Centre Glocalization has been a savior for many companies chasing diverse markets. Though it cannot be a universally applicable concept; this article looks into few examples of how companies leveraged glocalization to work wonders; by Amim Ahmed and Mahohar G

Liberalization and the dawn of Digital Marketing compelled conglomerates aspiring universal leadership to conceive radical strategic facets in their marketing practices and philosophies. The buzz “GO GLOBAL” was phenomenal, and thereby its impulse, that many marketers overlooked the eminence of the basic law that: “though the products are global, the markets are local.” The dynamic process of globalization forced the imprudent to recoil and scripted success for the innovators, the ones that made the best & most are the ones which became glocal.

Glocalization is a strategic route adopted by organizations determined to lead and conquer markets beyond their cultural and geographical boundaries. Organizations that have managed to efficiently align and synergize their core global vision vis-à-vis their cross border market specific visions and mission have achieved leadership not just locally but globally. The best example one could cite for Glocalization is that of Mc Donald, which had stood all the challenges, yet managed to stick to its globally standardized menu, but see how they did sell local?

The loudest glocal communication of all was done by HSBC: “The World’s Local Bank”. They say that it defines the distinct personality of the brand. It took HSBC a worldwide research to understand that though people value international products and services, they question the global model, and buy products that relate to them as an individual in their “bound rationality”.

“A Brand that stands for nothing, can fall for anything” has been an effective mantra, for which brands have been aggressive enough to capture mind space of their respective targeted customers. But, the impact of Glocalization is so much that even positioning is also going the glocal way. Look into the recent past advertisements of Coca Cola, yes, it’s less of ‘Coca Cola Enjoy’, but Thanda Matlab Coca Cola, which has been shot with Aamir Khan, posing in different cultures, as a Hyderabadi, Punjabi, Lucknowi, Bombay-Bhai and as a Gorkha as well.

Many in the list of failures show how multinational and global products have failed in local or domestic markets. Observers sigh at the causes, and neo-professionals ridicule at the reasons. Why? The reasons are very elementary. The marketer, when going global, must make a pitch and test its validity and relevance in every locality of the domain. Going global might not take much effort. But, going glocal means a lot of responsibility.

Reform political parties first

PRATAP BHANU MEHTA
Seminar January 2001

It is surprising that in the midst of our current debates over constitutional reform little attention is being paid to the reform of the internal structures of our political parties. While the Law and Election Commissions have often argued for the better functioning of political parties, politicians and the public at large act as if reforming political parties is inconsequential. Many of the anxieties that lie behind the calls for constitutional reform can be more effectively addressed by reforming the structure of our political parties.

The fragmentation of the party system and the prospect of perpetual coalition governments; the weakening of democratic accountability despite high turnover of incumbents; the fact that political parties are unable to transcend their narrow social bases and become parties of principle; the diminishing quality of public deliberation in our politics – all have their roots, less in the failure of the Constitution than in the party structures that have grown under it. These outcomes are, to a considerable degree, produced by poor institutionalization of intraparty democracy.

The lack of attention given to the inner functioning of political parties is surprising. Most complex democracies are unthinkable without parties. Democracy performs its most salient functions through parties. The selection of candidates, the mobilization of the electorate, the formulation of agendas, the passing of legislation – is all conducted through parties. Parties are, in short, the mechanisms through which power is exercised in a democracy. While, thanks to Robert Michels’ classic analysis in Political Parties, few are na•ve enough to believe that the oligarchic tendencies of political parties can be entirely overcome, it is abundantly clear that the ways in which parties structure opportunities has decisive outcomes for democracy.

The health of democracy requires that we attend to the health of our parties and the party system. Intraparty democracy will prevent fragmentation of parties, make politicians more accountable and enhance the quality of deliberation. The degree to which political parties are willing to countenance grand constitutional experiments without setting their own houses in order ought to be an object of suspicion. Our anxieties about the functioning of democracy in India are more likely to be alleviated by proper attention to intraparty democracy than by tinkering with a constitution that exemplifies the democratic aspirations more than our party leaders do.

The Burden of Democracy

Pratap Bhanu Mehta

After nearly six decades of its existence, there is a pervasive feeling that India’s democracy is in crisis. But what is the nature of this threat? In this essay Pratap Bhanu Mehta, reminding us what a bold experiment bringing democracy to a largely illiterate and unpropertied India was, argues that the sphere of politics has truly created opportunities for people to participate in society. But, looking at various facets, he also finds that persistent social inequality on the one hand, and a mistaken view of the state’s proper function and organization on the other, have modified and hindered the workings of democracy and its effects in innumerable ways. Positing the quest for self-respect as democracy’s deepest aspiration, this essay explores how inequality and the crisis of accountability have together impeded collective action to achieve such an end. To recover this sense of moral well being and responsibility, Mehta suggests, is the core of the democratic challenge before us.

Optimistic, lively and closely argued, the Burden of Democracy offers a new ideological imagination that throws light on our discontents. By returning to the basics of democracy it serves to illuminate our predicament, even while perceiving the broad contours for change. (jacket) Penguin, 2003, x, 178 p., (pbk). ISBN 014303022-1.

Social contract

Economic freedom and political freedom:
the links between misery and these two freedoms
The roots of human misery ALOK SHEEL
The Economic Times FRIDAY, JANUARY 28, 2005

Philosophers have long debated whether there are any patterns to be perceived at all in history, or whether history has any lessons to offer later generations. Arguably, recent history would appear to suggest that human misery can to a great extent be alleviated through a combination of economic freedom (that would ensure sustainable growth) tempered with political freedom that would pressure governments to ensure that nobody is excluded access to basic human needs. Although a case is often made out that one kind of freedom leads naturally to the other, that economic and political freedom are natural allies, so to speak, recent historical experience indicates that this relationship is contingent.

• There are societies with high per capita incomes and high degrees of economic freedom that are liberal democracies (such as in America and Europe), but there are others that remain to varying degrees politically un-free, especially in East Asia.
• At the other extreme are societies that are both economically and politically largely un-free, such as China and Vietnam.
• India seems to be in a class of its own with a high degree of political freedom combined with low per capita income and economic un-freedom. Such a social organisation can nevertheless be a stable one, as India has demonstrated for over half a century.

A common and, one might even hazard to generalise, defining feature of economically repressed societies is the high share of the public sector in economic activity. In several cases, as in Latin American countries, such activity might be nominally private, but really owned and controlled by entities close to the State and clearly gaining from public policy largesse, as the public sector typically does.

Where such economic un-freedom is combined with political repression, the State is highly unstable because there is no popular support, or implicit social contract between the government and the people. Frequent regime change, and even outright collapse, such as occurred in the former Soviet Union, can result. Realising this, most communist countries are following China’s lead of increasing economic freedom. On account of the dependence on the State for economic activity, fiscal stress is common in such countries, although lack of popular pressure might well keep fiscal crises at bay. But such fiscal discipline comes at the cost of heightened human misery.

Nobel Laureate Amartya Sen has eloquently argued that India has been better able to address famine and hunger than China, which grew much faster, because of popular pressures that resulted from greater political freedom. It is this combination of economic un-freedom and political freedom in India that has resulted in one of the biggest fiscal deficits as a percentage of national income. The ultimate trigger of the economic reforms of the ’90s was the realisation that in a democratic environment this fiscal burden could only be lightened through much greater economic freedom to attract private investment on a vast scale. This imperative remains.

Liberalisation’s children

RAMESH VENKATARAMAN

The Indian Express : Thursday, December 01, 2005

Liberalisation’s children are less aggrieved than upwardly mobile. Along with Bunty aur Babli (but thankfully in more conventional ways), they are eager to get in on the economic action they see around them and on their TV sets. What they are demanding from their politicians are effective public services and infrastructure (the bijli, sadak, paani, padhai of the slogans), a measure of probity, and a push to attract investment and create jobs that will give them a fighting chance to move up in life.

In short, we are moving from a politics obsessed with redressing historic wrongs — Indira Gandhi’s Garibi Hatao, militant labour and kisan movements of the ’70s and ’80s, Mandal, Mandir — to one focused on attaining future dreams. Equally, today’s electorate is starting to view government less as a mai-baap granting entitlements — seats in colleges, jobs in the public sector, subsidies — and more as an enabler of opportunities. This is a quintessentially middle class ethos in the making, even if material reality for the vast majority is still a long way from middle class levels. The lack of political momentum behind the proposal to introduce reservations in the private sector is telling evidence of the new mindset.

To become an effective political voice, however, the middle classes must shed their brahmanical abhorrence (although not their inherent civility, rectitude and distaste for unctuous obsequiousness before the powerful) for the rough and tumble of mass politics. India urgently needs its middle classes to stand up and be counted — not just in business and economy, but in politics. The writer is a Mumbai-based management consultant. The views expressed here are his own