Thursday, December 08, 2005

Globalisation is not the solution; it is the problem

By Jay Dubashi
Dhan.com December 12, 2000 (Source: Free Press Business Journal)
We are thus caught in a three-way squeeze, from MNCs and from WTO. Since the two are part of the same globalisation system, it is globalisation that will one day kill our industries, just as the globalising British and their East India companies killed our industries two hundred years ago. Globalisation is not the solution; it is the problem. MNCs, WTO, World Economic Forum and Enron are aspects of the same problem and so are foreign investors. That China has been able to survive them is the result of careful strategic planning by Chinese authorities, while we have nothing up our sleeve to protect ourselves.
We seem to think that more and more foreign investment will solve our problems, while the fact is that it will create more problems. And you cannot deal with one problem by creating two more problems. A growth rate of nine per cent a year is the kind of target India should aim at and it is perfectly within our reach, provided, and it is an important proviso, we lay the necessary groundwork for it. China has been able to maintain rates exceeding 10 to 12 per cent a year for the last decade, but the high growth rates are not entirely due to high rates of foreign investment. China's investment rate is actually lower than its gross savings rate. India has to put its house in order before asking organizations like WEF to help. As far as I know, WEF has never been allowed to hold its summits in China. China does not require such summits. Its economy is firmly under its control and it knows how to go about its business without undue outside interference.

Reforms have devastated small and medium industries

Price of reforms: Industries losing out, one after the other
By Jay Dubashi Dhan.com September 21, 2000 (Source: Free Press Journal)
The real reason for the slowdown in the economy is the slow destruction of our industry. Reforms have devastated small and medium industries and killed them off. Small industries have been killed off by imports and medium industries by foreign investors. Our entire soft drink industry has been destroyed. Our entire auto industry has been reduced to a shell. Foreigners are taking over our cement industry and also our drugs industry. One by one, major industries are being taken over and killed. Recently, Raymonds sold its steel plant to a German company, though Germans have never produced steel in India. Our businessmen are interested only in money and are selling off their companies to foreigners. Even the Indian government is busy selling its companies to foreigners. It could not get a buyer for its Modern Foods and sold it to Hindustan Lever, a multinational, though this company has never baked bread in India.
In a modern economy manufacturing holds the key to economic development, which is why all developing countries like South Korea, Malaysia etc have been focussing on manufacturing sector. And it is precisely this sector that is slowing down. Remember that the turnover of the entire Tata group, the biggest in the country, is around Rs 35,000 crore a year. The turnover of the next biggest business group, Reliance, is slightly smaller. This means that the reforms are destroying industries worth four Tata groups every year. It took Tatas a century and half to build up their group. The reforms are destroying in three months what Tatas took 150 years to build.
It is not only small and medium industries that have been destroyed. Large industries have also been hurt badly. Companies like Tata Steel and Telco are not what they used to be. They made losses last year, something they never did in the past. A large number of big companies are sacking people right and left though they call it voluntary retirement. Experienced people are being sent home, which means not only no work for them but also loss in output eventually. Some of the well-known names in business are disappearing. Almost all Indian firms making TV and electronics have vanished. And their staff is unemployed.
As I said, the reforms are costing this country four Tata groups a year. Five years from now, it could be ten Tata groups a year. Remember that only multinational companies and software firms like Infosys are flourishing. But remember also that companies like Infosys are essentially contractors and do no great work except doing what they are told by their clients. I do not know how long they are going to last. But in the meantime, India's industrial haemorrage continues at the rate of Rs 142,000 crore a year, a heavy price to pay for a poor country like India.

Let a Thousand cities and towns bloom

Mayors in shining armour Sauvik Chakraverti THE TIMES OF INDIA December 8, 2005
Without free civic democracy we are very far removed from the democratic ideal of ancient Athens. Bangalore, like every other Indian city and town, needs a Pericles. The US has 350 million people in 200 cities. Indians, 1,000 million-strong, should see their future in 500 great cities and 5,000 lovely towns.
To get there we must first fix our transport system. 'Spokes' have to be built from each of the five 'hub' cities of the Golden Quadrilateral. These spokes will connect all satellite towns. The five cities will decongest; satellites will mushroom. Apart from 'hubs-and-spokes', India will also need twin coastal expressways. With free trade, our twin coastlines will see massive economic activity and development. Under socialism, landlocked cities like Delhi and Bangalore have overgrown because of the artificial, bonsai economy. With free trade, it will be more natural for coastal cities and towns to flourish. This is what is happening in China, and from Shanghai proceeding down along the East China Sea, many great new cities are erupting.
India's west coast, from Surat to Cochin, has over 50 ports that are ancient centres of trade: Karwar, Honavar, Kundapura, Kudla, Kasaragode, Mahe, Kozhikode. Today, they are all in ruin and a rank 'newcomer' like Mumbai is over-important in the urban scheme. Similarly, Chennai and Kolkata on the east are newcomers bursting at the seams. With twin coastal expressways, and free trade, it will be boom time for every port city and town.
As far as matters of governance are concerned, both the central and state governments will have to yield substantial powers and resources to the mayors who will be required to run each of these cities and towns. Instead of the village vision of panchayati raj, the focus in a free market economy will have to shift to municipal administration. It is only in cities and towns that the division of labour is maximum — you cannot be a plumber, electrician, tailor, barber, dhobi, receptionist, taxi driver or chowkidar in a sleepy little village.
It is for this reason, basic to wealth creation, that cities have always been magnets for poor village folk. If we really want to help our peasantry, we should urbanise aggressively and rescue them from poverty and caste. Failing to do so will mean their 're-enserfment' as cheap agricultural labour. Urbanisation, in contrast, will lead to their moving away "from subsistence to exchange", as Lord Bauer aptly put it.
It is in the exchange economy of urban India that poor peasants will find niches from which they can achieve for themselves a far better life than the precarious toehold on existence they have in village India today. The liberal vision is, therefore, the polar opposite of the Nehru-Gandhi vision, which saw the future in terms of "millions of self-sufficient village republics". The liberal vision is 5,500 free trading and self-governing cities and towns. The writer is an economist
Comment: Hiranmay Karlekar wrote an edit-page lead-article in The Indian Express, nearly 20-years back, captioned, Let a Hundred States bloom, advocating ceation of smaller states. India is still aeons away from that vision. TNM

The task of the Left is against all irrationalism

By Prabhat Patnaik
akhbar Year 2002, No 5 October-December
This new phase of imperialism is based on the emergence of a new form of international finance capital. The rapid propagation of neo-liberal economic policies was a result of this confluence. And the masses, disillusioned with the years of bourgeois rule, were reluctant to defend the dirigiste economic policies, even though neo-liberalism was later to cause havoc to their livelihoods. This hegemony was by the emergence of divisive tendencies among the people. Two points however need to be noted about this transformation.
  • First, anti-democratic movements resembling in some ways the Hindutva phenomenon have mushroomed all over the world; the assault on reason, and the accompanying attack on democracy, are not specific to India.
  • Second, communal fascism, even while promoting its own agenda, is, very definitely, engaged also in promoting the agenda of imperialism.

The attack on the livelihoods of the masses that the hegemony of international finance capital entailed, through deflation, unemployment and cuts in social wage, often gave rise to a refracted form of anger, not against the oppressors but against some other segment of the oppressed themselves, breeding ethnic, religious and communal conflicts. Even when there was anger against the oppressors, this itself often took the refracted form of an anger against their skin colour, their religion, their culture, their customs, and their commodities, breeding fundamentalisms in an atavistic quest for piety and purity. But a consequence of this was that others among the domestic population with the same religion and cultural affinities were made targets of attack in an irrational frenzy.

The fact that accentuating unemployment provides a fertile soil for divisive tendencies among the people is well known. Needless to say, all these irrational ideologies do not ever address themselves to the question of improving in any way the conditions of the downtrodden. It follows then that we cannot accept either of the following two positions:

  • we cannot support imperialism, and the sundry irrational movements that hitch their bandwagon to it, in their attack on such irrationalism as is hostile to it, in the name of "modernity" and "civilization";
  • equally, we must eschew support to irrationalism, that is hostile to imperialism, just because it is "anti-imperialist", overlooking the fact of its being a handmaiden of feudal reaction.

An enormous amount of discontent is building up among the peasantry, not just the landless or poor peasants who eke out a precarious and marginal existence, but the middle and even the rich peasantry which has not escaped the depredations of the imperialist-dominated world market. The task of the Left is to mobilize democratic opinion against all irrationalism, and to link this mobilization with a movement against imperialism, since the phenomenon of imperialism is what underlies the flourishing of all irrationalism in the contemporary epoch. Courtesy: People's Democracy

US is capable of acting as a surrogate global State

Political Affairs 09/14/2004
"Globalisation" is the term under which imperialism presents itself in its current phase. The term however is a misnomer. The mistake here lies in confusing the mobility of finance for the mobility of productive capital. There are two very distinct hurdles to the pursuit of employment -promoting policies by States in the current epoch.
  • The first is the fact that finance capital opposes such policies; and
  • the second is the fact that while the States are nation- States, finance capital in today’s world is international finance capital.

If instead of nation-States there was a global State then the second of these reasons would have ceased to be operative. Since there is no actual global State it would have to be a surrogate global State that can at all contemplate pursuing employment-promoting policies for the world economy as a whole.

The State of the leading capitalist country, the US, though it is capable of acting as such a surrogate global State, and does play this role in certain respect, is nonetheless too much of a nation-State to take on the employment-promoting role of a possible global-State. It would therefore have to be a whole group of nation-States acting in concert that can act as a surrogate global State for purposes of employment-promotion. But even if such a group of nation-States could be persuaded to act in concert to promote global employment, it would still have to confront the opposition of globalised finance capital, i.e. the first hurdle mentioned above. It is not surprising therefore that globalised finance capital uses a whole gamut of weapons to prevent employment-promoting policies, by an entire group of nation-States acting in concert, from taking effect. And one important weapon is to shift the focus to the so-called "export of jobs" to the third world.

In India the peasantry had been insulated against a decline in its terms of trade, arising from factors such as those mentioned above, because of the system of public procurement and distribution that had been in place for quite some time. But with liberalisation this system became substantively inoperative. In short, there is a fundamental contradiction between the adoption of neo-liberal policies and the preservation of democratic institutions. New Age is a publication of the Communist Party of India.

CPI(M) against FDI in retail: Karat

The Hindu Business Line Thursday, Dec 08, 2005
New Delhi , Dec. 7 The Communist Party of India (Marxist) on Wednesday said the party is not generally opposed to foreign direct investment, but it certainly does not buy the arguments being used to allow FDI in retail trade. Speaking at an interactive session organised by the Associated Chamber of Commerce and Industries of India (Assocham), the General Secretary of the CPI(M), Mr Prakash Karat, said that "the impression that my party and the Lefts are opposed to foreign direct investment is generally not correct." "But are not convinced by the argument in favour of allowing FDI in retail trade," he said.
Mr Karat said that the party welcomes FDI when it helps in acquiring new technology, promote employment, augment productive capacity, particularly necessary in the manufacturing sector. "There is not a single instance when the Left has objected to FDI in manufacturing," he said. Elaborating the reason for objecting to FDI in retail trade, Mr Karat said that during the last 15 years employment in manufacturing and all other sectors have decreased. In case of retail trade, the employment has increased and according to one estimate it employs around four crore people. This sector has also absorbed some labour that the agriculture sector could not absorb, he said. "So if you kill this employment area it will have serious repercussions in our society," he said.
He added that the party has asked the Government to closely examine the fall out of allowing FDI in the retail sector in other countries. On allowing South Korea's Pohang Steel Company (POSCO), Mr Karat said that the party had never opposed the proposal. "We were not opposed but had asked the Government to look into the issue of indiscriminate exploitation of our mineral resources," he said. Related Stories: FDI in retail — A question of jobs, not ownership The retail FDI bugbear FDI in retail: The debate rages

Wednesday, December 07, 2005

Who are Dalits?

Caste system: One of the more confusing mysteries of India is its caste system. The caste system, which has existed already for more than 3000 years, has been developed by the Brahmins (priests) in order to maintain their superiority. Eventually, the caste system became formalised into 4 distinct classes (Varnas). At the top are the Brahmins, the priests and arbiters of what is right and wrong in matters of religion and society. Next come the Kshatriyas, who are soldiers and administrators. The Vaisyas are the artisan and commercial class, and finally, the Sudras are the farmers and the peasant class. These four castes are said to have come from Brahma's mouth (Brahmin), arms (Kshatriyas), thighs (Vaisyas) and feet (Sudras).
The Dalits: Beneath the four main castes is a fifth group, the Scheduled Caste. They literally have no caste. They are the untouchables, the Dalits, which means oppressed, downtrodden and exploited social group. A Dalit is not considered to be part of the human society, but something, which is beyond that. The Dalits perform the most menial and degrading jobs. Sometimes Dalits perform important jobs, but this is mostly not socially recognised. Dalits are seen as polluting for higher caste people. If a higher caste Hindu is touched by an untouchable or even had a Dalit's shadow across them, they consider themselves to be polluted and have to go through a rigorous series of rituals to be cleansed.
In India there are approximately 240 million Dalits. This means that nearly 25% of the population is Dalit. It also means that in a country, where everybody is supposed to have equal rights and opportunities, 1 out of 4 persons is condemned to be untouchable. In general one can say that being a Brahmin means that you are more privileged. This can imply having a good education and, accordingly, a more powerful position in the society. Being born as a Dalit you will be less well off and because of less education you will have a less good job. In daily life there are a lot of consequences of being a Dalit.
Dalits are poor, deprived and socially backward. Poor means that they do not have access to enough food, health care, housing and/or clothing (which means that their physiological and safety needs are not fulfilled). They also do not have access to education and employment. With deprived we would like to underline the injustice they face in every days life. Officially, everybody in India has the same rights and duties, but the practice is different. Social backwardness, lack of access to food, education and health care keeps them in bondage of the upper castes. Nevertheless, in the recent past the Dalit society has also thrown up powerful leaders, like Dr. B. R. Ambedkar. He was on of the most powerful personalities to stand for the rights of Dalits. National Campaign on Dalit Human Rights Source used: Kotler, Philip and Gary Armstrong,Principles of Marketing, Maslow's hierarchy of needs, , New Delhi, 1997, page 156.

The search for a Hindu agenda

By Subramanian Swamy Organiser Home > 2005 Issues > November 20, 2005 Dr Subramanian Swamy will write a monthly column in Organiser.
I am happy to be invited by the Editor to return to writing a column for Organiser. In 1970s I had written with “missionary” zeal in these columns about the Swadeshi Plan which was about self-reliance and not taking foreign aid, about achieving a 10 per cent growth rate in the economy by giving up socialism, and the feasibility of acquiring nuclear weapons. These were radical ideas in those days that angered Mrs. Indira Gandhi and her KGB benefactors. She denounced me on the floor of Parliament and her minister of education ensured that not only I but my wife were both sacked from our professorships at the IIT, Delhi. Today, those radical ideas of the 1970s have become mainstream and I stand vindicated. But the mission is incomplete, because India becoming a global economic power is not enough.
To count internationally and get her due place in the world order, India must become thoroughly united with a virile mindset without self-doubt, and undergo a renaissance to cleanse the dirt and unwanted baggage acquired over the past thousand years. Otherwise foreign forces already alerted by India’s recent economic successes and it’s implications will leverage our internal weaknesses and self-doubt to derail the country.
  • Look at the fate of Argentina, Chile, Colombia and Brazil, the shining hope of the 1960s. They are in one crisis after another today and in shambles.
  • And East Asia, the much publicised “Tigers”, had a blowout in 1997, and still to recover.
  • Soviet Union is in 16 separate pieces, a happy development but a warning nonetheless.
  • What happened to Yugoslavia ? It is in four warring pieces.

It had happened to us earlier in the eighteenth and nineteenth centuries when we were balkanised. It can therefore happen again. Hence we need a new agenda for change to weld the Indian into one corporate mind and entity. This I shall expound in these columns. Our nation is, in fact, at a crossroads of history today. To find our destiny and direction all Hindustanis with a patriotic mindset have to come together to combat a common unseen but alien enemy, and not to traverse again the unfortunate and tragic chapter of our past history when we helped the foreigner to get a grip on the nation in order to settle our own petty squabbles.

Earlier challenges were single dimensional—at the physical conquest level. Today the challenge is highly sophisticated, multi-dimensional and deceptive. The last time we set aside our political and personal differences and came together was to fight the Emergency during 1975-77. Had we not done that, in particular Jayaprakash Narayan and Morarji Desai had not teamed up with the RSS, despite all their past differences, dictatorship would have prevailed and been legitimised through the ballot box in 1977. We came together and triumphed, and restored democracy. Even if that unity did not last long, the main task of restoring democracy was achieved and the nation saved.

Today, the challenge is much more formidable than it was ever in our history. More important the threat to our national integrity embedded in this challenge is not obvious or crude as was when Mohammed Ghori attacked or Robert Clive plundered the nation. These earlier challenges were single dimensional—at the physical conquest level. Today the challenge is highly sophisticated, multi-dimensional and deceptive. What is happening today is a very subtle fragmentation of our national consciousness and an induced acquiesance in our outlook to condone or be impervious to whatever wrong is going on. There is, for example, no national will to enforce accountability on the leaders who make patently wrong decisions, which harm the nation. Or bring to book their lifestyle that is inconsistent with the national spiritual ethos. The Soviet model weakened the Indian economy, set us back, and introduced corruption in India as a way of life. This has made us vulnerable again to the foreigner.

Home > 2005 Issues > December 04, 2005 This renaissance has to be holistic: that is, an assertive global political outlook, a national defence preparedness of long reach, an active awareness of the nation’s true continuing history and it’s Hindu foundation, rapid economic development of more than 10 per cent growth rate, and unshakeable uncompromising resolve to defend the nation come what may, which five commitments must blend into our national consciousness to create a new mind set dedicated to the goal of recovering India’s global pre-eminence in our life time. That goal, however, can be achieved only by first undoing completely the Nehru legacy. It is a minimum pre-condition because Nehruvian ideas are ill-suited for national synergy.

The Nehru legacy is constituted today by the remnants of socialistic economic policy, a moth-eaten tilted ‘non-alignment’ foreign policy, a fraudulent one-way secularism, and an apologetic disdain for the quintessence Hindu tradition, all of which are embodied in the vice-like grip on the Congress Party of the rump descendants of the Nehru family. Hence, the search for a Hindu Agenda must begin with the exorcism of Nehruism and his legacy to the nation.

Buddhadeb's bourgeoisie infatuation

By Udayan Namboodiri
Organiser Home > 2005 Issues > November 20, 2005
Buddhadeb has had one significant success. He has outclassed all politicians of the country in the game of deception. He is the darling of the industrial lobby, which in Bengal comprises mostly of land sharks and crony capitalists. All kinds of fly-by-night operators who masquerade as “industrialists” issue admiring statements to encourage him into giving them lucrative monopolies. The same bourgeoisie media that Buddhadeb battled in his DYFI days, is now his greatest friend. There was a time when Marxists made a hate object out of the Kolkata-based Press. Today, it is to this institution that Buddhadeb looks for small mercies like articles and editorials in support of his bogus industrialisation plans.
Yet, to millions of people who live by the state’s single-biggest employer, agriculture, Buddhadeb is an object of hate today. He has sold out their interests by encouraging anybody who promises to bring “investment” to grab their lands. That’s after he’d ruined their prospects of a better life by promoting a party-backed class of agricultural middlemen who kept them mired in poverty and debt for three decades. The workers, whether in the huge industrial wasteland that is Communist Bengal or in the hundreds of sweatshops thriving on the unholy nexus between the CPI(M) and rogue businessmen, have been thoroughly betrayed. Their “progressive” Chief Minister is now striking militant postures against their interest by wooing international operators to come to West Bengal and strip them of the last vestiges of their dignity.
On November 6, Buddhadeb completed five years in office. Many of his admirers liken Buddhadeb’s predicament to that of Mikhail Gorbachev who was hated by his own comrades but feted outside the Soviet Union for carrying out glasnost and perestroika. The Bengali Communist survives in power by playing comrade against comrade. The CPI(M) today is a snake pit of petty conspiracy which results in open display of factionalism. He is mortally afraid of losing elections which explains the brazen rigging resorted to by the CPI(M) to keep itself in power since 2000.
Obviously, multinational companies have seen through this gimmick. But, while most shun Buddhadeb’s overtures, a select group of dubious companies rush to exploit the situation. The latest on the scene is the Indonesian conglomerate, Salim Group. This is a notorious house which attracted international infamy during the Suharto era and figured prominently in Time magazine’s cover story, “Crony Capitalism” in February 1997. In fact, Buddhadeb has also conveniently forgotten that the same company had bankrolled Suharto’s bloody persecution of Indonesian communists through the 1970s. The extent to which Buddhadeb could go to grovel before this discredited group was best illustrated when he openly declared, in an interview with Jakarta Post in August 2005 that he had “discarded communist dogma”. (The author is Senior Editor, The Pioneer.)

Opening up the socialist space in Indian politics

Harish Khare
The Hindu Wednesday, Dec 07, 2005
The central compelling fact of Indian politics remains that with the exception of the Left parties, there is no genuine organised platform that seeks to speak primarily and essentially for the poor who still constitute the majority of the Indian society. The poor no longer figure in anybody's calculus either as "vote-bank" or even as a sociological category. Both the Congress and the BJP are consciously committed to the welfare and prosperity of the consumerist middle-classes, which at best account for 30 per cent of the population.
In immediate historical terms, the BJP leadership has reason to be extremely grateful to Mr. Fernandes. Had it not been for Mr. Fernandes' willingness to break bread with the saffron crowd, the BJP would have not been able to overcome its untouchability problem at the national level with centrist/socialist forces. For a long time, except the Shiv Sena, no other political outfit, regional or national, was willing to sign up with the BJP. Then came Mr. Fernandes bringing with him a life-long cultivated anti-Congressism, which enabled the smaller groups to overcome their aversion for the saffron colours. As far as Mr. Fernandes was concerned, his anti-Congressism was topped with a generous serving of the anti-Nehru family animus. This helped the "socialist firebrand leader" become a natural ally of the Rashtriya Swayamsevak Sangh and all its political offspring. While this convergence of antipathies sustained the Fernandes-BJP love affair, it nonetheless drained the socialist elements in the Janata parivar of their traditional concerns.
In a way the George Fernandes-BJP jugal bandhi was a replay — if only a self-serving repeat — of the Ashok Mehta "thesis" in the early 1950s. Those were still early days of Independence and Ashok Mehta argued that India's inherent social stagnation imposed "inescapable compulsion" on political parties and that rather than act merely as "obstructive factions," the socialists could give "on the basis of programmatic agreement between democratic parties" the ruling party a helping hand in implementing the task of nation-building. For years the Ashok Mehta thesis confused the socialists and reduced them (in Rammanohar Lohia's evocative phrase) to "paralysed socialists." But more than this, the thesis of collaboration with Jawaharlal Nehru's Congress was, as Madhu Limaye was to point out later, "to make the progressive opposition an apologist for the government and let parties like the Communist Party take leadership of the discontented masses."
Just as Ashok Mehta generated confusion and chaos among the socialists in the earlier era, the Fernandes-BJP jugal bandhi hastened the creeping fragmentation of the Janata parivar in the late 1990s. Once Mr. Fernandes shepherded the "Janata" forces into the BJP/RSS embrace, the socialist voice lost out on two counts — a commitment to the secular values and a firm alignment on the side of the poor, the have-nots and the marginalised. Without these two notes the socialist voice lost its moral tenor at the national level; and within the socialist/Janata parivar, the gentle and the sensitive faces — Madhu Dandvate, Surendra Mohan, Kishen Patnaik, Rabi Ray, Mrinal Gore, Ramakrishna Hegde — got pushed into the background; newer, rougher and louder advocates of socialist dreams — Mulayam Singh Yadav, Ram Vilas Paswan, and Lalu Prasad among others — set up their private fiefdoms, all in the name of social justice. But with George Saheb so cheerfully playing raj guru to the BJP crowd, be it the Staines murder or the Gujarat massacre, the socialist voice ceased to count cumulatively at the national level.
The earlier socialist tradition of debate, arguments, and theoretical formulations gave way to the settling of scores with money and muscle power. Now the socialists have a chance to turn a new leaf. The socialists will have many opportunities in various parts of the country to tap the alienation of the poor from the mainstream economy. Not only will they have to reject the Fernandes' type of collaborative impulses, they will also need to find ways of rescuing socialist politics from the politics of social justice entitlements. A new beginning is possible.

Reverse Reform in Buddha's Bengal

Arindam Sen
Like Lula in Brazil , Buddhadev Bhattacharya (BB) in Bengal is performing this role extremely well and that explains why national and international ideologues of imperialist globalisation – from team Manmohan to top officials of World Bank and other multilateral agencies to the present US ambassador to India – are so tireless in praising him. Thanks to his 'communist' image, BB is today big capital's best bait for legitimising the otherwise discredited neo-liberal reform programme in India .
Progress in human civilisation – they tell us, citing the examples of developed countries – naturally entails a shift of emphasis from agriculture to industry. Well, if there is an element of truth in this statement, it is that the full development of productive forces in agriculture (to the extent possible in the given mode of production), creates conditions for industry (and then services) to emerge as the leading sector(s) of the economy. At least this has been the usual course of capitalist development so far. Has West Bengal , with nearly 4500 villages languishing in destitution (as Bhattacharya himself had admitted some time ago, during a discussion on starvation deaths in Amlasol), achieved this development? A peasant becomes a doorkeeper, with hardly any job security, in an apartment that rises on the land he owned and cultivated till last year – do we call that progress?
We must get rid of dogmas and accept the reality of globalisation – Sri Bhattacharya retorts whenever he faces questions or issues raised from a Marxist or broadly pro-poor perspective, such as resistance to eviction, struggle against imperialist penetration or class struggle and class outlook generally. In a recent interview to a leading Bengali daily, he candidly remarked that even revolutionary poetry – including poems by Sukanta Bhattacharya, Bengal 's most popular Marxist poet of the late British period who also happened to be the uncle of BB – no longer inspire him. Marxism itself is now a disgusting dogma for this darling of the bourgeoisie, who has emerged as the most authentic mouthpiece and salesman, within the left movement, of neo-liberal dogmas like investment as a panacea, investment above everything else.
And yet, since they cannot afford to abandon the communist/Socialist signboard altogether, Bengali leaders of CPI(M) now routinely cite the current Chinese praxis in support of theirs. Leaving apart the pros and cons of the Chinese trajectory, one could hardly think of a more ahistoric comparison. While discussing the New Economic Policy (NEP) that entailed many concessions to foreign and indigenous capital, Lenin remarked in 1921 that a victorious revolution "creates such a 'reserve of strength' that it is possible to hold out even in a forced retreat, hold out both materially and morally... in such way as to stop the retreat in time and revert to the offensive." (The Importance of Gold Now and After the Complete Victory of Socialism). State power in the hands of communist party, continuing public ownership of major means of production, economic foundations built up by decades of self-reliant development – in China you have all these and more that enable comrades there to interact with imperialist capital from a position of strength unthinkable in our context.

Socialism is sure to bounce back

Socialism Is the Future of Humankind -Dipankar Bhattacharya (The following is the text of a speech delivered at a Seminar at Ramjas College, Delhi on 'Is Socialism the only other world possible?')Home > Liberation > Year_2004 > January
The WSF slogan or motto ‘another world is possible’ has quite understandably given rise to widespread political debates. For one, the slogan says nothing about the nature of another world, and for another, it also does not address the important question of how that possibility of another world is to be realised. Socialists of the world are more or less convinced and agreed that the only meaningful another world we can talk about is a socialist world and that the path to socialism proceeds through revolutions and not reforms. But the WSF is not a World Socialist Forum, it is merely a world social forum and it is futile to expect sharp and crisp statements and definite calls to action from a body which calls itself a context, a process, a space, virtually anything and everything but an organisation or a movement.
When the WSF was born, the word ‘social’ was apparently stressed as a counterpoint to ‘economic’. If the annual World Economic Forum meetings in Davos, Switzerland were a jamboree of the big MNCs, and policymakers of capitalist states, the WSF was projected to be a global counter-gathering of activists, an international rainbow of protests against the oppressive Fund-Bank-WTO order. But the world has undergone major changes since January 2001when the WSF was born in Brazil. In the wake of America’s Afghan war and the subsequent Anglo-American invasion and occupation of Iraq, the whole world has been forced to sit up and confront the brutal and barbaric reality of imperialism and militarisation. And over the last two years we have seen a huge worldwide anti-war movement come up in almost every corner of the globe. But the WSF has been completely aloof from the anti-war movement and remained busy only with ‘social concerns’ that refuse to lead to any commensurate political action. The ‘social’ in the WSF thus increasingly seems to be building bridges with the ‘economic’ in WEF while moving further away from the developing leftwing political trends of socialism and anti-imperialism.
Coming in the wake of the series of anti-globalisation demonstrations that began with Seattle, the WSF initially seemed really huge and promised to bring a new impetus and a lot of fresh inputs to the anti-globalisation campaign. But now that the anti-globalisation campaign has already acquired a strong anti-war anti-imperialist thrust, now that we have already seen millions of men and women marching across the globe demanding an end to war and racism, to all the accumulated debt burden imposed on the third world and to the entire ‘multilateral’ framework of domination and plunder, the WSF has started paling into insignificance. A world solidarity forum aiding and encouraging all the live and vibrant anti-globalisation anti-imperialist movements of the world would of course be relevant, but an exclusively social and avowedly non-party forum does indeed look like a forum too many. With its present orientation, the social forum does indeed run the risk of being rendered superfluous by the onward march of events.
The word ‘possibility’ has been vulgarised a lot in bourgeois politics. When bourgeois politicians and ideologues define politics as the art of the possible, we know we are being asked to prepare for the worst. Every opportunist alliance, every marriage of convenience, every act of betrayal to the cause of independence and democracy has been sought to be legitimised in the name of the art of the possible. Yet when the people seek to bring about a revolution and push beyond the capitalist frontier, it is sought to be dismissed as a futile exercise in utopia, something that is outright impossible and undesirable. In the framework of bourgeois politics, the ‘desirable’ is always sought to be defined in terms of the ‘possible’ and the possible is then reduced to the existing. In other words, politics, the art of the possible, is reduced to a worship of the status quo, the worst kind of conformism. The point of departure in socialist or communist politics, on the contrary, is transformation of what is existing into what is not just possible but also desirable and necessary.
History continues to reveal before us a range of possibilities. During the last one hundred years two world wars have been shown to be possible, revolution in backward Russia and China has been shown to be possible, fascism and nazism have been shown to be possible, the collapse and disappearance of the Soviet Union has been shown to be possible, recolonisation of Iraq has been shown to be possible. Indeed, world history evolves through a constant battle between conflicting possibilities. The point is to choose the kind of possibility that one finds most appealing and fight for its realisation and development. The fight for socialism began long before the first socialist republic was born – as many as seven decades elapsed between the initial articulation of the Marxist vision of socialism and its first realisation in the form of the Union of Soviet Socialist Republics. The fight continues today even after the collapse of the USSR and even in the midst of continuing retreat of the existing socialism in a few republics like China, Vietnam and Cuba.
Marxism however considers socialism to be not just desirable and necessary but also inevitable. Like the world possibility, the word inevitability too has often been interpreted in a very mechanical manner. The ‘inevitable’ in Marxism is not automatic or spontaneous, but very much an outcome of conscious historical action. This inevitability is a projection into future of the laws of motion that have determined the trajectory of human history since the beginning of the written phase. Capitalism seeks to portray the present as the ultimate or eternal, and the laws governing capitalist market economy are sought to be passed off as natural laws. But if history has evolved through successive modes of production from the era of primitive communism through the age of slavery to the days of feudalism and capitalism, why should the process of change suddenly come to a standstill with the present phase of domination of capital? Why cannot there be social life beyond the frontiers of capitalism? Why cannot the small changes daily taking place in the capitalist context add up to a qualitative leap heralding the onset of a post-capitalist or socialist order? This quest found its answer in the analysis of the dynamics of the processes of capitalism, and the vision of socialism provided a real solution to the contradiction between the growing socialisation of production and private appropriation and concentration of wealth by matching socialised production with socialised ownership and control over the means of production and the output.
The term scientific socialism has also been a matter of great controversy. The term scientific was used as opposed to utopian notions of socialism which were rich in imagination but had little roots in social action or the history of social progress. And in today’s technologically driven times, the distinction between scientific and technological must also be underscored. Scientific socialism did not provide any technological blueprint for building socialism, it only provided broad general guidelines for organising a socialist revolution. And these broad guidelines have been proved to be essentially correct even in considerably different circumstances. More importantly, the applied science of socialism has not remained static. Initially, it was considered scientific to expect socialism to arrive in developed capitalist countries where possibilities of further development of productive forces would have been exhausted under capitalist production relations. Also socialism was expected to announce its arrival simultaneously in a number of countries. In real life, the break however came in a single backward country. Uneven development of world capitalism made it virtually impossible for socialism to win simultaneously in several countries and forced socialists to go about building socialism in a single country.
It is true that following the collapse of the Soviet Union and the retreat of socialism in China and other existing socialist countries, there is now not much practical evidence or display of the inherent superiority of actually existing socialism over capitalism. There are plenty of analyses about the degeneration and eventual collapse of socialism in the former Soviet Union, but a more superior model is yet to emerge. Yet if socialism remains a dream, the reality of capitalism is becoming increasingly nightmarish and the notion of a truly and universally peaceful, prosperous and democratic capitalism has been proved to be completely fictitious and illusory. Indeed, the model of post-war welfare capitalism seemed to work only so long as countering the socialist model of social security and employment for all remained a priority for advanced capitalism. It is no wonder therefore that the collapse of the Soviet system also signalled a rapid ‘retreat’ of the welfare state and return of predatory capitalism with all its ugly features of imperialist plunder and aggression.
On the eve of the revolution in 1917 when Lenin began to talk about the impossibility of simultaneous socialist revolution, he also started stressing the importance of anti-imperialist wars of national liberation. Massive economic plunder and brutal national oppression have been the two basic characteristic features of both colonialism and post-colonial or neo-colonial imperialism. The ‘clashes of civilisation’ argument is nothing but a theory of racist national oppression. From Palestine to Iraq, there has been no let-up in the imperialist campaign of national oppression. Along with socialist class wars, the battle for national liberation and independence from the clutches of the imperialist machine of plunder and humiliation therefore continues to remain central to any international vision of anti-imperialist resistance.
The two wars of anti-imperialist resistance – we can loosely call them class war and national war – are of course dialectically inter-related. During large parts of the twentieth century the two surged in tandem, each encouraging and strengthening the other. The leadership of the national wars of liberation, however, passed on in most cases into the hands of a vacillating bourgeoisie which in turn did everything to throttle the internal class war. As we approach yet another combined wave of class war and national awakening and assertion in large parts of Latin America, Asia and Africa, the forces of socialism must try to gain the upper hand both on the internal and external fronts of the war against imperialism.
A lot has been said about the disintegration of the organised working class and even the dismantling of the organised economy. We have heard any number of stories about the miraculous rise of the new economy, about computers replacing human hands all along the chain of production and human beings having little more to do than to press the occasional button of sophisticated electronic machines. Well, if capitalism has succeeded in partially doing away with the concentration of thousands of workers in a single production point, it is because production centres have been considerably relocated and the production chain or net has been cast much wider. For every automated production plant, there are sweatshops proliferating all over the third world. Socialisation of production has not been reversed, it continues to grow and in the process it has crossed national boundaries.
If we keep the big picture in mind we will see that what is happening is not disintegration of the working class but dispersal and expansion of the class. From highly educated and skilled groups working with state-of-the-art computers and sophisticated machines and electronic equipments to vast masses of unorganised and informal sector workers, the working class today occupies a much bigger social turf than any time before. Of course the class remains to be welded with a new consciousness and spirit, the transition from being a class-in-itself to a class-for-itself is certainly a very big challenge. But on this score too, there are a lot of new inputs. Apart from local trade union and other struggles, the anti-globalisation anti-war movement is also shaping up as an excellent international training school for the working class. The communication revolution especially the rise of satellite television and the arrival of the internet has opened up whole new avenues for not just dissemination of information but also networking for actual struggle. The vibrant two-way traffic between networking in the cyberspace and actual demonstration of solidarity and unity on the street is indeed an exciting development of our times.
A socialist world still remains a dream. But the historical and material foundation of socialism, developed and democratic socialism if you will, continues to mature within the womb of global capitalism. And the forces of socialism are also gaining in maturity and strength. With the structural crisis of capitalism spreading deeper and wider and inter-imperialist rivalry intensifying all over again, socialism is sure to bounce back with new strength and vitality. A socialist world is possible. It is necessary. It is the future of humankind.

America is not a civilised nation

PATNA: Monday, July 07, 2003 01:59:24 amTIMES NEWS NETWORK

"India will again be reduced to the status of a bonded labour if it is not freed from foreign debts," warned Kishan Patnaik, a socialist ideologue. Patnaik was delivering a lecture in a seminar organised by Vikalp, an NGO on the topic "New Challenges of American Imperialism" held here on Sunday. He also said that in order to fight American imperialism a country should resolve to fight consumerism. "America is not a civilised country as propagated by the media and it is also not the best example of civilisation," said Patnaik. There was barely any opposition to the recent US attack on Iraq. Even a country like China too did not register any strong protest against the US attack. This has only helped to boost America’s policy to dominate the world, he added.
Obituary: Kishan Patnaik never subordinated movemental politics to electoral calculations and remained involved in a whole range of popular movements till the last. He was among the last of the radical Gandhians of his generation who would never compromise on principles. Kishan Patnaik’s celebrated book in Hindi published on the eve of the new millennium was titled ‘Vikalpheen nahin hai duniya’ (the world is not without an alternative), which sums up his vision and strategies in sharp contrast to the TINA (There is no alternative) factor, a mantra chanted ad nauseam by the votaries of liberalisation, globalisation and privatization.
  • The tumultuous 1990s transformed the Indian socialist movement beyond recognition with socialists like George Fernandez joining NDA, debunking entire ideological baggage of yesteryears, the criminal-mafia appropriation of social justice under Laloo’s regime in Bihar and most recently the ‘corporate socialism’ of Mulayam Singh in U.P. Against this backdrop, the founding of Samajwadi Jan Parishad in 1994 with Kishanji as its founder President was a significant step towards an alternative brand of socialist politics.

Kishan Patnaik was not only a socialist thinker in his own right, but also probably the most creative of the Gandhians who would expand, enrich and apply the Gandhi-Lohia-J.P. thought to the newer realities of the times. Irreconcilable theoretical differences with Marxism would still not stop him from praising Fidel Castro in following words, “Marxism is an inherent energy which has always heated the hearts of the deprived communities. The heat generated in South American countries is due to Fidel Castro…. Castro is an island of uncompromising resistance among the surrendering nations…” (Samayik Varta, Dec ’03-Jan ’04). Kishan Patnaik adhered to the Gandhian critique of modern civilization and the idea of progress. Most of the developments in late capitalism seemed to him a confirmation of his beliefs.

His prolific pen would react to most of the burning issues of practical politics as well as those of theory, from farmers’ suicides to the ‘clash of civilizations’. The June 2004 editorial of ‘Samayik Varta’ (a journal founded and edited by Kishan Patnaik for nearly three decades) was quick in pointing out that the verdict 2004 was clearly against the new economic policies pursued for the last decade and a half and that the new regime had already started betraying it, a point to remember for all those who wish to carry his legacy through the present and future struggles.

As a young member of the third Lok Sabha, Kishan Patnaik was perhaps the first MP from Orissa to have raised the issue of starvation deaths in Kalahandi in Indian Parliament. The powers that be did not have the guts to admit that stark reality and efforts were made to sweep the starvation deaths under the carpet of false claims and statistical lies, much the same way as governments deal with the phenomenon of starvation deaths and farmers’ suicides today. Between 1964 and 2004, India has certainly changed a lot, but defying the gloss and grandeur of globalisation hunger continues to stalk the villages of Kalahandi and Koraput as doggedly as was seen first hand by Kishan Patnaik in his early political years. Patnaik never lost sight of this fundamental plight of rural India, and securing the right to livelihood for the people on the margin therefore always remained central to his politics and to his vision of development.

National governments are getting marginalised

A strong critic of the World Trade Organisation (WTO) and its policies especially those vis-a-vis developing countries, former Prime Minister V. P. Singh says nothing much has come out of the Doha Ministerial round. He sees no point in the next round of negotiations which, according to him, will be like writing a cheque again when a previous one has bounced. Excerpts from an interview he gave T.K. Rajalakshmi. Trade rounds and bounced cheques: Interview with V. P. Singh. COVER STORY Frontline Volume 18 - Issue 24, Nov. 24 - Dec. 07, 2001
  • Your comments on the outcome of the WTO ministerial meet in its totality.

There were two objectives, essentially from the point of view of developing countries. One was the implementation of old issues and the other related to new issues. A promise was made earlier that the developed countries such as the United States, Japan and the members of the European Union would reduce their agricultural subsidies and that would open the market for agricultural products from developing countries. The U.S. had promised that by 2001 it would reduce the quota restrictions on textiles by about half. None of these promises materialised. What to say of reducing subsidies, developed countries increased subsidies to the tune of $260 billion. As for textiles, in which we have a major interest, the U.S. has reduced restrictions by about 5 per cent instead of the committed 50 per cent. On the other hand, developed countries have been resorting to anti-dumping provisions much more than in the past. We were looking forward to the provisions of Trade-Related Investment Measures and Trade-Related Aspects of Intellectual Property Rights especially as we have had tremendous problems in the fields of health care, medicines and research.

  • Does the final declaration reflect India's concern over the credibility of a new round of negotiations when existing agreements are yet to be fully honoured?

Our main question was that when earlier promises have not been fulfilled, what was the credibility of promises in the second round? It is like writing a cheque again when a previous one has bounced. We were apprehensive that even if we were to go for a second round, what guarantee was there that it would be honoured? We have received the brunt of liberalisation. While we opened our agricultural markets, developed countries heavily subsidised their own.

  • Very little ground was gained on a textiles agreement. Was it a setback or a compromise to get issues like investment, government procurement and trade facilitation off the immediate negotiating agenda?

There was always a clear agreement on textiles but the U.S. muscles its way through each time when it comes to honouring it. The substantive point is that the issues raised in these rounds have an adverse effect. The kind of investment regime they want to bring will reduce national governments to having no role. National governments will have no regulatory authority. On the question of transparency in procurement, questions will be raised about what we procure from our farmers and that will definitely affect our Public Distribution System. They say we should have a "give and take approach" on textiles as they did not get what they wanted on agriculture. How many times are we to encash the same cheque?

  • What is your opinion about India's credentials as a leading member of the South at the WTO?

One achievement that is being talked about is in the area of compulsory licensing. But we have nothing to gain on anti-dumping, agriculture or textiles. All the other issues are open to negotiations and would be taken up after two years. But if one has not been able to intervene at the entry point of negotiations, what to talk of the end? We see global capital and governments of developed countries using the instrumentality of the WTO in imposing their own goals and priorities on the world economy. Governments have to take their people into confidence. Some of us told the Prime Minister, let us have a discussion on the WTO talks and take a stand - the country's stand. At least in Doha, the Indian delegation could have asked for a vote. Even if we were alone we could not have been thrown out, although this is what India has been afraid of - of being thrown out of the WTO. Expelling a member also requires a two-thirds majority. Had India been organised it would have been different. A credible leadership would have emerged. Smaller countries have no confidence in India. The SAARC (South Asian Association for Regional Cooperation) countries should unite. Within these countries, it should be the right of Parliament and Parliament alone to decide whether to become part of international treaties or not. It should not be left to the government.

  • What do you feel about the future of the WTO and the multilateral trading system, especially in the context of the global economic slowdown and growth of regional trade blocs?

We have endorsed the multilateral system of trading where the obligations of developed countries are imposed. We favour the multilateral system but it has to be fair. It is like the loaded dice incident in the Mahabharata. The majority of expectations have not borne fruit out of this system. Added to this is the poor state of our small-scale sector and the bigger industries. When vital sectors of the economy get affected, where will the purchasing power come from? The political issue is that national governments are getting marginalised. An elected government is answerable to its people. To whom is the WTO answerable? Anything under the sky can become a WTO subject. They have a dispute settlement mechanism but whenever it is settled that becomes a law for countries. Democracy is getting truncated more and more and nation-states are being taken over by bodies like the WTO.

V.P. Singh against WTO meet

NEW DELHI, DECEMBER 4 : Former Prime Minister and Janata Dal leader V P Singh has demanded that a farmers’ forum be set up by the Centre and the states to voice their demands and grievances. He was addressing a press conference today to announce a 15-day Rath Yatra-Kisan Jagran Yatra against government’s agricultural policies. The Yatra would start on December 7, 2005 from Allahabad. He criticised the government on the agricultural policies vis a vis WTO agreement. Stating that the Centre neither consulted representatives of farmers who are actually affected, nor states, the implementing agencies.
The Yatra is being organised in the context of the WTO meeting to be held in Hong Kong. India has been signatory to the WTO agreement since 1995. The issues which have given rise to the debate are the conditions in the agreement like getting rid of the licence permit system in imports and exports and the question of subsidies. WTO agreement requires government’s direct support for agriculture not to exceed 5 per cent in case of developed countries and 10 per cent in case of developing countries.
‘‘Farmers in the West enjoy huge subsidies, how can Indian farmers be denied them. Subsidies are important as nearly 80 per cent of the Indian population is engaged in agriculture and about 70 per cent of them are not satisfied with it,’’ said Singh. He expressed concern over the prospects and scope for the export of Indian produce. ‘‘Potential exporter will face difficulties both in the domestic and foreign markets. The West will dump all its produce here and the Indian farmer would not be able to export much,’’ he added. V P Singh bats for farmers The Indian Express: Monday, December 05, 2005

Tuesday, December 06, 2005

Create the opportunity for people to enter the market

Amartya Sen tells Shekhar Gupta, Editor-in-Chief of The Indian Express, the success of a global entry into a global economy depends to a great extent also on what we do within the nation. Excerpts from an interview on NDTV 24X7’s Walk the Talk:The Indian Express Tuesday, July 27, 2004
I think the special feature that Shantiniketan had is that it had great pride in the Indian tradition, Indian identity, and yet it had a very strong awareness of the world. It’s a globalisation in itself, not so much economic globalisation but a cultural one. And one in which the globalised world wasn’t just as what was quite standard then—mainly India and Britain—but also other countries, like China and Japan and the Far East and Africa, other European countries, America, all these were very present in our lives. I think globalisation has two features, one is the globalisation of idea, not being parochial, not being what in Sanskrit they would say koopamanduk, that is being a frog in the well, and have an awareness of the whole world. That’s one thing. Some of the debate about globalisation today is not about that, of course, because lots of the supporters of open ideas happen to be rather critical of the economic opening-up. So that’s a separate issue.
In order for the Indian economy to flourish in the global economy, in a way that benefits every section, what you need is a comprehensive programme, much more radicalism than they actually had. I’m very much in favour of the Indian economy. It’s playing a big part in the global economy, we are able to do it. We can produce competitively, we have the talents and the resources and the opportunity to expand our presence in the world in a big way, in the economy too. And yet, at the same time, what we have to do is make sure that it’s not just a small section who succeeds. And of course, we all take pride in the success of the Indian information technology and software industry and they’ve done tremendously well and we’re proud of it. But that’s a small group and even the leaders of this group will tell you that they are concerned that a lot of people in India are excluded.
So the radicalism is to create the opportunity for people to enter the market. You know my main complaint about the market economy—I’m one of those who think the market economy has many merits and I also take the market seriously enough to want everybody to be able to enter it—but in a situation where people are illiterate, where people suffer from tremendous health problems, no micro-credits, there’s no way they can enter the market.

Investing is quite like a game

There is something at stake, and you could win, or lose or draw. And like a game, there are some basic rules to investing, there are some premises inside of which this game takes place. So after knowing that investing is a good habit that stands you and the nation in good stead, we then look at what are the basic premises in which investment takes place. Now, if you play football, you know that there are certain premises, certain rules or assumptions like the aim is to score a goal, the team that scores the maximum goals within the stipulated time wins the game and so on. Likewise, the game of investing too has a premise or certain rules. Lets look at them:
  • This game is about gains and returns: The game of investing is all about getting your money to grow by putting it to use in assets of value. So you win when the money you invested grows. Now this can happen in two ways – capital gains and regular income flows. In case you invest your money (capital) in buying land or shares you would win if the price of the asset (land or shares) grew over a period of time. The profit that you get from the sale of the asset at an increased price is called capital gains.And the dividends or rent you get on a regular basis from the asset is called income flow. On an investment you could get both capital gains and income flows or either or them.
  • The risk factor: Investing always comes with a risk factor. There is always some sort of risk involved in investing. So when you invest in shares, there is a risk that the price will fall and you would lose your money. When you invest in a safe and secure bank savings account, chances are that you might not beat the inflation rate and lose out on the value of your money. So bear in mind that there is always a risk associated, a chance associated with investment.
  • The risk and reward relationship: Now, there is a direct relationship between risk and reward. Generally speaking, more the risk more is the reward. Philosophically speaking, the reward is meant as an incentive for the willingness to take a risk. So more the risk, more the reward. So the game the investor is playing is to maximise the reward while minimising the risk. The dream would be to have no risk and maximum of rewards. Smart investors keep looking out for such occurrences. But then these utopian occurrences where there is no risk and maximum rewards are far and few. Now, there are avenues where the risk would be maximum and the rewards would not match these rewards. Needless to say, such investing avenues are to be avoided.
  • Risk first and then rewards: While this relationship is easy to understand. It is important to note that you have to take risks first and then the rewards follow. You need to commit your money first and then get the rewards. And risks associated with investing keep changing over a period of time. A company that you invested in three years ago might become a risky investment as the profile of its business changes. Or a piece of land you brought five years ago might lose value because it might be located in an earthquake zone. The point is risks keep varying from time to time. Smart investors have the vision to look out for risks and reduce the their impact, when they arise.

All in all, as investors you would play to see the value of your money grows over a period of time by investing into assets, or you get a steady flow of money from these assets. You get rewards. But, investing involves risks and usually more the risks more the rewards. Sometimes, there is more risk and little or no reward, The winner in the investing game is someone who keeps an eye on reducing risks and maximising rewards. Happy Investing! Canbank Mutual Fund

How to pick the right Mutual Fund? Returns
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Rupee Cost Averaging: A sound Investing strategy
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Mutual Fund Guru - Bogle’s Mutual Fund asset allocation

What a prudent investor should do

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Ensure safety
A baby kangaroo is well protected and safe in its mother’s pouch even when she leaps.

Ensure liquidity
A giraffe feasts on the food stored in one of its four chambers, when it is hungry.

Diversify investments
A squirrel hides its nuts in different places in the woods.

Be patient
Stay invested to reap better rewards
A crane stands absolutely still in water for hours together for its catch.

Invest early
A zebra foal gets a head start in life as it stands up within an hour of its birth.

Invest regularly
to create wealth over a period of time
Ants regularly store more food than they consume. Typically what a prudent investor should do.

Will FIIs continue to woo Indian markets?

The Economic Times TUESDAY, JULY 06, 2004
SANDEEP DASGUPTA, CEO, Deutsche Asset Management (India) Pvt Ltd
In the year 2003, India became the darling of FIIs. The FII flows depend on a couple of issues; primarily on global trends and local fundamentals. As long as the government continues to offer higher-growth-oriented policies for the long term we would continue to see inflows. Investors will be keenly watching the pace of deficit reduction, privatisation and tax reforms, including plans to introduce a value added tax. If the government can reassure the investors that it is committed to reforms in the areas of duty rationalisation, infrastructure creation, opening up of new sectors for investment, and relatively better labour policies I expect that India will continue to be an attractive destination for FII investments.
The other factor that will play an important role in attracting FII flows is the continuation of domestic demand. While the demographics of the Indian subcontinent has been the biggest strength in boosting demand and generating employment, the government has to work earnestly to create over 10 million jobs every year to maintain 8% plus growth in the economy.
Lastly I would like to add that FDI and FII are not independent. Policy makers ought to appreciate the progressive role of foreign investment in the country. China has shown that FDI, besides boosting exports, can help improve the lot of a number of local firms. India needs to learn from this experience. We believe that the government will have to take initiatives to attract more FDI. This can be done by opening up more and more profitable sectors to foreign investors as also by allowing them to play a larger role. We will have to get out of the mindset of restricting their role to just silent investors and let them have some management control.
S V PRASAD, Chief Executive Officer, Birla SunLife AMC Ltd
Interest rates have gone up in the United States and are expected to go up further. The 10-year government paper in the US currently trades at around 4.5%, with the differential vis-a-vis the Indian 10-year government securities being around 1.20%. If you take the average inflation rate in the two economies it is very evident that the real rate of return in the US is higher than in India. Consequently, we’ve witnessed an outflow of money from India. This could further aggravate in the near future.
Further, the US economy is back on a growth phase and employment numbers are looking up. These in turn have raised concerns of inflation in the United States. Such apprehensions have been further compounded by the growing concern on the price of crude oil, followed by the planned cooling of the Chinese economy. As a result, the MSCI Emerging Markets Free Index has lost 6.45% year-to-date, while the developed countries index has gained 1.23%. However, emerging market economies will continue to outpace developed markets in terms of real GDP growth, making them relatively attractive in the medium- to long-term. India is likely to register a GDP growth of 7-8 % in FY 05.
There is little doubt that incremental growth and productivity will be higher in India and other emerging markets. So a sustained in crease in the FII flows is a distinct possibility in the medium to long term. Net private capital flows to emerging market economies are likely to grow to $225 billion in 2004, an increase of over 15% from $194 billion in 2003 ($128 billion in 2002). The Asia-Pacific region is expected to rope in almost 50% of total flows to emerging markets. In the Asia-Pacific emerging markets, India is expected to garner $7 billion on the back of rising corporate profits and improving prospects of economic growth.
The growth story in India is a domestic one, and not dependent so much on external economies. In the calendar year 2004, FIIs have already poured in $4.12 billion into the capital market in just three-and-a-half months, of which $3.76 billion has been invested in equity and a mere $359 million in debt. This is nearly 54% of the total investment of $7.6 billion and half of the total investment made by them in calendar year 2003. (This data is as of April 20, 2004.) The India Story, in terms of rising exports of services, and engineering, auto, auto components and generic pharmaceuticals are on track and we are likely to see a robust growth in exports over the next three to four years. Therefore, the balance of payments situation is likely to put pressure on the US dollar, which in turn is likely to strengthen the in the medium run. Currency stability will be the biggest positive factor for FDIs and investment by FIIs.
ANOOP BHASKAR, Fund Manager (Equity), Sundaram Mutual
Before taking a view on FII flows into India during 2004, a broader picture of fund flows into the emerging market will help us give a more holistic answer to the above issue. As per the latest report of the Institute of International Finance (IIF), a global association of financial services companies, net private capital inflows into emerging markets — FDI as well as portfolio investment — are expected to grow from $195 billion to $225 billion. This will be the highest level achieved ever since the Asian crisis of 1997-98. Roughly $25 billion (as against $21 billion in the previous year) will be net portfolio inflows into emerging markets across the world.
Importantly, almost 95% of this would be directed towards Asia. Thus, the overall flows into emerging markets will be sustained after touching record levels in the previous year. These flows are being driven by higher allocation from large institutional investors, especially pension funds like Calpers, whose investment destination earlier had been limited to the developed markets. In addition, most money managers, especially in the US, have again started to increase their allocation towards the emerging markets after having withdrawn, after the Asian crisis of 1997-98.
While FII flows of 2003 — US$7 billion — may appear to have topped the trend of FII flows into India, a definite upward trend is clearly discernible even now. Pre-FY 2004, the average inflow of FII was in the region of $1.5-2.0 billion a year. During the first six months of the current year, FII inflows have already crossed the $3.5-billion mark. The number of FIIs registered with Sebi has increased significantly over the last year. A large part of these new registrations are from pension funds, whose investment horizon is much longer compared to a hedge fund.
Thus, even though FII inflows will be lower than the record level of the previous year, they would be much higher than the average received in the past. In addition, most influential brokerage houses have placed India as an “overweight” in their model portfolio for Asian/emerging markets.
Finally, as the investment guru Marc Faber has pointed out “Asia will be the economic hotspot for the next 50 years”. India and China have prominently figured in the famous ‘BRICS 2050’ report by Goldman Sachs. For an equity investor with a time horizon of 5-10 years, India as market to ignore would mean sustained, long-term underperformance. While FII flows may slow down in the current fiscal, the upward trend is undeniable. Thus, the question “Why India?”, which was asked by fund managers, a few years ago, has been replaced by “How much in India?”

The greatest wealth creation opportunity

Sensex at 6,000: What a ticker we have had RAKESH JHUNJHUNWALA
The Indian Express Sunday, January 04, 2004
  • SENSEX 6000 is a milestone of significance for me personally, for my fellow investors, and above all for India.
It is not just a coincidence that the Sensex has touched 6000 just when GDP growth has crossed 8 per cent for the first time, and the yield on Gilts is hovering at 5 per cent. It is a moment of great pride for all of us. The Sensex PER (price earning ratio) today is about 15x whereas at the same level of the Sensex in 2000, it was around 30x with the interest rates prevailing then being double. The PER in 1992 was more than 50x with even higher interest rates. Today’s corporate earnings quality and governance are vastly superior to those prevailing in previous bull markets, as also the quality of companies that have outperformed. I believe this is a mature market that has learnt many a lesson in the last decade. And our capital markets are better regulated than ever before by SEBI.
  • Hence, the constant barrage of scepticism about the sustainability of the rise and the worry-warts fretting over some imaginary scam is most irritating.

The BSE PSU index has been the best performing index. The greatest beneficiary is the Government of India— where is the question of a so-called “Scam”? The pace and the quantum of the rise in the Sensex have surprised most Indians, but markets being markets, they always tend to surprise. To the wise, in any market, ‘the ticker tells all’ — and what a ticker we have had. While all attention is focused on the Sensex, we must not ignore the tale of the other indices. Most broader indices have outperformed the narrower indices. The Advance-Decline lines, and the new highs and new lows are all signals of unprecedented breadth in the markets.

  • But cynicism is still alive and kicking. It is a pity that such fear-mongering is depriving my fellow investors from the greatest wealth creation opportunity of their lifetime. It is my deepest regret that it’s the FIIs and not my fellow Indians that are doing all the buying, and making all the money.
At this poignant moment, I am a happy man — as much for the gains that I may have made, as for the vindication of my bullishness about India’s fundamentals and consequently its equity markets which I have often articulated.
  • Wake up fellow Indians, this milestone of Sensex 6000 must help us in recognising the transformed India which can surely with the effort of all us become one of the economic powerhouses of the world and consequently a world power. Please, please unshackle yourself from our inherited cynicism and break the inertia of our minds about our country and its future.

Please remember, this is not some politician or economist writing this, but an investor for whom reality is a religion, and price is omnipotent. (Jhunjhunwala is a BSE broker and an active investor.)

FDI is good cholesterol, don’t oppose it

Foreign investment once meant loss of sovereignty. But we must put that mindset firmly behind us The Indian Express Thursday, July 22, 2004
To use a healthcare analogy, not all cholesterol is bad. FDI in sectors of the economy that need capital infusion is like good cholesterol, needed to clear the arteries. Why would you want to oppose it? At the policy level, we need to encourage FDI. The restrictive era in foreign investment policy was consistent with a high level of trade protection and a wave of economic nationalism that perceived foreign investment as loss of sovereignty and foreign acquisition. We have put that era firmly behind us. The mindset now must change.
  • FDI brings to the recipient country not only capital and foreign exchange, but also managerial ability, technical knowledge, administrative organisation, and innovations in products and production techniques, all of which are scarce commodities. These benefits are not immediately apparent in the economy because they take time to develop. However, there is enough empirical evidence to prove that with FDI, the economy is better able to provide higher productivity and bigger job pools.
If India is open to foreign investment, a 49 per cent stake represents a reasonable level of engagement for the foreign partner. It is a minority stake and yet it is sufficient enough for the foreign shareholder to see the investment as meaningful. Foreign investors have a variety of locations to choose from and the attractiveness of a country as an investment destination needs to be firmly established. I believe at least a 49 per cent holding lends greater strength to the local entity’s operations. It allows the financial statistics of the foreign company to be consolidated in a meaningful manner and for the size and scale of the business to be reflected properly in its global balance sheet.
Given the imperative of attracting FDI for increasing India’s GDP growth rate, we need to lower barriers and, in cases where we believe the barriers must stay, have watertight arguments in favour of retaining those barriers. In my view any such barrier cannot be justified in the case of insurance. Consider this: the opening up of the sector has galvanised the sector, raised insurance awareness, introduced more modern products and brought about a significant improvement in the quality of face-to-face selling. Moreover, Life Insurance Corporation of India too has benefited from the competition.
Life insurance is a long gestation business and requires significant amounts of capital. A significant portion of the capital deployed is put aside for maintaining the required solvency margin. Some recent estimates reveal that to build a company the size and reach of the Life Insurance Corporation of India would require anything between Rs 15,000 crore-Rs 20,000 crore. The total capital deployed by the dozen life insurance companies is around Rs 3,300 crore. The potential for growth is enormous and Indian capital markets are not deep enough to support this exponential growth. FDI can effectively bridge that gap.
India is a country that lacks social security systems and people are grossly under-insured. They have traditionally bought life insurance for tax-saving and investment purposes. The awareness that at its heart, life insurance is about securing the future of your family is just about beginning to seep in. Given that life insurance can save families from economic strife, there should be rapid development of this noble business. Capital infused into life insurance businesses can be invested in long-term infrastructure projects in the country and the need for investment into those projects can scarcely be over-emphasised. Generation of employment — both direct and indirect — is remarkable enough. Insurance is best sold face-to-face the world over and privatisation estimates are that more than 125,000 people have become agents and another 20,000 are directly employed in insurance companies.
So, foreign capital will allow the people of this country to enjoy higher rates of economic growth, employment and a higher standard of living. Insurance, telecommunications and civil aviation will benefit. Don’t stymie that growth. Say yes to good cholesterol. The writer is CEO and managing director of Max New York Life Insurance Company.

It's a bull run, not a bubble

If India is good enough to fear, it is good enough to invest in
SWAMINATHAN S ANKLESARIA AIYAR
The Economic Times WEDNESDAY, JANUARY 07, 2004
My own credentials as a stock market prophet are seriously suspect. I carry this burden lightly, however. The markets are inherently not predictable, and all supposed market experts took a beating in the last decade. The market humbles the most knowledgeable and arrogant of experts. What experts can do is lay down scenarios, and leave you to judge how plausible they are. So here is my own scenario, or guesstimate. I think that the current bull run is not a bubble but the start of a sustained global realisation that India has arrived as a preferred destination for global portfolio investment. Now, perceptions of this sort can be highly volatile, and so I would expect Indian share prices to fall and rise in successive waves in coming years.
Yet for those willing to ride the roller-coaster, I would say that the current Sensex level of around 6000 is a reasonable time to buy. The Sensex has doubled in the last eight months, and nobody expects that to happen again. Yet it is conceivable that Indian share prices could average a growth rate of 15% annually in the coming decade, reflecting profit growth of 15% annually for the better companies. Inflation has come down from its historical trend of 8-9% per year, and may average 4-5% annually in coming years. So profit growth of 15% annually implies around 10% profit growth in real terms. How realistic is that? It is optimistic, but not wildly so.
Assume that real GDP growth continues at around 6% annually. That may seem to imply that demand will rise on average by only 6% in real terms, and maybe by only 5% if the savings rate goes up. Second, inflation may fall well below 5% annually, especially if the rupee begins to appreciate (as the BRIC report of Goldman Sachs predicts). On the other hand an increasing proportion of the population will graduate from near-subsistence to the market economy. An even more impressive proportion is likely to graduate to the purchase of consumer durables.
And the consumer credit revolution will surely go on for a long time: it has barely scratched the surface so far. Consumer credit has greatly increased consumer access to durables and housing, and so sparked double-digit growth in real demand. Expect more of the same.
  • Now, the consequences of a 15% compound growth rate are stupendous. If share prices keep pace with sales and profits, a 15% growth implies that share prices will double every five years. That is, the Sensex could touch 12,000 by the end of 2008, and rise further to 15,000 by 2010. Even if profits and share prices average no more than 10% growth, the Sensex will touch 12,000 by 2010. Those levels looks outrageously high today, and some readers might wonder if I have taken leave of my senses. Let me hasten to say that I am not predicting that the Sensex will in fact hit 12,000 in five years. I am merely saying this is the level implied by annual growth of 15% per year.
Because India has now arrived on the global scene as never before. India is now seen by Businessweek, the Wall Street Journal and FIIs as globally competitive in not only software but back-office work, R&D and even manufacturing. Every global multinational is formulating an India policy. US legislators are so fearful of India that they are legislating against outsourcing. If India is good enough to fear, it is good enough to invest in. So expect FIIs to invest several billions of dollars annually in India in coming years. That could prove enough to drive up share prices by 15% annually on average, with the path marked by wild gyrations rather than steady growth.