eye.gif (5286 bytes) Point of VIEW.

A purely analytical perception...


 

 

This is the result of an analysis that we did for a large corporation that was trying to determine whether to do business in India. The following was our superficial analysis of the country's history.  Read it and see if you can determine what we told them.

The answer is at the end of the article and no peeking.

 

INDIA, THE LAND OF MISSED OPPORTUNITIES

 

Updated 6-05-03

 History

Indian history goes back nearly as far as human history itself and understanding the culture in this country is a complexity that can challenge even the most philosophical of historians. The Library of Congress in their evaluation of India, put the matter into perspective. "Throughout its history, India has undergone innumerable episodes involving military conquests and integration, cultural infusion and assimilation, poli9tical unification and fragmentation, religious toleration and conflict, and communal harmony and violence. A few other regions in the world also can claim such a vast and differentiated historical experience, but Indian civilization seems to have endured the trials of time the longest ...although India is the World's largest democracy and the seventh-most industrialized country in the world, the underpinnings of India's civilization stem primarily from its own social structure, religious beliefs,, philosophical outlook and cultural values."

India had been an integral part of the British Empire for eons and from time to time, insurrections took place against their rule. During World War II, a most tenuous time for the English, both Gandhi, Nehru and 60,000 of their followers were arrested for agitation against the Government. These agitations over time had become more common and more vociferous.  However, as intransigent as Gandhi and Nehru were, interestingly enough Muslims went along with British program without flinching. Thus, even at this time when the die was being cast, the two religions were not going to co-exist within singularly defined borders or under any other arbitrary and unified framework.

Britain, having been nearly brought to her knees during the War was not in any position to put up much of a struggle when Ghandi's faction declared August 16, 1946 as Direct Action Day and the rioting that followed lasted until, June 3, 1947. By this time, Great Britain had enough and Viscount Louis Mountbatten announced the partitioning of India and Pakistan into separate and independent countries.

The countries people's who were once united, have literally been in state of religious confrontation  ever since. Each incarnation of new weapons owned by one side causes a frantic search by the other for neutralization or advantage. The price of ever spiraling armament plays an enormous toll on these countries and their international ability to compete in the export market. The province of Kashmir has become the rallying point for both sides and although occupied by India, it is claimed by Pakistan based on religious grounds. Moreover, logic does not play any part of anything that occurs between these nations and decades of increasing animosity have soured both country's economies and their abilities to compete in world globalization.

Politically, India has tried to walk the fine line of neutrality while Pakistan has offered itself up to the highest bidder. India's efforts have led toward an attempted leadership in what was once called the non-aligned nations. At one point these countries represented the balance in the high-wire act of international political intrigue. However, at the time, most of India's compatriots were rather strange bedfellows such as Libya. India's voting record on international issues could at best be described as one of a desire for non-involvement and ever since the fall of Russia, their foreign policy has been rudderless and failed. There has recently been an attempt to rejoin the world's more serious countries but for the most part, India has been caught between a rock and a hard place, fenced in by obsolete social customs, bureaucratic bungling, trade laws that went out with the Neanderthals and an isolationist philosophy the encompasses both its religious and civil society.

Concerns over external competition have formed a brand economic paranoia that has stultified their port facilities, destroyed the ability of  their government to have any latitude in its functioning at almost any level and has created an inability to compete head to head with production quality with literally everyone on the planet by their use of restrictive tariffs to eliminate competition with their indigenous local industries.  However, India is a country with substantial assets in education and has found many niches to fill in spite of a world class, inflexible approach. Call centers, diamonds and software have become economic engines which have fueled the hopes of  many of their people. Nevertheless, change is slow and the confrontation with Pakistan always looms large on the horizon pulling money from the economy that is extremely dear. 

 

SEPARATING THE WINNERS AND LOSERS, A STUDY IN INEPTNESS

 

The International Bank for Reconstruction and Development (The World Bank) publishes what they call the World Development Report, “The State in a Changing World. The book is basically an objective study of what is happening globally; who’s getting it right and who’s getting it wrong. An interesting story appeared setting out the differences between the way things are done in India and the way they are done in Korea. The story speaks for itself. 

“Experience across a range of countries suggests that a combination of mechanisms can boost incentives to perform in such areas. A study comparing irrigation agencies in India and Korea revealed that the Indian organization provided few incentives for conscientious work, whereas the Korean agency was full of such incentives. Korean irrigation patrollers had greater clarity of purpose and were subject to random monitoring from three separate agencies. Supervision techniques in India sought to discover grounds for punishment; in Korea, they sought to solve problems. With staff from all parts of the organization traveling frequently up and down the canals in Korea, there was more external pressure from farmers, stronger partnerships could be built for better performance. “ 

The World Bank Report does not give us any background for these dissimilar reactions but does provide somewhat of a hint by espousing that, “rampant political interference in employee transfers, even in merit-based recruitment situations, subverts the entire process. They also indicate that in India, senior civil servants are “transferred frequently, and in some states, field officers remain in one position as little as eight months. Thus, they conclude, “The once legendary Indian civil service is no longer perceived as a model of efficiency and effectiveness.”  Maybe this is because of the shortness of time that a civil servant spends at any particular post, when he is placed in a position of control.

 

I PROMISE YOU SIRE, WE ARE GOING TO GET IT RIGHT THIS TIME, JUST LOOK AT THE FINE START WE ARE MAKING

 

India has made it clear that they are open for business and are no longer going to pursue the peculiar economic policies that created so many problems for them over the last 20 years. The government’s statement that it now realizes that something must be done to raise the standard of living for its people, while providing them with competitive opportunities seems to deal with global realities, but wait, lets us read further farther before jumping to conclusions..  The fact is the government accepts the premise that it is critical to bring in outside expertise, financing and industry in order to accomplish the barest minimum of their objectives before the end of this century. A closer look at what the country has accomplished may reveal more than appears at first glance.

 COME ONE, COME ALL, DO I HAVE A DEAL FOR YOU! 

When India proclaimed a more pro-business attitude, one of the States, Bihar, its second most populous and known as the “gutter state”, thought it was a wonderful opportunity to pursue the concept in earnest.  The majority of the state’s population lives in abject poverty and only 20% percent of its people can read or write. Not illogically, they determined that the most sensible approach would be to circularize successful expatriates who still had ties to the country. Three hundred people made the trek to Patna, the State Capital and participated with feverish zeal in the seminar that included all of the bells and whistles.

 Apparently the attendees were more interested in the bells and whistles than they were in investing in the “gutter state” because while the seminar happened over two years ago, as of yet, not one nickel has been invested by any of the attendees.  When queried as to the lack of response, the opinion most commonly heard was the fact that there was nothing in the state that was worth investing in and even if there was, there was no infrastructure in place to support it. Organizers indicated that all the participants had gone with an open mind and seemed to have been more than willing to become involved if the right opportunity had presented itself.  In the entire state, there was no right opportunity, at least to this group.  Nowhere had the problem of foreign investments in India been so visual.

 There were many of the people at the conference who were committed to the theory of investing in substantive projects and yet when the day had ended, thought the better of it and went their own way. Moreover, who should know better about the perils of investing in India than those who lived there and found they could make their fortunes easier in a different environment.  While the State cries out for investment, the State's Capital has no electricity and no streetlights, yet the state’s coal reserves are the largest in India.  This is a land of paradox in which the national government tries to entice business but if just does not know how, and for the most part, foreign investors have heard it all before,

 India has had an uphill battle since its creation 50 years ago when it housed a mere 370 million people as opposed to today’s 970 million. While occupying only 2.4% of the world’s landmass, it is supporting 15% of the global population, of which a startling 40% are under 15 years old. This is caused by an uncontrolled birthrate, which will make India more populous than China in the early part of the 21st century. Thirty percent of the population exists under the poverty line, yet India supports the third largest army in the world.

 With these unbridled demands on feeding the population, farming the land became critical. Indian farmers faced a number of problems, poor top soil, inconsistent weather patterns, little or no government assistance and poor techniques. Having nowhere else to turn, many resorted to all that was left, suicide. In the Indian state of Andhra Pradesh, the farmers, barely hanging on to begin with, received a double blow, a drought that didn’t let up from June through August followed by an infestation that fell upon the scraggly remains of what had been planted like a swarm of locusts. Taking the "gas pipe" among Indian farmers became "de rigueur". 

The government has no financing incentive programs and Indian Bankers look upon making loans to farmers the same way their brethren in the Western part of the United States viewed the Dalton Gang. This left the farmers at the mercy of loan sharks that charge interest rates that would frighten Shylock. Obviously, those that worked the land for a living lost their farms, their possessions and their lives. Not being able to face the realities of what had happened suicide became fashionable to such a degree that the Indian Government even talked about providing crop insurance, something that has been available in most of the world for the last century. “The state government is approaching the Indian government with a request to extend the crop insurance scheme to commercial crops like cotton,” said Chandrababu Naidu, Andhra Pradesh’s chief minister. One of the residents who did not want to be identified, indicated that the chances of the government stepping in before everyone lost their land to well manicured moneylenders was minimal.  These lenders would then be forced to plant their inherited crops, to which he commented, “Let’s see how much production the government can get out of a bunch of money lenders.”   

In the two months from mid-December to the middle of February 1998, the Wall Street Journal reported that ([1]) over 100 Indian farmers had committed suicide because of crop failure. The method of choice was drinking the pesticide that was incapable of keeping the crops from being devoured by parasites, the primary villain being known as the “tobacco caterpillar”. Many farmers, in attempting to do away with themselves, were saved when the pesticides they bought had little effect, even when the suicidal landowners gulped it down in undiluted form. Supplier charlatans, in an attempt to increase their profits, had watered the solutions so dramatically that the products potency had been completely drained.  

“The suicides betray a breakdown of everything India needs to modernize agriculture: education, supervision of technology, finance, investment and more-equitable markets.” ([2]) They quote Warangal’s top agriculture official, Chalapati Rao as saying that part of the blame should be chalked up to small farmers “bad habits: poor crop choice, misuse of fertilizer and over-spraying of pesticides that built up the caterpillars’ resistance.” Not only does the government provide little or no help to the farmers financially but neither does it provide information on good agricultural methodology. An example of this would be the fact that even if the pesticides being sold to the farmers to eliminate the “tobacco caterpillar” were distributed in their full strength, they would have had no effect on the parasite. Rather than throw additional money down the drain with ineffective panaceas, the farmers would have been money ahead to have just let the caterpillars eat their crops. Because of the fantastic, heavily financed sums spent on the fruitless solutions, the farmers are now seeing their farms taken over by pesticide companies, banks and moneylenders.    

India and China started the race for economic betterment at the same time. The starter’s gun went off and they were neck and neck for about ten minutes. Here is a comparison of how the two have fared since 1980.   

 

 

   CHINA

   CHINA

   INDIA

   INDIA

 

   1980

   1994

   1980

   1994

International trade as percentage of GDP

 

   11.3%

   23.4%

   6.8%

   8.8%

External debt as a percentage of GNP* 

         

   2.2%

   19.3%

   11.9%

   34.2%

Inward foreign direct investment as % of  fixed capital  formation

   <1%

   24.5%

   .2%

   1.1%

Total stock of inward foreign direct investment as % of GDP

   <1%

   17.9%

   0.7%

   0.9%

 

*The above chart was compiled by the Financial Times from data abstracted from the World Development Report 1996, The World Bank

**Abstracted from World Investment Report 1996, UNCTAD

The above charts do such an excellent job of speaking for themselves, anything that we may say about them would be unnecessary, but it has been well done for us by Shashi Tharoor writing in “Foreign Affairs” in an article titled E Pluribus, India ([3]). “It is sadly impossible to quantify the economic losses inflicted on India over four decades of entrepreneurs frittering away their energies in queuing for licenses rather than manufacturing products, paying bribes instead of hiring workers, wooing politicians instead of understanding consumers, and getting things done through bureaucrats rather than doing things for themselves.” 

 Although India is serious about attracting global players, they have really not figured out how to do it. In Madhya Pradesh, there was an astounding discovery of diamonds and the State believed that the world would soon be beating a path to its door. In addition, they all came to call, De Beers, Rio Tinto, CRA and Ashton Mining. The Madhya Pradesh Government didn’t ask for much, just a 10 percent royalty on all diamonds sold and an 11 percent equity interest in the winning mining company.  Not only was this request, a deal breaker but in the fine print, state bureaucrats added that the diamonds would have to be sold to the highest bidder as opposed to through the existing diamond cartels. Locals think of the diamonds as a national treasure that belongs to India and indicate that foreign companies shouldn’t be allowed to dig them up. Unhappily for India, there is no local company that has anywhere near the expertise to operate the sophisticated mining operation that is required, thus the diamonds will go unclaimed and for the near future will remain India’s prized underground possession. 

 Setting up for business in India is not a “walk in the park” under the best of conditions as energy is iffy even in modern buildings and unless back-up generators are procured prior to moving in, data and just about everything else can be lost when the daily outage occurs. Water cannot be counted on either unless our enterprising company places its own water tank on top of its facility, anticipating the regular intervals when the water supply becomes contaminated or ceases to function altogether. It may take years before telephone lines can be installed and air conditioning, even if is available, will usually blow out the overloaded power lines. Even if you have your own generator, that is only the beginning, because as a rule, facilities don’t come with light fixtures. When you rent space in India, you get one thing, space, hopefully with four walls and often it is less.  

LET ME SEE, YOU OVER THERE, ARE YOU AN UNTOUCHABLE OF THE 4TH ORDER OR THE 22ND ORDER, OR THE 98TH ORDER OR THE…

Modern India has little in common with Japan, but there is one thing that they share, that is the intent to rewrite history. The Japanese didn't like what happened in World War II so they simply changed their textbooks to show that they really didn't start the war and certainly were not responsible for slave labor. India has had the same proclivities under their almost Fascist form of Government.  Among the interesting concoctions of  the National Council of Educational Research and Training (NCERT), which is the central government body that establishes the school curriculum for students up to the 12th grade, is the fact that Ghandi was not killed by a Hindu racist. In there fervor to show the world that Hindu history goes way back,  NCERT has changed the names, dates and place along with the people. They have concocted new standards of history that have little bearing upon the actual facts. They have also made the Christians the scapegoats for many of their current problems. Just as the schools in Saudi Arabia teach Muslim's to hate the West, so do those in India but they are equal opportunity bigots, they also teach their children to hate Muslims.

An effort is made to educate the young and impressionable and mold their young minds into the ways of hatred and bigotry expounded by the Hindu Nationalist Movement, the R.S.S.  Much like the much admired Nazis, they are training their young and mostly poor to be literally foot soldiers for the party. They have established through private foundations over 1,000 per year for the last decade, all principled on their hatred of anything non-Hindu. Naturally, in this upside-down, Alice In Wonderland world, civilization emerged from  India and it started infinitely earlier than scholars believe. The Indians at these private schools are taught that Lord Ram was born 886,000 years ago and it was from him that the Hindu Indians ultimately emerged.

Hindu's should not buy products made outside of India and television watching is for the great unwashed.  The development of Hindu pride and patriotism is paramount and only the brightest volunteers are accepted in these schools. They are taught to go into business when they finish school but to always consider that their allegiance to R.S.S, a secretive, all-male organization that attempts to instill Hindu feelings of nationalism beginning in childhood and that allegiance to R.S.S is their manifest destiny. 

India has a complex caste system within which there are thousands of sub-castes, thus making for an extremely complex arrangement. An interesting insight into India’s caste system is provided by Mr. Gurcharan Das, chairman of Citibank India’s Advisory Board and formerly CEO of Procter and Gamble, India.  He indicates, in part, that rural India’s entire social culture is organized around caste even when considering the educated middle and upper-middle classes within the mix. Das states that, “Caste divides Indian society into groups whose members never intermarry and usually will not eat with each other, their status decided by who will and will not take water from each other’s hands.  Everyone within a caste is a brother and without is a stranger. Caste varies by region, and the relative positions of castes can differ from village to village. Nevertheless, everywhere caste rules are rigid, and those who deviate from them are shunned. There is little room for individuality when the group – defined by family, ancestry, kinship, village, class and caste – is supreme.”

 The Bania, or merchant, is “twice born”, and is thus automatically assigned into the upper-caste end of the India hierarchy. The top of the pyramid is populated by about 15% of the total population and the country has been run by these groups for over 3,000 years, non-stop. The level below this, which makes up over 50% of the population, is called the “Shudra Caste” and basically, it and its hundreds of sub-castes are home to the ordinary laborers who do the menial tasks that keep the wheels running. The remaining 35% percent of the population is divided almost evenly between those people that are casteless or “untouchables’ and those that do not belong to the Hindu religion such as the Muslim’s, Sikh’s, Christian’s and Parsi’s as well as others.  

 

INTELLECTUAL PROPERTY, IF IS SOMEONE ELSE’S, WE OWN IT, IF IT WAS INVENTED HERE, YOU CAN’T HAVE IT

 India has never been too concerned about the rights of others when it came to intellectual property. The feeling is that India is playing catch up and it is easier to “catch up” when you make your own rules. Thus, there has not been tremendous desire on the part of high-tech companies to bring their trade secrets into a country that in the past has considered them fair game. Thus, there has been a lack of cohesive intellectual property laws on the books in India. Additionally, what little protection that can be found within the court system, is archaic, slow moving and biased toward indigenous companies who more often than not were trying to simulate products, names and contents of others.  An example of the depth of the problem, Tata Timken estimates that in the field of automobile spare parts (a critical industry because of import regulations and tariffs), some 40 to 50 per cent of all products are bogus. Although legitimate products may be available, poor distribution throughout the country hampers delivery.

 It is in the area of pharmaceuticals where Indian piracy takes a back seat to no country.  Their chemists can reverse engineer the most complex of medicines in no time at all. Many pharmaceutical companies such as Pfizer will not sell to India at all because they will not respect intellectual property. The Indian theory is that copying is alright, at least in the field pharmaceuticals, because monopolies tend to keep prices up, a patent creates a monopoly and India has too many sick and poor to have to worry about the niceties of playing by the rules. In addition, the government has come up with some new rules of their own which through convoluted logic seems to convince them that they are doing the right thing. India will recognize the methodology of the manufacture but not the end product.

 Simply put, if an Indian pharmaceutical company can get to the same result, but by using a different route, the product becomes totally legitimate, not only within the country but for export as well. This has resulted in total Indian pharmaceutical research and development costs, to develop copycat products, to be a fraction of what it is in the West. Thus, without the burden of substantial research and then development, naturally, the end product can be produced at a greatly reduced price. Many Indian Pharmaceutical companies have had their facilities approved by government agencies such as the American FDA, thus certain companies in India are free, for the most part, to export into almost all countries. Companies such as Indian pharmaceutical manufacturer Cipla Ltd. had Viagra copied, boxed and exported almost at the same time that Pfizer released it in the United States and while the going price in the States is around $10 a pill, in India the going rate is around $1.50.  

 In an attempt to show that something was being done about the problem of counterfeiting, the Government made an attempt to put its best foot forward, in a global sense. They determined to eliminate the practice entirely within the software industry, where abuses were so severe that literally all software was phony. In this highly visible industry, “the world would see what India could do if she tried”. According to the National Association of Software and Service Companies, an Indian trade group, software companies lost $140 million to pirates, which still accounted for over 60% of the Indian market.    

Tariff’s and Other Niceties

 India thinks that it is protecting its industries by placing inconceivably high tariffs on foreign made products. As an example of this extreme protectionism, the tariff on spirits runs up to 710 percent of its retail price. In other words, what the Indian Government is indirectly saying is that your product should sell at 7 times as much as mine so that I can be competitive. Obviously, the spirit industry in India is leaving quite a bit to be desired in terms of productivity, marketing and management and it has apparently not been helped by these excessive tariffs. India is a poor country and high tariffs strain the economic resources of a population that has little enough without adding to the strain. No country that wants to be economically competitive should have to carry the burden of industries that can operate efficiently from both a quantity and quality point of view on their own. Moreover, this is especially true in a country whose people are living with one of the lowest standards of living in the world. 

An international conference was held in 1994 in Uruguay that addressed this situation and at the time India indicated that it was indeed time for tariffs on spirits to drop but its own industry would need time to adjust to the coming competition. They promised the United States and the European Union that they would make the cut starting in 2002 and continue reducing the tariff until 2004 when it would reach the agreed upon parity. At that time in 1994, the Indian Government reported the terms of the deal to those companies in that country that dealt in spirits and warned them that they would have to learn to be competitive. However, as with everything else in this country, what you hear is not always what you get so no one paid much attention to this pronouncement and they were right.  

However, not only did India not keep its word but in 2002 it raised the tariff by another 75-150 percent. Officials in both the EU and the US felt betrayed by Indian backstabbing and are now going to take the matter to the WTO if it can’t be settled as agreed upon and settled sooner rather than later. India represents a large market for world spirit dealers and they point to the fact that both the EU and US have made substantial concessions when India sells its products abroad, why shouldn’t India go along as well? They have an excellent case and when they really try to push India to the wall, the Indians will have very little to fall back on. Interestingly enough, imports account for only 1 percent of India’s liquor sales and Scotch brought in from abroad is forced to sell at about 8 times or more what the Indian version sells for.  

This is not the first time India has made a deal relative to trade and when the time came to deliver on their word, they reversed course shamelessly. The realities of the situation are much different than those that the Indian Government believed. When the import of any product requires duties of the kind that India was imposing, it only paves the way for smuggling. While under the plan agreed to in Uruguay it would have equalized competition to some degree. By keeping tariffs synthetically high, the only winners have become the smugglers. It is a similar situation to what existed in the United States during Prohibition. When the product was no longer made in this country, manufacturing facilities were quickly erected off shore and the only one that was the victor in that contest was the Mafia, hardly what Congress had in mind.  

It was pointed out by Tim Jackson of the European Confederation of Spirits Producers and Scotch Whisky Association that, “Because of high tariffs, everything comes in through the back door. Only the smuggler and bootlegger win.” In addition the products are not even equivalent. By the definition of the EU, whisky must grain-based and matured for a minimum of three years. However, Indian whisky comes from molasses and is matured for a substantially shorter period of time. The product not only is mediocre but naturally it tastes inferior as well. In order to make the competition even fairer, the Indian product should probably really be even called by some other name. Moreover, the Indian version is less expensive to produce, less costly to store while it is maturing, does not cost as much to ship and when it is sold but the finished product according to many tastes worse than cough medicine. As a matter of fact, those experts in the EU point out that the end product is closer to rum than it is to whisky.  

The Financial Times in an article entitled, “Indian promises on spirits turn to either: A western delegation is determined to persuade India to curb its huge import ../../tariffs on liquor__148.css;, December 2001, Edna Fernandes comes up with the statement of a lifetime when they quote an unknown source as saying, “Indian whisky is distilled in the morning, bottled at lunchtime and drunk in the evening.” The Indian consumer is getting dinged everywhere he turns, but in this case he really isn’t even given a choice. India has not yet come to the conclusion that the rest of the world has realized long ago. Competition makes industry produce better products at a cheaper price. In the end, those that are successful survive but the consumer is always the winner. In India, the game is played so that the bureaucrats win, big business loses and the country continues to spiral down the drain.   

CORRUPTION, INDIAN STYLE

 We can’t add much to what was written the India WebPost, Zaire had One Mobutu, India Has Hundreds, Commentary, Jai Somanath 1997. 

After a scholarly discussion of what Mobuto had taken from Zaire, Somanath begins making a comparison with India by first pointing out that the entrenched bureaucrats know that whenever a unique type of new scandal rears its ugly head, the Secretaries and Ministers must join together in passing legislation that will exempt them from jail. He point out that during a recent bank scandal, they passed legislation stating that,  Bank officials cannot be investigated unless they themselves give permission!”

Jai continues by indicating that in the old days, a civil service appointment had a substantial life cycle and therefore money could be lifted from the system a little at a time, thus letting at least something filter down to the people. However, since the reign of Rajiv Gandi, civil servants longevity telescoped into uncertainty and they were forced to change their methodology. Where in earlier days it was possible to leave at lest something on the plate, a mad rush was begun to sweep the plate clean with an almost obsessive compulsion. Jai estimates that “only 15% of any money allotted for public works ever reaches the goal to get the work done. The rest of the 85% is swallowed.”  While these figures seem heady even for corruption prone India, they have at times even done better. He points out that during the prominent urea scandal, 100 percent of all the funding was allocated to sticky fingered bureaucrats and before that in the equally famous sugar fiasco a like percentage amount was commandeered. Between the two, literally $500 million dollars was used to fatten the purses of officials that were elected to protect the people’s interest. 

Somanath rhetorically questions the enormity of this operation when he indicates that even the lowly “Municipal Councilor in a tiny State of Kerala becomes a multimillionaire by the time he leaves office, so what to speak of Finance Ministers and Chief Ministers and Prime Ministers.”   ([4])  

One of the most astounding charges of corruption that we have ever witnessed concerns India’s loss of military planes. Indian newspapers have reported as many as 82 planes have been lost in 42 weeks from non-combat crashes. The cost of this to the Indian government, just for replacement of the loss, is estimated in the billions of dollars. But, why do they crash? There are three schools of thought on the subject. The first holds that possibly, the training of pilots is poor and they can’t fly very well.  While this is possible, it certainly does not bode well for India in any battle with neighbors, or anyone else for that matter.

 CORRUPTION, A SHORT STORY

 The second is that the planes are poorly made, which does not seem to hold water because India purchases all of their military aircraft from other nations, which have not reported these kinds of problems. The last, and more typical of the average Indian’s approach to anything that goes wrong in India, corruption. One of the major Indian papers ran a story last year about how people were cleaning up in “bogus aircraft parts”. The outcry has gone up that  the Indian Air Force was purchasing second-hand or homemade parts for their fighters. Some wags have already started making demands for an investigation. In the meantime though, in a land where people can’t find work, it is certainly unusual that the Indian Air Force cannot recruit pilots. Maybe the pilots know something.

 Popular Dissent

 To make matters even worse, the Indian Government is awfully thin skinned when it comes to cultural criticism. People living in the West are extremely spoiled when it comes to the type of reporting they are allowed to read. They are allowed to read whatever the newspaper lets the reporters write about which is usually just about anything that will sell papers. However, this is not the case in India where papers sell primarily based on gossip and rumors having nothing to do with government policies or for that matter, reality. God help the paper that takes on the administration in power or for that matter the country’s court system. When they do it becomes a case where no one is allowed free speech here no matter what they say or who they are if it steps on the wrong toes.  

Take the case of Arundhati Roy a woman who was awarded the highly regarded Book Prize for the novel, The God of Small Things. This novel has sold over 6-million copes and is still going strong. Moreover, Ms. Roy has been a vocal advocate of less dam building in India because it dislocates people from their homes and often after that does not do what was intended to do to begin with. Her vocalization of this fairly mundane topic caught the eye of the Indian Supreme Court and they asked to have a few words with her. That seems to have been their first and primary mistake.  

In the meantime, Ms. Roy had the audacity to indicate that “Any citizen who dares to criticize the court does so at his or her peril.” She followed up this blast with the statement that the court system in India has the “disquieting inclination to silence criticism and harass and intimidate those who disagree with it”. As far as the Indian Judicial system went, these were really fighting words and Ms. Roy could not be allowed to get away with it.  

However, she did not roll over and fought the Supreme Court tooth and nail. When there was a tremendous public outcry in favor of Ms. Roy the Court came to the realization that it may have taken on a task that was a tad bigger than they were prepared to handle. Quickly trying to back out of a tight situation, the Court sentenced Ms. Roy to six months in jail but they indicated that she would only have to serve one day of it. The said that the sentence was indeed “symbolic” and that because of its “magnanimity and because the respondent is a woman” they were going an extra mile to compromise the situation. This seems in its very essence to be illegal in itself and the court has shown its true colors by shamelessly backing down and then giving all the wrong reasons for doing so.  

However, another battle is yet to come and it concerns the $41 dollar fine that they assed Ms. Roy. We wonder what new words the Indian Supreme Court will use when she refuses to pay that assessment as well. It is a lucky thing that there is a lot of crow to eat in India. These folks that run the court will be dining on it for some time to come.  

Consumer Credit

 Historically, banks were that places in India where the people kept their cash and where the corporations were able to borrow it. Literally in this country there was really no such thing as consumer credit or retail borrowing; it did not exist. This legislatively weighted system did not provide for retail leverage and thusly, held back economic expansion and intrinsic growth more than any other single policy sponsored or induced by this archaic government.  

One of the reasons for this is simply the fact that there really are a dearth of foreign denominated banks in India. It is these banks that are more familiar with the consumer lending game, which if played correctly can be more profitable than corporate lending. Interestingly enough, “India’s 41 foreign banks own just 202 branches out of a national network of 67,821…retail loans only account for about 5 per cent of total assets in the banking system, or double if home loans are included, compared with 45 per cent in more developed markets. ”[5] 

There were several reasons for this. The first and most important could well be put under the category of “economies of scale.” Consumer lending requires much more manpower than does the corporate variety and in addition, because it is such a rarity in this country, it takes a lot of care and feeding. Most important, it is necessary to put controls into place that are country specific when you are dealing with uneducated consumers. In this respect, local lenders had the high ground because of the fact that they were well known, had branches located throughout targeted areas and employed indigenous people. Moreover, it is important to note that there was no way to buy your way into the Indian market.

 Despite its potential, a base had to be created one bank at a time, because of anti competitive laws relative to foreign branch-banking corporations within the country’s regulations. Recently, for the first time in the India’s history these roadblocks were eliminated legislatively and foreign banks can now able through a series of thresholds to own up to 98 percent of a bank in this country. However, in typically Indian fashion, the bureaucrats were unable to make the job simple; they once again had to make convolutions in order to show the people that they were not giving the country’s banking industry away directly.  

The way it is going to work is that foreign banking corporations will be allowed to own up to 49 percent of a bank in this country and foreign institutional investors would also be allowed to buy the same percentage. Thus, in principal, Citicorp could purchase 49 percent and its employee’s profit sharing plan could purchase the other 49 percent. The employees would agree to giving the parent corporation a management contract on their 49 percent, thus letting Citicorp run the whole thing and enrich their employees while doing it. India seems to believe in legally going into contortions when they pass legislation in order to disguise their end game from their own citizens and pervert the entire process.  

However, in spite of this convoluted regulation, there is not much for sale here that is worthwhile. Because of the fact that there has not been foreign competition, the industry has stultified and bad corporate loans make up a substantial part of each banks portfolio. Moreover, the banks have their share of bureaucrats working in them, and there are substantially more people employed in this sector than could ever be logically absorbed by a foreign banking desiring to make a profit. Because of the regulations regarding employment in this country, a bank after making an acquisition could not simply let the excess employees go. They would have to work it out through some sort form of attrition. Thus in spite of the change in regulation, at first it would make sense for any foreign bank getting their feet wet here to first start by purchasing performing loan portfolios. Once into the murky water they could learn how to deal within a market where approximately 8 per cent of the credit card holders are delinquent and that by the way is after an exhaustive screening process.  

However, if there is a single element that has prevented India from expanding economically it is its regulatorily overburdened banking sector. Foreign competition will teach the locals how to do it right and after a couple of more generations maybe India will become a real country at least as far as lending is concerned. The ability for the population to borrow geometrically expands almost every industry that it touches. How the government could have played its hand so close to the vest has caused India to remain a third-rate power in every sense for decades. Hopefully this will soon change as the demand for retail credit is expanding by over 30 per cent a year. Interestingly enough, “foreign banks account for about 8.2 per cent of total consumer and corporate loans at ICICI[6] but nearly 15 per cent of total profits for the bank in the year to March – indicating a lower cost base at foreign banks.”[7] Lower doesn’t seem to be quite the word for it.   

The System Is Just Simply Rotten 

Naturally the court system is overly interested in picking on people that are trying to do the right thing in this country and do not have time to deal with the massive criminal element that prays on the poor, the infirmed and the helpless. It would appear that you can say anything here, legal or not, but don’t start picking on the bureaucrats, the government or the court.  

For centuries Indian people have become preoccupied with the collection of gold and other precious gems. The primary reason for this is economic security, the people just don’t trust the government issued paper money, which can become literally worthless at the drop of a hat. However, it now turns out that their government did not do much to help them when they bought gold from shysters.  

One fine spring day recently, the Bureau of Indian Standards (BIS) decided to get off their butts and really check to see whether or not the people that were selling gems were selling the people what the quality material they were advertising they were giving them. The following will give you an idea of what they found: 

“A recent survey of the quality of gold jewelry sold in Calcutta by the Bureau of Indian Standards showed that few customers who paid for 22-carat gold jewelry actually received it. What the BIS discovered in Calcutta is also more or less the case in the seven other big Indian cities – Bombay, Delhi, Bangalore, Madras, Ahmedabad, Hyderabad and Jaipur – covered in the survey. 

In each city, 15 shops were chosen randomly from which BIS officials along with representatives from local consumer action groups bought jewelry without disclosing their identities. The subsequent assaying of jewelry showed that only 14 of the 120 shops in the eight cities were truthful in their dealings. The others were passing off gold jewelry of anything between 13.5 and 18 carats as 22-carat jewelry.[8]  

It is somewhat surprising that the Bureau of Indian Standards took so long to discover what they should have found out years ago. The Bureau was literally created with origination of the country and most of the employees of that division had done nothing since. This is especially strange when you consider the fact that India is the largest buyer and manufacturer of gold jewelry in the world and consumes almost 900 tons a year. After this report was issued, the purchase of gold came to a screeching halt. There is an alternative and that is to only purchase jewelry that is hallmarked but I am really not sure how much protection that is going to afford. Indians are very cleaver people and I do not believe that hallmarks would be all that hard to counterfeit. Maybe the checking on hallmarks is the next job we should assign to those alert people at the Bureau of Indian Standards who were able to nick this problem in the bud about three-decades after it had blossomed.  

Perhaps in the next century this gang in the bureau that doesn’t seem to know how to shoot straight will do what their assignment calls for. Figure out a logical way to protect the public. In the meantime, it would seem that not too many of the thieves have even been indicted. We are aware that 106 out of 120 stores that were checked were ripping off consumers. What did the Bureau do to these folks? The best that we have been able to find out is that they are still in business and have not even given up the practice of stealing from their own customers. Well as the Indian’s say, caveat emptor.  

THE STOCK MARKET, OR AT LEAST THAT’S WHAT WE WILL CALL IT UNTIL SOME BETTER NAME COMES ALONG 

Global investors looked at India and liked what they saw. A country rededicated to modern economic theory and committed to make capitalism work. Stocks in India were selling at invitingly low price / earnings ratios and there were over 7000 listed public companies to choose from. The markets had become mature as they had been in existence for decades, and most import, the second most populated nation on earth, just could not be ignored when setting up a global portfolio.  

But the global community was not really aware of how things work in India. Everything is manually executed and ownership is transferred by hand, in a cumbersome process. The individual corporations, for a large part, control the transfer of their own shares and depending upon their own bias.  At any given time you may or may not receive what you purchased. If, for example, the powers that be wish their stock to go higher, they endlessly delay transferring their shares, thus creating a market in which if an investor wants to make a purchase, he will have to pay dearly. On the other hand suppose that the Directors of a company want to declare themselves options and they want shares prices lower. They simply supply all of the stock that has been backed up at the transfer agent and let gravity run its course.

Indian Investments

 Transparency has never been the byword in Indian investments as stock exchanges all over the country were routinely rigged, shares routinely delayed in transfer and for the most part investing here was considered a worse gamble then betting on the outcome of the country’s rigged political elections. However, within every storm there is an eye in which calm prevails and it was the thinking of Indian investors that Unit Scheme 1964 or as it was better know, UTI, the oldest and largest of all Indian mutual funds was something extra special. At least that was the thinking of the 20 million Indian investors that owned shares in it. The scheme was so large and so influential that Indian securities regulators felt that it should be allowed to operate within its own space and not have to waste valuable investing time, reporting its holdings or valuing its portfolio.  

However, deals like these are what fools are made from and Unit Scheme 1964 turned out to be no different. Its management was conceded, inept and hopeless and when the real numbers eventually  came out, they showed that instead of being great stock pickers, the managers of the scheme’s team were nothing but a bunch of second rate hacks or worse. Generously the regulators had allowed the scheme to only report to investors at what price they were willing to redeem shares and as they increased this irrelevant number on an upward bias, the population felt that the funds management really knew what they were doing. This greatly enhanced the fraud and as long as the number of shares redeemed stayed at a relatively low amount, the difference in value between the price of redemption and the real value of the fund created no real difficulty for the funds executives to hand. They were more than able to make up the difference by taking the funds needed for redemption from their inflated management fees. 

Somehow or other, it got out that the redemption price bore no relativity to the value of the fund and it began a run on the bank. The fund’s managers panicked and halted redemptions entirely causing the government to step into the breach. It turned out when the auditors finished the tedious job of figuring out what the real value of the fund was that the redemption price had been hovering at about three times the actual value of the shares in the fund. “A committee charged with investigating UTI  in the wake of last summer’s crisis found many investment decisions were made at the chairman’s discretion, and that huge transfers between funds were common – possibly in order to ‘window dress’ certain schemes at particular point in time.’”[9] 

However it was at this point that the regulators probably made their gravest mistake of all. They informed investors that if they held their shares until May of 2003 they were going to guarantee them no less than double what it is worth now. In reality the investors had made a bad bet and they had lost. For some strange reason the government now feels that a bail out is in order for something that bears every resemblance to a genuine Ponzi scheme. Instead of returning the investors money, the culprits should be tried criminally for fraud, thrown in jail and ordered to return some of the investor’s money, but only those that purchased the shares at a price dramatically above what its net asset value really was. Now, the Government has entered into a no win situation. When the time comes to pay off their guarantee, the government will be stuck with either paying off twice what they would have had to pay now or defaulting altogether, which has become the standard here.  

Why the urge to give early investors who paid much lower prices an enormous profit when one never existed in the first place is beyond rational belief. The money should be used to begin a campaign in India explaining the nutritional benefits of vitamin A to malnourished children. India has not learned how to create laws that will stop these types of frauds, they have not learned how to spend their money judiciously and they have not how to rid themselves of an entrenched bureaucracy, which is only interested in further its own agendas, which seem to have little to do with benefiting the people in any way.  

However, don’t even hold your breath on this promise by government officials, you can’t bet just about everything that you have got that if the market price for shares in this scheme are anywhere close to where they are now, these bureaucrats will keep pushing forward the date out until everyone will just plain give up on believing anything this band of confidence men has to say. India is indeed another place.

 TO BE HONEST PUNJAB, I DON’T CARE IF THESE SECURITIES ARE BOUGHT AND PAID FOR, EVEN YOU WOULD NOT ANTICIPATE ISSUANCE WITH THE MOON IN ITS CURRENT POSITION

 As we have seen, in India, the court process is endless, and there is literally no way to get securities if the company is not in the mind to issue them. What makes the process even more annoying is that markets are extremely thin and even small purchases and sales have substantial effects upon prices. Even the companies that would like to have their shares registered all at once to drive prices down have problems. “Indian registrars, when confronted with a large backlog of registrations, would rather reject and return all of the certificates to the sub-custodian than expedite the process with their own operation.”  ([10])  

Foreigners have increased volume on the exchange and regularly cause paper crunches that can’t be dealt with. When faced with this type of contingency, the markets in India simply close until they can catch up with the backlog. But when you are dealing with this much paper, it isn’t always that easy. When volume has stayed high for any length of time, the certificates awaiting transfer start piling up. Soon, the vaults are filled and the overflow must be transported elsewhere. Alternative sites include trailers, stores and tents, which await an endless horde of messengers bearing more boxes, carrying more certificates, awaiting almost no dedicated storage and record keeping facilitates.

This, of course, creates that ultimate problem facing the Indian financial markets, failed transactions. So, you own this stock that was purchased some time ago and it has gone up in price. You call your broker in Bombay and tell him to sell. He does, and now the trouble starts. You shares are not registered in your name, they are not registered in your broker’s name or they cannot be found because they have been stored in a tent on the outskirts of town. The trade fails ([11]), and not only is it rescinded, but the seller is charged for the loss because of it not being successfully completed, as well. “About 60% of our investment return in India over the last four years has been absorbed by operating costs there,” according to John Lee, Managing Director of GSCS Benchmarks, Ltd., a company that has developed indexes showing the costs of failed transactions globally. ([12]) 

LEADING THE WORLD IN SECURITIES FRAUD, AT LEAST AS A PERCENTAGE OF TOTAL BUSINESS, THEN AGAIN IT IS GOOD TO BE FIRST IN SOMETHING 

India has yet to create laws against insider trading, thus making the Bombay Stock Exchange (BSE) ([13]) a free-for-all of white-collar crime. Bank credits are regularly used illegally to finance stock deals and a government investigation found that over $2 billion had been manipulated through this means.  

To make matters worse there are no disclosure regulations covering the use of funds raised on the exchanges, material facts effecting corporate affairs, or buying or selling by insiders.  Nani A. Palkivala, former Indian ambassador to the United States, an attorney and an economist, put it succinctly when discussing securities problems, “If I were a profession criminal, I would choose to operate in India.”     

In early October 1997, the Bombay-based, National Stock Exchange was put out of business when it partially lost one of its information satellites, Insat-2D. ([14]) In typical Indian style, during the rescue attempt, the catastrophe became complete when all the backup systems failed as well. The only alternative for the Exchange is reversion back to the defective system, which preceded it. Indians remember this hodge-podge as the one that wobbles in the afternoon and disrupts all trading. To make matters worse, in spite of the fact that the system had been down, trades still must be settled and the funds may not be available to handle the settlements.

 Hurriedly, the exchange brought its much-derided Insat 2-A reserve system out of mothballs and announced to all concerned that everything would be up and running again shortly. On the date that the reserve system was to take over, it was found that it had deteriorated from lack of maintenance and would not do the job. At this point it was too late to contact brokers that had gone home assuming that transactions would be settled and that the exchange was about to reopen. ([15]) 

 If this occurrence had happened in Japan, London or New York, the world financial markets would be in chaos. Luckily, India’s exchange is of little significance in the grander scheme of global matters and will remain that way until the country learns to get things right. Most countries use their financial networks to supply capital to industry and government. In India, this is hardly the case. 

Behind this illustrious backdrop, India is now preparing to begin derivatives trading as the barricades seem to have been overcome for trading to begin on an equity index future that encompasses the NSE 50 index of top Indian securities. As we everywhere in India, local business fears anything that smacks of additional competition and in the case, the Bombay Stock Exchange, feels that derivatives will cause the exchange to lose even more market share. Such incidental questions such as how can derivatives trade in India if cash settlements ([16]) are outlawed under Indian law. If that weren’t problem enough, the fact remains that no regulations are in effect to regulate this type of trading. In spite of the all of this, their is no question that as soon as the new  national elections are over in India, authority will be granted for the country to find a new method of financially blowing itself off the face of the earth.   

 IMPORT CONTROLS, NOW YOU MUST UNDERSTAND, WE HAVE A VERY SIMPLE SYSTEM, WE WILL EXPORT EVERYTHING WE CAN TO YOUR COUNTRY BUT IN RETURN YOU MUST NOT ATTEMPT TO SELL YOUR GOODS HERE; IF THOSE RULES WILL WORK FOR YOU, WE WILL BE HAPPY TO HAVE YOU ON BOARD.

 India, with a population of 949 million people, and estimated to be on target to overtake China as the worlds most populous country by the year 2047, with a then population of 1.62 billion, certainly represents an appetizing target for global business; a market with  pent-up demands for almost every kind of product and a middle class that can afford to purchase them. Before your mouth starts watering too much, lets look at the situation as it exists today.

 For fifty years, India has had more concern about protecting indigenous industry than doing business with the rest of the world. Now that they have determined to re-approach the global community because of their own internal capital needs, India has been requested  by the World Trade Organization to open their markets to foreign goods and lower their confiscatory tariff structure. India isn’t having any of it and wants it both ways. That is, they want foreign investment, without importing foreign products. The participants announced after almost two years at the table, “No consensus was reached, with a divergence on interpretation of the balance of payments situation”, said a WTO official. The United States, having sat at the bargaining table for 18 months, and fed up with the lack of progress, reportedly requested “consultations.” ([17])

 Now in India, we have a country with healthy foreign exchange reserves and a positive balance of payments. No lesser of an authority than the International Monetary fund has indicated that India would not be unduly threatened by compromising their stand with WTO. What little progress the West has been able to pry out of the slowly moving, bureaucratic Indian government, has been staged over two and three times the periods requested by the participants. Indiophiles insist that the government does not represent a consensus and could topple if the country moves to quickly. Apologists insist that their main concern is what will happen to the poor if subsidized food products start entering the country tariff-free from Australia, New Zealand and Europe.  We are not smart enough to understand why this is the case.

 Genetically Engineered Cotton

 For the most part the Indian Government is about as stodgy as an old sock. Change occurs very slowly in this part of the world and whenever something exceptionally innovative occurs, everyone around these parts raises their eyebrows and the newspapers write articles showing chapter and verse about all kinds of things that are wrong with it. Such is progress here. So it was recently when the Indian Government approved the use of genetically modified cotton for their crops. While this was a particularly aggressive action on the laid-back country, there was literally no choice.

India as it relates to cotton was falling far behind the United States and China in terms of gross production per acre and beyond that, the production was particularly of the non-mechanized variety. So to start, they were producing less but doing it at a much higher cost, not a good situation when you involved in the global export market. In addition, India recently has been devastated by a particularly virulent variety of the bollworm. The Indian bollworm has proven almost immune to whatever sprays, chemicals and other devices that the Indian government has supplied its farmers.  

Enter, bio-engineers products, usually held in low esteem in this country. Moreover, the folks at Greenpeace loudly announced that they considered this move a step in the wrong direction. However, in spite of many people that were actively against anything of this kind, Monsanto produced genetically engineered product seems to work wonders as an insecticide. The miracle workers at the large American chemical company ware able to insert a gene that makes the cotton plants toxic to insects. However, in the past the insect world in general has been able to eventually successfully evolve resistance to numerous varieties of substances geared to eradicate them in the past. There is no particular reason to believe that these critters will not be able to do the same with this genetically manufactured substance but at the moment it is a miracle insecticide.  

Relative to the genetically engineered insecticide, Greenpeace has also vocally expressed their dissatisfaction with China, Argentina and South Africa which countries have embarrassed biotechnology in order to stay competitive with more on the way. Brazil, Thailand and the Philippines are also slated to make Greenpeace even more upset in the near future, while Monsanto, the producer of choice seems about ready to clean up. However, cotton is somewhat different than meat or potatoes. You wear cotton and you eat meat so while this represents a breakthrough of sorts, it may be a substantially longer wait before Indian officials allow biotechnologically produced agricultural products to be ingested by their population.  

“With the likelihood of little protest from consumers, even environmentalists agree take-up of genetically modified cotton by Indian farmers will be substantial. ‘Farmers everywhere are in a bad situation over low prices,’ says Doreen Stabinsky of Greenpeace. ‘Whenever you see these crops come to market you see significant take-up because farmers see it as their salvation.” 

“For companies such as Monsanto, that means potentially huge commercial rewards. India is the world’s third largest cotton grower, producing 5.2 million tons a year compared with 14.6 million tons in China and 11 million tones in the United States. Yet productivity is low, with almost twice as much land area under cultivation as either of its rivals. ‘Monsanto should get its money back within three or four years,’ says Channapatha Prakesh, director of the center for plant biotechnology research at Tuskegee University, Alabama, U.S.[18]  

 However, lack of education in India will probably inhabit the progress of this economic experiment. The fact that this genetically modified seed will cost a tad more than the one that has not been tinkered with will probably confuse the farmers who have been sold a bill of goods before. Local cotton farmers may not even choose to believe the Indian Agricultural agents believing that they are being ripped off once again. This remains the ultimate test of the Indian will. If the farmers fail to grasp the gold ring here, it may put India so far behind the agricultural eight-ball that they may never recover. However, that seems the way here with the gold ring always somewhere else.

Wheat  

Substantially more people in India go to bed hungry every night than live in the United States. To be more accurate, about 350 million Indians don't have near enough to eat and starvation in this country is not unusual at. What makes this statistic so unusual is the fact that there really is plenty of wheat to go around, however, because of bureaucratic foul-ups, abnormal storage programs, bizarre logistics and lack of subsidies for people that cannot afford the high prices. Literally, food is rotting in the storage bins while people are starving to death. "Yet the government is sitting on wheat surpluses -- now at about 53 million metric tons -- that would stretch to the moon and back at least twice if all the bags were lined up. Persistent scarcity surrounded by such bounty has become source of shame for a nation that has taken pride in feeding itself." New York Times, December 2, 2002, Poor In India Starve as Surplus Wheat Rots, by Amy Waldman.

India, always the anomaly  has places such as Punjab State which has the highest per capita income in the country, only 2 percent of country's land, and yet grows 55 percent of its food. However, nothing that is good lasts forever and because wheat is selling for all-time high prices here, the farmers in Punjab are farming so much wheat that they are depleting both the water and the soil. This does not bode well for the future, but worse yet, it isn't helping the present one wit.

Moreover, while there are subsidies for the poor to buy their wheat at substantially below market prices from ration stores, these stores are for the most part located in areas where the people that need the food do not live. Thus, the Indians have created there very own self-succeeding program for defined starvation. Today there is so much excess wheat stored in this country that it is rotting or becoming worm eaten in the porous jute bags in which its packed. Moreover,  there is no warehouse space left and wheat now being stored in fields rented from farmers where rodents and the elements take a substantial toll. "A recent report found that it was spending more on storage than on agriculture, rural development, irrigation and flood control combined." New York Times.

WE HAVE BEEN MAKING THINGS THIS WAY FOR A THOUSAND YEARS AND IF YOU COME BACK IN ANOTHER MILLENNIA WE WILL STILL BE DOING IT THAT WAY, IT’S A TRADITION

 India’s products have a record of being poorly made and generally not competitive with global standards. Yet, a decade old company in India, Titan Industries, has become the sixth largest watch manufacturer in the world by concentrating on price, quality and upscale fashion. Titan has captured 75% of the high-end market in India, and now is attempting to go outside its borders to compete internationally. The perception of Indian quality is so poor that Titan has been forced to disguise its origin in both its advertising and its company literature, which is emphasized by a quote from Xerxes Desi, Titan’s Managing Director; “India’s reputation is a bit of a problem, so we’re playing it down.”  But in order to become a global player, the watch has to be available in foreign countries. That’s the rub.

 Because India does not allow the import of watches into its country, other nations are playing hardball with Titan and the company has been restricted from entering trade shows in various areas around the world. Where India’s laws work in a non-competitive economy, they tend to restrict the occasional superstar from rising above the throng. They are directly stifling their own exports, the country’s ability to earn hard currency and a return to global competitiveness with continued inward thinking.     

India will undoubtedly lose their skirmish with WTO as the 131 member Balance of Payments Committee has already stated that “the strength of the Indian economy did not justify retaining curbs on India’s 2400 protected products.” Thus, India will  be faced with two choices, returning to the world of isolationism, which is beyond comprehension, or they will capitulate in a negotiated fashion. Too much is at stake for WTO to compromise when China is looking over everyone’s shoulder ([19]).

 BANKING, OR WHATEVER YOU CALL IT WHEN ONLY THE RICH GET LOANS AND ONLY THE POOR MAKE DEPOSITS

 India is one of the world’s last refugees of public sector banking with no change in sight. Even with a policy of state controlled banking the government does not allow mergers and acquisitions to take place even when absorption of a weaker one by a stronger is logical ([20]). Entrenched bureaucrats, who are not interested in making waves, concentrate their risk within the public sector so that even if a loan fails to perform, they have the advantage of blaming another bureaucrat for the resultant run on the system.

 No matter how bad they perform, for the most part bank executives have all the trappings of civil service personnel. Their jobs are secure as long as they are willing to play the political game of making loans to the correct borrowers. There has been literally no desire within the government to bring change to this disastrous element in the economy which by its nature stifles the ability of new businesses (which have been the life’s blood of many economies) to flourish. India has been able eliminate innovation from its society by permitting this system to endure.

 A system that is obligated to devote a third of the assets to the acquisition of  government bonds and another 15 – 20% to priority industries of the currently entrenched government certainly does not seem destined for any great success. Just as in any country where  loans are made by edict rather than sound banking practices, the default rates become astronomical and the loans productivity drops to near zero.  In China, which has a similar system, this obligatory loan policy has caused one of the highest default rates in the world. Within the Indian Banking System, Morgan Stanley has estimated that one-fifth of all loans are “duds”.

NOT ONLY ARE OUR LOANS CATASTROPHIC BUT WHAT LITTLE MONEY WE HAVE LEFT GETS STOLEN

 In addition, Indian Finance Minister P. Chidambaram indicated in a report to the Lower House of Parliament that in the last three years there have been 6,823 cases of bank fraud in the country. He indicated that in spite of those astounding statistics, there was no reason to set up an independent audit commission to help fight the invasive nature of this criminal activity.

However, bank fraud or not, in India, over 300 million people are at the equivalent of poverty but that doesn't mean they don't have some money. They have enough money to buy staples with not a lot left over for luxuries and they keep their money in cans, in their shoes or in their undergarments. wherever they believe it will be safe.

In any case, being a poor country, India does not produce much coinage and its paper notes are of poor construction without much fiber. Many of the paper notes  are in small denominations and tend to change hands very often during the average day. This wear and tear on fragile currency soon causes the money to begin a disintegration process that can be catastrophic to its holder. It is like a game of musical chairs, the last one holding the money gets nothing.

Once more than half of the bill has disintegrated the money can no longer be turned in for new bills. Thus, the lines start to for a India's central bank early in the morning each day with hundreds of people waiting to trade their bad money for good. More often than not, an entire day passes and an unlucky customer never gets to the right window. In the meantime, he has been pushed and shoved and yelled at and is lucky to just make it home at night.

Enter the Money Launderers who patch and stretch and iron and clean and mend the bills so that they will be acceptable to the Central Bank. Then they stand in the vicious lines to exchange this currency knowing that there is always the chance of rejection should the teller have had a bad day.  Moreover, the amount of paper money in the hands of the public has doubled in the last decade and each bill is being worked at a more hectic pace than ever before. The same examiners have worked at the Central Bank examining the currency for as long as anyone around these parts can remember. No knew people have been hired by the bank in eons so that there is substantially more dirty money around than there are examiners to determine its validity. Moreover, money that passes through many  hands also carries other problems. In addition, the health of the Central Bank exchangers is always in question with thousands of people cluttering the windows trying to exchange filthy money that more often than not has more than its share of germs.

Thus, the term money changer in India has taken on new meaning. These are folks that take you old money and make it acceptable to the central bank. They then stand in the endless lines until they have exchanged it. For this service, these people are paid up to 20% of what they are able to get, a more than lucrative business in this grossly poor country. However, they often have to pay a substantial price for knowing what line to stand in, when to get to the bank, who to talk to and who to bribe. Sometimes the mob gets unruly and even the guards can't control the frenzy. At that point, the money window is shut and the mob is told to come back another time. 

However, there is some optimism here that the slick new money making machinery will produce enough tough currency to get the job done. The money changes are taking book on that.

 INSURANCE, WHAT WAS THAT WORD AGAIN? I DON’T THINK THAT TRANSLATES INTO HINDI

 When the latest government of India assumed office one of the first pledges that they made was deregulation of the insurance industry. This was not what you would call an eleemosynary gesture on the part of the government. Coverage for India citizens remains woefully inadequate due to a lack of domestic insurance companies with sufficient reserves to provide additional coverage. At the same time there is a general lack of construction (infrastructure) coverage available and this has been a factor inhibiting foreign competition in the Indian marketplace.  

Making matters all the worse is, until recently, for some bizarre reason insurance company’s use of computers was banned by the government. General Insurance Corporation of India, the state insurance company, is divided into four parts, each of which operates on a semi-autonomous basis. One of these subsidiaries, Oriental Insurance, has projected that without undue governmental interference, they could become fully computerized by sometime just after the turn of the century. In an industry where so much data is required to be analyzed on a regular basis and where quill pens are still de rigueur, it is no wonder that India has lost its way.

As though adding insult to injury, the nation after indicating the need to welcome foreign underwriters, intransigently announced a continuation of its closed door policy towards the insurance industry while New Delhi was hosting a conference of potential foreign investors including some of the world’s largest companies; Cigna, Aetna and AIG.  Hardly an auspicious time for such a pronouncement.  

The attempt was defeated for no particular reason other than it would have required an independent regulator and it seems that the country does not look favorably on independence at any level. In the meantime, with literally no local insurance available, archaic laws concerning coverage, a court system which can draw-out settlements endlessly and no change in sight, this may be one of the most import single aspects holding India back from a place as a global competitor.

 INFRASTRUCTURE

 India has literally no means of intra-country distribution and it is often easier to import goods from abroad and have them delivered where they are needed as opposed to sending them to various geographical regions within the country. Such is the case with sugar, which because of skewed bureaucratic thinking has become scarce in spite of a government hoard of over five million tons.

 Most of the sugar produced in the country must be sold to the government at prices substantially below the market. This disincentive has caused the production of sugar to drop precipitously and many sugar cane crushers will have literally little or no cane to mill. What is in the warehouses cannot be economically transshipped from where it is located to where the sugar is needed. Thus, India will find itself importing 500,000 tons of sugar while having enough in storage to meet its needs. And yet when people in the industry complain about what has occurred they are told by Mr. Rahhuvansh Prasad Singh, the Union of Minister of Food and Consumer Affairs, “the wholesale price of sugar has increased by 19.3 percent in just the last year”.  

What Mr. Singh does not point out is the fact that there is no relationship between the wholesale price and anything else. The government pays what they think the market will bear and that price is an estimate of how low they can purchase the sweet stuff without driving all the producers out of business. Yet with gall born out years of entrenched bureaucracy, Mr. Singh first expressed concern about the fact that state government consistently made lending commitments to the cane growing co-operatives and then without notice pulls their commitments and without taking a breath he indicated that he could not understand why a massive conversion from sugar cane to other crops was occurring.   If this guy was the government watchdog in the funeral business, no one would ever die. Either they couldn’t understand it or they couldn’t afford it. But in either event they could be assured that it would be painful.

 This one crop deftly illustrates the hopeless nature of Indian bureaucracy; in one fell swoop they have destroyed the incentive to produce the product by making it uneconomical to grow and when it is produced it is nurtured in places that it is not needed. Many in the country live without sugar as it rots in India’s warehouses. On occasion the government finds new and better ways of screwing things up than just destroying initiative.  

There are not a lot of alternatives when crops fail in India. For example, recently, the late arrival of the monsoon season caused the withering of cotton bolls and leaf curl virus over large tracts of land. Faced with an uncertain future and no government disaster support, in Andhra Pradesh alone, 50 cotton growers committed suicide in the just the last several months. Now suicide may be the accepted alternative in India when problems arise that can’t be dealt with and we can certainly sympathize with the cotton growers that were done in by Mother Nature. What we find unfathomable is the fact that the agricultural monitoring system in India is so defective, that bureaucrats underestimated internal stocks and thinking it had a surplus, released almost a million bales of cotton for export. Current stocks are a fraction of what is required for industrial use and cotton now must be repurchased from abroad at substantially higher prices than were received when sold. ([21])

 So, as we see, the India bureaucrats are able to screw things up not only when there is a good crop but a bad crop as well.          

HAVE ANOTHER DRINK

 The United States in the first half of the 20th Century thought, for whatever reasons, it would be a good idea to ban liquor in the country. They soon learned that not only was no one paying attention to the laws, but they were making mobsters rich and the government was losing substantial tax revenue. Even worse, with no controls on the production of alcohol, people were subject to poisoning as well. The Government determined that the idea was ill-conceived and ultimately dropped it like a hot potato.

The Indian State of Haryana apparently did not look into the history books and recently attempted to do the same thing. The ban was brought about just because the Hindu party thought it would be the right thing to do and secondarily because most women did not like their husbands coming home drunk night after night. The new law had several flaws, some of which were also the problems of prohibition in the United States. The first was that all the States in India surrounding Haryana did not have prohibition and neither did they have any laws against sending bootlegged booze across their borders. Furthermore, the bathtub variety flourished and the health of the citizenry diminished in direct proportion to the amount of that variety of liquor they consumed. The women determined that their men were going to drink one way or another and learned the hard way that more of their meager funds were going to the evil substances than before, for the simple reason that the contraband variety was substantial more expensive. The State’s tax collections had suffered a significant hickey, $308 million and because of that, water  and electricity taxes were increased substantially.  In addition, modes of transportation, usually provided by the state were forced to raise their fares. Teacher’s salaries were cut and schools went on shorter hours and the people rebelled.

 Almost everyone determined that it had been a bad experiment and went back to the old ways. Today, the people of Haryana are high and relatively happy.       

 

 ONCE A LEADER OF NON-ALIGNED NATIONS, INDIA HAS FALLEN INTO AN ALICE IN WONDERLAND TYPE OF POSITION, UNJUSTIFIABLE EVEN TO THEMSELVES

 At one time, India was perceived to be both the leader and savior of the world’s non-aligned nations and as such gained much international political acclaim. For many years, India took an intermediate position between that of the great powers and by careful positioning, was able to play them off against each other with moderate success.  India enjoyed the prestige of this position for some years but  became confused when the thaw came. And then how could it be otherwise? The Indian government has been in a constant state of turmoil since Gandi and in the year or so since 1996, the country has had three different governments, “The Vajpayee Government,” lasting 31 days, The Deve Gowda Government which lasted 11 months, The Gujral Government, which lasted for 10 months. 

Among other political catastrophes, India’s recent unilateral peace initiative to Baghdad succeeded in alienating both Iraq and the United States. India was bracketed with stellar performers, Cuba and Yemen in the Security Council vote calling for Iraq’s surrender.  India’s non-aligned leadership almost collapsed entirely when it joined Bhutan and Libya in voting against the Comprehensive Test Ban Treaty, which passed 158-3 in the United Nations General Assembly. According to Foreign Affairs, July/August 1997, by Ramesh Thakur, 

“The next month, the General Assembly voted to fill five nonpermanent seats on the Security Council. India and Japan keenly contested the Asian vacancy. What was expected to have been a close vote,  requiring several ballots, turned into a rout. Japan romped home 142-20. The two defeats proved that, 50 years after independence, India is neither rich enough to bribe, powerful enough to bully, nor principled enough to inspire.” 

LOCAL POLITICS AS OPPOSED TO INTERNATIONAL POLITICS HAVE ALWAYS BEEN A DISASTER, BUT THAT IS THE WAY IT HAS BEEN AND THAT IS THE WAY IT WILL BE

India is a bureaucratically run government which is democratically elected and no matter which party is elected, each seems to have been followed by the same snafu’s as its predecessor. With over 500 political parities to choose from, running the gambit all the way from the Vegetarian Party to the Anarchist’s Party, ballots must be printed in no less than twenty different languages and in pictures for those that don’t read or write. Assassination is an important part of political lore as tempers always run hot at election time. Assam, Kashmir and Punjab have been trying to secede for years and denizens of these states take their politics seriously. Ballot stuffing has become a way of life for those Indians who feel strongly about a particular cause and it has been said that Chicago ward-healers could learn some new tricks from those that have cut their teeth on Indian politics.

 The New York Times ([22]) reported that, “Although no reliable figures exist for this campaigning, (the 1998 election), the extent of the problem (criminalized politics) emerged in the 1996 vote, when one study counted more than 1,500 of the 13, 886 candidates with criminal records, including murder, kidnapping, rape and extortion. The Times, in the same article,  goes on to point out that in India, “...criminals were defined as those who had exhausted their appeals – a process that usually takes 20 years or more.”  In addition, the Times pointed out that almost all of India’s 600 parties and all of the major ones have fielded candidates with criminal pasts and that “more than 150,” or a third, of the lawmakers in the Uttar Pradesh state legislature have criminal records. Anand Mohan Singh exemplifies much that is wrong with Indian Politics. While a Member of Parliament, Mr. Singh had a local political official killed in cold blood in front of countless horrified spectators, and while out of jail on bail while he awaited trial on murder charges, in a parliamentary debate informed an opponent who disagreed with some of his statements, “Say that again and I’ll come and break your teeth.”

 In many villages, the people are not really allowed to vote at all. Thugs enter the polling places when they open and cast the people’s votes for them and declare the polling station closed. In other places, employers demand their workers to adhere to their instructions or lose their jobs. “Among nearly 5,000 candidates in the current election, hundreds are gangsters and criminals, men and women awaiting trial or already convicted but free on bail for crimes like murder, kidnapping and blackmail.” ([23]) Hardly the pacifists, that we have come to view Indian politicians as. 

In a major victory against free speech and liberalization, for the first time in history, India’s Election Commission on January 21, 1998 announced that the broadcast of opinion polls would be banned for the two weeks proceeding and during India’s general election. Simultaneously the Commission also placed a prohibition on exit polls. The oddity of this action is the fact that the Commission indicated that it had taken these steps with the concurrence of both major political parties. This certainly seems like a major step in the wrong direction for Indian civil liberties. 

 IN OUR SPOILS SYSTEM, BECAUSE WE ARE GROSSLY UNDERPAID AS CIVIL SERVANTS WE ARE CERTAINLY ENTITLED TO STEAL NOW AND THEN

 Tax evaders, especially within government flourish because they are almost always able to receive amnesty for their transgressions. Thus bribery does not interfere with the taxation process and even if the transgressor has shaken down an entire state, for the most part he is able to walk away without further adieu. Only slightly more than 1% of the population pays income taxes; 12 million out of 950 million.

 But tax avoidance and shakedowns are hardly the worst things that happen in this scandal ridden society where at times scoundrels are often held out as heroes by the populous. Going into individual acts of corruption would entail another complete book, but suffice it to say that it is a government embodied by civil servants well versed in the procedures of exchanging services for additional compensation.   

ABOUT THAT UNPAID TAX BILL, MR. SINGH, CAN WE TALK?

 The endemic game of tax avoidance has reached proportions, which could cause the system itself to fail as the infrastructure continues to crumble without replacement. The Indian Government, well aware of the dangers of continued passivity in this area is attempting a carrot and stick approach; the carrot, pay this years taxes and we will forgive your previous transgressions, conversely, don’t pay and we will come down on you. They are pulling out every stop. How would you like to be walking down a street in Calcutta when you hear the ringing of a telephone. You pick it up and the following occurs.

Ring,  Ring, Ring

 Singh:                         “Hello”

 Public Servant:          “Mr. N. K. X. Singh?”

 Singh:                         “Yes, this is Mr. Singh”

 Public Servant:          “Mr. Singh, this is public servant Jakrabati, I’m with the revenue secretary’s office. It has come to our information  that you have never paid income taxes.”

 Singh:                         “Yes Mr. Jakrabati that is a fact, your records are most accurate, unfortunately I have never had to file a return because my income could not justify it. If only I earned enough to pay taxes, I would do it gladly. The country is in so much need and just  seeing  thousands starving here in Calcutta because they can’t afford to buy food caused me deep grievance.”

 Public Servant:          “Mr. Singh, I am calling you on your cellular and we have attached the records of your payments to the telephone company. Not even counting your purchase of the instrument and your deposit with the phone company; you are paying more just for telephone calls than 98% of the population of India earns. How can you say that you have no income.”

 Singh:             “You are very observant Mr. Jakrabati, but you see, the phone has been provided to me for business use by the company for whom I am employed. They forward me the cash each month to pay the bill and I in turn pay it to the phone company. I am sure you are familiar with my employer, Ajax Chatchke Company of  Vanatuu.”

Public Servant:          “Yes Mr. Singh, we at the tax collectors office are all very much aware of the fabled Ajax of Vanatuu. Furthermore, we are well aware that you own the company and funded it on a business trip 6 years ago with cash illegally taken out of the country. Furthermore, we are also aware that Vanatuu has tax treaties, which prevent our proving what I am saying to court of law. “ 

Singh:             “Well, Mr. Jakrabati, it seems that you do have a problem. By the way, how is my friend, the inspector general; did you know that he is my bridge partner and a large stockholder in the Chatchka  business as well. If there is anything wrong with the way we conduct our business, do you think he would be involved? I will have him call you and explain how the system works and please give him my regards; oh and in the future, don’t call this phone during business hours, I use it for placing my bets on the Cricket matches.”   

Public Servant:          “We know that you have substantial income and have been avoiding taxes all of your life as well as your father before you. We have this amnesty program in which you can be forgiven everything if you just become current. If you don’t pay we will use every means that the government has available to prosecute you for your failure to pay.” 

Singh:             “Mr. Jakrabati, would you like my payment in hard cash here or should I open an account for you at my bank in Vanatuu.” 

Public Servant:          “ I would prefer the money wire transferred by “tested telex” to account number Br487324 in the Cayman Islands, banking coordinates ABA 0002134231. And by the way, Mr. Singh, you have a nice New Year.”    

All kidding aside, India’s tax collections fell far short of estimates and panic set in. Many argued that a reduction in taxes along with certain forgiveness of debt, would be an unbeatable combination if it was marketed in the right way. Lo and behold, India “bit the bullet” and went with the program. When the dust had cleared, India cajoled, pleaded, begged and threatened and guess what? Nothing much happened. And yes, they did check out everyone with a cellular phone and gave them a special amount of grief.  One guy said, next year some of the people were going to lease their phones using names from the gravestone in the local cemetery and see how much the government likes hassling those guys. Well, they couldn’t do any worse.   

REFORM, BEING A CIVIL SERVANT IS THE HIGHEST CALLING AND AS SUCH IT SHOULD PAY AND PAY AND PAY AND PAY AND … 

In the early part of this decade it finally seemed as though India was headed in the right direction after other Asia economies had totally eclipsed its progress over the previous 20 years. Whatever progress had been shown went into relapse and the patient has not shown vital signs since. Historically, working in the public sector was considered the highest calling an Indian Citizen could attain. Globalization has caused the disparity of income between the sectors to become dramatic with bureaucrats now only receiving a small fraction of what their counterparts in private industry are making. This has created an environment that is plagued with petty jealousy and as a result the entire country is the worse for it. The more qualified government employees leave for private industry at their first opportunity, leaving a residual of unqualified people to run government. ([24]) 

 The government has not been able to make any progress with its deficit to gross national product ratio, which has been hovering around a highly unacceptable 6%. Needless subsidies continue to support industries that would eventually perform better if they were subject to competitive market forces. Industry in general remains hampered by paperwork, inefficiency, bureaucracy, nepotism and voodoo economic theories. The caste system keeps talented people out of the creative labor pool.  India has well earned its substantial skid in the competitiveness ratings supplied by the World Economic Forum. 

Improvement that could occur in the private sector through privatization is non-existent because India has not even begun to utilize this highly productive avenue. The country still adheres to archaic principals of not allowing business once opened to even shut subsidiaries, thus placing an enormous tax on failure.  

WHY IS IT THAT EVERYONE IS PUTTING THEIR MONEY INTO CHINA AND INDIA IS GETTING ALMOST NOTHING, COULD IT BE BAD BREATH?

 The global perception that the Indian government is reluctant to go through the painful process of creating a favorable business environment has resulted in a startling relative constriction of foreign direct investment. This is illustrated by  offshore funds infused into China last year, which was twenty times more than those earmarked for India.

This is not unusual when analyzing the attitudes towards business normalization practiced by the diametrically different governments. Whereas China had no infrastructure, India’s has fallen apart from abuse and can only be restored at a staggering cost. In spite of  India having a national phone network decades ago, by the turn of the century, callers will be able to reach almost all of China and literally none of India.  What roads China had were literally only usable by foot traffic, animals and some motorcycles. Today, China is putting the finishing touches on a band of four lane highways connecting the length and breath of the country, while India’s congested thoroughfares make traveling any distance a painful experience.  

China has embarked on massive projects to create power, dams, and power grids while energy plants can be seen rising throughout the landscape. By contrast, the absence of adequate power supplies acts as a major deterrent to factory construction in India.

 AT THE RATE WE ARE GOING, WE WILL BE A FIFTH WORLD COUNTRY SOON

 An under-powered India, has energy needs, which increase approximately 8 percent per year while the supply has been growing at a hefty 2 to 3 percent.  Thus, this already hapless country is falling further and further back into the dark ages. At peak times, energy deficits average almost 20 percent making  blackouts a way of life. Apparently the problem is that whatever the central government promises to do in the name of increasing energy production becomes unraveled when the project reaches the State level. The problem is constitutional in nature and essentially it asserts that the central government has the power to set policy relative to energy but the purchasers of the derivative power are, for the most part, the states and it is here where the ball of yarn unravels.  

Each State has an Energy Board and each and every one of the 19 State Energy Boards’ (SEB) are bankrupt, thus their agreement to purchase or arrange for the purchase of energy is of no economic value. Worse yet, the SEBs universally sell energy to farmers at a fraction of what they charge industrial users, for political purposes. On average, the farmers pay only 10% of that of industrial users causing simultaneously, a massive subsidization of farm products and stultification of industry.   

Because of cheap energy, farmers tend to waste it, which is evidenced in the increase in their overall usage. While the number of farms has remained stagnant over the last decade, farm usage of energy has risen from 25% per cent of the nations output to almost 50%. So, what we see happening is rising usage from those that are paying almost nothing, pushing the SEBs further and further underwater. With economic policies such as these, it is not hard to understand that the SEB’s lost approximately $2.5 billion last year and are in debt for an equal amount to the central government. The provision of subsidized energy costs the central government $3.5 billion per year. When the losses and the debt and subsidies are added together, you can see that we are really talking about a substantial amount of money. This has become, truly a vicious circle. The only solution is to make the SEBs politically independent so that fees charged for energy can become more consistent and the bureaucratic logjam between the Central and State governments can be eliminated. For the moment, there is now a move in that direction.  

MAYBE THIS WILL HELP

 In an attempt to add to the Indian shortage of refinery capacity, the government made the  a number of substantive changes in its regulations to accommodate multinational players who could literally build refineries until the cows came home and not have scratched the surface, relative to need. No one answered the summons and today the situation with refining has become critical, the few facilities that are operational are decrepit and can stop operating at almost anytime, while little additional capacity is on the horizon. The bureaucrats put their heads together in an effort to determine why the majors had passed such a glorious opportunity and have no yet come up with a realistic answer.

 The answer is simple, under the Indian system, the more that is invested in refinery capacity, the more the investor is likely to lose. There is no free market within the country and all oil prices are set by the state based on a formula that even people within the government can’t understand. Thus, a  billion dollar facility could be hypothetically erected and the cost structure would create a break-even point at let’s say $12 a barrel. The state monopoly bureaucrat could well wake up on morning, after really doing the town, and tell the refinery to sell the oil to the government at $11 a barrel. Hardly a pleasant though. This my friends, is why India is so pathetically short of refinery capacity.    

 Indian Oil Company is the nation’s only entry in the Fortune 500 sweepstakes and is by far the largest oil company in India. While the company’s roots are still solidly enmeshed in the same bureaucratic milieu of all government organizations, Indian Oil is 9% owned by the public and that number is expected to rise substantially in the near future as additional privatization takes place. Although India enjoys the money these privatizations bring, they somehow can’t understand that once a company as been sold to public buyers, some of the old practices of treating the company’s treasury as a piggy bank have really got to cease. During the middle of 1997, when the “central oil pool” ran short of funds during the year, it just stopped paying Indian Oil for its purchases, nearly bankrupting the company. In the meantime, because the country produces little of its own oil, the resource most be imported at world prices from other countries. When it lands on the dock thought, the Bureaucrats determine at what price it will be sold and to whom.

 Not only does India subsidize the farmers, but strangely, they also subsidize differing types of oil. For example, gasoline and aviation fuel prices are kept arbitrarily high, while kerosene, used by the poor for cooking, heating and lighting, is sold at less than cost to over 300 million poverty stricken Indians. As oil production has continued to decline, while imports rise and subsidies increase, a finely tuned system has lost its pitch and has begun to sound grossly off key. The Kerosene subsidy alone runs almost $2 billion a year.  Any yet the search for new oil reserves has come to a grinding halt.

 PRIVATIZATION, INDIAN STYLE

 Indian Oil Company was a State entity until privatized in India's unique fashion. Shares were sold to a limited number of people, public trading began and that is where any resemblance between India's understanding of privatization and the of the rest of the world’s ended. India's philosophy is similar to that of the prostitute who when asked why with all her beauty, talent and charm she continues in that business gives her legendary answer, “Where else can I sell something, or even give it away, but when the day is over I still have it?”  

In India's view, the Company still belonged to the State and when it came time for India to make oil purchases they did what they have done for decades, they took the oil and paid nothing for it. This caused the company's credit to collapse, making them unable to borrow from banking channels. Thus, the  Company was forced to borrow the money from alternative sources, which charge dearly because of the troubled state of affairs that Indian Oil found itself in.  

These actions, when taken in concert, caused a run on the Indian Stock market and a bureaucratic nightmare. The government seeing that they better do something to calm the waters has offered an alternative to Indian Oil, but only in future transactions. Instead of not paying at all when they are short, they will issue the company, non-negotiable, low interest rate Petro-dollar bonds in exchange for debt. It would appear that whether they issued the debt in the form of a document or showed it on their books as due an payable, debt is debt; but more important, the bureaucrats seem to think that this is a milestone of some significance and have indicated that it is a better method than just stiffing the company.  The Indian government did not do much to assuage investors that public companies in India were truly public and these actions left scars on both the oil industry and the stock market.

 State owned companies are heavily favored when it comes to assigning new acreage for oil exploration, but even if the entire country sat on a basin of oil a thousand miles deep it might not matter. Those that are given drilling rights are dealing with outmoded equipment and technology while those that have the ability to bring in elephants, are restricted by tax laws, so archaic and confiscatory that there has literally been a revolt against new exploration in the country. Yet even when those problems are worked out, the state owned company’s still own the pipelines and will charge outrageous amounts for moving the product to market.

 But even when all of the other problems are worked out, a greater stumbling block will still stand in the way of making India energy sufficient, the country does not have a “power grid” that can efficiently transfer energy from here to there. Neither are the power plants that create the nation’s energy synergistic with each other. The existing grids cannot propel electricity produced by varying forms of energy along the same track. Thus, even if everything else became homogeneous, there would still be peaks and valleys within the country relative to energy use and cost.     

 THE GLOBAL LABOR POOL IS MADE UP OF EVERYONE, THAT IS EXCEPT IN INDIA

 In terms of individual rights, in spite of the fact that India is within spitting distance of being able to send a rocket to the moon, India has certainly demonstrated its atomic capabilities, less than four woman in ten can read. It literally took an act of the legislature to create a slot for women in parliament in spite of the fact that Indira Gandhi led the country for 17 years.

 There are countless recent instances within the country where women have been cremated alive when their spouses have died. This is called “sati,” and it is based on Hindu teachings that a woman has no existence independent of her husband. Female fetuses are regularly aborted even though the United Nations has estimated that the population has a short fall of over 50 million women. Uniquely, but logically, there are only 92.7 woman for every 100 men. Women can not directly share in an inheritance and therefore only receive a share in a male sibling’s largesse. Daycare is non-existent and therefore it is almost impossible for a woman with a family to continue working.

 Women’s lot in general is not good, but there may be nothing on earth worse than being a woman who has been widowed in India. Indian’s marry young and at the time of marriage, the woman becomes a part of her husband’s family and to a great extent loses her own. Should the husband die, his family, for the most part, takes the position that not only has she become their chattel but she is also unable to share in his estate. The end result of this strange custom is that she becomes indentured to his family where she takes on the role of a servant and spends her years waiting on her ex-in-laws.

 In spite of this, things have actually improved a lot. In not so distant history, immolation of wives on their husband funeral pyre (suttee) was common upon her mate’s death. Although the British have long since outlawed the practice, it is still common today. While widows may not be burned to death, as often as they were in the past, their murder has become more common. Should a widow attempt to stand up for her rights by demanding a portion of the deceased husband’s estate, the issue is almost never settled in court, its most common end is the wife’s murder by either her in-laws or her own children.

 There are some simple solutions to this problem you say. Wrong Bunkie! The easiest way out of this morass would seem to be that the widow would just remarry. That shouldn’t be too difficult in a land that has a substantially higher male population than females. The problem is that there was also a law, now repealed, that forbade remarriage and India is a land where old customs die hard. Even though the law has changed, Indian religion has not and the Skanda Purana, revered by Hindu’s states the following: “The widow is more inauspicious than all other inauspicious things. At the sight of a widow, no success can be had in any undertaking; excepting one’s mother, all widows are void of auspiciousness. A wise man should avoid even her blessings like the poison of a snake.” 

 Both Ends of the Indian Spectrum

  While the fact is that many people in India are totally uneducated, however, there are many parts of India where almost everyone is literate. The difference between the two spectrums seem to represent the difference between success or failure, at least based on comparative incomes. For the most part though, India is a disaster that has already occurred and is not getting one bit better. No less of an authority that India’s Prime Minister, Atal Behari Vajpayee, stated relative to the country’s economic future, that is was “deeply worrisome.”

 While everyone knows that the burden placed on industrial growth by overzealous bureaucrats who run around the place like chickens without heads, going nowhere and accomplishing nothing while filling their pockets with bribes. However, this is old hat and there isn’t a soul in this country that isn’t aware of that particular problem or is able to a thing about it. But this isn’t the only problem vexing everything Indian.

 An example of this is the fact that because of ineptitude it takes substantially longer for imports to clear customs here than it does almost anywhere else in the world. These unnecessary delays have an enormous economic cost relative to the inability of Indian consumers to use the basic products that don’t arrive and therefore putting them a competitive disadvantage. Moreover, interest rates here run almost 40% higher here than it does in countries that India competes with such as China, Indonesia, Philippines and Malaysia. Not only don’t entrepreneurs have what they ordered but they are paying interest rates far exceeding that of their competitors. Thus no mater what the advantages that there may be in the cost of India labor, manufacturers are behind the eight ball long before they even begin. Moreover, to even compare labor costs between the two countries is somewhat of a joke. China no longer offers social systems paid for by the government and extensively uses prison labor at literally no cost. 

 Moreover, the cost of power is so high that only the industries that have a huge margin are able to afford any substantial amount of it. In addition, within  the country and particularly within its individual states, even when power sources are available, more often than not they either cannot pay for it or they default on their debts as was apparent in the recent Enron fiasco that was one of the factors that lead to its demise. Thus, we see substantial unused power that if injected into the economy could make a substantive difference. This lack of inexpensive power, the high cost to the Indian economy of over regulation, high tariffs along with higher interest rates has caused India to set literally a global record for inability to attract foreign investment.

 “In spite of the states’ growing divergence, the country as a whole was still suffering from a poor investment climate, it said. At just 0.5 per cent of gross domestic product compared with 4.4 per cent in China, foreign direct investment levels in India were among the lowest in the world.”[25]  

Once again, it isn’t the fact that the power to run the country’s industry does not exist, it is the fact that India and its states can either not afford to pay for it or don’t want to pay for it. This is like playing Russian roulette with a fully loaded revolver.  

WE HAVE BEEN WRONG ABOUT THIS AND NOW THAT YOU HAVE BROUGHT IT TO OUR ATTENTION, YOU CAN BE SURE THAT WE WILL MAKE AMENDS 

In order to address the appalling way women have been treated through the years, the powers that be in India constructed a resolution that would make amends once and for all and put a deterrent in place against it ever happening again. They came up with the wonderful idea of reserving one-third of all seats in parliament and state assemblies for women. What could be better, the women could vote in a bloc substantial enough to protect their own rights in the future and probably control India's destiny if they stuck together.  

Well it seems that some opposition arouse to the bill just as it was coming before the legislature, on the grounds that it did not quite do enough. Some legislators believed that  the women should come from underprivileged minorities, not just represent women as a whole. This proposal gained momentum but everyone agreed that it was a logistical nightmare.  After not to long it became obvious to the ladies that the whole thing was a charade to temporarily placate them and once having come to that conclusion they did what any woman would do under the circumstances, the whole group went to sit under Mahatma Gandhi’s statue where from that vantage point they were able to scream vile epitaphs at the male legislatures who had gotten in the legislation’s way.  

They raised a major disturbance and when the press jumped on their bandwagon, legislators determined that they better take immediate action to diffuse the situation. Calm was restored when Speaker of the legislature Balayogi told them that the original bill would be proposed that day and that he had the votes to get it passed. Balayogi, as promised, went up to the podium, purportedly to introduce the bill, but no sooner had he picked up his papers to read the bill into law, a figure looking like the "Phantom of the Opera", darted out of the building's shadows, snatched the proposed legislation from Balayogi’s hands,  and disappeared back into the shadows never to be seen again. A gasp of disbelief arose from the lawmakers as this “Alice and Wonderland” incident unfolded in plan view of all concerned. Immediately speeches were made condemning the incident, Prime Minister Vajpayee stated; “We all should hang our heads in shame after what happened yesterday”; “A spirit of intolerance has developed to such an extent that nobody is willing to listen to each other’s views,” shouted Indrajit Gupta of the Indian Communist Party; everyone universally condemned the action and apologies were issued by the heads of both the RJD and Samajwadi Parities. In spite of all of these kind words, the legislation has gone the way of India's Phantom and has never been heard of again.     

WE MIGHT NOT HAVE BEEN FAIR TO OUR WOMEN, BUT OUR CHILD, THEY ARE ANOTHER STORY

A VIGNETTE 

Ignorant Chauvinist:              “Well, you may have a point when you discuss women’s protection under Indian Law, but our children are something different, we have passed a law called the Juvenile Justice Act over ten years ago and its purpose was to protect our offspring.” 

Inquiring Busybody:               “If that is true, why did Amnesty International issue a report recently stating that “children are regularly and arbitrarily picked up by police and abused?” ([26]) 

Ignorant Chauvinist:              “You know how those people from Amnesty are, a bunch of busy bodies always poking their nose where they shouldn’t. This people are just trying to poke up trouble, we love our children you know.” 

Inquiring Busybody:               “Your country’s record for human rights is well know outside of India and it is for that reason we would tend to believe the report by the Amnesty people. They say that you people regularly use torture on young children, let me report what one of your own people, Ms. Suchitra Sheth, a human rights activist said just the other day, “Third degree treatment methods like electric shocks, piercing chili powder and sticks into their private parts and knotting a child’s body to a stick so that he gets acute pain have been used…, What do you say to that, these are 10 and 11 year olds.” 

Ignorant Chauvinist:              “You don’t seem to understand, these children when we find them are very often suffering from lack of vitamins and some even have rickets, the chili powder is only used to give them nutrition, as for the sticks you are mislead again, when the children are brought in from the streets, they often are covered with lice which get into body crevices, we use the sticks to remove these insects as a humanitarian gesture. You see how mislead you can get if you believe everything that you read.” 

Inquiring Busybody:               “Well we would tend to believe Sheth, she was appointed by the court to investigate what was going on. I have read her report and it rather thorough. She went on to say that in spite of the fact that when children are picked up by police for crimes they are supposed to be produced before a magistrate within 24 hours. She indicated that not only was that not done, but that during the time the children we waiting to see the magistrate which sometimes took weeks, they were given electric shocks, choked, tied up and beaten.” 

Ignorant Chauvinist:              “I don’t have to listen to this propaganda, Sheth is a woman and is just upset because of the way women have been treated in our forgiving country. Everyone knows that women are inferior to men in every sense of the word and all free thinking people believe we are doing the right thing. This is nothing short of sour Curry and ignorant people like you go around repeating these terrible stories, things like this are exactly why India is getting a bad name. You know that it is against the law, I could have you arrested for sedition you know.” 

Inquiring Busybody:               “Your country’s record of civil rights has been bloody awful, and the only people that seem to be exempt from the loss of civil liberties are the bureaucrats that spend their time thinking up new ways to oppress everyone.”

 Ignorant Chauvinist:              “Police, arrest this man, he is speaking against the state and more important is slandering our  hard working bureaucrats.”   

FREEDOM, THINGS HERE ARE PRETTY GOOD COMPARED TO WHAT 

Freedom is one ephemeral things that if you haven’t lived it you don’t know really know that it is out there. We are all aware that India has protected its caste system from contamination by outside organizations concerned with civil liberties and individual rights for ages. The system goes back so far that everyone living within it seems to take servitude more or less for granted.  With the changing of international communications this situation will come to a harsh end.  The powers that be in India believe this as well and are attempting to push its inevitability forward into the next century. 

India does not currently have any private Internet services and the entire country has a community of less then 30,000 people connected to the web. The land of some of the best software writers on the globe has less than .00003 percent of its population online. The Delhi-based National Association of Software and Service Companies (Nasscom) believes that at least 150 domestic and foreign providers would move into the market if allowed to by the government. In the meantime, prices for Internet installation and usage are outrageous and the content is government controlled. Additionally, even if someone was desirous of paying the high tariff, the installation process tends to drag on forever because of bureaucratic nonsense.  

This has cost the country immensely in terms of future earnings. Indian programmers are top-drawer when it comes too responsive programming and add over $1.0 billion per year to India’s balance of payments.  

VSNL, the state run international telecom company does not look like they want to give up their stranglehold on this market anytime soon and there doesn’t seem to be any push in the works by the government to change the status quo. Thus, an entire country representing one-fifth of the globe’s population has been effectively prohibited from exchanging ideas with the rest of the world.   The theory of controlling the population’s minds by keeping them out of contact with the rest of the globe, will fail and the government of India will come tumbling down. 

EXPORTS, I DON’T THINK THAT WE HAVE THAT WORD IN HINDI EITHER, WHY DON’T YOU AT LEAST TRY TO EXPLAIN THE CONCEPT TO US 

India’s exports had their most severe drop in over four years, dramatically bringing to light the non-competitive nature of India’s products. At the same time other news was even worse, both the European Union and the United States were forcing India’s hand relative to their protectionist policies on imports. India in an effort to become part of the global neighborhood was proposing a nine year period in which to lower tariffs while Europe and the United States were offering three, India could accept and get the three or reject the offer and have WTO determine that the period should be even less. A lose, lose situation to India's way of thinking.   

India’s situation has become direr as it is facing the combined effort of the United States on one hand and their own ineptness on the other. The government had set a target of 20 percent growth for the period from April 1997 to March of the following year, during which time $40 billion in exports were to have taken place but what they got in return was actually a 10.9 percent drop. Bureaucrats argued that a trucking strike was responsible for the majority of the drop but that does not explain India’s exports now making up only 6/10 of one percent of the globe’s commerce.  

Even the most optimistic Indian bureaucrats admit that the basket of exports remains both low tech and unchanged in many years. The quality of the basket is inferior and for Indian products to be sold in world markets they have to be priced substantially under goods from other nations. Without an improvement in the technical quality of the items making up of the basket, even the most pessimistic of projections will go by the boards. Furthermore, India produces literally none of the faster growing items making up world trade such as electronics, communication equipment and engineering goods. As if that wasn’t bad enough, in the areas in which India has been dominant, other countries are making great strides with quality production of low tech items and without major improvement, the country runs a risk of losing even the small window of opportunity that it has.   

PORTS, WITH OUR THOUSANDS OF MILES OF COASTLINE WE ARE WELL EQUIPPED WITH PORTS TO SERVICE ANY NEED, YOU HAVE A CHOICE OF TWELVE 

The condition of India’s facilities for imports and exports, that is their ocean ports, is best described by the fact that all of the ports in India combined do not handle as much traffic as the single port of Rotterdam in Europe. Corruption is king and unless you know the territory it will cost you so much to bring goods in or out of the country that many just give up the attempt altogether. The ports are all government-run and the Mafia-like organizations that control these facilities are extremely canny when it comes to political nuances. They have a well earned reputation for always being willing to step up to the plate when there is a call for funding for this candidate or that. By and large they are supporters of all the parties that are competing for office and thus are pretty much left to their own devices in running these fiefdoms. Thus it is in their interest to let these facilities remain clogged, inefficient and thus rife with corruption.  

Ports remain so congested that all of them are operating above their capacity. We might add that this is the only thing in India that operates beyond its engineering rating. Yet, because of the inefficiencies, their capacity is a fraction of what a modern well-maintained port is able to generate anywhere else in the rest of the world. The average loading time throughout the country’s ports has been estimated by experts to be eight days, thus perishable goods have almost no chance of getting to their destinations without spoilage. A turn around time of this magnitude also gives criminals substantial opportunity to rifle cargoes and shake down owners. Not only is the time in port almost obscene in its inefficiency, but the average ship that has arrived at its destination must sit at anchor for an average of three days before it can find docking facilities.  Thus imports suffer the same fate as exports if their contents are at all fragile. 

Most of the cranes were erected in the 1950s and can only groan under their loads as their rusted out interiors give every indication of loading their last each time bulk or container cargo is hoisted. To illustrate the ineffectiveness of India’s ports one only has to look at the system located in nearby Sri Lanka.  Sri Lanka’s port operates at three times the India’s speed or in Singapore, which can load and unload at a speed of 400% of that of India.  

DEAR ME, I DIDN’T NOTICE THE HONORARIUM, I THINK WE CAN DEAL WITH THAT 

On the other hand, things can be moved along at a price and even the sleepy customs officials can arise from their slumber if the rupees that wind up in their pockets are substantial enough. In what we consider a lowball estimate, the World Bank estimated that in 1995, congestion and container-handling delays cost a total of $170 million.  These numbers were skewed on the low side because they do not even address the losses in ruined goods and lost opportunity.  ([27]) 

The  International Monetary Fund came up with some statistics regarding India's ability to catch up with the world's advanced nations. Their estimate was that at the current rate of economic growth, it will take India 112 years to close, by half, its income gap with the world’s economically advanced countries.   

Siemens, a company that has been heavily involved in India for 75 years and has 10 factories dotting the country, announced on July 21, 1997 that overdue payments from Indian customers were creating a terrible drain on overall corporate profits. On the same day Hewlett-Packard Co. Determined not to go ahead with a $400 million investment in India because of inferior port facilitates. ([28]) Countries better able to handle the export of substantial amounts of product such as Penang, Malaysia or Shanghai, China will get the nod. Facilities continue to be congested, corruption determines how long one’s materials sit on the dock and what does get out does so in the most inefficient of manners.   

HEALTH, OR A LACK THEREOF 

Because India is backward in other areas it would normally follow that they are also behind the times when it comes to understanding common problems relating to health. Simple matters like the donation of blood are made difficult by India’s traditions and at times people are willing to risk death instead of getting blood from a person of a lower caste in spite of medical assurances to the contrary. Similarly, many Indians believe that among the lower castes, certain inferior qualities are contained within the people’s blood and they run a substantial risk of becoming mentally enfeebled by a transfusion from the wrong sect. 

Relatively speaking, there is no blood in Indian blood banks. Thus, potential donors hang around hospital emergency rooms making themselves available should the need arise, and it arises often. The amount of blood in India, which is donated from historic sources, is only a fraction of what would normally be required. The patient, hysterical that he will be inflicted with the subhuman blood carried by frowned upon elements in the Indian society, ultimately lapses into a coma and his relatives go looking for blood. People willing to donate congregate around the hospitals and when the emergency becomes dire enough, one or more of them may be called upon to give blood. Far from developing devils within their systems from people beneath them in caste, the Indian blood recipient receive something far more ominous. AIDS! Indian hospitals are not well equipped to analyze all of the properties contained in of the blood being received and more often then not, the recipients become infected with dread diseases from the last minute experience.  

Because of the high percentage of people in India that test HIV positive from blood transfusions, the government is attempting to put a stop to professional blood donations. The only problem with this is that among the Indian population there is a strong belief that the donation of blood brings with it impotence, a fate worse than death. The only thing that has happened in India as the government has clamped down is the fact that the professional donors no longer operate from the bigger cities, they have moved to the outskirts where they are accepted. There is still not enough blood and they are still needed, the only difference is before you can get blood from one of them the patient may have died. But then again, this is India.   

Meanwhile, the spread of AIDS is becoming rampant and the number of cases has doubled from 2001 to 2002. The country now has the second largest number of cases in the world and the current figure stands at 4 million and rising. (South Africa has slightly more) The United States National Intelligence council has recently predicted that by 2010, there could be as many as 25 million cases in this country.  One of the best preventatives, condoms are almost taboo here as it represents a sure sign that you have AIDS if you purchase them. And in this country, you become a pariah if you have a dread disease, particularly AIDS. For mothers who have already lost their husbands to this dread disease, the thought of what will happen to their children should anyone find out is terrifying.

American billionaire, Bill Gates has joined the fight in India against AIDS with his money. Through the Bill & Melinda Gates Foundation he is funding AIDS awareness and has pledged in excess of nine-figures. Apropos to this, while being welcomed in Hyderabad where Microsoft had opened its first software development center in a foreign country, Gates was greeted by an eight-foot tall condom.

Polio is another disease that has found fertile ground in India. Just as with so many other things in India, rumors spread for no particular reason, but here, they tend to kill. Many people in this country believe that polio vaccine would make a child sterile. Many of those that choose for reasons of this kind not to get the shots, later come down with the disease. Particularly, In Uttar Pradesh, the state in India with the highest population, (more populated than all but five of the world's countries) the disease is making a determined comeback. The reason given in this area is the fact that the vaccine is a plot organized by the state as a scheme for population control. Nigeria and India are the only two countries in the world where the incidence of this disease rose.

Interestingly enough, Muslims have a much higher tendency to get polio than Hindu's which may be attributable to the fact that more Muslims believe poppycock stories than the other way around. However, the great majority of health workers in India are Hindu and to some degree they are feared by the Muslims. While the Indian Government has attempted to address that particular problem, both education and social customs tend to dramatically restrict the number that would be available. The lower the literacy rate, the higher the incidence of polio seems a more logical explanation to what is going on here, but once again, the Muslims are far less educated. 

The Relative Ease of Failure In India

 Because of the fact that most of the children in this country are suffering from malnutrition, which causes serious problems such as stunted growth along with fatal diarrhea, blindness and measles, it was determined, that vitamin A would be added to their diets. However, when 2-year old Wahidur died at his first visit to the doctor after receiving a dose of the vitamin, word quickly spread among the people who proceeded to blame the vitamin for his death. 

These vitamin injections were sponsored by UNICEF with support from many of the largest multinational drug companies. The program up to that point had been running like a well-oiled clock but with 35-million children involved and most of the parents believing any old wives tale that they may hear it was only a matter of time before the rumor was spread that the vitamin somehow had something to do with the child’s demise. This brought the entire program to an abrupt halt in spite of the fact that authorities in the area have officially concluded that the vitamin had nothing to do with the death.  

However, the physician who took care of Wahidur on that fatal day, Dr. Rikeswar he did notice that the child had a respiratory infection. Obviously in retrospect, this had been the killer, not the vitamin that had been safely administered to over 200 million children worldwide under the same program that was being used in India. Experts have said that if the program is not continued, tens of thousands of Indian children will die needlessly but gossip was rampant that it was the vitamin that did in the child and no amount of educating of the parents seemed to make the slightest inroads.  

UNICEF nutritionist Werner Schultink added his voice to the chorus stating that, “It’s proven beyond doubt that this is a highly effective intervention that saves many children’s lives, this thing that came up in India completely amazed us.” And yet, the Indian Health Ministry found reason to disagree. “There was so much hue and cry in the press we thought we better have an expert opinion,” was the comment of Health Minister C. P. Thakur who probably should be tarred, feathered and driven out of town for his stupidity. His feelings were seeming backed up by another person who should look for work in a laundry, A. R. Nanda who indicated that the vitamin A deficiency which effects at least two-thirds of the children in India, was not that widespread and he went on to say the it was some sort of a plot by the multinationals to enforce some sort of lobby. We would wonder what lobby he was working for, maybe the dumb lobby.  

Another party was also heard from in the form of Colathur Gopalan, 83, the founder of the Nutrition Foundation of India and a member of the government advisory committee on the subject. He too voted for discontinuing the project saying that “India must look to farms, not pharmacies, for solutions.” However, while it certainly would be a great move forward if India had enough diverse agricultural products available to feed their undernourished population, it is not now the case and at this rate will never be such. However the situation is not nice and these charming gentlemen in their ignorance are just a guilty of genocide as was Pol Pot or Hitler. Moreover, their blame of the multinationals is beyond stupidity as pointed out by the New York Times. “The vitamin A used in India was produced by two Indian drug manufactures, Nicholas Piramal and Nestor Pharmaceuticals. The syrup was free to the Indian government, donated by the Canadian government under UNICEF's auspices. Each dose cost little more than a penny.”[29]  

However all of the blame should not solely be placed on the ignorance of Indian bureaucrats that are never much use anyway. Indian newspapers are historically gossip sheets more interested in building circulation with the spread of wild stories than they are in getting to the truth. In this case the Sentinel, a Dhukpaguri Pather newspaper started the ball rolling with their inconceivable headline, which stated: “Assam Anti-Blindness Drive Turns Fatal, Thousands Hit.”  Once again the New York Times found another villain: 

“State health officials concede that they failed to act quickly to dispel the fear. `rather than immediately explaining that 47 children between the ages of 1 and 5 die every day in Assam – and that vitamin A has never been implicated in any death worldwide – the state health minister, Bhumidhar Burman, vowed to take action against Unicef if the vitamin syrup turned out to have been contaminated.”[30]  

Talk about biting the hand that feeds you. These folks can even make charity look dirty. Making mockery of the entire affair was the fact that of the six children that had been reported to have died from taking vitamin “A”, health officials in India later admitted that four had not even taken it. Moreover, the causes of death for the other two were more than adequately covered by medical experts and it was carefully explained that they had nothing to do with the vitamin. But rumors here die hard and another equally obnoxious one soon started making the rounds. This one had it that the government was sorry about the entire episode and in order to compensate families that had been effected by the potential problems attached to vitamin A, they were going to give each family a substantial sum of money to usage them. Unbelievably hundreds of people lined up in front of the government clinic to collect their money the next day. The problems are in the minds of the people but they are not able to do better. In this case when the rumored payoff turned out to be a fraud, people began to chant and then started rioting.  

Talk about yelling fire in a crowded theater. In India all you have to do is whisper the statement and it becomes tomorrow’s headlines. Nobody ever checks to see what the real facts are before they act and that is one of the reasons that in spite of some recent progress by the country in an industrial sense, it will be a long time before these people ever gain true understanding about what is going on in the world. We can only thank our lucky stars that we are not living in this god forsaken place.   

LANGUAGE, DOES THAT MEAN THE PRIME MINISTER HAS TO SPEAK HINDI? 

And to make maters worse  (if it were not already) Prime Minister H. D. Deve Gowda can’t even speak the national language, Hindi. Then again, it’s really not a big deal because most of the people living in India don’t understand it either. As a matter of fact, the Indian constitution specifies 17 distinct languages as “recognized”. But it gets even worse as there are over 45 languages that are spoken by over a million people along with 22,0000 dialects. In total there are over 800 different languages sometimes asking it impossible for people that are next door neighbors to understand each other.

It is most unusual that a national constitution instead of mandating a particular tongue, ([31]) the Indian Constitution allows for 18 different official languages. This creates an enormous dislocation when government documents are produced for dissemination across the country. Tax codes and laws must be translated into numerous languages and even television is not a unifying influence because so many people don’t understand what is being said. There is little commonality among the diversified groups, which even contain several states that threaten session whenever their mood sours.  

Recently, Mulayam Singh Yadav, Defense Minister stated that he and his cohorts “will not rest until English is driven out of the country. English should not dominate this country’s linguistic map.” Less than 5% of the people speak English, but of course, they are that segment of the population that have been highly educated, and recently there has been a dramatic increase in the number of English language Indian Schools  English is the second language of choice and is regarded to have played a substantive role in bringing India into modern times.  

As so many other things in India, which need so much, the Defense Minister undoubtedly had some other agenda and having nothing better to lash out against, he picked the English Language, One would have thought, Pakistan maybe?  

In this strange country, one could assume that this was an indirect attack against Sonia Gandhi, whose fiery political speeches are given in English primarily because the only other language she appears fluent in is Italian.  

As if India does not already have enough problems, their political parties cannot agree about anything and its fourth Government in 18 months has failed, along with the inescapable fact that they are a resident of the turmoil ridden Asian Continent. Just as their stock market was ready to make new all time highs, the consequences of devaluations throughout the region became apparent and the markets seemed to accept the more viable competition arising within their sphere of influence. India’s currency had become inflated in comparison to its Pacific Rim competitors and its markets seemed to be in a prolonged state of suspended animation.  

It has all come to an end with the rupee recently trading at an all time low against the dollar while the stock market has given way to the logic of long term prospects and collapsed. An unconscious Indian central bank has been defending their currency with Thai-like tenacity and as we have seen time after time, this has been a sure sign of coming economic disaster. Common sense would seem to dictate that the rupee should be revalued downward if for no other reason than to stay competitive with India’s neighbors, but logic has never found much solace in this strange land and in our view the outlook for India has now gone from poor to hopeless.   

On Vacation in India

 In spite of disasters that have either befallen India or in lieu of that, are about to befall India, luckily their tourism industry has remained intact. However, other than a visit to the Taj Mahal, there isn’t much to see here other than a lot of abject poverty. If you like watching beggars plying their trade on the street corners of Calcutta, Bombay or even Delhi, then this is certainly the place to visit. In addition, the price is right with food and lodging running literally a few dollars a day if you stay in a flee-bag in Calcutta eat the local food and are willing to die of ptomaine well before your appointed time, this was the place to visit. If there was nothing better to do on any given day, you could always take an overcrowded, fume riddled rickety bus into the mountains and meditate with yogi this or hari that.  

The odds of either not arriving or not coming back on Indian roads are extremely high and even if you were lucky enough not to be run over by a herd of displaced cattle you still will have to pitch and help fix the flats each time a tire pops. Certainly, every sadist that was into watching human misery wanted to visit this godforsaken place in order to feel that at least they had things better than someone. These folks always came back from an Indian pilgrimage feeling re-invigorated and on top of the world.  

However, this strange form of travel masochism ended abruptly on September 11, 2002 when travel to exotic places came to a screeching halt. Moreover, things soon got even worse. It seems that those folks from Pakistan and those folks from India do not readily see eye-to-eye, at least relative to either religion or Kashmir, an era that seems to have been pried partly from both country’s grip by an imposed treaty that neither side was ecstatic about.  

Just like the seven-year locust, every year or so, the area of Kashmir becomes inflamed by passions from one side or the other. While the fighting may break out in Kashmir, tensions as a rule soon spread to the length and breadth of both countries. India usually takes the biggest beating because of so many militant Muslim’s that still live under the Indian regime and hate their guts. These folks go around bombing churches, schools or whatever seems to be an easy target at the time. Well, soon after the World Trade Center was attacked by terrorists, the same thing routinely occurred in Kashmir. Both sides flexed their muscles by test firing an intercontinental ballistic missile or exploding a dirty atomic bomb.  

This caused substantial consternation almost everywhere, as if global things were not already at a high enough state of tension. Anyone that had booked reservations to India and hadn’t canceled their reservations on September 11, certainly called their travel agent to un-book once the fighting in Kashmir began. This was hardly a boost to the already wrecked economy.  

“The number of foreign visitors to India dropped 28% in September compared with the year-earlier period according to government statistics, and the market has yet to show any signs of coming back since then. ‘What can we do? There is nothing we can do.’ Said the tourism minister of the northwestern state of Rajastan, Bina Kak. Mr. Rajastan attracted a record 2.67 million foreign visitors in the year ended March 2001, and many of the area’s upscale hotels had come to rely on upscale international guests for most of the revenues.”[32] 

It was time for the Indian Tourist Board to come up with an alternative plan. The bureaucratic geniuses involved in tourism were not asleep at the switch, they determined in their infinite wisdom that the solution to the problems of the decimated travel business was to get the Indian people themselves to take up the slack. However, as in most Indian planning, the idea was considerably flawed. The domestic market, if indeed one existed and the foreign market are oceans apart. The domestic population can’t afford to live where the foreign visitors do, eat what the foreign visitors eat of travel the way the foreigners travel. Moreover, both groups cannot be accommodated simultaneously. Robert Garh put it into perspective: 

“…The timing and lifestyle (between them) is completely different. ‘For one, foreign guests tend to eat early, at around 8 p.m., and the kitchen staff is done by 9:30 p.m. “Indians drink all evening and may want supper around 10 p.m.,’ he said. The conflicting schedules make for management nightmares. Even large hotels fear that a sudden switch from one group to the other is risky. At its three properties in Rajastan, the Taj Group saw a 40% drop in revenue for the third quarter of 2001 compared with the year-earlier period. Whereas it once offered special packages to domestic tourists only during the summer months, when business is traditionally slow, it has begun to extend them into the high season, as well. But it is doing so only reluctantly.”[33]  

And the idea Indians have relative to tourism has been said to be that of being glued to the television and ordering room service. That to them represents the ideal vacation. They are not into traveling the countryside or climbing mountains. Moreover, the languages and dialects of the country are diverse and in many cases indiscernible. Taking vacations into the hinterlands may well be to Indians, the same thing as visiting a foreign country and as long as they are doing it anyway or can afford it; they probably will have a better time somewhere else.

 Toxic Transport

 India leads the world in little but they have claimed the gold ring in the area of air pollution. Over 100,000 people die each and every year from this cause, making it the absolute leader in the global foul air derby. No other country even runs a close second. One of the former leaders in the race for global pollution, Mexico and their flagship city, Mexico City was at one time a possible combatant for this crown of the king pollution but has since cleaned up its act to a limited degree and has been left in the wake of a determined India.

 Of all of India’s polluted cities, New Delhi is the country’s anointed leader and continues to bring home the bacon when compared to other breathless cities. Leading the pack here in generating contaminates is New Delhi’s diesel bus fleet that belches out a noxious blend of potentially crippling foul air has survived court battles, city ordinances and prayer sessions involving hundreds of thousands of people and survived them all. Now the country’s Supreme Court has determined to put and end to this intricate element of the city’s programmed pollution. It seems that the bus owners had been ordered by legislation to switch over to cleaner burning compressed natural gas and been unwilling to spend the few bucks that were required even knowing that it would mean the saving of lives numerous lives. It seems that these intransigent and squirrel-like owners would rather spend their money on vacations to the mountains where they wouldn’t have to breath the fumes released by their own buses.

 However, they apparently never believed that the Supreme Court was serious about carrying out their order and when the eleventh hour had come and gone they were up against a wall. Either convert the buses to the environmentally friendly system or shut down their companies. But wait, there was another alternative that because we are in India, just might work.  They did the only thing that was left; they went on a hunger strike that they vowed would last until death, unless they could continue to operate their diesel driven vehicle of death. This is a country the finds even the killing of animals a problem so you can imagine the consternation that this caused.

 The New York Times in reporting the story found a bus owner named Harish Sabharwal whose family owns 24 of these buses and asked him what he was going to do about the situation. His answer was consistent with his fellow owners, “When we had no other option, we knocked on the door of God.” Naturally this put the matter into perspective and we are certain that the Supreme Court will agree that Harish has certainly made a strong point in his own defense.

 However at the point we were in late 2001 and we are referring to a law created in July of 1998 by a New Delhi Court. However, things are not always what they seem to be here in India. Had the order been carried out when mandated, the change over would have been gradual and by this time it would have been completed without incident. Now, if the Supreme Court should shut the system down until the changes are made, people will not be able to get to work and the city will literally shut down. The blame goes strictly back to the officials that were running the city. These bureaucrats did what Indian bureaucrats had been doing for centuries, they literally fiddled while New Delhi burned, and taking their small payoffs for delay and pretending the situation did not exist. In spite of the law, they continued to license new toxic pollution machines as the old ones broke down. This set an example for the bus owners to believe that the city leaders were not serious about making the change. This in turn encouraged them to do exactly what they did, nothing.

 Anil Agarwal, an environmental consultant who deals with city officials and offers his guidance said, “The government here is probably the most incompetent in the world on environmental issues. We make recommendations, but who will follow them?” Moreover, he certainly must agree that his judgment is correct. However, more to the point is the fact that the government and the Indian Courts can enact all of the laws they want, if there is no product for the conversion available, what good can anything ever do in the Alice and Wonderland type of world. “For months, the shortage of compressed natural gas led to an explosion of snaking lines of bus and rickshaw drivers waiting 8, 10, even 12 hours to fill their tanks. And it isn’t the fact that there is any problem getting compressed natural gas, all you have to do is order it and then pay for it; New Delhi did neither.

 One recent afternoon, 206 rickshaws waited in a single line that stretched for half a mile. Some drivers snoozed. Some stared blankly. Many fumed about the hardships they have endured. Because of long hours waiting for gas every day, Lal Bahadur, who rents a rickshaw for about $3 a day, ceased to earn enough to support his wife and daughter living in a faraway village. Mukesh Kumar, who was married at 11 in the tradition of his low caste family, said he had been unable to send to his village for his wife to come live with him here and consummate their marriage because he was so broke.”[34] 

 The original action in court was filed by a M. C. Mehta, a lawyer that had filed a public interest lawsuit over seventeen years ago. More than anything he is continuing to marvel at the total intransigence of everyone involved, the bus owners, the city fathers and the people relative to matter of critical importance to their health. Should the Supreme Court force the buses to stop, Mehta probably would be hung by his heels on the nearest lamppost for causing the people to lose critical time at work. India is certainly a strange place and is not entering the 18th century with any great enthusiasm. As a matter of fact, it is only being brought there kicking and screaming.  

However, it is only fair that the city with all  the pollution was also the one to get a $2 billion subway system that can transport its 16 million citizens like a magic carpet. While Calcutta has had subways for a decade, the one in New Delhi is eventually going to be something special. While now only 5-miles long, when finished it  will cover 62 miles and eventually have 90 stations. It will be built under the most densely populated spot on earth (Old Delhi) and when it opened at the end of 2002, it immediately became a source of pride to the inhabitants of this city. Over one-million people rode on it the very first day. Most of the early riders were just trying out this new contraption for the pure fun of it. And in the wonders never cease department, the subway was built with a grant from Japan, with subway cars from Korea and with tunnels dug by the Germans and has fares of only 16 cents per ride.

Moreover, the project is being completed with only minute amounts dislocation as most of the work is being done at night. In addition, only 400 bureaucrats are involved in the project, with almost all of the work being subcontracted out with a total of over 20,000 involved in the day to day work. New Delhi with over 4 million vehicles, thousands of donkey carts and more than a few elephants plying the highways, certainly needed a change of pace and at least for now, India has something that has been done right.

The Great Train Catastrophe

 There has been Hindu – Muslim violence in India dating back to the time of partition a half a century ago. the British had a hand in creating the gaff between the religions by having separate water dispensers at railway stations, one clearly marked for the Muslims and the other for the Hindu's. "Though not a justification by any stretch, it is worth nothing that no two religions are more opposed to one another than Islam and Hinduism. Islam, a prophetic faith with a clear-cut orthodoxy, is as hard as the sands of Arabia. Hinduism, a conglomeration of sects, cults and often-conflicting philosophic systems, is as fluid as the river Ganges. Muslims abominate pork, which many Hindus eat; Hindus worship the cow, which Muslims find no more worthy of reverence than sheep. In just about every area of life from rituals and family systems to their most intimate habits and beliefs, Hindus and Muslims are unquestionably different. " WSJ, May 10, 2002, Into the Heart of India's Darkness, Ajay Singh

At that time in 1947, only 18 percent of the population was literate. Ghandi, literally the father of his country was passionate about his religious beliefs, being a devoted Hindu. However, Ghandi did not mold the country; he freed it from British domination.

On January 30, 1948, Mohandas Gandhi was a 78 year old man whose body had been wracked by the effect of numerous long and arduous fasts, was shot in the chest and abdomen by Nathuram Godse, a Hindu Brahmin from western India. the fact that he was not a Muslim probably saved both countries from being destroyed by civil war on the spot. Ghandi, in spite of his well earned reputation for peaceful solutions to infinitely difficult problems had fought long and hard to prevent recognition of Pakistan as a country. the result of this partition was that it had created a forced migration of Muslims to Pakistan and Hindu's to India and what little good will that had existed between the religious groups  soon vanished. Strangely, most of Ghandi's fasts had been an attempt draw attention to the fact that Muslim's were being slaughtered by his own people and he was rebelling in his own way against these actions.

As it turned out, Godse was a member of the Rashtriya Swayamsevak Sangh (National Volunteers Association, or R.S.S.) which was totally devoted to the creation of militant Hindu State instead of the neutral one that Ghandi had set up. The sect had been around for some time and was first established in Nagpur in 1925.  Godse believed that Ghandi was pandering to the Muslims and called what Ghandi had done,  "the vivisection of the country, our motherland." He claimed that these facts had indelibly driven him to murder Ghandi at the earliest opportunity that he be shown absolutely no mercy in his trial. From all appearances he died a happy man, stating the now with Ghandi dead, "the nation would be saved from the inroads of Pakistan." As he was hung in 1949, Godse went to his death while singing about "living Motherland, the land of the Hindus."  This man was totally warped but he seemed to create the template for those that followed him.

In the half-century that followed, the R. S. S. had grown in numbers and under the aegis of the Bharatiya Janata Party (Indian People's Party, B.J.P.) took control of the Indian Government in New Delhi in 1998 when the Congress Party (the of Ghandi and Nehru) became so corrupt that it collapsed of its own weight. Its leader than stood back to watch the bloodbath commence. Atal Bihari Vajpayee, is a card carrying member of R.S.S. and the Prime Minister of the country as well. Many of those surrounding the Prime Minister are also members of this questionable group. Since they have come to power, there have been three wars over the Muslim denominated state of Kashmir. These folks are not exactly what you would call a passive lot either, they are backed by Pakistan where a military junta overseen by Muslim extremists has taken charge. It was these Pakistanis that arranged for the mounting of a terrorist attack on the Indian Parliament in December of 2001. This action almost lead to the first and possibly last atomic war.

Ghandi's successor was a man by the name of Jawaharlal Nehru who was India’s first Prime Minister. These two men were too some degree contemporaries and while they shared many of the same ideas regarding India’s independence anything further is where they parted company. Nehru not only didn’t share Ghandi’s religious beliefs but in creating a national system of democratic elections he created an almost non-sectarian environment.  

“Secularism, in its Indian ideal, emulates some of the ways of the liberal West, which is one reason why Indian democracy – in spite of its flaws – has so many admirers in America and Europe. Religious parties are not proscribed; religiosity is not a bar to political advancement; and religious discrimination is unlawful. The framers of the Indian constitution envisaged a multi-religious state whose citizens coexist, with no group enjoying advantage, nor disadvantage, by virtue of religion.”[35]

In spite of constitutional protection and an enormous rise in literacy, forces that are almost beyond the people’s control are squeezing the life out of secularism. We live in an age where no matter what the legal protections may be in a country, hate is able to travel electronically. This is in dramatic contrast to the old days when being a card carrying isolationist really meant something. Without strong leadership and return from the continual harboring of almost cave dweller’s instincts relative to their own form of religious worship and god, India is quickly careening out of control and is being overwhelmed by a mob-like mentality of who indeed is the “right god.” Indian leaders have only stirred the pot of hate by setting rules, which apply to minorities unfairly and unequally. This government founded on Ghandi’s principals of peaceful resistance has turned virally aggressive when it comes to others in their sphere.  

The current problem is mostly a vestige of the original unsuccessful partition and a strange educational system which teaches self reliance and the exclusion of those who thing the least bit differently. Beyond that, there is a constant stirring of the pot by both sides which is not making things any better. However, throughout the years, to some, Godse has become a figure to be rallied around many killings are conducted in his name.

                  "...in India, their resemblance (R.S.S.) to the European Fascist movements of the 1030's has never been less than clear. In his manifesto, "We, or Our Nationhood Defined" (1939), Madhav Sadashiv Golwakar, supreme director of the R.S.S. from 1940 to 1973, said that Hindus could "profit" from the example of the Nazis, who had manifested "race pride at its highest" buy purging Germany of the Jews. According to him, India was Hindustan, a land of Hindus where Jews and Parsis were "guests" and Muslims and Christians "invaders."

                   "Golwakar was clear about what he expected the guests and invaders to do: "The foreign races in Hindustan must either adopt the Hindu culture and language, must learn to respect and hold in reverence Hindu religion, must entertain no ideas but those of glorification of the Hindu race and culture...or may stay in the country, wholly subordinated to the Hindu nation, claiming nother, deserving no privileges." NY times, Magazine 2/2/03, Pankaj Mishra.

However, in the beginning, all of the Muslim’s didn’t go to Pakistan or Bangladesh and all of the Hindu’s weren’t forced to emigrate to India. Thus, whenever tantrums flare in this region it is simplest to blame a minority for what has occurred. Tempers in this neck of the woods seem to be constantly on a state of high alert and there seem to be an unending number of reasons to be displeased with religious minorities. And there is a lot of things to blame other for, the economic depression that India finds itself in, the lack of energy to run the country, lack of quality exports, no source of hard currency and just plain stagnation coupled with a bureaucratic system that does not allow the government or industry to function. That is all certainly someone else’s fault and they, whoever comes to mind are blamed regularly.  

The flame of hate always burns at some level of intensity, sometimes like a pilot light with just enough heat to explode into a blaze when action is called for, or at other times, like a bonfire meant to encompass the bodies of the opposition within its pyre. Such was the case with one of the worst protagonist attacks of modern times when over 500 (some say as many as 1,700) people were murdered in the name of religion in the area around Ahmedabad in India. Some were killed in the destruction of a train where people were cooked alive in an enclosed train and others died in the catastrophe’s aftermath. However, this story is not about the persistent killing that continues unabated in India and Pakistan if you are of the wrong religious faith, this is a story of strange values.  

This was you may call a religious train that was attacked as it carried almost only Hindu activists that were returning from a religious pilgrimage in a little known place called Ayodhya. Although trying to determine causes religious hatred is often difficult even for the participants, it appears that this particular Hindu and Muslim confrontation goes a back to the year 1992. At that time, a Muslim Mosque existed in Ayodhya that was an important holy site. The mosque was called the Babri and was constructed by conscripts of the then reigning Muslim Mogul emperor, Babur in 1528. Moreover, it so happens that the mosque was conveniently constructed at Rama’s birthplace (a Hindu shrine as he was numero-uno as far as deities go) and therefore was seen as a direct affront to the Hindu religion which it undoubtedly was.   

The fact that the Hindu’s felt that they had been insulted by the Muslim’s some five-centuries earlier apparently simmered for a substantial period of time and ten years ago a mob of thousands of angry Hindu “nationalists” overran the mosque and destroyed it by literally taking it apart stone by stone. The matter hardly ended there. Beside the fact that over 2,000 people on both sides were killed in the ensuing battle, as you would expect, this action really annoyed everyone concerned and the conservative Hindus alleged that the only way to become totally vindicated would be to erect a temple of their own on the very site that had housed the Muslim mosque.  Talk about yelling “fire” in a crowded theater.  

However, in the ensuing decade, ownership of the land had come into question as the Indian Supreme Court in 1994 had ruled that religious activities would be banned on the site until the rightful owner could be determined. Obviously, this was just a ploy by the court to let the flames of hatred caused by this event die a natural death. It did not die! Naturally as with all things in the Indian legal process, no decision was ever made, as the justices were well aware that no matter which way the decision was crafted, the country would have a revolution on its hands. This did not slow down the Hindus in the least and it was planned that a religious ceremony in the form of a massive prayer service would be held on the site to celebrate the planned construction.  

The reality of the situation here is that the pedal has hit the metal from a religious point of view, but in India, nothing is ever completely, what it seems. The Indian Prime Minister, Atal Bihari Vajpayee is a politician first and a nationalist second. He is apparently much more interested in his party staying in power than he seems to be in attempting to assuage the wound that continued to fester between the opposing religious groups. His political base consists of 22 highly incompatible parties that can barely tie their shoelaces without getting into an argument over something or other. Within the party are a number of conservative Hindu factions that think whatever the Muslims want is wrong. The Prime Minister being afraid to upset his highly volatile coalition is unwilling to do the right thing.

                 “Mr. Vajpayee’s Hindu nationalist party is closely linked to the World Hindu council, and the prime minister favors the building of the temple on the disputed site. But he heads a fragile 22-party coalition, including many secular parties, and has said the Supreme Court order will be enforced.”[36]  

 And if you don’t think that politics and religion are everything in India read on. For some inexplicable reason apparently only known to the Indian Government, those that were killed in riots in the countryside from religious violence were said to be victims of violence and those that were killed on the train were said to have been victims of terrorism. While we believe that this is an interesting theory and most probably that if you kill a lot of people simultaneously you are a terrorist but if you are only going about it in a competent manner killing only one person at a time as a sniper would do, you are a violent killer. Well if that is the way the Indian Government wants it who are we to argue, however, there is substantial method to their strange type of madness.

 It seems that the government feels some guilt about the entire matter for whatever reason other than their owner fiddling while their country was ready to burn down. In perspective, they apparently felt that they were somehow responsible for whatever happened on the train and that families of those of the Muslim faith are entitled to the princely some of 100,000 rupees the equivalent of $2000 and those families of members of the Hindu faith should get 200,000 rupees or about twice what the Muslims would be entitled to. While the evaluations seem a tad strange what is even stranger is the fact that the police never came to the aid of any of the Muslims that were being brutalized in spite of the fact that they were all over the Hindu’s trying to assist them in whatever manner they could. It would seemed logical to assume that even if a Muslim in worth only half of what a Hindu is worth, they would be entitled to equal protection under the law, but in this supposedly democratic country, this is hardly the case.  

Not only had the Muslim’s received no protection but they also were given no food, medical supplies water or blankets after being decimated in the attack. Naturally questions were raised about this point about what had occurred and why. The most simplistic answer seemed to be that the State and the municipality had really not come to a conclusion about which should be handling the matter and with no clear cut decision, neither were able to provide assistance. This is similar to calling 911 and saying that you are being murdered only to hear the operator tell you that murder is handled by another department.

 The only reason for these strange actions seems to be that they are politically motivated as strange as that may appear. This occurred in a complex sociological atmosphere in Gujarat where fight for political control is constantly taking place “In Gujarat, the last large state the party governs, the party wins if it can unite the Hindus, normally divided by caste and other factors – and it accomplishes that by setting them against the Muslims. “The advantage for them is a polarization of votes,” Mr. Mansouri said. “At election time, they’ll be the beneficiary.”[37] In December with the aid of the R.S.S., they won the vote hands down.

 However, the bottom line is much more simple, the great majority of the people on the train were Hindu and thus they become the people that were killed by violence creating the payment evaluation. Thus it is easy to separate out who will be compensated in spite of the fact that many of the bodies are un-identifiable. The difference in valuations along with startling number of young Muslim children that were killed in the callous attacks are going to keep the flames of hate alive for some time to come. There will be no early end to the hatred expressed by these two groups living under the same roof.

But this was only the beginning of the terror. We have selectively quoted from a series of articles that appeared on the subject from various sources.  

“Indian Police Detain Thousands of Hindus, Fearing New Violence” Associated Press, March 15, 2002: More than 700 people have died in the last three weeks in sectarian violence in the western state of Gujarat, after Muslims torched a train carrying Hindu activists returning from a pilgrimage to Ayodhya. The train tragedy sparked an orgy of Hindu mob murders of Muslims, and claims by the opposition that the Hindu nationalist government did little to prevent the massacres.”

 “Hindu Mob Kills Two Muslims In Riot-Hit Western India, Associated Press, March 17, 2002: Nearly 200 Hindus armed with iron rods and tridents – a traditional Hindu symbol – attacked 20 Muslims returning to their homes in the city of Baroda after seeking shelter in a government-run camp following religious rioting Friday, police said. “

 “Fresh Ethnic Violence in India Leaves 17 Dead, More Wounded, Associated Press, April 22, 2002: A fresh wave of clashes over the weekend between Hindus and Muslims in western India has left 17 dead in mob attacks and police firing, taking the death toll to 850 in the country’s worst religious rioting in a decade, officials said Monday.”

 “Muslims Surround a Police Station In India, Demanding End to Violence. Associated Press, April 24, 2002. About 3,000 people mostly Muslims, surrounded a police headquarters building on Wednesday, demanding that officers top the mob violence that has destroyed 30 shops and a Muslim shrine near the station… An armed mob of 5,000 Hindus tore through the area, blowing up cooking gas canisters to ignite fires in the mostly Muslim area on Tuesday night. Some of them burst into the office of local police commissioner, P.C. Pande, demanding closure of a relief camp housing 4,500 Muslims who were burned out of their homes earlier in the sectarian violence.”

 When you consider the facts of the matter, it has many similarities to the Israeli – Palestinian conflict that appears nightly on every single television channel in the country. The number of lives lost, the territorial nature of the conflict, the refugee camps, the intransigence of the government and the one sided nature of reporting. However, for some reason or other, the news on this event has been brushed behind the last pages in the newspapers and no one really seems to care. The United Nations, which is flying their flag all over the place in the Middle East, seems to be strangely silent on the matters going on in India. In both cases, the Muslims are involved and in both cases, the Muslim’s created acts of terrorism.  

Taliban

Interestingly enough, there is a sleepy little town located in the north of India; deep in a poverty stricken state known by the name of Uttar Pradesh. The town is called Deoband and it is the strangest of  places where both Hindus and Muslims have coexisted peacefully since the beginning of time. Every facet of both religions is in full bloom here and yet there not only is no violence, but there seems to be a blend of friendliness and hope among the people that live here. All of the people that come from this area are called Deobandis and they do not understand the concept of things like jihads or the killing of anyone for any reason for that matter.

 There is a seminary here and its campus is called Darul Uloom where 3500 males of various ages, most from humble backgrounds attend school free of charge. In this school where they leave their shoes outside everything is spotless even though many of the classrooms are a century old. The students here learn the sayings of the Prophet Muhammad and read from the Hadith for hours at a time. Strangely of all, these people are taught that they are Indians first and then Muslims. They were Muslims  against the birth of Pakistan when it was created by the British in 1947.

 The seminary goes back almost a century and a half with its credo of preserving the Muslim identity in spite of the partition continuously intact. The students are taught how to be teachers of the faith and how to properly impart the tenants of Islam, that peaceful religion that believes in the sanctity of everyone. While only 12 per cent of the Indian population is Muslim, there are as many Muslims living here as in Pakistan which is 97 per cent Muslim. But the Muslims in Indian are spread out all over the country and almost nowhere do they makeup a majority of the population, this restricting their political base dramatically. However, in spite of the fact that they carry little political power, the Hindus are politically severely diluted because of the fact that each caste within that religion seems to belong to a different party.

 However, early on in India’s history almost everyone in this country was Hindu, but many of the people comprising the lower castes, having no future opted for the Muslim religion which taught that everyone could rise above his own state. In spite of this conversion, many of the original Hindu religious principals remained constant within this community. However, the caste system did not disappear with the advent of the new religion and women without dowries still had little to look forward to. However, Indian Muslim have learned to deflect the historic violence of the Muslim religion and they attempted to make whatever small gains that were considered possible within the system at the ballot box.

 However, nothing remains constant for all time and this form of the Muslim religion spread outward as time went on, to Pakistan and as Afghanistan. As it spread, its basic peaceful tenants became lost and the religion turned ever more violent, to the point that soon there was no connection between what had come before and what now existed. As the violence increased, international players appeared upon the scene to recreate their own scenarios as to how best to tame these flames of hate.

            “A series of powerful players – Pakistani military dictators and democrats, rich Saudis and the American government – tried to harness Islam to their own political and geopolitical purposes. They fed zealotry on a rich diet of money, patronage and arms, creating a fundamentalist force in Afghanistan and Pakistan that no one could control, say scholars and political analysts. The Pakistani military sought to strengthen its rule through an alliance with clerics and from the 1980’s funded thousands of madrassas. The Saudis, many of whom followed their own austere and conservative brand of Islam known as Wahhabism, sought to build a Sunni wall around Shiite-dominated Iran and contributed heavily to Pakistan’s Deobandi madrassas, as well. The Americans poured money into Pakistan to fund Islamic militants who fought the Russians in Afghanistan. The elected government of Benazir Bhutto nurtured the Taliban in the hopes of setting up a malleable government in Afghanistan. Since the mid – to late 1990’s both Pakistani military rulers and prime ministers have allowed secret funding of Islamic radicals who have fought Indian rule of Kashmir, India’s only majority-Muslim state.”[38]

 The roots of Deoband, India have spread throughout Pakistan and Afghanistan but as they spread, they gradually changed from that of peaceful co-existence to violence. The powerful nations of the region as well as many throughout the world tried to guide these people into ways unknown to them and thus in their tinkering they created what we know no as the Taliban. These violent religious fanatics with help from others have turned into something from hell, but they did not do it alone. Deoband still remains a land of peace and its schools teach unlimited tolerance.            

 CENSORSHIP

 India determined that if there was anything that would allow them to escape the shackles of mediocrity, it would be the creation of an industry based on computers, Internet and the writing of software. In some cases, they have succeeded admirably. But think of the disadvantage their people are at when the country determined that because they couldn't "black out" maps when they were on CD ROM discs it would be necessary to ban the import of this media as it related to Encyclopedia Britannica.  India's censors say that the new media does not give them a fair shake. In normal publications when territorial lines are shown, the words "External boundaries of India as depicted are neither correct nor authentic."  The irreverent publication had the audacity to include the statement that India had been in a state of war with Pakistan and China on several occasions since its partition and this obscured some boundaries. While the rest of the globe would find no fault with this statement, you will not find many copies of the encyclopedia in Indian Libraries.    

The International Monetary Fund has put India’s problems into prospective with the statement by chief economist Michael Mussa, who said,  

“There is certainly some sense that ...the structural reform that proceeded quite rapidly, certainly by Indian standards, in the early years of this decade, has in the 1st year or two slowed down, so it is necessary to move on the fiscal front, to put India on a sustainable faster growth path, stronger efforts are needed to reduce the large fiscal deficit, liberalize foreign trade and investment, alleviate infrastructure bottlenecks, deregulate domestic product markets, and reform the financial and enterprise sectors."

 I Wanabee In Pictures

 It may well be that India produces more commercial movies than the rest of the world combined. I doubt it, but you would never know. With 500 languages spoken here and literally a new "major" movie coming out three times a day and film revenues climbing over $1 billion per year, you would soon get the idea that this all they do here. Whatever the real facts are, the number of films produced here is indeed prodigious and they all seem to take on the particular type of idealism or nationalism existing in the country at any given time.  Bombay is literally the movie making capital of the world and its evolution has had more fits and starts than a tin Lizzie.

                    "but it (Bollywood) was far more prolific than professional, thanks to shady   financing, flimsy scripts, and chaotic shooting schedules. Now Bollywood is slowly getting its act together, and many hope investors will follow...While Bollywood has always managed to create magic onscreen, in real life it was notoriously disorganized. Film financing came largely in the form of loans from private investors, with interest rates as high as 40%. Industry experts say the business was awash with "black money," or unreported income hiding from the tax and law-enforcement authorities. In January of last year, Bharat Shah, a prominent film financier, was arrested on charges stemming from his alleged links to organized crime. " WSJ 3-26-02, Bollywood tries to Go After Mainstream American Cinema, Joanna Slater.   

Every time there has been a change in political scenery, the movie industry has rushed to reflect this changed mood.  When the partition between Pakistan and India first occurred the movies reflected a brotherhood between the two countries of sorts and some remorse over what had occurred. Naturally more recently with the war going on in Kashmir and Muslims and Hindus blowing each other apart, movies have displayed people from Pakistan as the real bad guys or hoodlums. In recent times many have likened Indian movies to thermometers of the times, becoming more or less violent against Pakistan as events heat up or cool-off.  However, no matter what the temperature, the Pakistani’s are always the bad guys, but in peaceful times, not so bad.  

“Today, the plots, lifted as they are from newspapers, are just this side of fiction. But Hindi movies being what they are, fantasy is hardly spared. Song and dance routines still break out on the snow-capped mountains of Kashmir, though these days, the films are more likely to be shot in a hill station far removed from Kashmir, which is considered too dangerous for film sets.”[39]

 No matter what the given situation is with India’s hated enemy, Pakistan, it matters little. The Indians are an emotional people and they let it all hang out in their pictures. While they are made on a strict budget, many of the Indian producers are rather talented and it would appear that if they really had something to work with, they could do some exceptional work. Eventually, this industry will probably find its own way and flourish in an international sense in a similar manner that software has. The fact that films can be produced cheaply here by serious people could eventually provide India with some substantive export income.  

Brain Drain

Historically when we speak of brain drain we are talking about the great male scientist, or painters or philosophers. We tend not to think of it in a feministic manner. However, currently in the United States there is an enormous short-fall of nurses and apparently we have used up the necessary resources in the Ireland, Canada and the Philippines and we are now looking to the East, to India to fill the pipeline. Moreover, the women here are avid listeners when we come calling they have more than a passing interest, India graduates 30,000 nurses a year but they are nowhere close the standards that are necessary to practice in the United States.

There is certainly an incentive. The average nurse in India makes less than $100 per month as compared with the average of approximately $4,000 that American nurses earn. With demand for software already ramped up and dulled out in India, Nursing has become the best of India's exports. Training centers, especially for Nurses with an ability to speak English are springing up all over the country and demand for these people is skyrocketing. While demand is big, as opposed to visas for programmers, there are only 500 slots a year in the States for nurses from India. However, this is going to change shortly because of the current nurse shortfall in this country of 110,000 and its expected rise to 700,000 by 2020.

Flying High

Many of the brightest feel restricted in this country and believe that their opportunities and freedoms lie elsewhere. India has suffered from brain drain as much as almost any other nation on earth. What is worth, many of their finest, once having pulled up stakes, never look back. Such a girl was Kalpana Chawla, the fourth child and third girl born into a family living in the planned city of 300,000 people in the state of Haryana. In a general sense this was an area where woman were not particularly appreciated as born out by the fact that among children under six, there are only, 820 girls for every 1,000 boys; a statistic that would indicate late term abortion where female fetuses are culled out.

However, Kalpana was a survivor, at least for a time. She went to school and eventually majored in aeronautical engineering against here father's wishes and became the only woman in her class in the undergraduate school she attended in India. Upon graduation, she left India for the United States and earned a master's at the University of Texas in Austin and then grabbed a doctorate from the University of Colorado. Her parents believed that she was overreaching and they became somewhat estranged.

She ultimately married a man of her choice as opposed to the arranged marriage that would have waiting for her in India. She ultimately was enrolled in the American Space Program and became a hero in back-home community by becoming on the second astronaut from India. Early in 2003 she took off on the space shuttle Columbia and  thus became the first Indian in space. Sadly she died with her cabin mates just short of landing. In life she set an example for Indian women, that they too could reach for the stars, but this lady that had skirted the odds all of her life, finally paid the price the supreme price. If she had to do it again, she probably would have done it all again, the same way. 

Reform For What It Is Worth

 In the United States we have an old expression that goes something, “everyone talks about the weather but nobody ever does anything about it.” In India a similar saying would go, “everyone talks about reform but nothing ever happens to change things.”  Small items make for a big difference here and when you figure out that India still has the highest interest rates in the world, in real terms, you can begin to get an understanding of what this economy is all about. Every square inch of territory here has a dozen bureaucrats attached to it hanging on for dear life, thus making any progress only accomplished in spite of them.  When you add the interest-rate problem to the fact that people cannot be hired or fired at will, one would think that it would be a miracle if any successful businesses existed in this country at all. Only now is the country considering legislation that would exempt companies with under 1,000 employees from the non-firing rule. But it ain’t done yet and as we have found with every other type or reform that has been proposed in this country, India has a way of pulling defeat from the jaws of victory with a panache unseen anywhere else in the known universe.  

Amazingly, only a tad over 8 million Indians are employed by the private sector in manufacturing jobs out of a labor pool of over 300 million. This would tend to indicate that companies don’t want to hire one more person than they need, because if times should turn for the worst, they will not be able to get rid of them. Thus they make do with less and therefore, less goods are manufactured and less people are employed. While the country waits to see who the government screw up this latest attempt at reform, the GDP growth for Indian has fallen by fifty percent since last year and is heading south.  

India is beginning to lose its grip,” said Deepak Parekh, chairman of HDFC, the country’s leading housing financier. “Contracts are not honored, the budget deficit is out of control and the legal system has all but seized up.”[40] 

High interest rates for lending are brought about by high interest paid on savings. This is a highly political issue and is the cause of manufacturing stagnation, inflation and pervasive unemployment but is not going to change anytime soon. Yet not one thing is being done to correct it. Making a bad thing even worse, banks are obligated to lend a high percentage of their money to specific sectors, which have no logical relationship with the overall health of country’s economic picture. It would seem that these are bureaucratic decisions having been thought out by little elf-like men with triangular heads. And would you believe that in a country that has just about enough energy to boil water, the tax on power consumption is three times as high as it is in China. The only way that industry can survive the government is create their own power by building their own plants. But how can these people running India ever get out of their own way when the country’s debt service is almost totally committed to salaries and debt service. This hardly leaves enough to give the government any breathing room. However, it looks like the worst is yet to come as the fiscal deficit is expected to reach 6% of GDP this year. It would appear that the best bet would be to trash the whole infrastructure along with the government and start the thing fresh.   

 

 

ANSWER:  We told our client that he should run, not walk, to get his company involved in India. This is the ground floor and he will never have this sort of opportunity again. Change will not happen overnight, though it will change and eventually, with the world largest population, this will be a market, second only to China in the world.

 



[1] February 18, 1998

[2] Wall Street Journal, February 18, 1998

[3] January – February, 1998

[4] India Web Post: “Zaire Had One Mobutu, India Has Hundreds, Commentary, Jai Somanath, 1997

[5] India’s battle for consumer credit heats up: Competitors are falling by the wayside, Khozem Merchant and John Thornhill, Financial Times, March 22, 2002.

[6] A Singapore based banking conglomerate that happens to break out its India based statistics.

[7] India’s battle for consumer credit heats up: Competitors are falling by the wayside, Khozem Merchant and John Thornhill, Financial Times, March 22, 2002.

 

[8] Indian Jewelry proves a problem, Kunal Bose, Financial Times, February 26, 2002

[9] Crisis forces India’s largest mutual fund to confront reality, Financial Times: February 6, 2002

[10] Wall Street Journal, June 26, 1997, Arson.

[11] It must be bought  because of an inability to make delivery, sometimes at a substantial loss to the seller.

[12] These costs consist of dividend collection, withholding tax, corporate actions and failed trades.

[13] Seventy percent of the country’s trading is done on the BSE.

[14] The Satellite failure also caused major outages in telephone communications and television stations.

[15] Almost as an omen of things to come, a week earlier, Indian scientist s

[16] It is too difficult to deliver the basket of securities underlying the derivative on settlement date to the buyer so instead, a cash equivalency value is set on the package and it is settled in this manner. This is similar to the way derivatives are handled elsewhere.

[17] Equivalent to sanctions.

[18] Gaining ground, John Mason, Financial Times, March 26, 2002

[19] China will soon be facing the same negotiations.

[20] According to the Reserve Bank of India Deputy governor Jagdish Capoor, “The banking sector will continue to be insulated from mergers and acquisitions even in the light of increasing competition among market players.”

[21] Financial Times, January 21, 1998

[22] New York Times International, Thursday February 26, 1998

[23] New York Times, Sunday March 1, 1998

[24] The highest monthly salary ever received by Rathikant Basu, former chief of India’s state-owned broadcaster, was approximately $220 per month. Recently Rupert Murdoch who hired him at over 50 times that amount, causing resentment and jealousy. , Murdoch’s direct-to-home television project was literally outlawed over the situation and unrestricted television in India  is still in the distant future.

[25] Economic Reforms Sharp Divergence Between Weakest and Strongest States As Vajpayee Warns of ‘Worrisome Outlook’, Wall Street Journal March 19, 2002. 

[26] Reuters 7/14/98 quoting Amnesty International’s Statement

[27] From information taken from the Wall Street Journal Monday July 21, 1997

[28] “It takes two hours to truck export goods a mere seven miles from the factory to the airport in the Southern City of Bangalore.  But Mr. Rajpal remains optimistic about India, and hopes that the recent Hewlett-Packard incident will be a wake-up call. The government, he says “doesn’t realize problems until they lose out on major investments.” Wall Street Journal, Monday, July 21, 1997 (A19) Jonathan Karp.

[29] Fear Stall Health Push In India, Cellia W. Dugger, March 4, 2002, The New York Times.

[30] Ibid

[31] Or no language at all.

[32] Lagging Tourism in India Focuses on Local Indians, Karen Mazurkewich, the Wall Street Journal, March 13, 2002.

[33] Lagging Tourism in India Focuses on Local Indians, Karen Mazurkewich, The Wall Street Journal, March 13, 2002.

[34] In India’s Capital, a Prayer for the Belching Buses, By Celia W. Dugger, September 28, 2001. The New York Times.

[35] Can India Save Its Secular Legacy? By Tunku Varadarajan, The Wall Street Journal, March 11, 2002.

[36] Indian Police Detain Thousands of Hindus, Fearing New Violence, Associated Press, March 15, 2002

[37] In India, A child’s Life Is Cheap Indeed, by Celia W. Dugger, The New York Times, March 7, 2002.

[38] Indian Town’s Seed Grew Into the Taliban’s Code, Celia W. Dugger, The New York Times, February 23, 2002.

[39] Indian Patriotism Gets a Bollywood Makeover, Somini Sengupta, The New York Times, January 27, 2002.

[40] India seeks new life in ‘second generation’ plan: But reforms designed to boost badly needed private sector investment are under attack, and may anyway be insufficient.” Edward Luce, Financial Times, February 25, 2002.

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