The Indian Elections and Their Aftermath - Part 1

This is going to be a lengthy post, hence it is in two parts. The elections are over. What is up with the Indian electorate? I have not exactly understood why the UPA govt has been voted back to power and that too with such widespread support. One theory I have heard is that Muslims have voted unitedly for it this time which has caused this swing. But, does no one hold the government responsible for the spate of terrorist attacks that took place over the last 2-3 years? Or is everybody hoping that Manmohan will work his magic on the economy and bring it out of the slowdown? Do people believe the NREG scheme and the nuclear deal are wonderful examples of the UPA government's achievements? I don't know.

One question we have to ponder is that what is happening to us as far as terrorist incidents go. When the Mumbai attacks took place, there was national outrage? I do not see any manifestation of it in the electoral outcome. Have we become resigned to the situation? Do we believe we cannot do anything about this? South Mumbai where the attacks took place saw a voter turnout of 47% I think. What is happening here?

One good thing with the electoral results is that the verdict is not fragmented as it has been in the past couple of years. Regional parties do not seem to have a strangle hold over the govt that is to be shortly formed. So we can hopefully look forward to a decisive govt (consider the irony, the BJP was giving ads about a decisive govt). Now it remains to be seen if Manmohan Singh can stand by two promises he had made. Unless I am mistaken he had said in an interview that he would get India out of its slowdown in 100 days if the UPA came back to power. He had also said the same thing about bringing back Indian black money stashed abroad. Will he stand by his words or has he also learned the art of realpolitik? Will we have more farm loan waivers (God forbid)? Apart from the effect on the fiscal deficit of the country, I hate seeing the money that I as a middle class member pay going into farm loan waivers. I am all for helping farmers. But do it properly. Improve irrigation facilities, consolidate land holdings, improve seed quality. Sharad Pawar seemed to be as (or maybe more) interested in the BCCI as he was in the agricultural ministry. Will there be a repeat of this? Whatever one might say, I am happy that it is Manmohan Singh and not Sharad Pawar, Mulayam Singh Yadav or Mayawati that is becomming the PM.

The stock markets seem to have given a thumbs up to the UPA's victory, so much so that trading had to be halted! Does this portend good times to come?

freedom of speech

We pride ourselves on being the world's largest democracy, though we are far from being a mature one. Freedom of speech is a very important requirement for a democracy to function effectively and I am not sure how far along that road we have come when compared to let us say the US (to be fair, the US has had a long time to mature since it became a democracy, we got our independence only in 1947).

The reason I said this how anyone can lampoon anyone in a cartoon or in an artistic manner and get away with it in the US. If a similar thing happens in India, there are immediate threats of defamation suits (jadu ki jhappi anyone?) Watch American comedians and you will understand my point. A case in point is given below.

http://blogs.wsj.com/economics/2009/05/10/tim-geithner-the-never-ending-target/?mod=rss_WSJBlog

Outsourcing and the nuclear deal

Yashwant Sinha says the BJP will link implementation of the nuclear deal to outsourcing decisions by the US. He says why should India provide jobs to Americans who make nuclear reactors when Obama is taking away outsourcing jobs from India.

http://timesofindia.indiatimes.com/BJP-to-link-N-deal-execution-to-US-outsourcing-move/articleshow/4492192.cms

Even if India goes in for serious expansion of nuclear power, I seriously doubt the number of jobs that would be generated in the US because of making nuclear reactors for us, at least when compared to the number of outsourcing jobs in India. The reason is that I believe the nuclear reactor manufacture is highly technology-intensive with not very huge labour requirements. Also, there are non-US players like Areva who are also possible manufacturers.

Also it is WE who need the energy. India's growing energy requirements demand newer or at least bigger sources of energy. So Sinha's reaction is like cutting off the nose to spite the face.

http://en.wikipedia.org/wiki/Cutting_off_the_nose_to_spite_the_face

Obama's move might not be very palatable for us but still it is justifiable. A recent newspaper report mentions a KPMG senior management guy saying that even after the proposed tax measures on US outsourcing companies are implemented, it will still make business/monetary sens to outsource. If Obama decides to actually impose additional (or punitive) taxes on outsourcers, that is when we have to seriously worry. The US economy is in a bad shape. So Obama's measures are understandable. Are these issues so ununderstandable to the former civil servant who has been a former finance minister as well as foreign minister of the country, or is this simply political posturing?

Solving the fin crisis or creating a new one?

This was a doubt that I had a few days back. Everybody (at least central banks) has been trying to infuse 'liquidity' into the world markets. Governments are pumping in billions of dollars to infuse cash into the market. Also nobody was lending to one another not because of lack of monet but because of a lack of trust.

My doubt goes like this. The world was awash with liquid money some time back. Because of the sub-prime crisis, assets esp. property have lost value. This only means that the realizable amount a house owner will get if he sells his house has gone down. But there is already money in the system which must be locked somewhere. Now we are trying to infuse extra cash into the system. Some time in the future confidence will return and people will start lending normally and engage in transactions as before. Will the cash being pumpd in right now not add to the cash already existing in the market? Further - right now there is no inflation as such, so the need to pump in more money to counter the loss of value is not there; also no cash is being 'physically destroyed', so what is to stop inflation from arising in the future because of the money being pumped in right now? Can anyone clear this up for me please?

India's elections

The EC set up a voting booth for just one person in Gujarat. This was for a priest in the Gir region.

http://www.hindu.com/2009/05/01/stories/2009050157680100.htm

This is probably what is meant by following principles/rules in spirit and deed! On the one hand we have our election commission which tries to have free and fair elections. On the other we have well, our own political parties. As I have mentioned earlier once somebody defined politics as "poly means many and tic are blood-sucking insects". One can only wonder at the power-hungriness and unprinciples nature of politics and India is a case in point. Next door in Pakistan we have an absence of democracy while here it is abused.

A lot of voters are poorly informed. A few years back a magazine carried a report. An old woman in some part of te country said she was voting for Indira Gandhi. She did not even know the woman was dead! Then there is general voter apathy. Appeals by film actors and the Mumbai carnage did not bring out voters in Mumbai. We curse our government all the time, are we not responsible for that?

http://www.ndtv.com/news/india/2611_little_impact_on_voters.php

Finally we have our politicians, the less said the better. I have a confession myself though that I did not vote. I am registered in Hyderabad and I am in Kota. I am not Amir Khan to fly back to Hyderabad to cast my vote (like he came back from the US to India). I think some kind of provision must be made for people like me (if there is one, I do not know of it). A lot of people keep moving around for various reasons - job, education etc. Some provision should be made to allow these people to vote also. If I am not mistaken we need a postal ballot system like the one for the US military personnel stationed outside the US, or something along those lines.

Time travel and foreign exchange

I had some random thoughts in our finance class today. All the fin gods are requested not to kill me after they read this. Remember the Grandfather Paradox in time travel? You go back to the future and kill your grandfather before your father is born. What will happen? This is an argument against time travel.

I thought up of another, actually what I came up with proves that you can't use time travel to your exact benefit (for e.g., know the outcome of a match so that you can bet on it). The limitation of my theory is that it cannot explain the example I just gave, but as I said, some random thoughts.

Theory: In hedging, you consider the futures rate of a currency and decide whether or not to hedge. So I take a time machine, go to the future, find out the spot rate and take a position accordingly. Now I think I have benefitted. But the very act of me taking that particular position has affected the futures price of the currency, thus effectively negating the gains.

This theory proves that to gas around, you can even know absolute bullshit and seem knowledgeable (probably this is one reason for the present economic crisis, too many people like me out there :P). Tell me if the theory made any sense to you, I am not sure it did to me!

India and the Oscars

The whole country went ga-ga when Slumdog was nominated for the Oscars and when it won various other awards. My question is, is all the hype justified? Rahman has won two Oscars, that's fantastic and there was Pookkutty for the sound mixing. But is the general hype justified?

As Ustad Amjad Ali Khan has said, this is not Rahman's best music. The movie is not Indian (remember, the movie got the best movie award, not the best foreign language film). The day we get the latter, we should really be proud. What was showcased to the western world was India's poverty and conditions in the slums. The movie did not even do well in India. What are we patting ourselves on the back for (other than Rahman obviously)?. A friend of mine put up his status message as Rah-maniac...that is one thing that actually seems justified :)

Another point to be noted. This movie was made in India with an Indian (and of Indian descent) cast. But the director was not Indian. Smile Pinki (forgive me if the spelling is wrong) got another Oscar, the film maker was again not an Indian. So what does this prove? We have the potential to make good movies, we just wait for somebody from outside to make use of that? Aishwarya Rai and Mallika Sherawat landed miniscule parts in The Pink Panther 2 and The Myth respectively, but then again there was a lot of hype.

One one hand we have the hype and on the other we have people who think we should not hanker after western approval but should concentrate on making our own brand of movies. Both make sense actually. So we have to decide which path we have to take!

So media, stop hyping everything that can sell! Maintain some standards for god's sake! Today's Delhi Times (I detest that paper, it's a tabloid disguising itself as a newspaper, but yes I still go through it at times) was full of stuff about the movie. Let this movie actually act as an awakening call to our government about the appalling conditions of our slums and of street children. There was an NGO that came to our campus recently. The person in charge spoke well, but ended up grossing us out bygiving us certain details which could have been avoided. When will the government awaken to this situation?