Recession – Causes and solution – Rajendra Pratap Gupta

India & Recession – Why & When

It is more than one and a half year that we have heard and read about recession , slowing economy, reduction in industrial output , high inflation , negative agricultural growth , voluntary cut in production , lay-offs , reduction in wages , shutting down of companies etc . Prime Minister and other ministers kept assuring that we are a decoupled economy with very ‘strong fundamentals’, and that India will not be affected. In the interim budget they did not give anything as ‘Stimulus’. Suddenly, when Standard and Poor down-graded our economy ratings to one level above ‘Junk status’. Overnight, the government announced a stimulus for the economy, and still keeps saying that, the economy will grow around 7 %. Personally, I am compelled to be optimistic, as I can’t afford to see my colleagues losing jobs, factories shutting down, people dying of hunger. A country with a billion populations fights a blame game. Government will finally put it on the global crises. But India was supposed to be a self reliant economy? Right? So are we saying we are beggars to the world and when the world goes belly up we will be reduced to what we are? Shame on the politicians who are liars of the highest order and distorting facts

There are five big questions that need answers from all of us and not just the government whom we have voted to power. These questions are related to the so called recession

1. Why it happened
2. Who failed us or who let us down
3. Where are we today
4. What is the solution
5. What we can do to prevent the same

Why it happened?

Congress ruled India for around 50 years .They gave us the infamous license raj, where it was difficult to produce without a license, available only to a select few. Outcome , politicians became rich , corporate houses became richer and the masses in India remained poor. When it came to voting, it was easy to ‘Influence’ and ‘Buy’ votes by offering ‘Daaru’ and ‘Sarees and cycles’. 70 % of the population lives in villages and they are the people who count when it comes to voting, and not people like you and me who read these blogs are merely 40 million in a population of over 1000 million?

In the 1990’s, our economy’s balance of payments situation became worse and Manmohan devaluated the currency twice and opened the economy to the foreign sector. After that, there was no looking back. Our immediate problem was solved but long term problems started. We started measuring our economic strength in the foreign exchange reserves in the country. These foreign investors also got into the stock market. Over the years, we got a very high Sensex- 21000. WOW!

As a result, Mukesh Ambani became the richest man in the world (albeit for a few days!!).

Just a few Indians who left the Indian shores for abroad and made it big ( V.S.Naipaul, Amartya Sen , Indira Nooyi , Arun Sarin etc..) or Arcelor , Tetley, Land Rover & Jaguar , or Corus acquisitions . These were merely aberrations. In India, where 16 % of the world populations reside, why do we not have 16 % of the top executives and 16 % of the top class firms in every sector? So these achievements were not a part of the Indian government’s plan or strategy. Clearly, these were a few aberrations and we arrogated them to India coming of an age. If you are asked about five top Indian names in the global corporate sector, you would find it difficult to reach the number. If you were asked to name five Indian fortune 500 companies, you would start looking at the wall. Is this what a land of billion minds should have produced? So we went wrong in our human resources management

We measured India with how many contracts Infosys or Wipro’s signed in Europe and India, how many call centers started serving US and European clients, and how many dollars got invested into India.

On the other hand , Ambani’s , Birla’s & Tata’s were looking at these ‘News’ and assuming that the entire India is growing fast . The reports that Indian government churns out is nothing but a bunch of information that government wants the public to know ,so that the government remains in the good books of the public and makes it win the elections and give it another term.

While Manmohan had opened the economy, he did nothing for farmers or small scale industries or BPL people. The result, we created a huge disparity in the income generation and spread. This was the sowing of seeds for a long term economic failure that our economy is facing today. Ideally, 25 out of the 100 richest people should have been from India, 100 of the fortune 500 companies should have been from India and 50 % of all patents should have been from India. Our billion plus population is for a mere statistics. Actually, our effective population is not more than 150 million. Rest is mere numbers or rather they have been just treated as numbers. I recall a definition of a politician ‘One who promises to protect rich from the poor and poor from the rich on the pretext of extracting money from the rich and votes from both’

Who failed us ?

Government did not fail alone. Media, in my belief, which is the teacher of modern society failed by selling its ethics and focusing on yellow journalism. Most of the top journalists are known to enjoy privileges and selling their conscience to others and write what their ‘Actual employers’ pay.

Judiciary: I read a day before yesterday a judge having said that, they should not equate to politicians & judges should not be asked to disclose their assets. SHAME ON YOU MR. Judge. Hopeless is a charitable word to describe judiciary in India . All the pillars of democracy have failed as judiciary is corrupt to an extent of over 90 %. Can you imagine the rot when a judge issued the summons to the President of India, Dr.A.P.J.Abdul Kalam? What worse can you imagine? If the president can be a victim of this inefficient judiciary what can a common man expect? If the judges have any shame they must quit en masse! You are a bunch of corrupt and inefficient people on the tax payer’s money and you don’t want to disclose your assets? Why the hell you want to keep them secret? Tell me a reasonable cause

Could you not try cases related to political corruption on priority things would have been different. But these greedy judges are not worth trusting for any worthwhile things for a suo moto action. They just keep passing judgments that gives them publicity.

No one trusts the government; everyone fears the judiciary and enforcement agencies. In all, the system has failed to deliver. I am not commenting the education and healthcare system as they don’t exists in the country

In all, I believe that our education system & more importantly teachers, media and judiciary have failed and delivered a fatal blow to our democracy

Teachers should be blamed for not being able to inculcate values amongst the students

Where are we?

A country is as strong as its citizens. When more than 80 % of the people are struggling to earn a two meals a day even after 61 years of Independence, have we gone the right way?

We are today in midst of two serious crises. One is the economic crises and the other is political crises.

Economic crisis can further be divided into two.

First, the one that has resulted into wrong economic policies blindly focused on FDI inflow and on making India a body shopping country. Also that, Indian government did not focus on developing the agriculture, infrastructure, SME, Retail & research based education. This had created a ‘Big economic divide’. Our politicians did not realise that the capacity building that could have resulted on building these sectors could have catapulted India to a different growth trajectory in the last two decades.

Second is the one that has been due to FDI, stock markets and the so called retail revolution. This was limited to about 35 towns directly and indirectly this gave employment to a lot of rural migrants. Knowing well that, most of agricultural families also depend on the members that work in towns and send money back home. These people have been affected due to reality and retail sector that is slowing down. All these are having a cascading effect.

Most important : Every one , right from the Reserve Bank governor to PM says that the worst is yet to come but they don’t tell what is the worst and when it will come and what is the solution ? It is like an astrologer telling you that you will die. Everyone dies one day , so what big a deal to tell that ? One should be able to tell when and how will you die .

I believe that , We are actually nearing the mid of recession cycle, and we will come of it in another year and a half.

Political crises: For more than 50 years, our country has been ruled by Gandhi family – A family of Kashmiri Pandits. This is enough to understand their commitment.

Who took the Kashmir issue to UN? Jawaharlal Lal Nehru, and we blame Pakistan for internationalizing the issue? Learn history

Congress lead by Gandhi’s has created a vicious cycle. Even today, Sonia Gandhi is the Chairperson of UPA, constitutionally authorized to oversee the implementation of CMP. Why these dual centers of power? Ideally, the Prime Minister’s role should not have been decimated. Why in the first place this extra authority created? Gandhi’s love for power is not hidden and they will keep away anyone who comes in their way. Gandhi’s have never allowed anyone to be number one in the party or politics. Whether it was Sharad Pawar or anyone else. No matter what. Also, that they have paid the price for this? What the Gandhi family is doing is against the law of nature. Power is like sand being held in the fist. The more you tighten the fist, more the sand will flow out. I would not be shocked if the family suffers a few adversaries in the times to come. They have always paid the price for their misconduct and the country had paid more …………………..Till the country gets rid of this family in politics, nothing can change.

Also, every Indian citizen has failed by not being active in politics and just making politics a tea table and road side discussion item. It is such a serious issue and has been treated casually by the Indian population.

What is the solution?

Complex problems have simple solutions – Read my earlier blog – An open letter to the PM.

Economic crisis has a political solution and political crises have an Economic solution.

First thing that needs to be done is to cut interest and lending rates in one shot and not in installments. I have been telling our PM since last year that we don’t need ‘Baby steps’, we need firm and drastic measures

Secondly, we must announce massive investments in infrastructure, Education & Research and IT (Government should set at least 100,000 IT kiosks as Government’s touch points for public access). The work should be given to IT companies of small and medium scale to retain the young IT talent.

FDI In retail should be discouraged and stopped immediately. We need an Indian version of FDI – Finance from domestic institutions.

Agriculture should be given a big push with incentives for organic farming & cash crops. According to NSS (National sample survey), even if one works for a day in a field, he is a farmer!! Which inflates the number of farmers in the country?

Five sectors can relieve India of its miseries; Infrastructure, Agriculture, Education, Retail & IT. Fortunately, we are at a nascent stage in every major sector . Be it agriculture , SME, Retail , IT , Automobiles, industrial growth , urbanization etc . In the US , the problems are of plenty , saturation & wastage . We are just at the reverse . Whilst US might find it difficult to protect and grow , we can log on to a massive growth with the right initiatives . Infact, India and US are at the two extreme ends of the growth cycle. All sectors in India have a potential for phenomenal growth. The 800 million Indians have to be made earning class and a spending class, and this one thing will take India to a 10 % + growth for the next twenty five years . We have a long way to go . Right governance can help us . NREGA Is not the right solution for a long term growth

Where will money come from?

What do you do when your family gets into financial problems? You sell a part of your assets for temporary relief and buy them back or buy better things in the good times or when the financial condition improves

India needs to re-look at the ‘Navratnas’ and dilute the equity and follow a moderate privatization drive to raise money to invest in the five sectors mentioned above. This is the way India can come out of the recession faster and build an economy with 8-10 % GDP growth every year or more.

India’s parallel economy is much bigger than the economy of taxes ( Black money economy is for sure a lot bigger than our 1000 Bn USD economy ). This money needs to be brought back and invested . I am not at all mentioning the money hoarded in Swiss banks and other heavens. All this can solve India’s problems today evening. This is a must , if we want to build an economy based on solid Economic and social foundation.

Lay-offs are one part of the problem what about the fresher’s who are struggling for jobs. We need to create more job opportunities. No one seems to be addressing the issue knowing well that, we will have more 10 crore people who will get hunting for jobs in the next 5 -10 years

Defence spending should be cut and the same be invested in infrastructure. The defence strategy should be re-looked and reworked

All tenders for house-keeping, parking stands, vendors in public places and railways etc………should be reserved for both educated and uneducated youth irrespective of caste but on financial background

We must have guidelines where we build economy on 40 % services, 50 % manufacturing and 10 % on global trade. We must never exceed exports more than 10 % of our GDP

Need driven services never go slow or out of business? Indian economy must be ‘inward looking’ and should be build on essential services and these should not be imported. All the national demand should be met by domestic producers. Need driven sectors like agriculture , FMCG, Healthcare ,textiles , processed food , Education , Oil and natural gas should be country centric and needs more thrust for explosive growth .

Any tender worth 500 Crores or more should not be allotted to bidders who have a manufacturing outside India. This will increase capacity building within the country

Seeing that it is recession time, the EMI of housing and vehicle loans for people who have lost jobs should be adjusted for at least two years. If the loans of 65000 crore can be waived for an income class that does not pay income tax (farmers). Why not give a moratorium on payments for the income class that pays tax. The two years EMI that are deferred for payments should have the interest based on the PLR or at reduced rates.

Every Indian needs to spend 10 minutes a day for politics and community work – An hour a week. Go start a neighborhood-nation building programme to ensure good governance. Rest I will add in my next blog

There are three sources of growth for an economy, increase in capital, and increase in labour force, and improvement in productivity. We will have to address all three

There is a difference in Economic growth and economic development. Economic growth is purely GDP but economic development is a broader concept that includes not just GDP but also indicators like social justice , income distribution, political freedom, pollution , Equality of income …………GDP captures average national income , but do not reflect how that income is spent.. Even increase in aids and cancer incidences in the country will add to the GDP expenditure on health services , Also, calamity will lead to the increase in GDP due to increase in reconstruction activities.

Moreover, GDP growth rate is inadequate measure of growth as it is calculated largely on the basis of rate of growth of income of the upper 20-30 % of the population who receive disproportionately large share of income. It calculates only money transactions and leaves many important activities and social measures and conditions like adult literacy rate, life expectancy and HDI rank

We must change our economic measurement methods from Economic growth to economic development

India needs to re-look into the growth measurement model. We have a solution for economic crises. We need to act fast and grow faster. Rest in my next blog

Good luck

Rajendra Pratap Gupta
President
Country First
Mobile:
India + 91 9323109456
Email: President@countryfirst.org / mail@rajendragupta.org
http://www.countryfirst.org
http://www.linkedin.com/in/rajendragupta

Third World War is on- Rajendra Pratap Gupta

Actual GDP growth around 4 % ? – Rajendra Pratap Gupta

According to the Ministry of Commerce & Industry provisional data released on 6th March 09.

Core growth shrinks to 1.4 % in Jan 09.

The growth of six infrastructure industries – crude , oil , refinery products, coal , power , cement and finished steel –slumped to 1.4 %. Reflecting India’s decline in consumption and getting deeper into recession. Sector had grown at 3.6 % last year. According to the provisional data released , the crude production & petroleum refinery output slipped into a negative growth in January, recording a fall of 8.1 % and 2.6 %.

Agriculture has already moved to negative growth at -2.2 %

Bad loans jumped by 60 % in the third quarter of 2009 for CANARA Bank . Almost similar is the case with other banks .

Had the sixth pay commission recommendations not been implemented , the growth would have been much lower than 5.3%. Growth would have been lower than 4.3 % for Q3 2008

With the rising unemployment as time passes, we are headed towards creating more NPA’s in the financial sectors. With banks becoming more risk averse , their profitability will suffer, as they wound not make money in lending , and give away interest on deposits and lose on increasing NPA’s via defaults .

Chinese economy is slowing down, and it will affect Indian economy in two ways. One , the exports to China will slow down . Second, the Chinese will dump the goods in India with the closing of Chinese factories

If you thought that the Third world war would be fought with weapons , you were fooling yourself. We are in midst of the third world war . Every part of the world is fighting . But as it would have been , the very definition has changed , we are all resorting to protectionism- Financial world war- This is nothing but the third world war in its new avatar.

We are headed towards a major crisis . Time to act fast ………..

Rajendra Pratap Gupta

E-mail : rajendra.india@gmail.com

An appeal to teachers – Rajendra Pratap Gupta

Dear Teachers,

Most of you are busy conducting exams . After this , you will get busy evaluating answer scripts. Here is what i need to appeal to you. As most of you will remain untouched from these hard economic times , as you belong to government run schools and colleges. But your students have a multiple problems, that i must apprise you. Most of your students are depressed with poor job prospects after education or their long term future prospects , Besides , they are also facing problems in case their family member has been fired from the job recently or has taken a pay cut or the family business is passing through trying times .

Appeal to you all is , that please be liberal in evaluating the answer scripts unless the answers have no relevance . Please do not add more to students problems . Try and boost their morale .

Hope this appeal does not fall on deaf ears

Thanks for your kind consideration.

mail@rajendragupta.org

Rajendra Pratap Gupta
Mobile:
India + 91 9323109456

Youth and Women hold the key to success in 2009 Elections- Rajendra Pratap Gupta

Youth, Women, Minorities and Regional parties hold the key to success.

In the last twenty five years, the electoral dynamics has changed. It is easier to understand and a challenge to manage. One who can manage will form the government at the center.

Let’s have a look:

According to 2009 electoral rolls, women are in majority in six states Andhra Pradesh, Kerala, Manipur, Meghalaya, Mizoram, and Poducherry.

• Andhra has 2.86 crore women compared to 2.80 crore men

• Kerala has 1.11 crore women compared to 1.03 crore men

• Manipur has 8.97 lac women compared to8.29 lac men

• Poducherry has 3.91 Lac women compared to 3.63 lac men

• Tamilnadu , Daman , Diu had more registered women than men

Also we must carefully understand the implications of these statistics :

• 49.1 % was the percentage of votes that congress got in 1984 elections, in which it won 404 seats.
• 48.7 % was the percentage of both the congress and BJP combined in 2004 elections.
• 477 is the number of seats that six national parties got in the 10th Lok Sabha elections in 1991
• 51 is the number of seats that state and regional parties got in 1991 . In 2004, they got 154 seats.
• BSP increased the number of seats from 5 to 14 in 1998-2004, increasing its percentage vote from 4.63 to 5.33%
• SP increased its seats from 20-36 from 1998-2004 & decreased its percentage vote from 4.93 to 4.32
• RJD increased its seats from 20-24 between 1998-2004 and the percentage vote decreased from 4.93 % to 2.41 %
• DMK increased its seats from 6 to 16 between 1998 till 2004. And the percentage vote increased from 1.44 o 1.81 %
• BJP had a 1.6 % vote loss costing the party as many as 44 seats in 2004
• In the last election Congress got about 26 % seats and BJP got about 22.16 % votes
• Muslim form more than 30 % of the electorate in 42 of the 543 seats
• In 1998 Lok Sabha polls only 7 % of the muslims voted the BSP and 61 % for SP. But in 2007 assembly polls , 32 percent voted for the BSP and 40 % for SP.

Youth :

• There are 34.8 crore youth in the age group of 15-34 years .
• Of these, about 10 crore are in the 15-19 years of age . Of these , 7 crore are rural and 3 crore are urban .
• Of the urban youth , more than one crore are living in large cosmopolitan towns and the more than one crore are living in small towns less than one lakh.
• Of the 3 crore urban youths , only 1.3 crore youths have completed their matriculation or higher secondary .
• Another 24.8 Crore youth are in the economically active age group of 20-34 years.
• Amongst these 7.6 crore are in urban areas , more than a third of them in small towns of less than one lakh.
• Only 3.6 crore of the 7.6 crore have studied till matriculation or above.
• And there are only 1.3 crore graduates . If we count total number of young graduates ( Urban & Rural ). It will add up to 2 crore.

If the party can understand the evolving electoral dynamics & worsening economic scenario coupled with elections just 45 days ahead & has a carefully evolved high noise level strategy. Victory is a foregone conclusion

Rajendra Pratap Gupta
Email: rajendra.india@gmail.com
mail@rajendragupta.org
Mob: +91-9323109456

Difficulty viewing the blogs ?- Rajendra Pratap Gupta

Some of the tables get jumbled . Please check the following link to see it correctly –

http://rajendrasays.blogspot.com/

A must read for all

Rajendra Pratap Gupta
Mobile:
India + 91 9323109456
India + 91 9867300045
USA + 515-450-6165
UAE + 971-553121829
Email: mail@rajendragupta.org
rajendra .india@gmail.com
http://www.linkedin.com/in/rajendragupta

Kamalnath Says, Worst for the Economy is over !- Is he in senses ?? Rajendra Pratap Gupta

Worst for the economy is over – Senior Congress Minister – Fooling Indians to vote ???

On 28th December 2008, I had written on this blog, that the GDP growth will be less than 6 % , I had also given the reasons as to why it would fall below 6 % for sure, when the government was firm that GDP growth would be 7.1 %. The fact is out now , and we our GDP has grown as low as 5.3 % in the Q3, 2008.

We will have lacs of suicides from job losers ! Earlier it was the farmers , now it will corporate people and workers who will commit suicides or commit crimes or suffer a nervous break-down. Why are we sleeping now . We just have 45 days – Please check the congress score card on my blog , They are a bunch of inefficient & dishonest people ! Can we entrust them our nation ?

As per the latest data ,

• India had an external debt of $221.3 Bn at the end of June 2008, 20 % of it is the short term debt, this will be hurt badly due to weak rupee .
• NRI deposits declined by as much as 1.1 Bn USD at the end of June 2008 compared to end – March 08 level.
• India’s foreign exchange reserves declined by 62.35 Billion dollars to 249.53 Bn USD as on Feb 20, 2008 from 311.88 Billion as on April 4, 2008.
• Agriculture is reporting negative growth at -2.2 % in Q3 , 2008,
• Exports have plummeted and people in export oriented companies are being fired every minute
• Industrial production is at a record low
• Fiscal deficit is highest since independence
• Sensex is at a record low in the last 40 months , Investors have lost more than 2/3rd of their investments
• Real estate sector is facing worst crisis ever
• GDP fell to 5.3 % in Q3 , 2008
• Rupee is weakest at about Rs.52 to a dollar
• Tax collections and revenue earners for government are dipping every day due to the above mentioned factors

Is what we call an economy of strong fundamentals ? When US , Europe and Japan sank into recession, immediately our growth story withered away, and we had been fooled to believe that India had strong fundamentals and we will not be affected . Is this not severe recession ?

At the top of all this , our learned writer of the book ‘India’s Century’ & also our Union trade and commerce Minister , Kamalnath had said just 3 days ago, that the ‘Worst time for the economy is over’. And just three days after the rupee is about 52 to the dollar and the sensex is on its 40 months low !! How clueless is our Union Minister ? Do we give such people to run our trade and commerce for the next five years ? If his words cannot last even a week , how come he writes a book on India’s century ?

We are into an unprecedented crisis , if we let congress win , I am sure that some of us will not even survive to vote !!

Rajendra Pratap Gupta
President
Country First
Email: rajendra.india@gmail.com
President@countryfirst.org
Mob: +91-9323109456

Indian Government is clueless about the Economic Crisis – Rajendra Pratap Gupta

India is clueless about how to resolve the current economic crisis?
For over a year, the world has been sliding into the grip of recession. First it was America, then Europe and now Japan. It was naive of our Harvard and Oxford educated FM & PM to keep denying that India would not be affected from the crisis. They kept shouting that India was fundamentally strong and that the crisis would not impact the Indian economy. Even after issuing a ‘Token Bailout’ package the Congress government believed India was better compared to the rest of the crisis affected economies. But of late, congress has accepted the fact that 2009 would be worse.
The height of irresponsibility and lack of knowledge is evident from the fact that Indian Government also did what America was doing i.e. issue a bailout package. India should have acted differently. But why apply brains? Just copy what USA is doing – copying others is the biggest folly of our selfish and mindless politicians !! Way back in August 2008, i wrote for Financial Express supplement – SME World about the impending crisis. This article got published in November 08 issue of the magazine (download the original article from http://www.rajendra.collectivex.com ). But the contents were very much available on my blogs much earlier. I had clearly mentioned that the crisis in India started much earlier and the government was a silent spectator. It did nothing to correct it. Now it is acting posthumously. The moment banks started hiring recovery agents , the crisis has started. After all , banks don’t hire recovery agent for small NPA’s.
I see quite a few reasons for this illogical and irresponsible bailout step. Why should bailout be avoided and what did the current government to the economy. Listing a few view points
• Indian government and our foreign educated PM & FM are totally clueless about the crisis , so leave alone management of the crisis
• They quickly hired foreign experts in their advisory council. Irony is that these foreign experts have rarely stayed in India and know little about the realities on the ground. Adding to this , they had the so called Knowledge commission , P.M’s advisory council, Economic advisory council and many such sinecure posts to keep the sycophants and power hungry corrupt people on benches on our tax payers money
• Political compulsions & uncertainty keep the government & the public guessing for the future moves and the markets will never gather momentum
• Real issues have not been addressed so far, and i don’t see any signs of revival in the economy with such an irrelevant approach to this crisis which will worsen with time passing
Now let’s examine what the government is doing:
• Pumping more liquidity in the banking system
• Decreasing interest rates
• Announcing sops for exporters
• Announcing increase in NREGA scheme
• Making tall statements of strong fundamentals etc…..
Now let’s see what each of the above mentioned steps would lead to:
• Putting more liquidity in the system. But Indian financial system was never cash strapped, Banks were growing very well. We have enough of money available! Now, the bank and financial institutions are becoming risk averse. Who trusts these crooked politicians? If the banks dole out loans and they turn out to be NPA’s. Manmohan and PC Would be gone by then , and the poor branch manager or the M.D. of the bank will become the scapegoat. So in as much as these measures are announced with much fanfare, the implementation is poor. No one is trusting each other. It is a ‘crisis of lack of trust and transparency in our System’. PM can increase liquidity by repo rate cut, but he cannot force the local branch manager of State Bank of India to start lending tomorrow from 9.30 AM till 5.30 P.M. Imagine, even if this was a reality. Would you and i take this loan? For what & Why? We are concerned about the uncertainty of income and job. Liquidity in the system is not the remedy, right? So clearly, government is not taking the right step as it does not know or acknowledge the problem in reality. Today, even corporates like TATA are finding it difficult to raise money. Let’s see why? TATA’s went overboard, and brought big businesses abroad for billions of dollars, and mostly, in all cash deals!! Wrong strategy? When they brought these companies, the stock markets were racing around 20000. Their stocks were really valuable. Had they done a cash and stock deal for all its acquisitions, they would have been better off even when the markets tanked. Now for the price they brought Land Rover and Jaguar, they could have bargained to buy the entire company!!! Any ways, the companies that owned these brands are fast becoming history or getting bailouts and kind of getting nationalised or filing for bankruptcy. Same is the case with Arcelor Mittal. What a deal it was. Now the question is, was it structured in the right manner?? Wait for another quarter, Iconic Ambani’s are likely to tell a similar story. Indian systemic corruption has created mammoth business houses, and the future of this natural imbalance is a foregone conclusion. It was just a coincidence that Satyam got caught. No big corporate can exist without political patronage, and this political patronage comes at a price in cash and with moral flexibility . Satyam is just the tip of the Iceberg. Each and every corporate has shady spots somewhere or the other. Difference is that they have not been caught like Satyam.
• Lowering interest rates: Still the loan port folio of financial institutions is not increasing. Reason , people believe that companies due to drop in sales going forward, and increasing inventory pile up, will dole out better discounts and so are deferring the buying decisions, till the prices drop further. The recession has taught people that, cash in hand is better than ‘Notional money’ in real estate etc…. People are pretty sure that times ahead will not be easy. Assume for a while that, even if the corporates go for taking a loan and increasing the production. Who will bring the buyers? People are in no mood for discretionary spending. All in all, lowering interest rates is also not working in isolation. The problem is totally different and not getting addressed here at all. In today’s tour economy is akin to cycling, either we are peddling or we will fall!
• Announcing Sops for exporters: Suppose, i am an exporter and i am exporting to USA, Europe and Russia. My order books have dried up as the economy is headed for trouble in these countries. Will Sops help me bring orders? Is this not an eye wash for the public? Sops will only work when orders start pouring in. This is again a misfired weapon.
• Announcing increase of funds for NREGA (National rural employment guarantee Scheme) Schemes: This scheme was already in place. We have never been able to quantify the positive impact of this scheme on poverty alleviation. Albeit , our politicians have become richer ! We all know the fake musters made and the amount eaten by the babu’s and ministers. What poor need is not money, but training to earn money consistently. It is like if you feed fish to poor; you can feed him fish a few times, better teaching him how to fish and he can earn for himself every day. How long will NREGA spend our hard earned money on feeding people? This is a misguided and misplaced scheme. What we need is a NYVTS – National Youth Vocational Training Scheme & NRSS – National Re-Skilling scheme – to re-skill and retrain people in better earning vocations and not NREGA. We must create – SEZ’s – Skilled Entrepreneur Zone in every tehsil / district to empower the rural –real India. Still 68 % of the population lives outside urban India. Mind you, urban poor are worse off than rural poor. What schemes are meant for them?

Solution to the Crisis:
Essence of this is that printing & pushing ‘Notional money’ in the system is not the solution. It is an illusionary step. Creation of money by the hands of people is the right solution. How will that happen? I believe that government (Even the US Govt.) should not have resorted to bailouts. If Lehrman Brothers collapsed, it collapsed. So what? Let all the financial institutions and auto majors be left to meet within themselves and come out with a solution. They could have formed a practical consortium to deal with the problem, shared resources and planned a better crisis management. Now each of these corporates will get a bailout package, they will go out on the rampage with cut throat Competition and crisis will aggravate, a few of the bailed out companies will eventually cease to exit. We are just giving a palliative care through bailouts. Competition and collaboration are two ways to save the economy. We need collaboration now. Today the government is patronizing inefficiency and paying the price for poor regulation as bailouts and it will cost it dearly.
Even after the bailout, i fail to understand, how 16 or 25 billion dollars will save General Motors? About a year back , GM had about 30 billion dollar as cash and it was burning billions of dollars every month and finally they fell on the knees.People are not going to buy a Chevy due to the fact that the GM motors has a government bailout plan and package! History was a witness to Enron collapse, World Comm collapse, and IT Sector bust after the boom. Well that’s in a business cycle. All that goes up comes down. If the government wanted to do well. It could definitely take some practical steps like.
• Put a moratorium on corporate , housing and other loan EMI’s for the next 3 years or part payment instead of full EMI’s for the next 2-3 years a nominal interest be added, so that even banks do not suffer loss. But public should be relieved of the burden of payments substantially and immediately
• Automobile industry should be happy as the crude oil is cheaper. What the government could do is to step in and make the cab drivers replace taxi’s older than 10 years by a bank loan for 10 years duration at reduced interest rates like 7.5 % for any duration i.e. fixed rate of interest for the entire term of the loan . The duties and other taxes should be cut by 50 % for all the taxi’s that are older than 10 years, by 75 % for vehicles that are more than 5 years to less than 10 year old. Would this not boost both the auto industry and the banks? Also, this would increase collection of the government as road tax. Which could be reduced by a good 50 % for all purchases made in the next three years? It would boost a whole lot of industries associated with Auto , fuel, Iron and steel , rubber , etc …….Make the small car ‘Nano’ and the ‘electric car & scooters’ totally duty free . Any ways, the government collections are down. At least, here it will not lose anything, but only gain as whatever taxes it can collect directly. But indirect collection of taxes will get a boost as a host of activities will increase with this push. It will lead to substantial increase in employment
• Business and Real estate : Service tax on rental be abolished , Increase the tax slab for interest payments to Rs.2 lacs, issue home loans at fixed rate of interest from 7 % till 8.5 % for any amount of time . Appoint immediately a Housing regulator to check inflated real estate cost and check the cartelization to keep the prices low. One thing that government can do is that, all buildings under construction and not sold, in those buildings, 70% of the units can be sold and remaining 30 % have to be rented only. Government must construct flats & shops for poor and low income groups for rental occupancy only. This will not only boost the demand but also keep the real estate prices low. The stamp duty and other government charges should be reduced by about 50 %. Any ways, government is not making any money due to poor or nil demand in real estate sector. 50 % taxes would be good enough at this point in time. Even the biggest real estate company by market cap, DLF has reduced the prices of their projects due to poor sales and their prices have dropped by a good 32 % in one of the Bangalore projects. Most of the real estate co’s are abandoning the projects.
• Alternative Energy: Wind power and solar power is to be immediately pursued in every house hold, town & district. This can be financed by banks and will lead to a cleaner and greener countryside and improve the economy and generation of power for households and communities
• SME: this sector is contributing to just 39 % of the manufacturing output. In developed economies, this sector contributes about 90 % of the manufacturing output. Government needs to push this sector into growth mode by setting up nodal growth centres for SME’s manned by professionals from the corporate world. Setting up incubation centres in major national & regional institutes for providing technical support and professional guidance. For detail steps , read the article that i have recently written for The Financial Times supplement – SME World
• Transport & Logistics: Approx 90 % of all the commercial vehicles sold in India is via loans. According to Deepak Sachdeva , President of the Delhi Goods Transport association , between April and December alone, close to 158000 commercial vehicles were repossessed or either surrendered due to loan defaults. This impacts the employment of drivers, helpers and host of other people who run the road side businesses dependent on the truck movements. We need to incentivise these set of people and relieve them from the loan burden with moratorium on EMI payments. Reduce tax on road permits , remove penalty for late payments of EMI for up to 2 years . Octoroi tax must be abolished immediately.
• Agriculture: The government needs to push this sector with more reforms and technical innovations considering that more than 80 % of the farms are of small size holdings less than five acres. We need to bring a sigh of relief to these farmers by host of measures
These are just a few of the steps that government can start with. Rest later

Rajendra Pratap Gupta
President
Country First
Mobile:
India + 91 9323109456
India + 91 9867300045
USA + 515-450-6165
UAE + 971-553121829
Email: president@countryfirst.org
rajendra .india@gmail.com
http://www.linkedin.com/in/rajendragupta

FDI in Retail

Dated : February 16th, 2009

Dr.Murli Manohar Joshi
Chairman
Parliamentary Committee on Commerce
New Delhi

Ref : Foreign Direct Investment in Retail Sector

Dear Dr.Joshi,

I wish to draw your attention to the following for a postive consideration and further recommendations.

There has been a lot of debate about the opening of the retail sector for foreign direct investment

My view is , that the retail sector in India is a major employer and is the key to India’s youth employment and empowerment . It today comprises of about 12 million establishments . Adding to this, there are atleast 2 helpers at a retail outlet. Further , indirect employment is provided to at least 6 people

With such a massive employment potential . We must consider the following before we talk of FDI in retail sector

1. Why should foreign brands take away India’s earnings ? Land is ours, employees are ours, spending is ours , raw material is ours. Then why do we allow foreign co’s take away our earnings by just putting their brand names ?

2. It is a known fact that, most of the reputed brands all across the wordl manufacture their products in India sub continent and sell across the World . The products are of highest international quality and well accepted . Why do we not sell locally and serve the local economy as well

3. It is well known that this big foreign MNC’s change the rules of the game by increasing rentals , salaries and lowering prices or even increasing them . Thereby , making it difficult for the localites to operate . We cannot regulate all this , but for sure , we can check the entry of these MNC gaints

4. What the retailers in India need is a different version of FDI – Finance from Domestic Institutions . If we get finance from domestic finance intitutions , we will be more competitive and we can grow profitably and grow even internationally . Indian products are already sold in differne parts of the world

5. I also suggest you to consider and recomend that retail be given an ‘industry status’ and there should be a separate ministry for retail and vocational training . That also takes care of re-skilling of the talent . We have a sever skill gap that needs to be immediately addressed

Hope that your good selves will consider my suggestions and incorporate with your recommendations

Looking forward to hear from you

Thanks again with high regards

Rajendra Pratap Gupta
President
Mobile : +91 9323109456
+91 9867300045
Email: president@countryfirst.org / mail@rajendragupta.org

Address to the Journalists who covered the Mumbai Terror Strike on Nov 26,2008

This is the text of the speech delivered to over 100 Journalists who were Felicitated recently at a function organized on Feb 2nd 2009 at Mumbai.
Good Evening Friends,

We all are glad to have ‘brave hearts’ with us today and we feel proud of you. In fact, on 26th November, i was awaiting to board the flight at the New Jersey airport for Mumbai when i got a call from my friend with whom i had the lunch that afternoon. He sounded worried and said, Rajendra, my God, did you see what is happening in Mumbai? I asked him? What do you mean Nailesh? He said terrorist have taken over Taj and Hilton hotels and a police Commissioner has been shot dead. It sent shudders down my spine. I had heard about Akshardham temple but now, it was my very own Mumbai .I walked to the nearest TV screen at the airport. I was shocked. I could watch all this thousands of miles away as you all staked your lives and kept sending the live footage. This held the nation captive for three days to the television sets. After the freedom movement, this was the first time that united the communities and the nation.
Press has always played an important role in nation building and society.
How many of you know how the democratic movement started? It was with the Introduction of printing press in mid 15th century in Europe, the proliferation of printed information helped fuel the rise of democracy. So my journalist friends, when you started the democratic movement, you will also have to safeguard the same.
After this November 26 terror strike, a lot many politicians have lost their jobs and so a debate has started on whether press should have shown everything live. I strongly believe that, since the press was showing it live, and that the whole nation was watching it, those who were fighting the battle with terrorists performed to their very best. Else, we could have lost many more lives. You all in fact, pushed the forces for their best performance . Freedom of press should not be compromised .I would go to the extent of requesting to the government to even make the sting operations legal and give immunity to the press for bringing such issues to the public . Most of the development and progress that you see in India today, is due to two reasons ; first, cheap telecommunications and second, proliferation of the Media. Media has opened the eyes and ears of the common man.
Now coming to the root cause of terrorism: Remember that each of the terrorist had 400 USD. Intelligence agencies took weeks to figure out why only 400 USD was in each pocket. This is exactly the amount you require to pay to enter your boat or jetty into the Indian waters. Our national security is priced at USD 400 ? If we stand at the Vashi check post , the price is down to 500 rupees. You can get your truck into Mumbai by just slipping a Rs.500 note at the check post
“Unemployment, uncertainty & frustration amongst the youth coupled with corruption in the government and administrative inefficiency is the root cause of terrorism and you just cannot fight it with sophisticated weapons alone” .
Terrorism survives and thrives on political and systemic corruption and inefficiency .
Remember,
When trust fails, people resort to justice
When justice fails, people resort to power
When power fails, people resort to violence
India has already slipped into an economic recession .Thousands are becoming jobless every week. This will increase criminalization and health problems.
How can we help fight terrorism? We must have a nationwide ‘Neighbourhood program’. Where every 50 or 100 people in a locality form groups and spend 4 hours a week for community work. This way, we will be able to watch and ward out suspicious people and help build closer ties within the community and will be more active to serve the community and the nation better
Why did Country First decide to honour our Brave hearted journalists? Today we only recognise the contribution when someone dies, but rarely during their lifetime. You all could have been hit by hundreds of bullets getting fired. But you decided to stay there , track this terrorist strike at the cost of your lives. Police had weapons, all you had is just a camera & the conviction and courage to stand there without caring for yourself in the interest of this nation – that is Country First ! Some of you had a near death experience .We must recognise your contribution. So we are here today
Hat’s off to you !
Jai Hind!
Rajendra Pratap Gupta
President
Country First
Email : President@countryfirst.org / mail@rajendragupta.org
Mobile :+91 9323109456 / 9867300045

Satyam Saga- Many heads may tumble. Raju’s life might be in danger

Rajendra Pratap Gupta

The satyam saga is not as simple as people believe . My personal view is, that it happened due to the political comfort Raju enjoyed with all the powers that are at play. More specifically , all the A.P. Governments be it of CBN or YSR..

I am sure that, this dirty trail will pull out many political skeletons. And if this is bound to happen, Raju’s life might be in danger . No A.P. politician would like to be named when elections are just a few weeks away. I fear that Raju might be eliminated in the name of a heart attack

The center must interrogate , investigate and keep the custody of Raju out of Andhra . But as we know, that our courageous politicians , corrupt agencies working under political influence and control, inefficient judiciary and biased press will not let the truth be out for the common man. That is what is called the CMP – Common Minimum Programme !!

Government has given mobilizing advance to Maytas infra. What steps have been taken to build safeguards for the two thousand Crores given as mobilising advance ? It is well understood that government has a cut in every such deal. Rajiv Gandhi once said that, out of every rupee meant for poor , 15 paisa reaches the poor. In ( political – business ) deals , poor are our politicians and they demand much more than 15 paisa out of every rupee in the name of the party and themselves – They have no shame – Remember Bangaru Laxman ?. How come suddenly a news paper cartoonist like Bal Thackeray and his entire clan run deals worth hundreds of Crores !! A poor man when becomes a saviour of the poor ( read politician ) suddenly becomes rich ?? I recall a quote- A Politician is one, who extracts votes and money from the rich and poor on the pretext of protecting each from the other !!

A few days back, I was talking to one of my friends who has access to the powers at the center. I was shocked to learn , that planning commission does not issue money to the states till there is a guarantee for the portion of the money being returned for fighting elections. If the grapevine is to be believed , this amount per state runs into thousand crore plus !!! That’s why when you complain about corruption , no one listens, as all the powers are deeply involved into it either at the front end or at the backend . Corruption is the politician’s only religion . Corruption is a trickling down process and is like rain water . It comes from the top and not the other way round !

While a lot of people are looking at bringing about a change in the governance of the nation . But trust me , it will not happen soon. Reason is, that there are only less than 5 percent of people who read and get frustrated about the current state of affairs ; unfortunately, they don’t even vote . So frustration alone will not change this system.. Rest 95 percent are victims and partners by force to such an ‘illegal democratic System’. The corruption is “institutionalised business” to such an extent that you and i cannot imagine as honest individuals . A Member of parliament. has to pay for becoming an M.P. then he has to collect the same money ( with returns ) from business houses, IAS & IPS officers in the name of getting things done !! A low level clerk or the hawaldaar / constable has to be pay for his posting and lucrative transfer . At the end , i and you have to pay for all this as bribe. This is my definition of the current democracy – a totally manipulated system by the politicians , for the influential at the cost of the common man.

Those of us who think that we can change it by mere lighting a candle or filing an PIL. Just go and check how many election commissioners , retired judges that have given favourable judgements are in plum postings post retirement ? why did Chief Election Commissioner T.N.Sesan not become a Union minister and Mr.Gill become a union minister ? Why do IPS officers , Judges become governors of states after retirement ? Many such cases exists. Just peep into the past. You might have all answers. Why does the CBI need a permission from the government for prosecuting the officers or M.P.’s ? Simply to delay and bid time . Anyways, an average Indian is so lost in daily chores that he/she doesn’t have time to get ‘involved’ in ‘such issues’ . Votes that the ‘intellectuals’ like us give does not exceed 3 % .Mostly, we don’t even go to vote. Majority of the people who vote for these corrupt politicians decide not on the basis of good governance, but whether his wives get a saree and the family gets a sumptuous meal a few days till the voting day. These are the 600 million innocent and exploited people who for almost next five years after elections will go to bed empty stomach every day. They cannot practice our principles ! And the politicians don’t wish them to prosper . If these 600 million people prosper and come out of poverty, corrupt people like Lalu Yadav, Shibo Soren, Mulayam Singh , Amar Singh, Sharad Pawar and many more would not be rubbing shoulders with Sonia or Manmohan or dreaming to be union ministers !! We all know why Ashwariya got the Padmshri award ? Simply because Amar and his gang have bailed out the congress ? Rahul Gandhi and Sonia Gandhi talk about democracy in the nation . If Rahul was not Gandhi would he become the Gen.Secy of the congress so soon ? When the party itself is against democracy and decides the top posts based on sycophancy , favouritism and dictatorship how can it guarantee democracy to the nation ? Why are we getting fooled. I would go to an extent of writing that Manmohan would have been forced for the cardiac surgery . So that if by chance , Congress comes to power. On health grounds , Manmohan can be retired and Rahul can step in to lead the nation to disaster ! Anyways, the Gandhi dynasty has ruled the nation for 90 % of the time since Independence . Earlier , they can be credited with ‘license raj’ and now ‘quota raj’ . Both the steps led them to manipulate and come to power but weakened he nation and divided it . We have gone backward than becoming developed . Elections have never been fought for good governance . It has been fought to stay in power. The priorities are misplaced totally. Last five years into power they had all to develop an indigenous growth model for India . But they went on to build a dollar based economy and gave us recession to live with . What a colossal failure for Sonia , Manmohan and PC !!

Don’t expect the system to change soon . A new cult has to come up from the youth , specially women who will have to lead another mass movement to make it happen. And it cannot happen if you read this and still decide to sit back and go into thinking mode.

We must get up to action .

Rajendra Pratap Gupta
President
Countryfirst
Email: mail@rajendragupta.org
rajendra.india@gmail.com

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this: