Kill bureaucracy to convert Red tape toRed Carpet
On May 28th, I wrote the article in the ET; ‘Bureaucrat Mukt Bharat (http://blogs.economictimes.indiatimes.com/et-commentary/steel-frame-of-bureaucracy-is-an-obstacle-to-development-its-time-to-rehaul-it/).
On Independence day, we heard the Hon’ble PM saying that his Government’s motto is to reform, perform and transform. Also, on 01st September, Carnegie Endowment for International Peace wrote, “India’s economy has grown rapidly in recent years, but the country’s bureaucratic quality is widely perceived to be either stagnant or in decline”. A former PM had once said about the Indian Civil Service (ICS) , the earlier avatar of IAS; “as neither Indian, nor civil, nor a service.”
I think it is time to re-look at overhauling the bureaucracy, if we wish to realize the vision of Modi’s idea of India
We need speed, we need efficiency and we need effectiveness in our entire chain of command. This is the pre-requisite in realizing the vision of the greatest statesman – Modi.
We have had a mixed bag of experience with the bureaucracy in implementing some of the key announcements from the Hon’ble Prime Minister, and the commitment on budget announcements and schemes. I have the following suggestions;
The reason our bureaucracy fails is because of the following;
- Unlike the politician, who have to go to the electorate every five years seeking ‘votes’ as his ‘appraisal’ for the performance, bureaucrats come with a ‘seniority based promotion’ and a defined retirement age and hence, they are least bothered for their performance reviews and also that these ACRs (Annual Confidential Reports) for performance reviews can be ‘managed’.
- Also, since bureaucrats make the ACRs of these bureaucrats, the norm is ‘do no harm’, and they are generally rated between 8-10 in the ACRs and the chain continues year after year, badge after badge. Actually, now there is no merit in looking at these ACRs. Even the most corrupt and inefficient officers had the best of ACRs
- Most of the bureaucrats are there for ‘authority’ and ‘administration’, and not development. Their approach is to ‘control’ and ‘Govern’ and not – ‘work as a team’ for ‘development’.
- Also, if one gauges the real working of majority of these bureaucrats, they don’t work for anyone, but they work for themselves, and then, there are ego’s, differences, grudges and dislikes for other bureaucrats. So there is never a ‘team approach’ in whatever they do and this drags the performance of the Government.
- Bureaucrats are more ‘procedure driven’ than ‘Outcome driven’. They focus more on following procedures and not necessarily on the outcome or performance, and that is why files take months to travel from one desk to another. Famously, one of the best performing Minister, Sh. Nitin Gadkari said on 09th May 2016, that it took him a 9-month wait for an approval for an automated parking. This is when Sh. Nitin Gadkari ji is known for being really fast in getting things done within the bureaucracy, and hence we can imagine what other ministers must be facing!
So, the time has come when we think out of the box and overhaul this system. Else, in 2019, our biggest failure will be because of the inefficient and unaccountable bureaucracy who will fail to implement Government’s key schemes.
We need to focus on the team approach; ‘One India, One team, one Goal’, that touches and transforms life till the last man standing in the line.
Re-defining the Appraisal System: As of now, we have an appraisal system that looks at ACRs, which only counts for an individual’s performance. If the performance and payment of the bureaucrat was based besides his individual performance (50% weightage) , the performance of his department / ministry (25%weightage) and the overall performance of the Government (25% weightage) , then the bureaucrats would work as a team and give up the siloed approach . So the first change is;
Move from ACR to CPR (Comprehensive Performance Review), which includes
- Individual Performance Review (IPR). Based on the yearly goals/ deliverables assigned
- A) Secretary’s goal should be decided by the Minister of the department
- B) Deliverables of the Joint Secretary and above decided by the Secretary of the department and the chain follows down
- Department’s Performance Review (DPR). Overall departmental review be based on the goals set for the year for the department / Ministry
- Government Performance Review (GPR). This is the overall performance rating of the Government based on the
- a) facts / data based self assessment by the Ministry / department (10 % weightage)
- b) Annual online survey taken by the citizens, for all the departments / ministries at the central level (15 % weightage)
Weightage for each level of review for the Comprehensive Performance Review (CPR) :
- Individual Performance Review (IPR) should have 50 percent weightage
- Department’s Performance Review (DPR) should have 25 percent weightage
- Government Performance Review (GPR) should have 25 percent weightage
Increments, variable pay/ incentives and promotions of officials should be based on CPR
Implementation: Can be in a phased manner ;
- Option 1: We could start the IPR (Individual Performance Review) & DPR (Department’s Performance Review) from 2017 at the Joint Secretary level, and the CPR (which includes the overall Government review) can start from 2018
- Option 2: CPR (Comprehensive Performance Review) can start at the Secretary level from 2017
- Move to the Joint Secretary level from 2018
- From 2019, the same can applied to employees holding the post of director rank in the government – Central
- Option 3: Have CPR only for Secretaries in 2017, and rest can be in a phased manner
Parameters for IPR could be picked up from what is already defined under ACR, but it must be more specific like;
- For Defining / planning time bound quantifiable and measurable deliverables for the year (20 % weightage)
- Completion of targets within the time frame (20 % weightage)
- Completion of targets without increase in budgets (15 % weightage)
- Utilization of funds (15 % weightage)
- Disposal of files & Grievances (15 % weightage)
- Innovations (15 % weightage)
For any of the misses, the weightage be objectively apportioned.
Department’s Performance Review (DPR)
- Every department must define / plan its key yearly deliverables / priorities. This must be done by the TEAM – Minister in-charge and officers up to the rank of Joint Secretary (20 % weightage)
- Completion of targets within the time frame (25 % weightage)
- Completion of targets without increase in budgets (20 % weightage)
- Utilization of funds (20 % weightage)
- Disposal of grievances (15 % weightage)
For any of the misses, the weightage be objectively apportioned.
Government Performance Review (GPR)
A part for the GPR be based on actual data / facts, and must be done by an independent government agency (40 percent weightage) and the rest must be based on public perception (60%) ; or it can be made (50 %) of actual assessment by an independent agency and (50 %) by public voting ;
- Implementation of key schemes goals Vs. achievements (10 % weightage)
- Meeting the Inflation target (5 % weightage)
- Fiscal deficit (5 % weightage)
- GDP Growth (5 % weightage)
- Utilization of funds (5 % weightage)
- Disposal of grievances (10 % weightage)
The government works for the citizens, and finally it is the citizens who are the best judge of its performance. Parameters 1-6 above can be objectively judged with data / facts, and others can be subjectively judged by the citizens under Jan Bhagidhari Assessment (JBA) through online voting.
At the end, it is the Government ‘for the people’, so the people must rate the Government on overall performance through public voting, after Government presents its self- appraisals on the points mentioned from 1-6 above.
The voting should be open for 30 days for the public to vote by a missed call from their registered mobile number on a toll free number; (60 % weightage should be assigned to public perception / judgment on performance) and 40 % on self appraisal / independent assessment by the Government.
Major change in bureaucracy is about making it a ‘performance based contractual service’: Also, one reaches the rank of Joint Secretary after a minimum service of 17 years. Joint Secretary is the actual ‘official’ who runs the show for the Government on a day-to-day basis, but if one sees the performance of the Joint Secretary, in a real sense, s/he does not feel accountable to anyone. The reality is, that now they are more driven by authority and administration and less by duty and development.
The biggest bane of bureaucracy is their job security and on one can demote them or remove them. When politicians have to go every five years for their performance review and renewing their term before the electorate, why should the top officials not undergo a review and renew based on their performance? Let us give them job security, but for performers. The Government is serious about a ‘Big Change’, and has to go and seek appraisal from the voters in 2019, but most of the bureaucrats are not as serious. They have been used to seeing government after government for decades. For them, this is all routine office work but for the Government, it is an implementation emergency. This is the only way to bridge the divide and bring about a cultural change for performance, accountability and rewards. Today, only the politicians are accountable but not bureaucrats! And it is time to change and fix the accountability based transparent review process / system.
All officers of the rank of Joint Secretary and above must be put on a 5-year contract, based on their performance review, with a performance based financial incentive for their outstanding work. So, the salary structure should have a fixed pay and a variable component . If they fail to live up to the performance standards (IPR) below 80 % for three years (out of five year term), they must be relieved. Let us not forget that the ‘Best are first to be hired and last to be fired’. So no worry for the best performers, rest should worry about themselves.
Even, Nirmal Kumar Mukarji, the last serving Indian Civil Service (ICS) officer in India who retired as Cabinet Secretary in 1980, as chief guest at the Indian Administrative Service’s 50th Anniversary celebrations 1997, had called for an end to the all-India tenured services.
Also, PS to the Minister is considered an important bureaucrat but he is a junior IAS. (below the rank of Joint Secretary), and hence s/he plays safe dealing with his seniors, as one day he might have to work under them, and the loser in this case always is the Minister. So, we need to consider that the PS to the Minister be a Special Secretary rank .
eOffice & eFile – Files are taking months to move from one table to another . e-Office / eFile concept must be implemented. No file should take more than three weeks and pass more than three levels. If there is a delay of more than a week, the note should be made on the file justifying the reasons for delay
Modi has the intent, the will and the vision and he is working really hard. Will his administrative system be able to catch up? There is a big difference in how the minister and the common man are handled by the bureaucrats. So the first impression here, should not be the last impression! Bureaucracy is slowly putting red tape to the red carpet !
Modi rightly said recently, “We cannot march through the twenty first century with the administrative systems of the nineteenth century”. If we see, we still have ‘Collectors’ in post British India, and this itself shows that the bureaucracy is still in 19th Century! A senior IAS wrote to me, ‘Modi is ahead of time’ and I said ‘ Yes, Modi is definitely ahead of time but unfortunately, the bureaucracy is still in the 19th century’. When Modi was thinking of Planning Commission, he made a profound statement, “Sometime it is better to build a new house than to repair the old one”. May be the same approach is needed for the ‘institution’ called bureaucracy. Do we repair the old house or / and build another one. The transition is critical and we have no time to lose. It needs to start soon and there should be a time bound plan to implement it
Rajendra Pratap Gupta
Time to change ?
Last year at the Economic Times Global Business Summit, finance minister Arun Jaitley had said that “the creeping acquisition of Rajya Sabha is on”. The thumping victory in Assam and an increased vote share across states show that the BJP government at the Centre is marching towards its goal. Also, the party seems closer to the goal of ‘Congress-Mukt Bharat’ after the latest assembly polls.
However, these results need introspection from all political parties. While the results have led to comments from party veterans like Digvijaya Singh’s observation that Congress needs “a major surgery” and Satyavrat Chaturvedi’s similar prognosis involving “a cardiac surgery”, the Narendra Modi government needs to conduct an open heart surgery for a ‘Bureaucrat-Mukt Bharat’. In 2014, India had voted in Modi to spearhead radical change, end corruption, execute citizen-friendly policies and administration, provide development with jobs, and lower prices.
The prime minister started well by meeting the secretaries and not his ministers. But somehow, the bureaucracy, after a while, started ignoring the ministers, as they had direct access to the PMO. I know of a minister who lost his portfolio because the secretary of the department made repeated complaints against this honest man who took a tough stand on irregularities happening in the ministry. Finally, the bureaucrat succeeded in ousting the minister.
I had a meeting with an additional secretary in the presence of a Cabinet minister. We discussed a few programmes that could be implemented on a priority basis. The additional secretary had a problem for every solution we proposed. He provided reasons as to why a major programme could not be implemented. And when we provided a workable solution for each one of his ‘problems’, he finally agreed on a timeline — without ever delivering. During the meeting, he kept flaunting that he had just returned from a meeting at the PMO.
Dragging the Nation Down
Then there was a senior technocrat in a ministry whom I met last month. He immediately told me to send him an email and promised that he would get the job done. The email was forwarded to his junior for action only after nine days! And this, despite clear instructions from the Cabinet minister a few days before. Most bureaucrats don’t seem to be bothered with the job at hand.
When people single out politicians for corruption and non-performance, I beg to differ. The bureaucracy runs the government. If the bureaucrats did their jobs well without fear or favour, we would not have straggled so far behind China. We have been terribly let down by the bureaucracy. There are always exceptions, of course. But they are far and few between.
Bureaucracy has still not got out of the officer culture that they have been used to for about 60 years of Congress rule. The role and orientation of the civil services has to change. Bureaucrats need to give up their role of ‘administrators’ and work on becoming ‘developers’.
I keep hearing that bureaucrats are afraid of taking decisions due to the fear of being hauled up by the Comptroller and Auditor General (CAG), the Central Vigilance Commission (CVC) and the Central Bureau of Investigation. But aren’t these institutions also in the hands of their fellow officers? Why on earth are bureaucrats afraid of bureaucrats?
It is time for the officer to learn a few lessons from the armed forces. Soldiers join the army knowing well that while working for the country, they can lose their lives. The working conditions for soldiers are not as comfortable as that of bureaucrats and neither do most of their pay scales match those of bureaucrats. And, bureaucrats are also soldiers for development and they should not worry about action against if they discharge their duty impartially and without fear or favour.
If people don’t have the passion and commitment for the country, or if they join the civil services for a job that gives them only authority as an administrator — or only for a safe job with a good retirement plan — don’t join the administrative services. Modi has a grand vision and is a man of action. So, either the bureaucrats rally behind the prime minister’s vision and implement his government’s idea of India by focusing on development with passion. Or we get rid of them.
Goodbye to Bureaucrats
Union road transportation minister Nitin Gadkari has got rid of bureaucrats in his ministry in key positions while having achieved a lot in a ministry considered tough to handle. Could Gadkari’s prowess as a minister have anything to do with the fact that his private secretary and key members of staff are from outside the Indian Administrative Service (IAS)?
So, we need to get rid of the British Raj-era kind of bureaucracy and its officer culture. Otherwise, the bureaucracy will be the biggest bottleneck for implementing the vision of the Modi government with the country paying a price it cannot afford. Fortunately, the prime minister has three years left in his current tenure. So, the next goal for the government should be a ‘Bureaucrat-Mukt Bharat’.
The writer is a public policy expert
Please read this before you think about whom to vote for ? We cannot afford to experiment with new parties or give another chance to a privately owned political party… We need a party with a proven track record of delivering results , and that is BJP ….
State of the Nation: – A Decade of Decay
Decade under the UPA I & II can rightly be summed in one line, the ‘Decade of Decay’, in which India had a free fall on all fronts – be it economic failure, diplomatic humiliation, failure of foreign policy, intrusions across borders, corruption & scams or crimes against women. There has been gross misuse & total denigration of government & constitutional institutions and this has eroded the office of the Prime Minister. The Government dithered by each passing day, casting gloom and doom on the country that was once under the NDA regime called the ‘Emerging Super Power’. In 2004, NDA left the Government with 8.1 % growth. The UPA could not even maintain that growth and mismanaged the country so badly, that the growth rate declined to 4.8 %, with the nation in a deep mess. We have lost a wonderful opportunity and have pushed the nation 20 years behind and rendered millions jobless and hopeless.
CAD now exceeds even 1990-91 Level – India is revisiting the crisis of 1991.
Between 2001-02 and 2003-04, the nation had a pleasant experience on balance of payments, turning surplus for continuously three years, which was unprecedented after the post-independence period. All the gains of the NDA period have been frittered away in saving the dynasty rule through various election-financing schemes
Debt Trap – A result of Wrong policies
Total public debt on India is Rs 4,606,350 crore, and the debt per capita stands at about Rs 38,000
Rising NPAs – things are going from bad to worse
Economy is slowing down and the banks are under strain. Defaults have led to NPAs almost doubling from the 2009 levels. Rs. 2.43 lac Crore of estimated NPAs are in 40 listed banks as on December 2013. Rs.4.0 Lac crore is the amount of restructured loan under the CDR scheme.
The Indian rupee, which was at par with the American currency at the time of Independence in 1947, has touched its historic record low of below 68.80 against the dollar under the UPA
Jobs – Shrinking job market
The employment generation actually decreased sharply between 2004-05 and 2009-10, especially when compared to the earlier five-year period.
In the five years from 1999-2000 – 2004-05, NDA created 60.7 million new jobs against the 2.76 million new jobs between the years 2004-05 to 2009-10 under the UPA. Now, India is going to lose more jobs in the coming years due to the wrong policies of the UPA
Poverty & illiteracy is the result of Congress misrule
416 million poor, 316 million illiterate & more than 600 million population without toilets sums up the outcome of the economic policies followed by Congress
India continues to be one of the hungriest nations in the world & accounts for 42 per cent of the world’s underweight children.
India’s Human Development Index rank has a negative trend for the time period 2007-12, which indicates deterioration in the indicators determining the Human Development Index.
Inflation: Price rise during the UPA years – Contrary to the Global Phenomenon
Whenever it came to low rate of growth, UPA justified that it was due to global economic situation, but the same cannot be justified for the increasing food prices in India. In November 2013, the Food Prices Index fell by 4.4 % globally, while in India, the Wholesale Price Index (WPI) was estimated to be close to 20 % in November 2013.
On one side, we have European Union’s inflation rate declining to a four-year low, and on the other side, UPA is groping in the dark for the past decade to find a solution for inflation and deficits. Country’s growth that reached near double-digit due to initiatives of the NDA government has come down to 4.5 %, that too remained because monsoons played a face saver and there was a high growth in agriculture ( 4 %). Year 2013 had an unusually good monsoon favoring a good agricultural yield, but had the monsoons been average, the growth would have been below 3 %. It was the agriculture & not the Government Policies that saved the nation from a collapse!
The State of the Education Sector in India declining
Health and education are defining sectors for equitable human development and sustainable and inclusive economic growth of India.
Despite levying a tax to fund education and enacting a law to ensure access to education for all children between the ages of 6 and 14, the government hasn’t succeeded in improving the learning outcomes in India’s schools, because the UPA thoroughly bungled the Sarva Shiksha Abhiyaan initiated by the NDA.The quality of learning has either shown no improvement or actually worsened in the nine years of the UPA’s rule
Recognized as a critical element for India’s growth, the UPA government had claimed way back in its first term, that 6% of the GDP would be spent on education, which is a bare minimum for an emerging economy like ours. Nonetheless, the sector still stands at around 4% of the GDP today.
It is unfortunate, but the UPA government and the Ministry of Human Resource Development have surely missed the focus on Education and Employment, and the Research & Development expenditure has stagnated under the UPA.
Health care – India’s ticking time bomb
Healthcare is still inaccessible and unaffordable to the masses. Out of pocket spending is still high at 78 %. Goals set forth under NRHM have not been achieved and the scheme has floundered. UPA has failed to deliver health, or healthcare, despite a huge spending.
Agriculture Sector – Farmers and Farming Neglected
Due to lack of investment (both public & private) in agriculture, the share of agriculture in GDP has dropped to less than 15%. UPA has failed to increase investment, productivity & profitability of agriculture, leading to farmer suicides, migration from agriculture and widening the urban-rural divide. The Nation is left at the mercy of rain Gods!
India’s Foreign Policy – Alien to India’s strategic interests!
The past decade has witnessed, a directionless Indian Foreign Policy under the UPA I & II; of alienation and antagonism in relations with South Asian neighbours, & of international humiliation. India has been miserably failing in accomplishing its national interest due to poor diplomacy
India has slipped to 60th position in terms of its competitiveness globally. This is India’s lowest ever rank and also 31 place below its peer emerging market -China. With regards to GCI, India is placed at 60th position out of 148 economies
India is ranked 134th position out of 189 countries in terms of ease of doing business
Transparency International’s Corruption Perception Index in 2012 ranked India at 94, out of 176 nations
In the global happiness-ranking list, India stands at rank 111-much after Pakistan (rank: 81) and Bangladesh (108).
Downgrade to downfall !
International rating agencies have been warning that India’s Baa3 rating is in danger of a downgrade, which has vitiated the investment climate. Any further downgrade would club the economy with junk-grade countries.
The fiscal profligacy of the UPA government has put India into a tight corner when it comes to repayment of borrowings. Government bonds worth Rs 1567 billion (Rs 1,56,700 crore) is coming up for redemption in fiscal year 2014-15 & In the fiscal years 2015-16, 2016-17, 2017-18 and 2018-19, government bonds worth Rs 114600 crore, Rs 231200 crore, Rs 256700 crore and Rs 242400 crore are coming up for redemption, respectively.
Where is India headed ?
Erosion of moral and societal values and governance
Crimes & corruption are on the rise across the nation and scams have impacted all the sectors like Panchayat, Housing, Education, Health, Agriculture, Mining, telecom etc. No one is untouched from corruption in the UPA regime
Corruption has become a part of the daily life. There is hardly any day when we do not come across the cases of flourishing corrupt practices getting exposed in one form or another. The policies of UPA have resulted in fast degradation of moral, societal,and cultural values
Use your right to vote to seek a change for a better India
Rajendra Pratap Gupta
Please see the total debt , interest and principal payments by the Government of India . Still do you think that we can pull this country out of the mess under the UPA ? We need radical changes
As per data made available by the Ministry of Finance on debt vide RTI dated 13th May 2013 letter dated AAAD/COORD/ L(1)2012; AS ON 31/12/2012
Government Loans :
Total multilateral debt is INR 2,401,829,740,367
Total bilateral debt is INR 1,046,418,091,740
Total Government loans ( multi-lateral and bilateral ) is INR 3,448,247,832,107
Non – Government loans
Multi-lateral INR 302,495,682,321
Bilateral INR 190,240,677,456
Total Non-governmental Multilateral & Bilateral loans – INR 492,736,359, 778
Grand total ( Government & Non-Government ) 3,940,984,191,885
Total yearly payments of interests & principal
2011-12 2012-13 ( 01.04.12 – 31.12.2012) Figures in 1000 INR
Interest 2425686378 2028398390
Principal 34823428250 24641868095
On 4th June , 2013 , I analysed the data and concluded that the Indian economy would grow below 4 % when most of our economists were speaking of returning to 6-7 % growth in the second half 2013 . https://commonmansblog.com/2013/06/04/the-titanic-is-sinking-can-we-do-something/
Leading global organizations like IMF / OECD have given similar predictions about Indian economy after 4-5 months of my analysis about the Indian economy
The recent reports of IMF on October 9, 2013 cut the India’s growth to 3.8 % in 2013 http://articles.economictimes.indiatimes.com/2013-10-09/news/42864491_1_world-economic-outlook-growth-forecast-global-growth
Also , OECD stated on 19th November, 2013 that India would grow at 3.4 % http://www.bloomberg.com/news/2013-11-19/oecd-cuts-global-growth-forecasts-on-emerging-market-slowdown.html
On one side , we have European Union’s inflation rate declining to a four-year low ( Mint , 16th November, 2013) and UPA is still groping in the dark to figure out how to handle inflation , deficits and govern this nation
To me , the fate of truck operators & tractors companies and not the sensex, is directly related to the fate of the common man & is the right indicator of the nation’s economic health. Trucks are the means for transporting goods and thereby, the correct parameter to judge the movement of economy. Truck operators are exiting truck business ( Mint, 26th November, 2013)., which is an indicator of the negative economic indicators
Sales of trucks dropped 29% in the first seven months of 2013, and truck sales have been declining for 20 months in a row according to SIAM and the existing truck operators are operating at 40 % of their capacity. Mint dated 26th Nov.
In my view, this mirrors with the growth slowdown of the economy that was once growing more than 8 % and is now growing around 4.5 % ….. High octane speeches of returning to double-digit growth are fine , but when our markets and rupee move with the news of US quantitative easing , it is good enough of the proof, that the intrinsic strength of this country’s economy is weak and of a lesser weightage than just the good news of foreign markets ( tens of thousands miles away ) or the US quantitative easing !
Small truck operators which constitute 75 % of the market are worst hit ( Mint , 26th Nov), and this must be good enough to sum up where have these Oxford, World Bank, IMF famed economists taken this country to ? May be, good rains can shower some temporary good news , but in the short-term and middle term , India has more tears to worry for than merry for this years good rains
No wonder, S&P downgraded IDBI bank debt to junk status . (Nov 26, 2013). More banks are under strain, but I believe that they would not declare NPAs before the next financial year to avoid disclosures that could add to their and the country’s woes !
Recently , very few people noticed a four line news that , Moody’s Investor Service downgraded the so-called financial strengths ratings and the baseline credit assessments of;
1. Bank of Baroda
2. Canara Bank
3. Punjab National Bank
The outlook on Union Bank of India has also been changed to negative .
This is the first indicator of ‘Gloom & Doom’ that is set to hit the economy soon. Somehow , India has missed the recession in 2008 , but India will now enter into recessionary phase that is likely to last between 3 -6 years .
Somehow , the investments that came due to ‘overselling’ the India story like the SEZs, power plants , airports are fading off and most of the infrastructure companies are under a huge pile of debt. More NPAs and job losses will follow .
I see that not a single politician or an economist can put his head out and speak the truth that India is hitting a phase of recession ( probably , they do not know it , like the American crisis ). From a high of 9 per cent growth , we are already down by 45 % in our GDP growth . How else do we define recession ? Are we already not into a recession with companies laying off people every month and our growth slowing down by 45 % ?
Let us accept the situation and plan now. Else , India will be headed for an unprecedented crisis. I am not more worried with 2014 election as much as the rapidly falling economy . On many occasions ,i have pointed my friends across political parties that they would be better off losing 2014 elections than winning them , as there is enormous crisis to be faced, and a lot of dirty and hard work to be done to reverse the falling fortunes of this country and it is not going to be an easy 2014 for politics and politicians .
Let us consider this situation ;
India needs foreign exchange – USD . This can come due to ;
- Reduced imports
Now , exports might start shrinking or remain the same , so not much can be done on that front .
FDI comes in India for
1. Either setting up manufacturing
2. Investment in corporates / stock markets
All the money that comes in FDI needs to produce profits due to either exports or domestic consumption . Both are not going to happen the way investors look at ROI or IRR on their investments as the local consumption story is missing . India has already passed off 100s of millions of poor as ‘middle income aspirational class wanting to spend’ , and this was the biggest fraud of Sonia & MMS led congress government and 100s of corporates have lost millions of dollars every month and are now exiting India or slowing down
Only way the foreigners can make money is dabbling billions of USD in stock markets . So, now FDI’s constitute 11.2 % of GDP in India (2011-12) , and FIIs can play a spoil sport for Indian Economy and generate a balance of payment crisis in any trading hour !
Also, how i could i miss writing about another direct cash transfer scheme of Congress ! Party has got a new way to make money ‘ CSR spending’ under the new companies act .Now politicians can ask corporates for CSR spending and bang ! You know why this bill got passed so easily. And if i am a corporate and i wish to get a license or avoid something OR seeking favours like Robber Vadra, i will give money under CSR to a politician’s NGO….. Wow , another MNAREGA, NRHM and a wonderful legal cash transfer scheme , So who says that XYZ paid bribes , now you cannot prove it , it was just a CSR spending . So, corporates , what are you waiting for , come buy your Rajya Sabha seat , it just cost 100 crores in CSR spending ! Come and block your seats now , it is election year , and sweet -legal deals available through all state leaders and through various national schemes , we have legalised bribes and you have an option to chose your preferred medium . Hurry, this is the last congress government. Hurry up, come , before we run out of time as Elections are likely in November
BTW, time for any sensible politician to come out with a job creation and wealth generation model for India before thinking of FDI or going back to 9 per cent growth
Earlier we realise , the better it is . India is into a recession now !
Rajendra Pratap Gupta
On 8th February , 2013, i wrote about the ‘Oxytocin’ injections that the Government is giving to our economy to draw out milk…….here is the proof.
Life Insurance Corporation was the most dependable automated teller machine for the government in the past year, buying record amounts of bonds and stocks of public-sector firms. Which was shown as ‘successful divestment by the Government’.
The state-run insurer’s purchase of government bonds rose 20%, and it bought nearly 40% of the shares sold via offer for sale (OFS) in four out of total seven PSUissues, said people familiar with the investments.
Of the Rs 4.67 lakh crore raised by the government through securities, LIC provided over Rs 1.10 lakh crore, or 21.4% of the total figure.
LIC invested Rs 236 crore in Nalco (35% of the OFS size), Rs 142 crore in RCF (45%), Rs 608 crore in Hindustan CopperBSE 0.87 % (44%), Rs 923 crore in NTPCBSE -0.35 % (5%), Rs 1,069 crore in SAIL (71%) and Rs 282 crore in NMDCBSE 2.50 % (4.7%).
LIC had contributed 81% to the government’s Rs 14,000-crore mop-up from share sales in 2011-12 by investing Rs 11,400 crore in ONGC
LIC invests in government securities with a view to holding them till maturity, and mark-to-market losses in the interim are not good. It would be a good practice to evaluate returns on redemption each time it happens and compare it with benchmark government bond rates. “Any shortfall in the return should be compensated by the government,”
Also, LICs mandate to invest 50 % in Government securities should be re-looked .
So the big question is , was this really divestment or a ‘back door buyout’ & a ‘face saver’ from a state controlled financier with public money, which could have yielded better returns had the LIC invested into blue chip companies . We all know that the state run PSUs will perform poorly when compared to other blue chip firms . Does it not warrant a CAG inquiry into the management ( mismanagement ) of LICs investments under duress ( from Chidambaram ) ?
LIC is failing in its fiduciary responsibilities to its investors ( people of this country who buy insurance policies from LIC ) , who invest Rs. 450 crore a day in LIC . Time to raise this issue and realise , that the actual divestment figure shown by the Government was a back door forced buyback by a family firm ( Government’s family firm- LIC )
Rajendra Pratap Gupta