The Tribune, Chandigarh, India

Plethora of parties
EC makes a beginning to curb their number

The Election Commission’s proposal to strike off 150 political parties from the register before the next general elections is in the right direction. It will check the growth of non-serious parties. There are as many as 912 parties of varied hues under various labels that are cluttering the political landscape and creating confusion all over. For quite some time, the Election Commission has been maintaining that elections are a “serious business” and associations with no interest in participating in the election process should not be permitted to pollute the system by enrolling themselves as political parties. In a communication to the Union Law Ministry in May this year, the commission reiterated the need for amending the law for empowering it to regulate the registration and deregistration of political parties.

A large number of political parties exist only on their letterheads. Worse, these overload the electoral system and make a mess of the democratic process. Many political parties are either beholden to individual leaders or descend into factional fighting. Most parties are based on loyalty to leaders and not to issues, causes or institutions.

Over 60 years of experience with political parties as they have evolved makes it necessary to enforce discipline on the party system. In view of the increasing criminalisation of politics, the parties should be directed to maintain a register of enrolled members with details about their background so that persons with criminal antecedents are not given tickets for contesting elections. Parties are the mechanisms through which power is exercised in a democracy. And lack of inner democracy causes malfunctioning within political parties. Thus, holding periodic elections of party office bearers, maintaining annual accounts duly audited and payment of all dues to the public treasury are vital for strengthening democracy. These also require the attention of the Election Commission, the government and the political parties.

RBI acts again
Sensex ignores positive developments

To tackle the deepening crisis of liquidity and cool money markets, the RBI further reduced the cash reserve ratio (CRR) on Friday by 1 per cent. The present and the previous CRR cut of 0.50 per cent will together release Rs 60,000 crore in the financial system. The CRR cuts are aimed at providing liquidity to cash-starved corporates, some of whom have been forced to borrow at exorbitant rates. There are reports that banks are reluctant to advance money to companies engaged in real estate. The CRR cut may not immediately lead to any interest rate reductions as the measure is targeted at unclogging the financial arteries.

However, most central banks in Europe and the US have coordinated interest rate cuts to ward off fears of recession. Friday saw intense financial activity provoked by the global financial meltdown. Thursday’s massive sell-off on Wall Street coinciding with the expiry of the three-week ban on short-selling jolted Asian and European markets on Friday with Japan’s benchmark Nikkei shedding 10 per cent. The BSE Sensex plunged to a new low of 10,239 before recovering to 10,527 on close with a loss of 800 points despite the CRR cut, oil touching a 12-month low at $85 a barrel and inflation sliding to 11.8 per cent.

The relentless selling by foreign institutional investors (FIIs), reeling under redemption pressure back home, continued on Friday, which also witnessed the rupee fall to a new low of 49.30 against the dollar in early trades. The economic gloom deepened with the release of disappointing industrial production data for August. Against the industrial growth of 10.9 per cent last year, this August it fell to 1.3 per cent, which indicated the extent of the slowdown. The RBI’s rates hikes in the past have given a serious blow to growth. Unlike their counterparts elsewhere, Indian banks have withstood the financial pressure and are absolutely safe as depositors have full faith in them.

Thought for the Day

I find that the harder I work, the more luck I seem to have. — Thomas Jefferson

ARTICLE

Financial crisis worsens
Public needs to know the truth
by Arun Kumar

Foreboding headlines confront the middle and the rich classes, the primary savers in the economy. They are quaking at the rapid depreciation in their wealth. Stock markets, mutual funds, real estate, etc., are down. While the going was good, they dreamt of a life of luxury but now they don’t know where to duck.

The financial analysts and the reassuring noises by policy makers had lulled them into believing till early this year that the good days would last forever little realising that the story could go horribly wrong in six months. Such was the euphoria, that those cautioning prudence were seen to be Cassandras of doom.

Ben Benarnke, the Fed chief and Paulson, the US Treasury Secretary, the two people at the top of the heap of the global financial markets were assuring one and all in August 2007, at the start of the sub-prime crisis that matters were under control. Not till February 2008 did Benarnke suggest that something was remiss. It was on September 19, 2008 that both said that the USA faced a deep financial crisis and that the $700 billion bailout package was necessary to save the system from collapse. But with the system continuing to spin out of control, is there a con game all the way through?

The Finance Minister and the Deputy Chairperson, Planning Commission, the two worthies in charge of the country’s financial planning, followed a similar path, assuring the country that India is insulated and that growth would remain intact at around 8 per cent while it can slip to 5 per cent or less.

On October 8 with international markets tumbling, in spite of the coordinated intervention by the central banks (an unprecedented step), Indian markets also followed suit. They stabilised because of the old game of government-induced intervention by certain institutions. The Finance Minister came out of a Cabinet meeting to say, that there was nothing to fear and more liquidity would be infused into banks. He said that Indian banks have strong balance sheets and no one need worry about the safety of deposits. The FM, a lawyer-politician is no economist and maybe excused for not comprehending what is going on.

But the Deputy Chairperson is an economist. He is reported to have said, “ … when normalcy is restored (in global financial markets), normalcy would also be restored to stock markets”. He apparently added that stock values are not a measure of the country’s economy and that stock markets are always more volatile. What a turn around? The government was till recently suggesting that the stock market rise reflected the economy’s performance. However, it is the first statement that needs analysis since it is vacuous.

When would normalcy be restored in global markets? It does not appear to be in sight. In spite of the trillions of dollars being poured in by governments a collapse has set in. In February, a tax cut of $ 160 billion was said to be adequate and then a few hundred billion dollars to take over Fannie Mae and Freddie Mac and AIG was thought to be adequate. Next, $ 700 billion was thought to be adequate and then a coordinated rate cut but the markets continue to collapse. As mentioned in this author’s piece in these columns (February 6, 2008), this is a case of `too little, too late’.

The situation is a dynamic one with matters deteriorating rapidly and faster than anyone is able to anticipate. As argued by Kaldor, once expectations turn negative, nothing helps and that seems to be the current world situation. There is a complete lack of trust so that institutions are running scared, the financial markets are in a state of freeze and liquidity has dried up. Further, the real economy which was already slowing down in 2007 has rapidly gone further downhill. The US has lost close to a million jobs. Now even the IMF has woken up and predicted a slowdown/ recession. The implication is clear that with the real economy sliding, profits all across will tumble and businesses may go broke. Under the circumstances, all investments are uncertain and financial markets already in turmoil can hardly revive. Even companies and banks that today look safe may rapidly sink into losses.

The recent past is a good guide to all this. Even in June 2008, the demise of WaMu, Lehman Brothers, Merrill Lynch etc., the nationalisation of Fannie Mae, Freddie Mac, AIG etc., and the spread of the contagion to Europe could not have been imagined. The decline of Dow Jones to below 10,000 or that of Sensex to below 11,000 were in the realm of impossible. One of the big Indian private banks is 19th in a list of 36 risky banks in the world. Even tiny Iceland faced bank failure. Not only has all this happened, much more is feared in spite of the various packages.

A projection of all this into the future is frightening and a turnaround is not in sight. Hence when the Deputy Chairperson of Planning Commission said “when normalcy returns” he should honestly also add that there are few prospects of that in the near future and no one really knows when that may happen. Was the public being conned?

Analysis of the international financial markets over the last 20 years suggests that an unsuspecting public has been conned. Many were sucked in by greed and invested in unsafe instruments (even the Chinese Central Bank) due to the con job pulled off by the financial experts/advisors. The FBI is reportedly investigating Lehman, Merrill and AIG for possible fraud. While the markets rose, everything seemed to be as scripted but few asked what if the script went horribly wrong as it has done now. Even the most savvy financial experts have lost because they had also conned themselves and invested in the instruments that are now sinking. An NRI steel tycoon is reported to have lost over $16 billion in the last four months in spite of his battery of financial advisors.

The financial sector is not buying the turnaround story and continuing to collapse. It cannot trust others in this dynamic situation where what is apparently safe today can be risky tomorrow so that any investment can turn bad and they can themselves be the next victim. Hence, government bailouts are being treated as good to clean up one’s own balance sheet and improve one’s situation but not good enough to trust anyone else.

The nightmare of a bad script is with us but the con job continues. Rather than admit that the problem is systemic and needs an overhaul, policy makers the world over are busy fire fighting and not doing a basic reassessment which would require a change in priorities. They are attempting to shore up the collapsing financial structures which seem to be beyond repair and ignoring the real sectors of the economy which could react to stimuli much more quickly. A paradigm shift is called for but that requires a mind set change which the current breed of policy makers are proving to be incapable of because of their predisposition(s).

MIDDLE

Dreariness of it all
by Shelley Walia

I call Page 3 gatherings ‘platform parties’ where sporadically one hits into the same crowd. I have had the experience of rubbing shoulders with people over and over again without so much as exchanging a word for a number of years. What kind of people are these, I wonder, whom I see at every party, with whom I eventually graduate into a nodding acquaintance albeit unknowingly? Why is it that no meaningful relationships ever develop with these people; why do I remain on that same level of (non)acquaintance?

This breed does not visit you unannounced like friends do, and not many phone calls are exchanged. Meetings are initiated only by inviting them or being invited. The drinks session goes on endlessly but once dinner is over they evaporate like morning mist. It seems feasting is the only reason they meet up. And if someone withholds holding a party, there is the fear of being dropped from the circle altogether. Indeed, each social occupation creates its own mentality.

I realised that ‘friends’ today are symbolic of world-weariness and uncertainty in a fusty and empty private world of frustrated energies too fragile to rise to any meaningful intellectual involvement. It is just desolation with a make-up. At the end of the day, one looks back at an evening wasted, engaged as one was in an inconsequential conversation replete with vacant laughter at a sense of humour that has become a currency to popularity, or listening to names being dropped of holidays taken abroad or of gastronomic adventures in eating out at exclusive joints. Nothing could be more mind-numbing.

Slowly I came to the conclusion that this was the picture of insecure unhappy people whose mental world rests tremulously on the edge of a neurosis, a sterility reeking of disenchanted sexuality capable of exhibiting only a breakdown of communication. It was an apotheosis of material well being into an economic craving resulting in the collapse of human values and standards so vivid in the ‘Bright Young Things’ in Evelyn Waugh’s novel Vile Bodies.

I see in it the individual’s crisis of identity where the participant feels that he is able to overcome the pathetic status of anonymity by being part of a social group. Being invited to such parties becomes the sine qua non of existence and imparts a sense of well-being issuing from a sense of ‘inclusion’. Page 3 gatherings are the gradual corruption of the spiritual hygiene once experienced in get-togethers where, as youngsters, we had talked of Sartre and the wretched of the earth, of war and human rights, rather than of eating out or using Creed Green Irish Tweed perfume, an empty chatter that severely questions the dignity of conversation. Unlike those intellectually stimulating evenings about which one is so nostalgic, the spasmodic party scene turns out to be a private world of gross sensations seeking release from the tedium of an already nondescript existence where coherence stands wrecked and self-assurance sapped.

I am at last happily out of the dreariness and banality of it all, alone in the company of my music or books, or sometimes old friends, without the need of such empty occasions or people who are no friends to spend an evening with.

OPED

Nano misadventure
News analysis by Special Correspondent Bhagyashree Pande

The reversing of the Nano small car from West Bengal has many lessons for India Inc on how it should go ahead with land acquisitions, dealing with labour and farmers and taking care of innovations so that it finally delivers returns.

India is at a stage when there is a large-scale disparity in the income levels of the urban and rural populations. The farmers and labourers are feeling left out in economic growth, which is now at 7-8 per cent.

The growth is only trickling at the bottom of the pyramid and the farmers and labourers know that their skills and livelihood are going to be under threat as rapid industrialisation leading to land acquisitions takes place in times to come.

Thus, India Inc should realise that it is in its own interest to have proper land laws so as to function smoothly in the transfer of land.

Otherwise, such an issue will remain contentious unless the outdated British Raj-enacted Land Acquisition Act of 1894 is amended.

It is to the industry’s disadvantage if the cost of acquisition of land is high as it only adds to the cost of the product, thereby making it uncompetitive.

India Inc should have pressed the UPA government to bring about amendments to the Land Acquisitions Act on a priority basis the way it had rushed to get the Special Economic Zones Act passed to set up industries in the SEZ areas.

The Indian industry should also realise that having a unique product and a big brand name are not the only factors where the advantage lies.

Rapid manufacturing and marketing of the product is what will get the innovator the returns that he or she is looking at from a product that is built on wafer-thin margins.

India, which has been pretty low on innovations, should bear in mind that an enterprise makes money from a unique product till such time as similar products are brought in the market.

Nano is such a product and the success of many such products will lie only if the manufacturer gets the advantage of selling the product before competition sets in.

Indian companies should bear in mind that the Chinese are good at cheap, innovative and quick product manufacturing. And we, by bring lackadaisical in our approach to innovativeness, are only trying for an added advantage that the Chinese already have.

Is our competition only within the country or on a global scale? This is the question Indian Inc should answer and work towards ironing out creases.

Another lesson that the industry should learn is to make rural folks partners in progress by not just giving them some low-end jobs and compensation.

The industry should realise that these are not the times when farmers are only satisfied with compensation; they have higher aspiration levels and want to be a part of the progressive structure and earn more from such enterprises not just for themselves but for the next generation who does not want to just till the soil.

One of the suggestions that the industry body had made was to make farmers shareholders in an enterprise that gets set up in the rural areas.

This is one of the ways the US and Europe had acquired land when an industrial revolution had taken place.

Another area where the Tatas went horribly wrong and India Inc should guard against is in being complacent when the land acquisition was taking place and relied solely on the state government’s word.

True when Mr Buddhadeb Bhattacharya gives his word, it is a gentleman’s promise, but what is surprising is that the Tatas had been missing completely from the scene for the last two years when the project was announced and the land acquisition process started.

In India can an enterprise afford such complacency and rest on the laurels of a brand name? Sadly, the answer is no and this has been demonstrated clearly in West Bengal.

There have been cases of forgery and the use of force which could have been avoided had the Tatas been part of the acquisition process.

The reversing of Nano is definitely a loss for West Bengal but it is also a loss of face for the Tatas because a brand that stood for values has unfortunately been maligned by such an unsavory experience.

And a project that is for the common man has unfortunately given the common man most angst.

Hopefully, while going forward India Inc will be more proactive in seeking changes in the basic rules and Acts that could otherwise jeopardise projects and give the world industry, waiting to set up shop in India, a wrong message.

An unlikely Nobel choice
by David L. Ulin

If the selection of French writer Jean-Marie Gustave Le Clezio as the 2008 Nobel literature laureate has anything to tell us, it’s that Horace Engdahl means what he says.

Last week, Engdahl, the Swedish Academy’s permanent secretary, called American literary culture “too isolated, too insular. They don’t translate enough and don’t really participate in the big dialogue of literature” — comments seen in the United States as evidence of the insularity of the Nobel itself and proof that American writers would be shut out again.

The last American to win the prize was Toni Morrison in 1993; since then, recipients have included Wislawa Szymborska, Dario Fo, Gao Xingjian and Elfriede Jelinek. That such authors are not household names has led to charges that the Nobel committee is willfully obscure, or worse, motivated by political considerations.

Certainly, the previous three winners — Harold Pinter, whose acceptance speech excoriated the Bush administration’s Iraq policy; Orhan Pamuk, who faced criminal prosecution (later dropped) in his native Turkey for speaking out about the Armenian genocide; and Doris Lessing, an early and committed feminist who campaigned against apartheid and for nuclear disarmament — are political as well as literary figures, although there’s no question about the quality and engagement of their work.

It’s hard to say where Le Clezio fits into all of this; I’ve never read his books. In fact, until this week I had never heard of him — and I’m not alone. Harold Augenbraum, executive director of the National Book Foundation, which administers the National Book Awards, said the same thing, as did David Kipen, literature director of the National Endowment for the Arts.

That might seem to support Engdahl’s claims of American isolationism and insularity, but I would suggest the issue cuts both ways. How do we make the case for Le Clezio as representative of the best that literature has to offer when so many are unfamiliar with his work?

I don’t mean to equate popularity with quality; some of the best-known Nobel winners (Pearl S. Buck, Rudyard Kipling) are not the most exemplary on the page.

And, to be fair, Le Clezio does seem intriguing; an “irregular” resident of Albuquerque — he has taught, on and off, at the University of New Mexico — he is fascinated by the notion of borders, both real and metaphorical, and has written nonfiction about the American Southwest and Mexico.

But if this makes him very much a writer of the moment, reflective, as Augenbraum suggests, “of important themes in immigrant literature that may really resonate with American readers,” his selection brings us back to an elusive question: What is the purpose of the Nobel Prize?

The same could be asked of all awards, which have a veneer of authority when, in fact, they’re as subjective as their judges. Just look at Engdahl, whose statement that “Europe still is the centre of the literary world” reveals a pervasive cultural blindness.

“I’d be more inclined to take Engdahl at his word,” Kipen writes in an e-mail, “if his championing of European literature didn’t also ignore all the great writing coming from the rest of the planet just now. Africa, India and China, to name just three not inconsiderable land masses, are producing wonderful stuff.”

Augenbraum takes a more nuanced position: “I think the uproar is unfortunate because it diminishes the award. Without the Nobel committee, would we be reading Imre Kertesz or Elfriede Jelinek? Kudos to them for introducing these writers to us.”

Augenbraum has a point; awards juries pluck books and authors from obscurity all the time. That’s part of the idea: to bring deserving writers to new readers.

The Nobel, though — or so the argument goes — is different; it carries a weight, an authority, that most awards don’t have. In Slate last week, critic Adam Kirsch wrote: “Unless and until (Philip) Roth gets the Nobel Prize, there’s no reason for Americans to pay attention to any insults from the Swedes.”

By such a standard, the choice of Le Clezio can’t help but be read through a political filter, as payback for our insensitivity.

By arrangement with LA Times-Washington Post

Crisis exposes European-US entanglement
by Edward Cody

Three weeks ago, as the Bush administration struggled to salvage collapsing U.S. investment banks, European leaders calmly reassured their people. Banks on this side of the Atlantic are more wisely regulated, they said, and unlikely to succumb to the chaos on Wall Street.

That was then.

The continent has in the intervening 20 days awakened to discover its financial system is so interwoven with that of the United States and the rest of the world — and so vulnerable to shaky assets — that the virus in New York swiftly spread through the European banking network. In so doing, it revealed that Europe’s leaders face challenges just as difficult as those bedeviling Washington and exposed the limits of the European Union’s much-heralded economic integration.

But European leaders, with a tradition of state intervention lacking in the US, responded forcefully outside the E.U. umbrella once they realized the depth of the crisis, bailing out banks, pumping hundreds of billions of dollars into the financial system and declaring publicly that no big financial institution would fail on their watch. Many people here feel they moved more swiftly than their counterparts in Washington. Jean-Claude Trichet, president of the European Central Bank, for example, said Europe had nothing to be ashamed of in its response to the crisis.

As they are increasingly pushed against the wall, some European leaders have begun to say out loud what many seem to have been thinking all along: that the original fault lies with the Bush administration and a hands-off, free-market dogma that led it to stand aside when the venerable Lehman Brothers investment house started to crumble.

One of the first European rescues targeted the giant Fortis group, in a joint operation by the governments of Belgium, the Netherlands and Luxembourg over the weekend of Sept. 27-28. Hardly was that fire put out when Paris and Brussels had to negotiate a bailout of Dexia, a Franco-Belgian bank specializing in lending to local governments, and Germany was forced to salvage its floundering Hypo Real Estate Group. Even Spain, whose banks were thought to be the firmest of all, announced Tuesday that government funds would be used to insert liquidity into the system.

The facile claims that European banks were too well regulated to have any real trouble were long gone. French Prime Minister Francois Fillon warned that the continent had stood on “the edge of an abyss” until its leaders stepped up to guarantee against the spread of bank failures.

Finance Minister Peer Steinbrueck of Germany, who had been particularly acerbic in blaming Washington for allowing U.S. banks to spin out of control, was busy in Berlin trying to keep up with the troubles in his own banks. An initial $49 million package for Hypo unraveled, as banks that had agreed to come to the rescue complained that its losses were far more than they had been led to believe. Steinbrueck had to round up millions more to prevent a collapse.

— By arrangement with LA Times-Washington Post