The Tribune, Chandigarh, India

RBI sticks to status quo
Inflation a priority, growth can wait

Monday brought double disappointment for India. First, the RBI did not live up to the widely held expectations of a rate cut. By keeping interest rates unchanged, the apex bank has dashed hopes of a push to growth. There is not enough money supply in the system. The bank has injected only Rs 30,000 crore to help exporters hit by euro zone troubles and a feeble US recovery. Reflecting the economic mood in the country, the bonds, stocks and the rupee all fell. Later in the day global firm Fitch downgraded India’s rating from stable to negative, worsening investor sentiment after the blow received only recently from Standard & Poor’s.

The economic data announced in March spread gloom in India. The growth rate sank to 5.3 per cent, the weakest in nine years. April’s industrial growth figures announced last week indicated there were no chances of an early recovery. Foreign investors, already rattled by back-date tax changes, headed for the exit, causing a steep fall in the rupee. In this deteriorating environment came hints from senior RBI officials of possible cuts in interest rates during the monetary policy review on June 18. This revived hopes of a reversal of the downtrend. In April the RBI had rather surprised everyone by a larger-than-expected rate cut. So, expectations of a similar aggressive action went up.

Since this has not happened, disappointment is natural. However, what the RBI has done is not without reason. The apex bank is worried about inflation being in the uncomfortable zone. The benchmark inflation rose to 7.55 per cent and food inflation moved up marginally to 10.36 per cent in May. The bank feels that any rate cut at this juncture will aggravate inflationary pressures. As for growth, it says factors other than high interest rates are also contributing to the slowdown. It is for the government now to do its bit to stimulate growth and bring down fiscal deficit by resuming reforms, removing supply-side bottlenecks to contain inflation and better targeting subsidies.

Denial of a fact
Cannot change the figures of disability

It was only when Firdaus Kanga, India-born writer who suffered from osteogenesis-imperfecta, the disability of brittle bones, went to England, he realised even the disabled could travel. He wrote, ‘Heaven on Wheels,’ about the joy of discovering the world on a wheelchair. Unlike Kanga, who was fortunate to get UK-based publishers who brought out his autobiography, ‘Trying To Grow’, that recounted the misery of growing up as a disabled in India, most disabled remain invisible in our country. One, they are stigmatised; two, the infrastructure is not disabled friendly, which keeps them confined to the four walls of home. And then to justify all injustices of life, we have the ultimate theory of Karma — especially applied to the disabled — to wash off our hands.

Though the government has changed the nomenclature for the disabled by re-coining the phrase ‘differently-abled,’ it has failed to get them special attention. Nor could it lend the concerned departments more sensitive to tackle the issue. What is more shocking is the fact that after 65 years of Independence, empowered with a Constitution that guarantees equal opportunities to all, we have not found a mechanism to give a certification of disability to the 100 million disabled of the country, which would help them avail the many benefits they are entitled to — like transport concession, job reservation or the benefit of a quota in educational institutions.

Of the 216.3 lakh differently-abled persons in India (about 5 per cent of the total population), only 84.62 lakh have been given an official proof of disability by the government so far. That too after several organisations clamoured for their rights. The rest of the discourse — on what should be done to help them maximise their potential would follow only after it is ascertained that they do suffer from about 40 per cent of disability. It is intriguing that we have the wherewithal for the most sophisticated technologies of our times, yet we fail to offer basic dignity to such a large population.

Thought for the Day

What would be left of our tragedies if an insect were to present us his? — Emile M. Cioran

ARTICLE

Europe and the Arab world
Living in uncertain times
by S. Nihal Singh

A Sunday of elections, two in Europe and one in troubled Egypt, has yielded some reassurance to the world but little comfort to the people of Egypt, still battering with their revolution, on the verge of being stolen away by the old regime. The result of the Greek election has brought a sigh of relief to the world over the narrow victory of the pro-bailout party of Mr Antonis Samaras because upon it rested the fate of the euro and the financial health of the continent and the wider world. In the French parliamentary election, President Francois Hollande’s Socialist Party has won a majority in the National Assembly, giving him the assurance of pursuing his growth policy.

The bunching of more than one election has also highlighted how interdependent the world has become and the fragility of its economic structures. Germany has, of course, been reminding its fellow Europeans that the monetary union underpinning the euro zone can succeed only by a closer financial union, but many members are reluctant to give more of their sovereignty to Brussels. Besides, the policy of austerity promoted by the German Chancellor, Ms Angela Merkel, while opening the tap of assisted funding to weak economies, has been challenged by Mr Hollande, who has emphasised the virtues of pursuing a growth policy while having a measure of austerity.

As the results of the Greek election show, the country is divided down the middle, with the party of the radical Left Syriza barely behind the New Democracy Party of Mr Samaras. Although the latter has gained the authority to form a coalition government, probably with the moderate Left Pasok, the traditional ruling party now reduced to an also-ran with 12 per cent of the vote, and also a smaller Left party, Syriza, will be snapping at his heels. What ultimately swung more voters behind Mr Samaras was the fear that leaving the euro zone by repudiating previous bailout agreements was fraught with risks. By the same token, Mr Samaras will need some sops from Europe to make his new government viable.

In France, Mr Hollande’s Socialists won the presidency after a rather long gap, and his quest to give a new direction to French domestic and European policies would have been frustrated if the conservatives had won a majority in the National Assembly forcing a so-called cohabitation of opposites. The new President now has the opportunity and challenge of following his much-promoted growth strategy. How it will work out in practice remains to be seen. The European engine is a French-German combination and it is conceivable that while emphasising the need for austerity, Europe will now sing the blessings of growth. In relation to Greece, it is likely that the terms on which it received billions of euros to bail it out will be softened.

Egypt’s is a more tragic and complicated story. The revolution that toppled President Hosni Mubarak is spluttering, and even as the second round of presidency was being held, the military council announced a constitutional amendment that would entrench the military’s role not only over its own affairs but also over key domestic and foreign policy issues. Earlier, the military-influenced constitutional court had nullified the parliamentary elections in which the Muslim Brotherhood had secured roughly half the seats while upholding the validity of Mubarak’s last Prime Minister, Mr Ahmed Shafik, contesting the presidency. In any event, the electors last Sunday were being offered a Hobson’s choice between a representative of the old regime and the Muslim Brotherhood candidate, Mr Mohammed Morsi.

The fact that Mr Morsi made it to the second and final round of the presidential election was an indication that after more than a year of protests and chaos and repeated elections – initially a great new experience for Egyptians – the people are tired and want stability. Although Mubarak has received a life sentence for his complicity in the deaths of demonstrators seeking his ouster in the early days of the Arab Spring last year, the military has been biding its time before ensuring to maintain its grip on power. Seeing the divided liberal forces and the strength of the Muslim Brotherhood, the only organised party during decades of dictatorship, the military establishment first tried to make a deal with it. It now seems to have changed its mind and has decided ti confront it.

The reaction of those who fought for a new order has still to crystallise. Will they seek to revive the old flavour of defiance at Tahrir Square? If they decide to do so, will they receive the support of the wider masses, now tired of the chaos a revolution represents? The military establishment has won this round but it would be foolish to believe that it has won the war. Events in Egypt have demonstrated that it is a long road to achieving success in a revolution because the old order and vested interests will fight back. The armed forces have a lot to lose because they have built an economic empire and have enjoyed an unsupervised military budget, including a massive annual US subvention, and will not easily give up power.

If the string of elections reminds the world that we are entering a difficult period as we progress in the 21st century, it would have served a purpose. In many ways, the European continent is starkly different from Egypt and Africa and the Middle-East. The peoples of West Asia are fighting for their democratic rights after decades of colonial rule followed by autocratic rulers. For Europeans, basking in the longest period of peace after the two world wars of the 20th century and unprecedented prosperity, the travails of managing their wealth in times of recession beginning in 2008 and now in the euro crisis endangering the future of the euro and the European Union itself are proving a challenging task.

Where Europe and the Arab world meet is the uncertainty of the times we live in. Old certainties are no longer valid as Europe discovers that wealth and prosperity are not permanent states of being even as the Arab world found out the hard way more than a year ago that living under dictatorships and military boots is no longer the permanent destiny of Arab and African peoples. Let us say two cheers for these discoveries.

MIDDLE

Inside a casino
by V.K. Kapoor

On the east coast of America’s Atlantic City is the Mecca of casinos. Atlantic City is the basis for game ‘monopoly’ that is an icon of the American Wealth Worshipping Culture. There are 11 casinos, and a new one ‘Ravel’ was due to open shortly. On the opening night Hollywood diva Beyonce was to perform, and she had charged 2.5 million dollars for that. Tickets ranged from $50 to $1000. Atlantic City Boardwalk was the first Boardwalk in the United States. The Boardwalk runs along the Beach.

It is a city of glamour, geeks and gangsters. There is a sense of unbridled freedom and adventure about the place, heavy as the smell of salt air on a Boardwalk. Casino buses bring people from New York, New Jersey and other American cities. On reaching the casino, the players are given coupons for $30 to play. For regular players there are facilities of a free room, food and booze.

I entered the casino called “Caesar”. In the stylish decorated hall was the impressing marble statue of Julius Caesar. I was reminded of the famous dialogue of Julius Caesar, ‘Et tu Brutus’, when Caesar was stabbed by Brutus. I felt that in the casino, the machine or the dice plays the role of Brutus. Gambling has a narcotic thrill. It is also one of the primitive and elemental human instinct. In the Mahabharta Yudhishthir lost Draupadi with the role of a dice.

Most of the tables were occupied. Every machine has a winning combination. Skimpy-clad waitresses served drinks, which were on the house. One loses the track of time. There is no window. One is not aware of the break of dawn inside the casino. Life is in a state of continuous ferment.

I played with small stakes and won eighty dollars. The person sitting on the next table was playing with very high stakes. He was continuously swearing.

Suddenly, he gave a shout of joy. He had hit a jackpot and won $52,000. He danced and asked for a drink. The achingly attractive waitress handed him a drink. He gulped and took another. He told the waitress that if she permitted him to touch her back, he will give her $1000. She replied saucily that she could permit him to do so for $10,000. He readily agreed and gave her the demanded money. He fondled her with cold-blooded relish. After that, she walked away with a cynical express on her face. The villains vary, the results don’t. The ingredients of sin have always been the same.

After watching this, I thought that behind the naked belly is an empty stomach. Hunger devours all morals and scruples where no compromise is too great. Hunger is the greatest single reality of life. I was reminded of Sahir Ludhianivi’s “Dunia ki har-ek besharmi, ghurbat ki goad mein palhi hai,/ Fakon se jo rah niklati hai, chaklon mein jaakar milti hai.” (The route to all evils is through hunger and poverty).

All players in the casino hope to win a jackpot. In real life also people hope to get a lottery which will change their fortune. Hope deceives more than cunning can. There is no medicine more effective than hope, no incentive so great, no tonic so powerful. Everybody is hoping for a morning which will bring all good things of life —“Voh subah kabhi to aaye gee.” Hope sustains life.

OPED WORLD

Which politician will be brave enough to tell voters the days of abundance are over? The conspicuous consumption produced by the easy money of globalisation was never going to last
Epicentre Greece, crisis European
John Kampfner

A man casting his ballot before a map of Greece in polling station in Athens on June 17, 2012. — Reuters photo

Elections grip the imagination because they combine drama with the rare moment of public participation in politics. Few elections are as significant as yesterday's in Greece, amid dire warnings from Europe's elite that voters must continue to embrace German-imposed austerity to stave off financial collapse.

The outcome will, in the short term, have a considerable impact on the livelihoods of millions of people, not just in Greece but far beyond. Last night's early indications of an inconclusive result, with the centre-right pro-bailout New Democracy party running neck-and-neck with the radical-left anti-austerity Syriza, will only sharpen the mood of emergency. The result appeared merely to confirm the previously messy elections in May, which were seen as adding to the atmosphere of instability and fear. It is now likely to take weeks for a new government to be formed, amid worries of a run on the banks and the need for the ECB and others to step in.

But for all the doom-laden predictions, the verdict of Greece's despondent and angry voters will not influence the longer-term historical cycle: for what we are watching is the inexorable, albeit now-accelerated, decline of a political bloc wedded to two competing economic orthodoxies, each as self-indulgent as the other. While both models appear to be at loggerheads, they are each jointly and separately responsible for the mayhem that took hold in 2008 and continues to this day.

In one corner are the disciples of unbridled free markets. With their simplistic notions of the profit motive as a driver of growth, their selective disdain for state intervention (abhorrent except when it comes to propping up casino banks), and their dogged refusal to factor in broad consequences for their actions, they have propelled Europe and the US not just to the brink of financial ruin but to social strife.

In the other corner are the myopic advocates of the high-tax, high-subsidy model, based around 20th-century notions of a bloated public sector and unsustainable welfare. In Britain, low productivity remains endemic. In France, a laughably short working week requires industrious employees to take large chunks of time off in order not to get their bosses in trouble. In Spain, over-manning was long seen as a means of guaranteeing employment.

What unites these two approaches is a sense of entitlement, particularly among the post-war, baby-boom older generation. Just as CEOs of the most powerful private-sector corporations are intensely relaxed - to coin a Mandelsonian phrase - with exponential salary rises, so public authorities have felt little remorse in awarding ludicrous bonuses and pay-offs to their friends. Doctors in the UK complain about broken promises on pensions, but did they, or anyone else in a similar position for that matter, ever wonder about the sustainability of paying people large sums lasting decades?

Underpinning both flawed practices was a consumerist feeding frenzy that took hold in the 1990s, the era of post-Communist Western political and economic hegemony, the so-called "End of History". Governments behaved recklessly, encouraging banks to encourage individuals to copy them.

In Greece, profligacy was boosted further by corruption. It was hard to resist the temptation to screw the system because pretty much everyone was doing it, led by the political and financial elite. Now that the music has stopped, as ever, the people being punished are not the ones who caused the problems to begin with.

With the recession in Greece now into its fifth year, the suffering for many is real and intense. It seems likely that the Greeks will be allowed to renegotiate parts of the bailout, but probably only at the fringes of the deal. It seems hard to imagine a time when the country will get back on its feet and when, or if, they do, it seems harder still to see the private sector producing the necessary impetus to growth. Under the straitjacket imposed by the ECB, IMF and the German government, the public sector will have nothing to offer.

Even if their medicine is far too severe, driving unemployment higher and choking growth, the German diagnosis of the original ailment is beyond dispute. The conspicuous consumption produced by the easy money of globalisation was never going to last. The more productive and less spendthrift Teutonic approach has, for all its sombreness, the merit of sustainability.

Austerity was always going to be hard sell, even if we were all going to be in it together. As we saw pretty much from the outset, that was not going to happen. The culprits - the bankers and their many associates - have emerged almost completely unscathed. The then Labour government in Britain had the opportunity, back in 2008-09, to punish them. Instead, ministers rolled over. The Coalition has since produced a series of reforms that are so lightweight as to be virtually meaningless.

Across Europe, the sense of dislocation is tangible. In Greece, this will be exacerbated among many by resentment at having been bullied into voting the "right way". If, after years of misery, the Greeks, and not just the Greeks, feel that ordinary people have borne the pain, while the global super-rich have got even richer, playing the currency, equities and property markets, then nobody will be surprised if political extremism takes hold.

Greece may be the epicentre of the crisis, but this is a European crisis - of greed and irresponsibility. It will take far more than bailouts and exhortations to voters to solve. What is needed is a new economic paradigm that does not depend on public- and private-sector excess. But which politician anywhere in Europe will be brave enough to tell voters that the days of super-abundance are over and that societies will have to find less materially exuberant ways of determining success? In short, this is a matter of managing decline, as fairly as possible. But that is an election slogan that nobody, whatever their views on the bailout, the euro or the Germans, wishes to hear.

— The writer is the author of 'Blair's Wars' and 'Freedom for Sale'.

The Independent

Greek deciphered
The problem

Greece has a sovereign debt pile of 340 billion euros ($481.5 billion), more than 30,000 euros per person in a population of 11.3 million. It has been rescued once already, accepting a 110 billion euro bailout last year from the European Union and International Monetary Fund. But that has proved insufficient and a second package worth 120 billion euros is now under discussion. Until future funding is agreed, at least in principle, doubt hangs over payment of the next 12 billion euro slice of the first package, which is due on June 29. With its debt equivalent to 150 percent of annual output, Greece holds two unwanted world records: the lowest credit rating for a sovereign state, and the most expensive debt to insure. Its people have run out of patience with an ever-deepening austerity drive that has slashed public sector wages by a fifth and pensions by a tenth, and violent protests broke out in Athens this week.

Why does it matter?

The longer the crisis drags on, the greater the risk that contagion will spread to other troubled euro zone economies like Ireland and Portugal, which have also been bailed out before, and Spain, which is much bigger and would be far more expensive — perhaps too expensive — to rescue.

Key players

Under increasing pressure from street unrest and a split in his own party, Greek Prime Minister George Papandreou tried unsuccessfully this week to form a national unity government. He gave the finance portfolio on Friday to Evangelos Venizelos, a party rival. Venizelos is a political heavyweight who ran the preparations for the 2004 Athens Olympics, but has no economic track record.

At the European level, the single most influential figure is German Chancellor Angela Merkel, as head of the EU’s biggest economy. Merkel, who is losing popularity and has suffered a string of defeats in state elections, is under intense pressure from a German public that resents footing the bill for what is widely seen as Greek profligacy — hence her insistence that banks should share some of the pain. Merkel has been accused of holding up the second Greek aid package, further eroding investor confidence which could make the bailout more expensive.

How did it come to this?

Greece, whose economy had grown strongly but suffered problems with corruption and bureaucracy, joined the euro zone a decade ago, linking its economy to other European countries.

It went into recession in 2009 after 15 years of growth and its budget deficit hit 15.4 percent of GDP after a series of revisions by the government which revealed the country’s economy was in far worse shape than it had previously admitted.

Chronic problems include rampant tax evasion — the labour minister has estimated a quarter of the economy pays nothing.

More broadly, the Greek crisis reflects an inherent weakness in the structure of the euro — a currency zone with a ‘one size fits all’ interest rate for a set of widely divergent economies, and 17 different countries running their own fiscal policies. How the crisis plays out will determine the failure or survival of the project.
—Reuters