Capitalism Socialism etc - unload here

I think people have dropped from mars to believe they can run a pluralistic democracy of a billion people like a personal kingdom. The only socialism that is even possible to have without causing a breakdown of the economic system is a social security system. Everything else is a hogwash resulting in pilferage, corruption and proliferation of unionised extortion. To think that we are some great country where communist style equality will succeed is to think that soviet russia was a huge success to be celebrated.  All these castles in the air are because we are a unitary state. I think it is best we convert this nation to a federation so we dont have people living the past trying to save humanity by having govt make soaps and incandescent bulbs for the poor and needy; or airlines, as if that were a real social requirement.

IDS, Murali-sir,

Please take time to read the following links as you consider capitalism the next best thing after sliced bread :).  What I read from your posts is that if only the government got out of the way and we let all these noble capitalists in we would be living in the tropical version of the US or Europe.

http://www.guardian.co.uk/environment/2006/feb/02/energy.comment

http://www.chrismartenson.com/crashcourse

One could argue that because we have not valued either fossil fuels or the environment fairly (a free market failure) , we have wasted precious limited resources on completely idiotic consumerism which we consider to be the good life that should be on offer to anyone who can afford it. 

Capitalism thus far has proved to be the winner because we could both find cheap energy and burn it easily without bothering about the environment.   Both assumptions are going to be increasingly challenged in the next decade. 

As for "those were the days", can any Bangalorean actually say honestly that the quality of life in this city has improved in the last 20 years?  yes we get mobile phone connections, choice of cars, 150 flights a day, etc etc.  And if we continue down this path what will be the fate of our children?  Capitalism does not put any value on sustainability.

Srivathsa

 Socialism and capitalism are the two faces of the economic ideology coin. There could be many aberrations of these two basic ideologies. Capitalism existed for long before Adam Smith wrote in 1776 his book "The Wealth of Nations". The foundation of Capitalism is in government’s non interference in the economy, there by encouraging competition. Healthy competition depends on demand and supply principle. Socialism on the other hand favors cooperation. 

The merits of competition are undisputable and so are the compulsions of cooperation. You can play with the ice-cream when the food on the table is plenty. When more mouths have to be fed sharing is joy. When the food on the table is far too short survival of the fittest or Leissez faire comes in to fore which is off topic. Oops! 

Read and take a quiz on Socialism and capitalism

With profit making the only goal and such a huge population of which most part is illiterate and those who are decently educated cannot be protected by law how do you expect capitalism to succeed in india?

With leaders who put their interests first and deliberately keep most of the population poor and under-developed how do you expect socialism to succeed?

I hate to think of the impact it will have on the reader passing by if some tangential, irrelevant and out of context  statements which do not represent reality were left unchallenged

Indeed, that's my compulsion too.

blind love for privatisation as answer to all ills

It's nobody's case that privatisation is the panacea to all of the country's problems. There will continue to be problems. But, like the late Sri C Subramaniam had once stated, atleast these will be new problems, and not the same old ones for which we have not been able to find solutions for over half a century.

There never was and there never can be bigger Socialists (in its true spirit) than Dr Ambedkar, Nehru, etc, the founding fathers of the Indian constitution. However, they
themselves opted out of listing the word 'Socialism' under the 'directive principles' of the Constitution. It was not an oversight, it was deliberate; since they had very clearly foreseen how it could be misused.

And, the irony of it all is Nehru's own daughter, using emergency powers, brought about the amendment to the Constitution to include the S-word in the directive principles, in order to pursue her own nefarious agenda, justifying it with her infamous quote 'corruption is a global phenomenon'. This is the legacy we are now having difficulty living down.

Air India example is so useless for this debate - for goodness sake, look around and there are heaps of big and small private airways in trouble.

As far as my understanding goes, atleast GOAIR, PARAMOUNT, SPICEJET in India seem to be doing fairly well, and also expanding operations.

I mean the reference to private postal service in India - frankly its unregulated, disorganised and pathetic compared to Govt post - we are just too lazy to go to the post office and want someone to come pick the post from our doorstep

There's no private postal service in India. There used to be the Angadia service amongst the business community earlier. But, I don't know if it still exists. But, the private courier companies are very efficient, reliable and charge a moderate price for the service rendered.

Let us talk privatisation using TVS or Tata or someone else if they show any incling to being part of this business where clearly the returns are not as high or risks big

As I have stated before, the most important question today is how urgent is the need for efficient public transport services. In my opinion, we can't wait even a day longer. If you accept that, can we then afford to wait in eternity for the BMTC to get its act together, with or without the help of a Prof Ashwin Mahesh? No - we have to bring in the TVS's and TATA's today. And, when approached that way, the route becomes very clear.

Because of the prevailing 'license-permit raaj', so far, it's been only the Blue-line (of Delhi) kind of operators that have generally been in the picture, in turn earning the
private sector a bad name. For that to change, the raaj has to be dismantled and the entry of reputed players like TVS facilitated, all under the oversight of a duly constituted
and empowered regulatory body.

And, the TATA's and TVS's are also equally desperately looking for avenues for growth, particularly with the conventional ones based largely on exports, becoming less and less attractive or even closed.

So, it's a win-win for everyone involved, particularly the aam aadmi.

This is also the case with Our other infrastructure service sectors (power distribution, water supply, railway operations).  

BEST manages fairly high standards

May be. But, BEST ran up deficits of Rs 221 cr in power supply, and Rs 372 cr in bus services, in '08 (It manages with Maharashtra government grants). As compared to that, in adjoining Central and North Mumbai, Reliance supplies power equally or more reliably, at the same tariffs as fixed by MERC, and makes fair profits. How long can the Maharashtra government continue subsidising the BEST operations, particularly when the contrast is so stark?

Well, apart from Mumbai, the cities/ areas that 'enjoy' power supply from private companies are Ahmedabad, Surat, Kolkata, Greater Noida, and in all these places, the customer satisfaction and profitability levels are far higher than elsewhere where the supplies are with government companies/ agencies, all being subject to uniform regulation by the respective SERC's. Delhi will be joining them soon.

Muralidhar Rao



 

 lobbied to get the Glass Steagal act revoked

This is one of the the symptoms of the monetary system post Bretton Woods collapse. I have always supported going back to a representative monetary system with gold standard or to any other standard the experts can come up with. Hyperinflation due to fiat money is not an indicator of the health of private participation in public initiatives to improve quality of life, it is instead the indication of a flawed monetary policy under any ideology. Scandinavian countries with socialist leanings were one of the first to get off the gold standard and into fiat money to save themselves from depression.

 If privatization of BMTC is the solution for better urban transportation in B'lore

Private participation in running buses for Bangalore may or may not mean Privatization of BMTC. Who will regulate the private parties and manage them? If it is going to be BMTC then they need to become a regulatory authority like TRAI or SEBI and only handle regulation. They cannot compete in running buses and still be the regulator. It will then become like Air India being the regulator for the Indian skies instead of DGCA. 

but we have no words or suggestion for BDA?

Try to apply the analogy above for BDA and you will get your answer. Who is regulating the real estate in India? Who is responsible for cleaning up entitlements and land titles and allocations and match them up with master plans? How many agencies do we have for land related functions? What is the coordination between the sub-registrar and BDA?

The sector is in such a mess because instead of being a regulator BDA is busy allocating sites and has left the sector to the whims and fancies of ministers who are only representatives and not regulators. If there was a regulator not only will real estate not be lassiez faire anarchy but it would mandatorily have different classes of housing in the product mix. BDA have not yet discharged a strong regulatry function. Instead they are entrusted with building ring roads because BBMP has too much on its hands or it is not trusted to deliver.

Feel like putting up an old quote (ingore the sustainable transport angle of attack for now)

• Communists - bicycles for all, mercedes for one
• Socialists - scooters for all, bicycles for some
• Capitalists - mercedes for all, nothing else for none

I am trying to keep out of this thread, but I will say this for IITs being mentioned by a few as the shining beacons for socialism and what not.

It bothers me that some people take pride in having institutions in this country that take care of mere 1-2% of the demand that exists for them, and that too in a critical social sector (quality secondary education). Those who work in the IT sector know that the real strength of IT industry in the country is "quantity", and not "quality". And whether we like it or not, that "quantity" comes from those unknown or private engineering colleges operated by the netas and what-nots that are often made fun of relative to the IITs.

I only imagine where would we be in IT industry today if we had quality on top of the good quantity. Or may be, a little less quantity, and little more quality.

This is not to attack the IITs by themselves, each one of them is a fine institution by itself. But quoting them as "successful" example of socialism is like saying "hey, every citizen in my state lives life king size", and then producing the king himself as the example.

 this is not any different from Bisleri water susbtituting for lack of clean drinking water in much of India

Again misleading apples to oranges comparision. Private bottled water is as opposed to govt bottling water themselves. Private parties participating in providing piped drinking water is as opposed to govt doing it themselves. 

I firmly believe that this country has not seen the true spirit of social welfare, all we have had is 'corruption' and its not going to go away just through privatisation.

Corruption is only going to increase by trusting the govt continuing to do more of the same. If this point is lost you can beat around this bush for time immemorial. We have had lokayukta around for ages.

It is easy to get hung up on the left unwilling to find middle ground which works for the nation. This is a disease only people from the left are unable to come out of. It shows up in the cause of the Naxals. 

I will try it one more time. The model of govt doing everything so that people get jobs is not scalable beyond a few lakhs. When we make private sector build the servicing capability and create the jobs we increase the competition. The govt can then utilize those skills to provide services to the rest of the people. A robust regulatory model is all we need. I provided the PWD example for NHAI and how it would have failed if it were attmepted by govt. There is the example of how govt did not keep cell phone to itself but instead invited private players to participate. Tons of working examples which can be replicated. Instead of fixing the non working examples we are going back to an essentially non-scalable model..

Luckily India has not reached the nadir of capitalism even though it is surviving as a nation with socialism awash with all the mediocrity because our Constitutional obligations of the political system ensures that we continue to lead a socialistic pattern of society.

ASJ's postal services example will be valid for another hundred years. Liberalisation of trade practices has enabled capital hooliganism affecting the most vulnerable sections of the society.  Such practices do have their advantages for a selected few to have a little Jam on their bread and butter.  Whereas socially responsible sectors, though incurring losses due to bad planning and execution are necessities in a democratic country like India. The Govt. allowed courriers and look at their plight.  How many have survived? 

But The Postman is surviving and rendering service to the remotest corner by running or riding horse/camel back or going up the mountainous areas by sweating.  How many private players would have embraced such onerous responsibility and care for the aam aadmi.

Telephone was a luxury - now it is available for the asking - how? By entry of liberalised players.  But with fast track innovative telecom fireworks, Government ensured a far sighted regulatory mechanism through TRAI while it played its own cards through its national BSNL network and volume. 

BSNL's ability to embrace technology and showcase its capacity for providing mobile services at reasonable rates forcing other players to fall in line is a class of social regulatory mechanism that can thrive under chaostic scenarios.  Otherwise, Rs.6 per minute call rates would have benefited the capitalist based telecom players with no end.  The rates would have gone up citing increase in operating costs etc.  But BSNL has done what an aam aadmi expects - it stepped in and said, "hey common man, your savior TRAI will take care of you".

Even though we have created a stratified society through liberalised trade/services sector practices, we should continue to have enough effective control mechanisms through proper governance of the system as enunciated by democratic principles for the sake of one person -

- THE COMMON MAN who is gasping for clean air, reasonable transport, minimum health care, healthy food and clean water as his minimum needs.

- The bottom line:  Let there be healthy competition between socialism and capitalism but with a sense of responsibility to the society we are living in and with a touch of humanity.  Socialism cannot make profit - it can at best be only = NO PROFIT NO LOSS = whereas capitalism ensures investments only if there is an element of PROFIT.

My constructive suggestions

(1) - To satiate a section of our Prajas hell bent on advocating watered down capitalism in India, try experimenting by PRIVATISING JUDICIARY AND GETTING FAST TRACK JUSTICE TO ALL SECTIONS OF THE PEOPLE - you will definitely go to Heaven because of blessings of those who are, for decades, waiting for myraid justice.

- This suggestion is a WIN WIN for all because there is lot of black and white money for both parties - the petitioner and the respondent. 

(2) - PRIVATISE/DECENTRALISE CORRUPTION - This is a two pronged beneficial suggestion - Decentralise the permit raj of socialism between ten inspectors - whoever quotes the lowest corruption rate, gets my nod to get me what I want by bending the rules in their red tape structured misuse of office. 

- Let us live and let live.  Because, we are wedded to socialism for life. Divorce and remarrying capitalism is a prolonged and painful experience. However, if we can encourage social capitalism, may be both will survive.

- Vasanthkumar Mysoremath

 I will get it when they take water / electricity at affordable prices to remote India and not just urban India or build hospitals of same stature as they do in urban India in rural India

This is a valid concern and the only way to do this is to first explore the best options to improve efficiency of services and then use govt as a fall back. I will tell you where the middle ground is. It is in not in kneeling to a bookish definition of capitalism but start with introducing private players for each service that the govt by default will provide.

 Believing private parties to do it by themselves or I run back to big brother govt is self defeating. You are basically not exerting any control over managing the situation you either throw it away to others for exploitation or want to do it yourself through a proxy called govt. This is no leadership or application of a god given matter called brain.

Ex. take cell phone service and universal service obligations that are placed on it. Look at the way circles with all kinds of demographics are carved out an awarded to private players. Be informed on the roadmap from vanilla to GPRS to 3G to 4G and how technology is upgraded via the regulator. Read about how the villages in India today have access to cell phones and not wired govt driven land line phone. 

 There are some places private players simply will not go to if there is no money to be made. 

From cell phone services we know how the regions can be mixed into circles, opened to private parties and universal service obligations be enforced. How many people in rural see a class divide in cell phone services? All of them have the same rights to service level and accessibility as their counterparts in the cities. These are models worthy of emulation. Like I said application of mind and ability to try out scalable models are important not trying to fix more of the same.

Watch out sectors for regulatory illnesses will include SEZs, real estate, mining, public transport, water supply

All of the above dont have a regulator and are run by various boards and ministries of the govt. So let alone regulatory ilness there is NO regulator at all! its free for all in case of some. In case of others depends on the govt and the minister. In certain others others, unions living in a world of job gaurantees.

There is a very strong correlation between per capita electricity consumption and per capita GDP

Yes I am concerned too. We need to either find sources of energy or more berries :)

which is the sort of level that Thailand and Malaysia are at (let alone US and Sweden)

Unsolicited advise to me from a traveller in Europe: "It is not possible for India and China to match up to per capita levels in developing countries ever. There isnt enough resources on the planet to let you do that. You are just too many people". Nobody even thinks of Africa anyway. Its just a time bomb waiting to explode if we are all still around to see that day.

 Rural mobile phone penetration is about 12% vs urban of close to 75%. One can hardly say that we have universal coverage

100% coverage exists even where penetration is 12%.

 True. However one has to understand why private enterprise is called an enterprise and not an undertaking, like public undertaking is called an undertaking when it is a monopoly? Enterprise is enterprise because of the risk involved. This risk is shared by many people by putting money and they end up being called stake holders. It is but natural that the entrepreneur is an entrepreneur to maximize his returns. This is justified because of the inherent risk he takes of loosing the capital. 

People are people because they are ordinary. They can be good or bad though. Hence we can come to the conclusion that the success/good name of an enterprise depends on the people being good or bad not on the ideology. 

@spry - If running a pre-school is so profitable, what prevents you from starting one, please?

If economic good is to be paramount, government must get out of economic activities that are best left to private players.

Government's role in economic affairs should be that of a regulator, overseeing private competitors to the extent of ensuring they play by the rules. As a regulator plus majority stakeholder of companies, government faces a conflict of interest that it often reconciles by skewing the level playing field it's meant to guarantee. Private firms are at a competitive disadvantage when their state-run counterparts are coddled. Consider the reported fiat to ministers and babus to only fly Air India.

For the full text of editorial comment in today's TOI, click here

In the end what matters is social justice.  Social justice can be ensured only through direct involvment of the state. If you let the capitalistic forces take their own course, even with the best of regulatory mechanism in place, I really doubt whether all can get access to "affordable" education and health.  You can always argue that competition will take care of it.  But see all the private schools that have mushroomed in and around bangalore. They are playing on the emotions of people and make them pay through their nose. Can those who support privatisation with regulation explain this?  If the state could regulate, it can as well run things on it own taking care of "all" sections of the society.

That does not imply the private players must not be allowed at all. They can erect as many wireless masts as they like( or make profit of). But in some areas they better be off limits.

 May be PSA sir is right. It is the people that matter not the ideology.

Private players or capitalism is good in cosmetics, software, etc but not not in healthcare i.e. hospitals, education, transportation, and other essential services which should only run by true nonprofit organizations. Some businesses can never be done for profit.

I think employees are not treated well by the capitalists. Salary may be good but how about the job burden with ridiculous targets to threaten the employees. Private sector have been employing child labor and not government.

They run their business with extralegal measures at least in India like bribes and muscle power. They create artificial scarcity with collusion and lobbying. Lobbying is not transparent. I think all the discussions between ministers and private citizens should be made public. There are bribes paid private sector deals too.

Three years back:

I were very happy with the service quality of all the private banks and took no time in closing all my relationship with SBI when I opened an account in a private bank. When I wanted a home loan I preferred a private bank for their speedy and easy process.  I were very happy that "customer is king" is truely practiced by my "choosen" private bank. I were on the strong opinion that all the Govt owned bank should close their office and their employees should be sent to hell for their callous attitude.

Now:

Thanking Govt for not closing SBI. I am back with "my" old bank and transferred my home loan to SBI.  And I am not alone in doing so, ask anyone who have taken home loan from any private bank. I think i dont need to explain anything here. Mush has been discussed during recent credit crisis.

Murali sir, Hope u wont suggest me to start a pvt bank ;-)

@srinivas But see all the private schools that have mushroomed in and around bangalore. They are playing on the emotions of people and make them pay through their nose 

Who is the regulator for the schools? what are the rules, regulations and specifications laid down by that regulator for schools? Are there any universal service obligations being ensured by the regulator while granting license to start schools? What are the auditing and inspections being carried out by that regulator for compliance? What is the role of corruption in govt department that approves these private schools? How is your(tax payer) money being used to provide education in govt school? What is the standard and quality of education being provided to the downtrodden? What is the return(in terms of qulity of education) on the money being pumped in? do you want to pump more into the same system? What is the coverage of the govt school system and  what is the claim that it has achieved its social obligations? Has the govt looked at sourcing facilities and equipment from private parties for providing govt education? Are you willing to try a different approach to solving a problem? Does that approach involve utilising expertise available with enterprises instead of within the same department?

@PSA what is wrong with a public enterprise like BSNL? 

Why is your (tax payer) money being used to provide a service like a phone? Is it  in short supply? Do the people not have the technology to provide that service? What has been the reach of BSNL land line service when it was a monopoly? How is your situation wrt getting a land line during monopoly days vs now? If BSNL went away would you miss it? Would you rather put the money that goes into BSNL to some other activity?

@PSA The Answer is it is healty competition. Not a (Governament?) monopoly.

Yes it is and Govt does not need to be in sectors where private players can deliver same or better value. Why are we propping up Air india? Why is 4000crores going there vs 12000crores for all the cities of India combined under JNNURM? Make your list of loss making PSU's. Why are they still being propped up? Why is your tax money still going there? What is the intent? if it is jobs or unions, lets go back to the start of this thread.

@PSA If you want the best out put with the minimum inut put then healthy competition.

Very well put

Hey guys,

Most of you are agreeing to agree with each other and many of you are agreeing to disagree with each other, like the nth round of India Pak discussions.  What is the point in arguing without logical conclusions?

I think it is time for Admn to enact a capitalistic control system and prescribe the maximum liimit of posts by a Praja on a subject with a moderator control+alt+del any posts that may go off tangent.

No doubt discussions are necessary but never ending...?  By the time this subject finds its end, I am sure, India's population would have soared to 1.5 bln. and PWG would have taken over India.

- Somebody please summarise and help us to have the pleasure of spending time on something useful.

- OK, now I am ready for a volley of....

- Vasanth Mysoremath

With independence and advent of Five Year Plans, creation of Public sector was a necessity and was born a few decades ago with holistic thoughts, goals and when the sperm of private sector had not been sown at all for - 

-  optimum utilisation of natural resources and raw material

-  for productivity of economical goods that are necessary for the aam aadmi

-  improving the industrial scenario

-  generation of employment opportunities

-  creating an industrialised nation etcetera 

Even today many central sector entities like BHEL, BEL, HAL, and financial institutions like SBI, IDBI etc., have been rendering yeomen service in the defense and civilian industrial/financial sectors and have even earned the coveted titles of Navaratnas with ISI, AGmark, and other certifications. 

All these are not for nothing.  Let us give the angels their dues.

Liberalisation may be a boon to some private players but they are definitely a bane to some well known public sector entities because the pvt. sector has been employing various corporate techniques and tactics to see that certain branded public sector entities become ill at the earliest and get into the BIFR emergy ward.   

Example: NGEF, Mysore Lamps, KAVIKA, KIMCO, have lost out to the onslaught of many MNCs and the government directors on Board of many of the flourishing public sector U/Ts, were asleep after a heavy lunch when decisions were being taken by a few vested interestes and were playing into the private lobbies.  

- Luckily, my Mysore Sandal Soap has withstood the acid attacks because it is a good soap - otherwise, private sandal oil soap mfrs (with their artificial scent) soaps would have swalloed and drank all the real estate water around these companies.

-  What I am trying to bring out here is, with all the page 3 approaches (read Capitalism), the aam aadmi's page 1 remains the first preference in a democratic country like Mera Bharat Mahaan because it carries the headlines (read Socialism) and people always look at page 1 before going to page 3.

- Vasanth Mysoremath  

We are only concerned about taxes we pay to Govt but never ever question Private secotors on scale of profit they make from us. Who is paying for luxaries which private sector champions enjoy. Did we ever question Ambanis for building 34 story building for his family of 5-6 members when 75% mumbaites lives in slum. Who is paying for their luxaries. Do they not have any responsibilities when their profits are coming from common man.  Did we dare ask pvt secotors to limit their greed and help "common man" in their struggle to survival.

We become very vocal about "tax payers money". What about  "profiteering"? is there any control on that, that is also our money.

its also an essential first step to privatisation

Well, well, that's interesting!

But, then you go on to say - "In such an event, why not see how we can help them hit 5 million passenger trips through comprehensive internal reforms - yes, the answer to this is that people like Murli-ji have tried this over years and nothing has come out of it. Nothing will come out of anything until there is public pressure - its no good saying
'our governments and in case of BMTC the corporators are useless, incompetent, corrupt' when we elect them, when we fail to come up with better candidates. The problem is not out there, we are very much a part of the problem (the thread on NICE and its possible fraud says it all - we the educated are accepting and tolerant of corrupt practices)."  

Forget it, Doc! Like I stated before "What amazes me is the amount of intellectual intercourse going on on PRAJA to straighten out a BMTC, even as we all know how very simply the straightening out happened in the case of telecom, banks, insurance, airline services, postal services, etc - effective competition". Anyone who wants to waste his time and effort can pursue that. I very clearly see that effective competition, and that alone, will change BMTC.

It's ESIC, not ESIS. And in my opinion, the Insurance part of the ESI scheme is perhaps a useful one, and can be continued after professionalising. However, the healthcare part is a disaster, far worse than the regular government hospitals, and needs to be closed down totally - check this

And, Doc, what you are repeatedly pointing out is the unwillingness/ incapacity of the government to discharge its basic functions. Inspite of that, you want to burden it further with all kinds which can be done far better by the private players. I just can't understand the logic.

As for a summary, Yajamaanru has done a fair job already, and those are the concerns I share too.

And, let the debate continue, so that increasingly people begin to realise that we no longer need to prostrate before the 'commanding heights of the economy' of yore.

 

ASJ,

I couldn't agree more on your assertions that the solutions to our national issue should be devoid of ideologies. Becoming slaves to the ideology should be last thing that we should attempt. Let me come to the point straight. Time again people do not get tired of quoting telecom department as the perfect example of PRIVATIZING/PRIVATE PARTICIPATION a government hold sector.

Before anybody start reading further, I urge the readers to go thru the story of Indian Telecom first.

http://www.slideshare.net/kbsyed61/the-story-of-indian-telecom

Is this Telecom being 100% PRIVATIZED theory a true fact? Does govt still offers the basic telephony to the urban and rural customers? The truth is government is still in the business of providing the basic and advanced telephone services. Then what is this story of telecom being privatized?

Up until 1996, Telecom services were 100% govt provided. When time for mobile telephony came, govt allowed the private players to offer mobile telephony services. it was very good and successful experiment. There came the telecom regulator 'TRAI' and also the allowing private players like reliance to offer basic telephony services. But this did not mean government agency like BSNL, MTNL suddenly disappeared from the scene. For major metros, the BSNL operations were corporatized into MTNL, but that is still a govt holding company offering the services.

Is there a lesson to drawn or learnt? Yes. Lets decipher the events in telecom sector.

1. In 1996 govt added mobile telephony services with private players as the service providers. Later even BSNL joined in for the mobile pie.
2. It opened the basic services to private players, but it still continued its operations and services. It seems it has also brought reforms and rationalized its services.
3. A regulator was appointed and seems to be working fine except for few here & there skirmishes from BSNL, private players etc.

Let's apply this model to BMTC and public transport system that exist in B'lore.

1. Create a single public transport authority that is responsible for planning and regulating the business.
2. Best would be to have the regulatory authority to be independent of transport authority.
3. Re-design/Re-jig the entire BMTC route system
4. Relegate BMTC, DMRC to be service providers
5. Allow private players in new areas of operation
6. Bring autos, taxis, tempos into regulated PT umbrella and make it a part of the PT system
7. Bring in new legislative laws for priority for PT on roads in city

Is this something we can take forward for further discussion?

Kbsyed61 avare,

 I read your masterly article “The Telecom story”. It is indeed a masterly written document. However I must admit I read till “Murga Bangh Tega”. While I am really ashamed of myself for not reading till the end, kindly allow me to put in some of my thoughts right now. 

We all should agree that government should be allowed to spend the tax payer’s money to the general good. That is why Tax is called Tax because it is taxing to cough up (hard earned?) money. But unfortunately we mere mortals do not understand (or better still do not want to understand) that we earn huge money because of the law and order maintained in our beloved land by a stable government. 

That is why in the early days of democracy in our land the likes of Babu Jagaleevan ram could visualize the importance of rural nature of our country that is India. Bapu’s  Panchayati Raj which is nothing but a local governance concept, is perhaps misunderstood. One cannot understand Local governance if one forgets that the economy also has to be local. 

I would like to call this as green economy. Green because it is sustainable. 

Unfortunately the above green economy has been rejected by us Indians long back. I refer to the Industrial revolution. The Kahdi movement is long forgotten. So we should not crib if some money is diverted to our villages in the form of providing Rural Telecom. 

In fact I am for a healthy competition between BMTC and other private Players for Bangalore city Transport.

 Interesting reading

Now, if the government sold a majority stake in public sector units, allowing new private sector management to take over, that would hugely improve efficiency. But only minority stakes will be sold.

For the full article by S A Aiyer in TOI, click on http://blogs.timesofindia.indiatimes.com/Swaminomics/entry/selling-family-silver-to-fund

And, that doesn't help!

Excerpts from the colunmn by Swaminathan Aiyer in today's Sunday TOI (for the full text, click here)

In the West, innovation is done by scientists using expensive equipment. In India, it's done by every housewife, farmer, transporter, trader and industrialist. It does not require high-spending R&D: it simply needs creativity and imagination. Anil Ambani once said Reliance succeeded through innovation, not invention.

One avatar of jugaad is what management gurus call "frugal engineering", exemplified in the Tata Nano, the cheapest car in the world. India's telecom companies provide calls at Re 1 a minute, the cheapest in the world.  Narayana Hrudayalaya and Shankara Nethralaya provide the cheapest heart and eye treatment in the world.  Indian reverse-engineering of patented drugs is also frugal engineering.

Some management experts warn that jugaad uses any means, legal or illegal, to get a job done. They say bribery and manipulation must not be confused with genuine creativity. I disagree. The creativity in unethical activity is, with rare exceptions, not fundamentally different from the creativity that yields frugal engineering. The incentives and rewards of the political-economic system determine whether creativity is used mainly for unethical profit or heroic productivity.

The hawala market, for instance, is used by drug lords for money laundering. But it is also an example of jugaad, enabling poor migrants to remit money across countries, faster and more cheaply than any formal bank system. Hawala was legal for centuries before modern governments declared it illegal.

Dhirubhai Ambani was the master of jugaad. The licence-permit raj made it impossible for him to progress legally, so he exploited the corruption and cynicism of the system. He exported junk to get profitable import entitlements. He created industrial capacities vastly in excess of licensed capacity. He imported huge textile machines as "spare parts". He engineered highly profitable changes in rules for polyester imports and telecom licences. The jugaad he used to overcome hurdles was not distinguishable from crony capitalism. Yet when the licence-permit raj gave way to a more open and deregulated economy, Dhirubhai used the same jugaad to scale dizzying heights of productivity and become world class. His giant refinery complex in Jamnagar had the highest refining margins in the world, beating the Singapore refineries. He converted to reality his vision of making telephone calls cheaper than a postcard.

Dhirubhai showed that manipulation and world class productivity are two sides of the same coin called jugaad. If governments create business constraints through controls and high taxes, jugaad will be used to overcome those hurdles. But if deregulation abolishes these hurdles, the main business constraints become lack of quality and affordability, so jugaad shifts to improving productivity, quality and affordability. That ultimately makes you world class.

Jugaad is amoral. If laws are oppressive, jugaad will seek ways round the law. Yet this amorality kept Indian business alive in the 1970s when controls were buttressed with income tax of 97.75% and wealth tax of 3.5%. Honest businessmen would have been taxed into bankruptcy. But jugaad, including innovative tax dishonesty, kept Indian business alive, and enabled it to surge when economic policy moved away from insane socialism.

Socialist politicians viewed themselves as golden-hearted geniuses who knew better than greedy Marwaris about what should be produced. Nobel Laureate Friedrich von Hayek pithily called this "the fatal conceit".

Socialist planning was supposed to optimize use of India's resources. But it assigned no value at all to the marvelous innovativeness and enterprise of Indians in every branch of activity.  Five-year plans sought to optimize financial resources, mineral resources (like coal and oil) and administrative resources. But they sought to crush enterprise and jugaad, the most precious resource of all. That has now been liberated by economic reform, and the value of jugaad has gained worldwide recognition.

The delivery of government services — education, health, infrastructure —remains terrible. Here too socialist control needs to be replaced by jugaad.  Alas, politicians and socialist ideologues will not allow it.

How can anyone defy Aiyer's plain and simple logic? His comlumn is must on my Sunday reading list.

Now that the Commonwealth Games have commenced, glitches and all, we can assess them more soberly than the high-pitched media sound bites of recent weeks. Many critics complain that the Games show India in a terrible light. In fact, they provide a pretty accurate representation of the country.
    
Globally, the big picture shows India as a major success story. In fact, it is largely a story of private sector success and government failure. Many Indian companies have emerged as world class, but government services and corporations have, with some honourable exceptions, remained ridden with waste, corruption and callous inefficiency. The Commonwealth Games accurately mirror this reality: they too represent a mix of private sector success and government failure.
    
The contrast with China’s successful management of the 2008 Olympics is truly stark. But it is not the case that India is universally shoddy. Ambani, Infosys or Tata are known for completing large, complex projects on time and within budget. The public sector, alas, is known for the very opposite.
    
China’s success has been largely government driven. Even so-called private companies in China are often controlled by party bosses and officials. The state mercilessly destroys slums and other structures without adequate compensation when it so feels, as in the 2008 Olympic facilities.
    
The contrast between China’s management of the 2008 Olympics and India’s management of the CWG shows, yet again, that China is largely a government success, while India is largely a private sector success. Economic reforms have enabled the private sector to bloom in India, but many key tasks can be done only by the government — law and order, justice, rural infrastructure, welfare measures, basic education and health, and much more. Unless the government improves its performance dramatically, India cannot hope to catch up with China.

For the full text of the column by Swaminathan Aiyer in the TOI, click here

 

Prices of primary articles have doubled since the UPA came to power in 2004. Equated Monthly Instalments are rising every quarter. Interest rates on student loans are between 13 to 15 per cent. Indeed, interest rates for housing loans are — believe it or not — as high as they were in August 1997.

Look around and you will discover everything that is in the domain of the private sector — product and services — and subject to competition have either become cheaper or at least at inflation adjusted constant. Everything that is controlled, regulated, distributed and produced by government is riding the upward graph. Interest rates are but a part of the theorem of inflation and are again governed by the laws of supply and demand. Thanks to the profligacy, government demand for money has been rising exponentially as it continues to spend way beyond its means.
 

For the full column by Shankkar Aiyer in the New Indian Express, click here. All so very true. And, looks like Mr Shankkar Aiyer is browsing through PRAJA too:))).

Overall, Indian business has undergone a huge churn, despite a fair amount of crony capitalism. One reason is that many of the well-known crony capitalists today are not old giants but newcomers in real estate and infrastructure---DLF, Unitech, GMR, GVK, and Lanco. There is churn even among cronies.

So, it is simply wrong to claim that India is dominated by a handful of business oligarchs with political connections who wreck competition. The heartening message of 20 years of reform is that newcomers keep breaking into the top 30 with surprising regularity.

For the full text of the column by S A Aiyer in the Sunday ToI, click here

- a point that I have made earlier too.

This (occupy wall-street) movement will not spread to India despite the Left’s best efforts. We are at an early capitalist stage of dynamic growth. Millions of new jobs are being created and although inequality is growing, the average person is rising. India’s problem is largely governance; hence, protests in India are about corruption. - - - It would be a great pity if this new generation of aspiring, hungry, hardworking young Indians is spoiled by West’s culture of entitlement. The Congress Party is unthinkingly bringing such a culture to India with welfare schemes which reduce the desire to excel. The employment guarantee scheme is already beginning to hurt the work ethic in rural India. Instead of creating phony jobs through NREGA, the government should invest in roads and power, as China has, and this will lead to real, productive jobs.

For the full column by Gurcharan Das in the ToI, click here

Can't but agree.
   

This is why taxes were cut in 2008-09-to generate a big stimulus for an economy hit by the Great Recession. At the time, the left supported a strong stimulus to help the aam admi. Yet today, some tax cuts are being called "revenue foregone" and decried as corporate loot.

- - - The finance ministry must abandon its ridiculous methodology for calculating "revenue foregone." I am all for exposing the long list of tax exemptions, many of which are unwarranted, but oppose nonsensical calculations that mislead instead of clarifying.  

For the full text of the column by Sri S A Aiyar in the Sunday ToI, click here.

This "revenue foregone" is a favourite bogey of CPI parliamentarian Mr D Raja, whenever he comes on TV debates on economic issues. And, by inventing such terms, the 'PronobDa' s of this world are just playing into the hands of the likes of D Raja. Or, more likely it is competitive Socialism between Sonia Congress and the Left.

Take Japan, Germany, France and other Continental European nations. The GME Consulting study on the saving behaviour of West, citing researches on ‘market-based’ and ‘bank-based’ economies, says, ‘one of the fundamental differences’ continues to be ‘the traditional division between the Anglo-Saxon ‘market-based’ economies and the Continental ‘bank-based’ model. Germany and other southern European countries remain heavily dominated by their banking sector”. It also shows that the savings rate in bank-based economies is higher. According to Business Week (September 30, 2010), in the end of 2009, stocks constituted just 3.9 per cent of German household financial assets; life insurance 28 per cent and cash and bank deposits 38 per cent. Japan is identical. In a paper presented to the Bank of International Settlements in May 2009, Bank of Japan officials point out that ‘Japanese households prefer bank deposits over risky financial assets when all the financial instruments are so well-developed and heavily traded in Japan unlike in other Asian markets’. The ‘bank-based’ Japan and Germany are as efficient as the ‘market-based’ US, if not more.

- - - Indian ‘reform’ process has to be endogenous. Not exogenous. Yet, Indian ‘reformers’ are habituated to search the waste paper baskets of the ‘market-based’ US for its outdated ideas to ‘reform’ the Indian economy. Are the ‘reformers’ listening?

For the full text of the essay by Mr S Gurumurthy in the New Indian Express, click here.

The question that arises is can bank-based reform by itself take us to the level of growth required for addressing our 40% + poverty levels

In kali Yuga, where fence eats the crop, nothing works. We get what we, as a society, deserve. We have to wait for Rama rajya after the present kali Yuga

1) For the full text of the  one by Sri S A Aiyer, in the SToI, click here

Budget problems in the US are totally different from those in India. The US has been badly hit by demographic change. Earlier, its baby-boom generation contributed more in taxes than it took out. But now the boomers are retiring, and will take out much more (through Medicare as well as Social Security) than the next generation will put in. Both George W Bush and Obama have greatly increased health entitlements . So, total US spending on three items — Social Security , Medicare and Medicaid (for the poor) — is projected to skyrocket from around 8 per cent of GDP today to 18 per cent by 2025. This is the crisis Obama has to tackle.

India, however, has excellent demographic prospects. The proportion of Indians in the working age group 15-60 will rise by up to 300 million over the next two decades. This means buoyant tax receipts. If economic reforms ensure that their productivity keeps rising, fast growth will add to the revenue boom. That’s exactly what happened in ASEAN’s boom years: a rising workforce and fast growth helped raise both living and social standards. This was growth with social justice. India should follow the same path.

2) For the full text of this one by Sri Gurcharan, again in the SToI, click here.

What keeps me awake at night is that many of our policies have corrupted the morals of our people. When we cancelled loans of Rs 60,000 crores in 2008, a farmer who had just repaid his loan, sadly said, ‘What is the use of being honest? Human society is based on trust. We learned as children to keep our promises and repay our debts. Tulsidas reminded us, ‘praan jaye par vachan na jaye’. Loan waivers wound our moral universe in the same way as ‘make-work’ jobs adulteration of diesel with kerosene, and the vast theft of PDS food.