Is subsidy really helping India?

A simple but strong point was made by Prof. Amartya Sen in the recent public discussion held in Delhi University, "Every time I am here I have to carry a pullover at the height of summer because everything is, you see that Tokyo keeps the temperature 23 degrees, Singapore at 22 degrees, Bangkok at 22, Beijing at 22. We keep at 16 or 17 on subsidized power, air conditioning at 16 or 17. So I think we have to think of how it is valid?" 
The other eminent speaker of the discussion Mr. Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, made the important point about subsidiary "....there is no doubt that the subsidy structure that has evolved did not evolve from a presumption that look, let's do something for the poor. It was there, it was allowed to develop and there is a huge understandable, political resistance to be withdrawing subsidy. Most people are not aware to what extent these things are being subsidized. I mean for example, let's take diesel. Total expenditure in the Budget on food subsidy, which is, everybody agrees is a priority. We ought to do a better job, etc. There is no dispute on that. [It] Does not exceed Rs. 70,000 crore. The subsidy on diesel is Rs. 91,000 crore. "
So the big question is, does common man or aam aadmi of India really need the subsidiary he is getting?

Lets begin with subsidized electricity. In the same speech, Prof. Sen points out that about one third of people in India are without proper power. In addition to that, many states like TN, AP are reeling under severe power crisis, which has lead to closing of many industries and leaving many people to be jobless; and not surprisingly, these state's power utilities are in worst financial mess. The main reason being,: these utilities sell power at loss making rates. Hence no fund is available for modernization and expansion. (Incidentally India's average transmission loss is one of the highest among similar developing countries; In a country with almost 400 million without power, that is criminal!).

The details above, clearly show how valuable electricity is. Now going back to Prof. Sen's point: Can we be so careless about such a valuable commodity? The answer is blatant, such people should be penalized, not subsidized!! A great example is what happened in Gujarat. Mr Modi was strong enough to remove free power to farmers. [He actually calls it a curse]. Though he received strong resistance initially, now people of Gujarat receive uninterrupted power and of course they are very happy about it now. This is just the case of one sector. In Railways, tickets charged were at unviable rates until recently, when prices were revised. (Sadly the proposal to provide diesel at market price to bulk consumers has nullified all the gains). So are LPG which are sold at almost half the market price, and of course diesel for which govt and up-stream oil companies share 91000 Cr an year of subsidiary bill. And what do people do, they use domestic LPG for commercial purpose, smuggle kerosene and diesel to other countries where these commodities are sold at market rates and the biggest of all, super rich people drive ultra low mileage SUVs and luxury cars using subsidized diesel.  

As pointed by Mr Ahluwalia, people do not realize, how much of subsidiary they are getting and importantly the purpose of subsidiary. The main beneficiary of such subsidiary are not actually poor people, but "aam admi" as mentioned by Prof. Sen "... middle class, which has renamed itself aam admi i.e. they are relatively poor of the rich, that's the category and has a tendency to be vocal and all has to cooperate[with their demands]." These are the people who actually can avail all facilities at market price but still want to enjoy subsidiary because they are used to it. That sounds ridiculous, isn't it?

So what is the end result. Many govt. entities are under severe financial crunch or cannot be world class because of lack of funds. Worst of all, India is facing a risk of financial downgrade which can be disastrous to India inc, because of huge fiscal deficit. And what is there to check the fiscal deficit? This is what Mr Ahluwalia said about it: "You know, all the Fiscal Responsibility act does, is it forces the government to say what is its fiscal deficit going to be and somewhere, in November or so, report back are we on track or not, and if we are not on track, then explain to Parliament why the fiscal deficit is higher. There are no penalties other than what Parliament can impose. Now if Parliament had the approach, that if you've exceeded the fiscal deficit, we should have a vote of no confidence, there would be an immediate penalty. The problem quite honestly is that if you go to Parliament and say I had to exceed my fiscal deficit because I doubled the following subsidies, and I increased all these various others expenditures, generally you get applause. There is no perception I feel, generally amongst politicians, even amongst public that high fiscal deficit cause damage and that sort of view does it little bit as a free launch." People and importantly politicians, should realize the financial state of a country and act accordingly; if there is prolonged mismatch, history gives only one answer for it: economic crash!  

This actually doesn't mean, there should be no subsidiary, subsidiary should be given only to people who really deserve it. It should help development, not hamper it! Though the slew of tough measures in reducing subsidiary currently being taken, the revenue generated should be used to address the basic problem like healthcare, education and malnutrition. If all these saved money ends up in a 2G like scam or in Swiss bank, the whole objective will be defeated. Such tough measures should be backed up by strong political will . This week's financial and railway budget will be a clear indicator of how much will, the government has, to move towards a more sustainable economy. On one hand, this being the last budget before 2014 election, UPA may want to be more "aam aadmi" friendly and on other side, the lurking threat of financial downgrade; it would be interesting to see which side Mr Chidambaram takes!                                  
  

Sept 11

A blog at last!! So here we go...

I was thinking about what to write and just noticed the day: eleventh of September! 

The first thing, most of the people would remember about this day is the deadly attacks on US in the 2001. Exactly 11 years ago, about 3000 people were killed, thousands injured in the suicide attacks when 19 terrorist belonging to Al-Qaeda hijacked 4 civilian jets and crashed into buildings. Both North and South towers of World Trade Center were completely destroyed when each of the towers were hit by a passenger jets each carrying around 40,000 liters of aviation fuel!! The third plane crashed into Pentagon building.The fourth one was intended to crash on the Capitol building in Washington D.C., but the brave passengers fought with the hijackers; the plane eventually crashed into a field near Pennsylvania. In response to the attack, the U.S. lead   coalition launched the war on terror, invading Afghanistan and the Taliban controlled government was overthrown.

Personally I still remember the deadly day. In the evening, after coming from school, I was just scanning the TV channels, I noticed the news on a Indian news channel. I quickly changed to CNN for latest updates. Just as I was trying to figure out what was it all about, I was shocked to see an almost live news: Another plane crashes in WTC south tower. Soon after, there were more reports of attacks, buildings collapsing and growing number of causalities. I still can't forget these images. There was sadness everywhere around; not just on that day, but for weeks after that! Soon the US lead coalition launched the war on Afghanistan, where more innocent civilians were killed. More than that the events had completely changed the way the Western society looked at Asian people!

There was another event on September eleventh which completely changed the way the Western society looked at Asian people(but in a very positive way), exactly in same place (U.S) some 108 years ago before this attack! It was in Chicago at the Parliament of the World's Religions. A young Indian Man, who was not even part of the official delegates from India, looking nervous, was about to speak next; he had already asked for more time when his turn came initially, as he had developed stage fright because he was probably the only one without preparation. Just before his speech, he prayed to goddess Saraswathi and he spoke. Swami Vivekananda's first few words "Sisters and Brothers of America!" received unbelievable response: a full two minutes of standing ovation. It was a short speech but history was written! Full text of speech
He represented India and Hinduism but he spoke more on Universal brotherhood. He made many more speeches and by the time the parliament had come to an end, Swami Vivekananda had created the most impact. He came, he spoke, he conquered!

Swami Vivekananda was indeed one of the greatest people in modern Hinduism. It was because of him western society had developed interest in oriental philosophy, yoga, Hinduism and Indian way of spiritualism.
The whole generation of freedom fighters who came after him were some how inspired by him: Mahatma Gandhi, Subhas Chandra Bose, Arabindo and Bal Gangadar Tilak ; other notable people include Nikola Tesla and Rabindranath Tagore to name a few. He inspired Jamsetji Tata to set up Indian institute of Science for which he was asked to head it. He also received a similar offer from Harvard University. He turned down both the offers saying a wandering Monk and cannot be restricted in one place.

It is indeed shameful that very few people remember this historic day and more importantly know about Swamiji . His teaching especially about awakening youth was in many ways the building block of Indian Independence movement. India again needs such awakened youths to bring it to the glorious position envisaged by our forefathers and indeed Swami's teaching can again work wonders! Jai Hind!
                   

         

The dream run...

29-07-2009, 5:23 PM.... I receive a call... My dream run starts.

It was the first company to come for recruitment in our college. And it was Ashok Leyland. I do not know what that name ment to others but for me it was stupendous. And i believed it was my only chance as no company that came to our college can be compared to it.

All eyes were on the recruitment procedures. The D-day arrived. We all were roaming around in unusual, formal attire with files in our hand. Everything was new. First we were asked to wait in a hall, waiting for the company ppl to come. And the proceedings started as soon as they came. First it was the pre-placement talk. Then it was the tests. A series of 3 tests ,one after the other. It was too much to handle. Finally we all came out, most of them exhausted. Most of us came back to hostel, some confident ppl still waiting for the results at the hall.

As we were trying to figure out how our performance was, my phone rang. It was one of my classmate, telling me that my name was in the list, a list of 17 ppl shortlisted from nearly 130 students. I didn't know what to do. (And one of my friend who did not know whether he was eligible till the day before, was also selected.) It was an unusual feeling. And there ppl around me who were dejected about not getting selected, so really couldn't celebrate as i would have wished( And it was the opposite case after the TCS interview i.e everyone celebrating and was alone watching them. Guess i always remain alone!!). Anyway my interview was only on 14-09-2009 so till that time i was roaming around the college as if i had conquered the world. So many ppl congratulating, it was so nice. And with so much time one could have studied every sbject he has studied before, but only few do that and i wasn't part of that 'few' group.

The next leg of the dream run: 17 of us go to Chennai to attend the interview. I stayed in my friend's (Shriram) house. We all assembled at the Ashok Leyland corporate office, a 14 storied tower. It was fully furnished hi-tech building with all the latest facilities imaginable. And After a short wait at the lobby, we were taken to the 7th floor. My interview was the second last one. It ended to be a pretty good performance. And their tantalizing questions like 'which dept would u like to work' etc gave me bit of too much hope that i was messaging around saying that 'the interview was actually fun!!'

As every dream run, it had to come to an end. Probably they had already selected the ppl before they took my interview. Or i should have understood when they said 'why your mark is so low'.
Or they did not wanted any one from mechatronics. Anyway i did not know what made the a 5.5 lakh job into a mere corporate visit!! In the end only 5 of them were selected and all of them Mechanical engineering!!

Well there is no use feeling bad about it and that event has give me a chance to write this blog as an INFOCIAN!! All iz well!!