BOOK REVIEW:SUDEEP CHAKRAVARTI: THE BENGALIS:But Why Should Anyone Fight Over Beauty?

BOOK REVIEW

TITLE: THE BENGALIS-A PORTRAIT OF A COMMUNITY

AUTHOR: SUDEEP CHAKRAVARTI

PUBLISHER: ALEPH BOOK  COMPANY, 2017

PRICE: HARDBACK, Rs.799/-

But Why Should Anyone Fight Over Beauty?

The last line in this book,(But why should anyone fight over beauty?), makes fair, if poignant comment, on all that is Bengali. It is by no means the whole story, any more than the snippet of lyric at the very end of the last LP  from The Beatles. That bit of whimsical farewell, which said: “And in the end/ The love you take/Is equal to the love you make”.

The Bengalis is an astonishingly good book, written by an author at the height of his powers. If Sudeep Chakravarti was an American, preferably a  Jew, he’d probably be sporting a well deserved Pulitzer Prize for writing it, his sixth book.

Who knows, the highly educated Bengali diaspora, many in academia there, could yet propel the American version, if there is one, to just such an outcome.

And that is another point to make- this book targets the “Banglasphere”, certainly in India, Bangladesh, and then Bengalis and “not-Bengalis” anywhere in the world. All, in fact, interested in this quirky community capable of exaltation and terrible pettiness, in almost equal measure. The range and depth of it, over 400 pages, marks it out as a labour of love, because no publishing advance in India can compensate for the obvious research and prodigious amount of work that has gone into it.

The Publisher, Aleph Book Company and its visionary Editor David Davidar,  possessed of excellent taste, is to be congratulated for producing this sumptuous “keeper” of a book. The Bengalis tells a story that needed to be told, before it all went to pieces in incompetent hands.  The production values too are superb, at least in the hardback edition.

Davidar was, long ago, Editor of Gentleman Magazine, and then the first Editor of Penguin India and later Penguin Canada.

The Bengalis is a mixture of research based history and restrained personal  anecdote blended together with considerable finesse. Its content is vivid, humorous in parts, but also sad, because there is evidently enough potential unrealized in the community to float an entire civilization on the clean slate of a new-found planet.

Having said that, much indeed has been accomplished over the centuries, and in multiple directions.  Chakravarti chronicles a great deal of it, as if loath to leave any significant aspect out of his remarkably unbiased account.  There is the bald fact of happening, the opinions and attitudes that shaped it, and the consequences- all laid out with great lucidity.

The present low ebb in Bengali fortunes can be traced, as is fairly well known, to Viceroy Curzon’s Partition of an insurgency-ridden Bengal, in 1905, along cynically communal lines. Chakravarti calls the section, towards the end of the book, The Age of Fire.

By the time the British re-unified Bengal in 1911, cutting it up again, but along linguistic lines this time, the damage had been done, even as the terrorism had only intensified. The Raj on the back foot, moved the Capital to Delhi, truncating the importance of Bengal forever.

And this repeated fracturing that never healed came to its bloody climax through the forties and into the Partition of 1947.

Independent India too, for reasons of its own, made busy with cutting what remained of the “arrogant” Bengali down to size. And today, self- confidence gone, the residual, self-destructive fractiousness, is a tangled skein, that may take a generation again to unravel. 

It has grown intense over the Naxalite years, the anti-industry rule of the Left Front, and that of an agitational Trinamool Congress. It is as if a talented people have been blighted by the Arab/Turkish/Indian concept of  the evil-eye(Nazar).

But Chakravarti manfully ploughs through his material, refusing to be burdened or side-tracked by the ruined promise of Banglasphere, both on this side of the border or that.

He writes of  a once composite culture of Hindu, “Mussulman”, Christian, Tribal, leavened with the mercantile Marwari, even Bengali entrepreneurship, and those others who made the place their home.  It is a composite ethos that is both there and not anymore, but with the potential to rise once again to its glory days, should some as yet unknown stimulus catalyse it afresh.

Is Chakravarti, a well-known Liberal journalist in his earlier avatar, hinting at a renaissance brought about by the BJP, in his maturity?

Mukul Roy and Amit Shah will certainly do their damndest.  And when Marxism, Muslim appeasement, and reckless Populism has racked West Bengal with debt and damnation, why not? Who knows but the Saffron “Nationalists” may well come to the rescue.

There are excellent Bengal roots. Echoes of the “bluechip bhodrolok” Syama Prasad Mookerjee, who coincidentally not only headed the Hindu Mahasabha and kept West Bengal from slipping into East Pakistan, but also established the Jan Sangh, the predecessor of the present day BJP, can still be faintly heard.   

Chakravarti describes the contribution of the rich elite (Borolok), the middle-class (Bhodrolok) and the delightfully unrestrained and numerous poor(Chhotolok).

He points out the passions central to a Bengali’s way of life, not only food, though that too, and the classist hypocrisies of what the Naxalites contemptuously referred to as the “Bourgeoisie” and “Class Enemies”.

That the entire leadership of the bloodthirsty Naxal Movement came from the Bhodrolok, slumming it as revolutionaries in the woods, never once entered their heads.

Chakravarti also goes further back to the Bengali dynasties that ruled before the Moghuls and the British. He draws cameos of the stalwarts, and interesting, if unknown persons. In a way very different from Amartya Sen, he describes the Bengali love for verbal sparring and pushing the envelope with their opinions.

He goes forward too, away from the heat and dust of Bengal, to the mostly distinguished, “great scattering” abroad, not just of today but yesterday too.

He travels, as only a Bengali and a Gujarati can, with both “love “ and “fortitude”, just for the pleasure of it. And everywhere, he takes the reader back to intrepid and thoughtful Bengalis who happened to have recorded their experiences before him.

For: The Sunday Pioneer BOOKS

(998 words)

November 27^th, 2017

Gautam Mukherjee

Elevation Of The Dynasts

Elevation Of The Dynasts

What does the long awaited elevation of Rahul Gandhi portend? Does it suggest an alluring “youth” blast from the Opposition positioned for 2019? Is it calculated on a narrower margin of victory for Modi in his home state of Gujarat, or even a surprise upset?

Lord Meghnad Desai in a recent column cautioned against scoffing at the idea of  a light on substance youth appeal.

The nominated political journey, that began in 2004 when Rahul Gandhi became an MP from Amethi now sees the heir apparent walking the walk and talking the talk better than ever before. Some say it is himself, maturing as a politician, with improved ambition and focus. Others say that Rahul Gandhi seems to have gathered a better set of speech// twitter writers.

Throughout these 17 years, Rahul Gandhi has steadfastly stayed away from any office of Government, though de facto he has been calling a lot of the shots since becoming General Secretary in 2007, and Vice President in 2013. Nevertheless, he has contributed or presided over, it is alleged, 29 consecutive electoral losses.

He tried hard to reform the working of the Youth Wing and the student- based NSUI, change around State unit office-bearers, motivate grass-root workers etc. with intermittent talk of inner party democracy and elections. In practice, processes have stayed largely nominated, and attempts to induct political novices from disadvantaged sections have fallen flat.

Meanwhile, the 130 year old Congress itself is reduced to ruling just two large States, namely Punjab and Karnataka, with other small left-overs from a ravished presence in the North East.

In Parliament it has less than 50 seats in the Lok Sabha, and a dwindling leadership in the Rajya Sabha. Much however is made of an occasional Panchayat, Municipal or parliamentary bye-election seat win, clutched at as an possible indication of a turning of the tide.

This upcoming Presidential “election” suggests Rahul Gandhi has decided to go the distance despite the punishment. The timing also suggests that pulling it off for an ailing Sonia Gandhi might be running out.

Of course, as long as she occupies 10 Janpath, there will still exist a parallel centre of power, with yet another, in a much lower key around the Vadra residence too. 

It also means the further diminishment for Sonia Gandhi’s long-serving courtiers, with Sonia herself seeing to it that they are unable to sabotage her son. They may not be turfed out right away, but will certainly be supplanted by Rahul’s own coterie.

They too are Congress dynasts, who have been maturing on the vine alongside - Scindia, Deora, Hooda, Prasada, Pilot etc., and allies: Omar Abdullah, Akhilesh Yadav, Tejaswi Yadav and so on. Prince Charles may be forgiven twinges of pain, though this is only an abdication and passing of the baton in a political party in the Commonwealth.

But can this lot of suave and privileged scions challenge the Modi-Shah juggernaut for the remaining Assembly elections and the general elections in 2019? Can Rahul Gandhi make more effective decisions going forward?

With the sidelining of the Old Guard, most of the taint of serious corruption that hovers like a miasma over elderly former Union//State and Chief Ministers  from the Congress/UPA, and quite a few pliant functionaries/bureaucrats, will be jettisoned.

Of course, Rahul has the National Herald case of his own to contend with, and there could be one or two more. The main thing is to stay corruption free going forward.

Given this, and making consistent sense in pronouncements, the 40% of voters that are now urban, with 65% of them under 35, may well become enthusiastic in due course.

More so because India is headed towards becoming an urban society within “a generation”. Congress meanwhile is updating its “secular”, minority appeasing, ostensibly liberal outlook basted with a soft Hindutva to boot.

The urban youth could increasingly buy into the Rahul version of  “India” as opposed to Modi’s more rustic  appeal to  “Bharat”.  This, may not do the trick in 2019 or even 2024, but 2029 could well be theirs.

But, even this will remain a pipe dream unless Congress improves its showing in 2019. This means toning up its lousy lack of organization at Booth and Block level to rival anything the BJP and the RSS can bring to bear.

The old caste, class, and religion fissures, traditionally exploited by the Old Guard, have been bested by robust BJP’s Mahadalit support, and a new found resonance with Muslim women.

This even though the umpteenth version of Rahul Gandhi launched during the Gujarat campaign 2017 has done quite well so far. But, with Himachal Pradesh also slated to slip out of Congress hands, there is clearly no winning poll strategy in place.

What can a Rahul Gandhi led Congress wrest away from Modi going forward? Can it draw blood with his harping on lack of jobs, farmer suicides and low growth? Is it waiting to benefit from Modi’s mistakes?  While true enough, will people believe that Rahul can do better?

Still, those in the ruling combine that ridicule a gaffe-prone Rahul Gandhi and are cocksure of their chances may be as misguided as Congress  raking up the Chaiwala image yet again.

It is a fact that Modi and his Government have not been able to fulfill quite a few of their election promises. And yet, the voting public, from all accounts, has accepted the pain of structural changes, inspired by the untiring efforts of a squeaky clean Prime Minister and his Cabinet.

The Modi Government has not however scored very high on Governance. Much that has been accomplished is perceived to have been rammed through by Modi personally. 

Is the BJP then seen as low on bench strength compared to the Congress, even an untried new one?

It sometimes seems that way, despite the presence of a number of good ministers such as Sushma Swaraj ( who steered the ICJ win recently), Nitin Gadkari, Piyush Goyal, a terrifically successful Party President in Amit Shah, and a determined Arun Jaitley. But what about the dozens of others on board?

Fortunately, Modi has the ideological backing and approbation of the stalwarts in Nagpur. This helps him ignore vociferous and senior dissidents, and uncivilised fringe elements out to embarrass.

All this is apparent to the public too, alongside the good things done. There is vast infrastructure development underway, OROP was settled after 40 years in limbo, the 7^th Pay Commission was executed smoothly, some direct tax reform was done for the lowest rung of tax payers.

Then, the fiscal deficit and inflation has been admirably controlled, the Benami and Bankruptcy Laws were passed. The vast millions of the unbanked were included, the Aadhar card was used extensively to identify and link people to a largely digital system. There is much greater provision of electricity and cooking gas to the masses. 

Government Welfare Programmes are being effectively implemented and administered.  But Petrol and Diesel remains horribly over-taxed.

There is a feeling though, that much more is to come, and Modi must be given the chance to bring it about.

But what can Modi do in the remaining time to effect a resounding encore in 2019?

Sorting out the Ram Mandir at Ayodhya, festering for 21 years will be a proud moment, if it comes through. Removing  J&K’s special status under Article 35A and 370 will be very well received, particularly after confronting the Hurriyat and eliminating nearly 200 terrorists this year.

Modi has already warmed the cockles of patriotic Indian hearts by smacking Pakistan with the Surgical Strikes and standing up to China over OBOR and Doklam.

Still, the middle-classes, the traders, small to medium business in the unorganized sector, industry, real estate,  all feel ignored and let down.

Can Modi urgently address these sections of the disaffected? Can he do something to elicit cheers from them too in the coming Union budget 2018?

And he needs to do this as a self-starter, and not after being mocked and goaded by Rahul Gandhi. Unfortunately, the reduction of GST duties happened after a prolonged period of Gandhi calling it the “Gabbar Singh Tax”.

Modi’s lurch towards the poor also came about after Gandhi characterized the Modi Government as a “Suit Boot Sarkar”. No further David strikes should be allowed by Goliath, if he knows what’s good for him.

 For: The Sunday Guardian

(1,387 words)

November 22nd, 2017

Gautam Mukherjee

BOOK REVIEW: India@70 MODI @3.5: THE ELEPHANT GATHERS MOMENTUM WITH MODI AS MAHOUT

BOOK REVIEW

Title:  India @70 MODI @3.5-Capturing India’s Transformation Under Narendra Modi

Editors: Bibek Debroy & Ashok Malik

Publisher: Wisdom Tree/Dr. Syama Prasad Mookerjee Research Foundation, 2017

The Elephant  Gathers Momentum With Modi As Mahout

This book was released by the Finance Minister Arun Jaitley at the Nehru Memorial Auditorium amongst functions to commemorate the 3.5 year mark of the Modi Government. That the next days headlines spoke of  a former occupant of his high office applying for a job “at eighty”, was based on an incidental quip from Jaitley, and no fault whatsoever of this worthy collection.

It is made up of 18 essays written by that relatively rare breed of intellectuals from the right-of-centre, in a field generally crowded with ideological Leftists, and not just in India. It includes amongst its line-up, think-tank functionaries, journalists, bureaucrats, diplomats, and other Government officials.

The tone of the book is confident and upbeat throughout. But perhaps Prime Minister Modi put the emergence of the BJP best. It is now at centre-stage with a electoral majority for the first time in its history, and also after 30 years nationally.

He did so, in another context, that of Indo-American relations, by saying India was ready to get over “the hesitations of history”.

Swapan Dasgupta, now a Rajya Sabha MP, points out that the Modi led BJP has set about expanding its political base as of 2015. This is borne out by the increase in vote shares creeping up towards 40% on average, and in isolated cases, even higher than 50%, at subsequent Assembly elections.

The engineering of it saw a new emphasis on providing succour to the rural and urban poor, and the lower middle classes. This was combined with unprecedented public spending on infrastructure in the absence of much initiative from the debt-ridden private sector.

This increase in vote share, evident post demonetization, but before the advent of GST, is seen in the clutch of five states that went to the polls along with Uttar Pradesh.

It can well be contrasted with the share of the principal Opposition Congress declining  from some 28% at the last General Elections in 2014 (to BJP’s 31%), languishing, in some instances, into disastrous single-digits.

And Dasgupta also makes the telling point that Modi’s new politics, ( ably aided by chief election strategist and Party President Amit Shah), shows no compunction in hopping back and forth across the Right-Left divide.

I will skip over the tendency of most of the writers to dutifully cover the laundry list of achievements, natural in a commemorative volume of this type. These gains are mostly incremental in nature, with the exception of a vast improvement in electricity  and cooking gas provision to the poor. 

Much has been done through the tweaking of various Government programmes and the prevention of leakages. This is another hallmark of Modi economics/administration, but then, there are the bold moves too, (Surgical strikes, hot pursuit, standing up to China, banking the unbanked, demonetization, Benami Act, Bankruptcy Act, GST…).

A young and globally recognised Sanjeev Sanyal, Principal Economic Advisor to the Government of India, author of several readable books, is proud of the recent successes of the World Bank ranking improvement in the ease of doing business stakes, and the Moody upgrade( first in 13 years).

He is something of a city expert from his earlier experience in Singapore, and makes the point that India will soon become an urban majority country “within a generation”.  

This is, of course, the glide path of emerging economies growing into developed ones. It is however a long way from MK Gandhi’s “India lives in its villages”. But the challenges of managing an influx to total a billion city folk will be considerable.

Sanyal suggests that India will have to considerably pick up its game on “Urban Management”. He sees urban poverty not as static but a “dynamic flow”, and says all countries which are now much better developed had tremendous slums in the urbanization phase. This includes London and New York.

He suggests facilitating the rural to urban migration process, and encouraging the dynamism that slums with “shops, mini-factories, people moving in and out,” typify, at once bringing up visions of the Dharavi Slums in Mumbai, amongst the biggest in Asia. This means, keeping the organism alive and thriving through the transition, and much more than providing a roof over the migrant’s head with “low-cost housing”.

The essays on Health, Water, Sustainable Development, Tax Reform, while well laid out and argued, leave one less enthused, because most members of the general public can’t see any improvements visible on the ground. Ditto the much-publicized flop of the Swachh Bharat Mission, against a rising tide of filth, sewage, garbage and pollution. And the less said about the “Minimum Government Maximum Governance” slogan, probably the better. The Ministry of Defence remains a Tower of Babel where things are forever expected to happen but don’t.

The chapter on ASEAN and South East Asia by PM Heblikar is interesting because of the 11 heads of Government from the region slated to grace our Republic Day parade in January 2018. This, soon after Modi’s own visit to meet all of them at the Manila Summit recently. India’s attitude to South East Asia has been ambivalent and luke-warm for too long, despite policy professions of “Act East”. The efforts being made now for a better political and economic engagement with the region promise to yield good dividends.

Anirban Ganguly of SPMRF flags Modi’s desire to create a “New India”, a self-renewal, driven by: “ innovation, hard-work and creativity”.

Diplomat Veena Sikri highlights the remarkable rise in India’s “soft power” under Modi’s determined engagement with the countries of the world, some visited by an Indian Prime Minister after decades, some for the very first time.

Recent opinion polls show that the masses of India as well as the urban elite still repose great faith in Modi’s leadership, at a time when the “honeymoon period” is long over. And this by itself is the main message at the end of more than 3.5 years of the Modi Government.

For: The Sunday Pioneer BOOKS

(983 words)

November 19^th, 2017

Gautam Mukherjee

BOOK REVIEW: NITIN GOKHALE-SECURING INDIA THE MODI WAY

BOOK REVIEW

TITLE: SECURING INDIA THE MODI WAY

PATHANKOT SURGICAL STRIKES AND MORE

AUTHOR: NITIN A GOKHALE

PUBLISHER: BLOOMSBURY INDIA, 2017

PRICE:Rs. 499/- HARDBACK

No  More Playing At Mr. Nice Guy

Only once in a while does one come upon a book which is non-fiction, and on the defence/intelligence/security policy and establishment, but more compelling than its imagined counterpart.

This is thanks to the author Nitin Gokhale’s basic training as a journalist of over 30 years standing, rather than the fulminations of a typically stuffier “expert”.

For India, living for long in a Gandhian cum Nehruvian haze of confusion that our enemies have exploited, a change of attitude is most welcome.  

Of course, the Indira Gandhi years were an exception to the foreign policy naivete that preceded and succeeded it.

Prime Minister Modi is often likened to Prime Minister Indira Gandhi, both for his ability to garner votes like her, and refusing to be anybody’s push-over.

So the new resolve, coming from the highest political level, has evidently liberated the National Security establishment and the Armed Forces to do their jobs without hindrance, and show all what they are truly capable of.

It is making Pakistan and China less certain of what to expect from India after years of a predictable timidity and disgraceful unpreparedness in security terms.

Now all this is changing before their very eyes, as the surgical strikes through the LoC and the Doklam standoff demonstrated to each respectively.

Continued work on connectivity and border area infrastructure including train lines, roads and airports, placement of missiles and other military hardware, and the raising of Mountain Corps trained to operate at high altitude and difficult terrain, leaves no one in any doubt.

Combined with an energetic and muscular diplomacy  led by the Prime Minister that has gained a fresh understanding of India in the comity of nations, things have changed a great deal.

Gokhale’s book from start to finish reflects, with glowing approval, this new confidence, though it also underlines our bureaucratic approach. The audacious Surgical Strike, post the attack on an Army unit at Uri, is a departure from the norm typical of Modi.

Gokhale describes, in time-lined reporter format how India retaliated on 29 September 2016, sending soldiers into Pakistan occupied Kashmir (PoK) to wipe out some 80 terrorists/ Pakistan Army personnel without suffering any losses of its own.

The saving of the massive Pathankot Air Base, also in 2016, using effective multi-specialized units, based on timely and credible Intelligence is notable too.

Going further back into 2015, Gokhale describes the “hot pursuit tactics” employed using Special Forces. This, into Myanmar,  in retaliation for several ambushes suffered by Indian forces. The insurgents in Manipur and Nagaland typically slipped away into multiple camps some 10 km. inside Myanmar.  

The signal strikes here were followed up by visits by the Indian National Security Adviser (NSA) Ajit Doval, and the Foreign Secretary Jaishankar to obtain Myanmar’s endorsement to the actions taken into its territory.

Nitin Gokhale goes on to tour the diplomatic territory too, the fresh reengagement with West Asia - UAE, Saudi Arabia, Israel, as well as Iran.

It points to the tangible success of Chabahar as an India-Iran-Afghanistan initiative, joined also by Japan of late. With the first wheat shipment to Kabul via Chabahar reaching safely, Afghanistan has been quick to point out its sole dependence on Karachi Port is over.

This Government’s dealing with Maoist violence in 10 States in Central India is still a work in progress though, with liberal uses of both carrot and stick.  

There is the force, of the Central Armed Police Forces (CAPFs) - CRPF, SSB, CISF, BSF and the ITPB under the leadership of the Home Ministry’s Rajnath Singh, plus the thrust towards “Vikas” via roads and infrastructure development.

Is it working?  Hearts and minds apart, the number of clashes have come down to 554, from 2,213 in 2010.  Civilians killed in 2010 were 720, including suspected “police informers” (320). This is down to 113 as on 15^th August 2017, with 63 of them being alleged informers. Similar declining trends are seen in the number of security forces killed, arms recovered, and so on.

The worst internal situation of this kind is certainly in the Kashmir Valley where frequent  attempts at appeasement have not yielded good results.

Modi’s policy of eliminating known terrorists and pulling apart the veil on Hurriyat complicity, has given Pakistan a fresh strategic headache. And this applies to new fronts sought to be opened by Pakistan’s ISI and others in Assam, West Bengal, Kerala (ISIS), and even Punjab (Khalistanis from Canada).

Gokhale has written a long chapter on “Standing up to China”. It encompasses India’s closer relationship with Japan, its refusal to participate in the CPEC citing the illegal use of PoK, the Dalai Lama’s visit to Tawang, the initiating of quickened development and infrastructure in Arunachal Pradesh, and of course, the stand-offs at Doklam and in Leh.

In addition, India has drawn closer to B IMSTEC, ASEAN, Australia.

There is military, economic, and high technology potential from drawing closer to Israel, America, France, Britain. India continues strong with Russia, and with a lot of the oil and uranium rich Central Asian Republics. There is no neglect of Beijing and BRICS, G-20 etc. either.

But China is no longer in a position to take an aggressive military posture with India.

The chapter on the Ministry of Defence reveals how the Indian establishment, both political and bureaucratic, has been and continues to be, the worst obstacle. They have made pig’s breakfast of Modi’s ambitious plans to manufacture in India state-of-the-art armaments and equipment in collaboration with the best in the world. It smacks of clashing and powerfully entrenched vested interests.

The book ends with a happy chapter on the accomplishments of the ISRO ( Indian Space Research Organisation), and a worried note on our capability to secure the cyber domain. This covers threats to power, banking, communications , transportation, all in the backdrop of persistent suspicion that  China is able to knock our fighters and helicopters out of the sky (in Arunachal Pradesh), because of their prowess at cyber-hacking.

For: The Sunday Pioneer BOOKS

(991 words)

November 15^th , 2017

Gautam Mukherjee

Has Something Fundamentally Changed For Mutual Funds In India?

Has Something Fundamentally Changed For Mutual Funds In India?

For two decades, the Indian Stock Market has had an upward momentum.  That some of this was through NDA I, and ironically as the Kargil War raged, is interesting as a phenomenon. The market, we are told, marches to its own drum, and anticipates the future.

At the same time, even as key indices doubled and trebled, it built a higher base continuously, never falling back to original levels during  periodic consolidations and corrections.

And of course, it moved now in response to not just domestic issues, but global trends, as protectionist walls were lowered. The combination of openness and regulatory caution in India has kept the worst excesses from happening, even in the difficult days of 2008.

This maturing of the bourses began, it is seen, within seven years after Liberalisation, in 1991.

Probably as soon as some people, mainly Gujarati and Marwari market men, began to believe it was a permanent change for the better, after the long years of Socialist constriction.

The fuel for the rise of the stock market though, which mirrored the real economy after a fashion, till very lately, was almost exclusively the ingress of Foreign Institutional Investor (FII) funds.

This showed up as billions of dollars, never seen before. Though in overall size, even now, it does not exceed $30 billion odd per annum.

The FII domination was palpable for years, and they controlled the rise and fall of the indices based on what they chose to do. Domestic retail and institutional money,  mirrored the FII plays, or sat watching on the sidelines.

Our companies mostly, with the exception of Dhirubhai Ambani’s Reliance, did not dare to raise big finance from the stock markets at first, and truth be told, there is much unexploited potential even now.

The FII money, climbing over the years from a billion or two at first, is not a large sum as a proportion of international investment in the emerging markets. China gets over a $100 billion every year. The Indian portion represents a tiny percentage still.

But nevertheless, it has been enough to transform. It took our bourses, over the years, from a turnover of just $ 250 million or less in the eighties, through its stimulation, to around $ 2 trillion today.

As it grew, there was intelligent speculation that a proportion of this money was Indian, round tripping, from clandestine Black to Hawala to White on the return  journey, via the anonymous participatory notes (PN) route.

This was a loophole that the Government of the day was loathe to close for more reasons than one. PNs were hosted by the FIIs, but they did not have to disclose the identity of the beneficiaries.

Another portion of the flow in was from global investment firms taking advantage of no tax treaties with countries like Mauritius. These have recently been plugged in the main.  But back in the day, investment entities registered there enjoyed nil taxation in India on their stock market profits.

The domestic investors too had a lot of tax incentives and exemptions that exist to this day, but not for short terms of a year or under.

All the while, the relatively substantial domestic “household savings”, higher than any other country except China, stayed away from the bourses. Just 5% of this resource strayed from bank fixed deposits into equity, and sometimes the debt instruments, directly,  via stock brokers, but more often than not, through private and  Government  bank floated Mutual Funds. These made an entry into the country in 1993, and then grew exponentially over the years since.

That is, with the exception of the Government owned Unit Trust of India (UTI) that had a solitary mutual fund operating since 1964, joined by some more offerings in the eighties, paying steady dividends for years. But eventually they, soon after the millennium, had to be wound up. Government owned funds were too often forced to invest in Public Sector Units (PSUs), and other Government debt, not always on commercial considerations, or to its own benefit.

But in fiscal 2016 all this changed organically. After a gestation period of nearly 23 years, the share of direct equity investment, much of it via personal trading accounts online, via the traditional brokers and through mutual funds doubled, from a largely inelastic 5.29% of household savings to 11.04%.

This trend is likely to accelerate, due to better returns, and much better tax treatment, compared to fixed deposits in banks. And because the dam of suspicion may have been breached at last.

Domestic interest rates are trending downwards, with inflation and long term contracts in imported oil prices largely under control.

This means fixed deposits in banks, taxable at the marginal rate complete with tax deducted at source (TDS), cannot do very much to satisfy going forward.

Also, with real estate prices, the other big traditional favourite, stagnating with oversupply, there is less fresh speculative investment going into it.

Meanwhile, reflecting these tectonic shifts, overall asset management by the Indian mutual fund (MF) industry surged 30% to Rs. 21.45 lakh crore in September 2017, up from 16.51 lakh crore just a year earlier.

The MFs have reached into the tiered cities in a big way, for the first time as well. Investment from beyond the top 15 cities rose to Rs. 3.79 lakh crores in September 2017, up from 2.74 lakh crores a year earlier, representing a rise of 38.5%.

Individuals investing, as opposed to corporate parking their liquidity, rose a quantum 50%. This is represented by 6.68 lakh crores, up from 4.45 lakh crores a year ago.

The net effect of this surge in domestic, largely retail money, going into the bourses is that the markets have tended higher, ahead of results and fundamentals. Any corrections have been shallow and recent levels have seen all time highs.

Also, and importantly, the FIIs have been matched and bettered, and they cannot rule the roost and manipulate pricing anymore, unless they bring in much bigger monies than so far. But, at the same time, with even a strong, stable rupee to boot, they cannot stay away either.

The Government, on its part, is earning international kudos for its structural reforms, such as the new bankruptcy law, and the introduction of an online linked Goods and Service Tax (GST), even though the execution of the latter has been clumsy.

The depth of the Indian financial market is insufficient to absorb quantum leaps in foreign investment without more structural reforms, growth, and modernisation across the board - in equity, debt, futures, options, derivatives and so on. Nevertheless, a continued surge from this point onwards is more than likely. The fact that India does not yet have a fully convertible currency when other much smaller countries do, is a glaring negative too.

But, as is long held true of the real economy, the domestic demand for financial instruments too can be huge once the public sheds its inhibitions. India may indeed be waking up to the charms of the financial markets on a more widespread basis for the very first time.

With the cash economy being subsumed into the official one post demonetisation to a large extent, the joys of tax evasion are not what they used to be.

Putting the money to productive use to earn higher yields instead of being forced to consume it as before, may benefit the erstwhile cash hoarder as much as the national economy. It calls for a shift in mindset, of course, but judging from the sharp increase in digital transactions, the change of heart may be taking place automatically.

All in all, it is probably true to say that the Indian Mutual Fund Industry could begin to emulate the US giants as drivers of growth and excellence, with domestic houses plunging in to compete more effectively with subsidiaries of international giants.

Investment Bankers, will not just engineer mergers and acquisitions on an accelerated basis, but will increasingly tap the financial markets. They are expected to dwarf the banking universe for opportunities for their client Start Ups.

How long now before the paradigm shift from reticence to risk appetite like the Hong Kong Chinese?  And when the bolder ones amongst the Investment Bankers look at launching some aggressive Indian Hedge Funds of their own?

  

For: The Sunday Guardian

(1,378 words)

November 8^th, 2017

Gautam Mukherjee

BOOK REVIEW: The Political Economy Is A Varied Landscape

BOOK REVIEW

TITLE: INTERVENTIONS IN POLITICAL ECONOMY-EXPLORATIVE OBSERVATIONS

ESSAYS IN HONOUR OF PROF.MANJAPPA D HOSAMANE

EDITED BY: PROF. MUZAFFAR ASSADI

PUBLISHER: KALPAZ PUBLICATIONS, DELHI, 2017

PRICE:  Rs. 850/-

The Political Economy Is A Varied Landscape

This is a slim, variegated, and academic volume, of 13 macro-economic essays, broadly classified under the moniker of the Political Economy.

It has been written by an assembly of distinguished professors from Mysore University, in the main, with others from abroad, and an industry voice or two to join the chorus.

The Editor Prof. Muzaffar Assadi, PhD from JNU and post-doctorate from the University of Chicago, briefly sets the tone by recounting the development of   theory on the Political Economy, beginning with Adam Smith and John Stuart Mill, through the unavoidable Karl Marx, and on to distinguished 21^st century ethnic Indian thinkers like Amartya Sen and PN Bhagwathi.  

The essays in this book include one from Prof. Kishore Kulkarni PhD from the Metropolitan State University of Denver, Colorado  which argues that: “Policy effectiveness is  better explained when interest rate is treated as a reflection of money supply change rather than as an instrument to make the change in money supply”.

Kulkarni implies the recent US macro situation with regard to small hikes in interest rates is a post facto acknowledgement of improving money supply, rather than an agent provocateur  to make it happen.

However, it will be remembered, that under President George W Bush, post 2008, and much of  both terms of Barack Obama,  US interest rates were kept at near zero, and combined with huge stimulus packages to keep the US economy from collapsing into a 1930s style Great Depression.

Another, on export decision making by the small scale industry, comes from Dr.Younos Alroaia, Islamic Azad Industry, Semnan, Iran.

He picks on the small scale industry in Iran because it has become a major source of employment and is a growth driver of exports. This may well have parallels in India. Reflective of this, in the Indian stock market, it is small and midcap stocks that are much in demand.

Younos quotes 2004-2005 figures to cite 23% of the total exports emanating from the small scale sector, along with 20% of total manufacturing output,35% of indirect investment,18.4% of value-addition, and 4% creation of fresh employment.

In Iran, largely dependent on its oil exports, small scale industry accounts for over 80% of its entire industrial sector.

Dr. Alroaia demonstrates a strong preference for “the Technique for Order Preference by Similarity to an Ideal Solution (TOPSIS) developed by Hwang & Yoon in 1981 for solving Multiple –Attribute Decision Making (MADM) problems with a finite number of solutions”.

And to improve matters, there are, inevitably, multiple variables to consider.

Prof. Assadi also writes on the Political Economy of Climate Change. He calls it “the child of science”, implying that it is both the problem and the solution, but with large implications for politics.

“Societies,” says Assadi, “ will not survive unless and until capitalism is not disciplined, commoditization of environment is not contained, and consumption is not restricted”.

Infosys Ltd. Lead Data Scientist Dr Vinay M R has written on Innovative Business Solutions using Big Data Analytics. It is used to analyse Retail Customer Behaviour.

He analyses a Switzerland based multinational (14 countries), client’s experience.

The company is in e-Commerce via an online retail platform, publishing of  newspapers /magazines, digital newspapers, web property, online ticketing, mobile platforms and Apps, TV and radio stations and so on.

The Infosys worked mining of data threw up, amongst other things, significant customer profiling, identified 14 opportunity areas for potential increase in sales/revenue/ profitability,   and  new monetization possibilities across business lines. This last, using both available and potential data that Infosys could take on another contract for.

Is there a direct connection between Financial Liberalisation and Industrial Growth in India? Dr. Niranjan R of Vijayanagara Sri Krishnadevaraya University, Ballari, Karnataka, says yes.

Dr. Niranjan’s exploration suggest that “controlling for other variables, the integration of financial systems promotes growth of all industries regardless of their characteristics”.

Does a financial analysis of public, private and foreign banks in India reveal a particular advantage for any one category? The answer according to Seyed Mehdi Pourkiaei and Prof. S Mahendra Kumar of the Department of Economics & Cooperation, University of Mysore, is yes and no.

Each has its advantages and there is room for improvement all around. But yes, the comparative performance of Foreign Banks is better than that of both Private and Public Sector Unit (PSU) Banks.

When we are headed towards becoming the most populous country in the world by 2030, the question of “International Labour Migration” is of particular interest.

Professor HR Uma of the University of Mysore and Madhu S, Research Scholar explore this matter. Some countries with the opposite problem are beginning to invest in skilling Indian labour already.

There a mismatch between countries with nil or declining population growth and ageing populations, and India with its much vaunted demographic dividend. Some 65% of its people are already under 35, and will be 30 going forward.

The world, on its part, is realizing that “Sustainable Development” must recognize the positive contribution of migrants, and move towards international cooperation in this regard.

This thought provoking volume has essays on a number of other issues such as the viability of rainfed sericulture, the renaissance and revival of languishing industry in the States of the Indian Union with special reference to Karnataka, Voluntary Retirement Schemes (VRS), and the gaps/ lacunae in official Statistics Systems.

It is dedicated, touchingly, in a Goodbye Mr. Chips way, to recently retired Mysore University Professor Hosamane, who was also a distinguished Banker and is clearly a Mentor to many of the contributors in this book.  

For: The Sunday Pioneer BOOKS

(923 words)

November 4, 2017

Gautam Mukherjee