2G Auction: Think before you criticize CAG

The auction bomb of 2G spectrum for telecommunications stands practically defused now. The two-day auction of the 2G mobile phone spectrum has proved to be a flop show measured even on the government’s yardstick. Notwithstanding that the UPA government wanted the auction to be a flop show, the establishment is surprised itself with the outcome of the auction. But, it is unhappy for another reason.

The UPA government had its hopes pinned on the auction amount to meet its target of keeping the fiscal deficit at 5.3% of the GDP in 2012-13. It expected to earn Rs 40,000 crore the least from the auction of 2G spectrum, but it could not fetch even Rs 9.5 thousand crore. Nonetheless, the UPA government stands vindicated on the presumptive loss figure of Rs 1.76 lakh crore as calibrated by the Comptroller and Auditor General of India in 2010. It has always maintained that the CAG’s figures were wrong.

The above paragraph explains why the government has been rather circumspect in responding to the low earning from the auction. But, the attack on CAG’s authenticity is only round the corner. It may come from either the ministers or the Congress party or pro-government media houses. However, we need to think before criticizing the CAG over the poor interest shown by the bidders in the auction of 2G spectrum licences. Too much water has flown under the bridge since 2G spectrum bomb exploded some two years ago after a CAG report.

The CAG calibrated the loss due to government’s policy for not opting bidding to allocate 2G spectrum based on the market situations and realities of 2008; and, the CAG did its calculations in 2010. But, since then, the market’s concept and preferences vis-à-vis future of mobile phone communications in India have undergone a great change. 2G spectrum is now a thing of the past and future gains cannot be big when 3G technology is already there and 4G is creating a new buzz. The same companies, which either bid at a lower price or stayed away from the auction, may (definitely) have behaved differently in 2008. And, the fierce competition would have been witnessed had the same policy been adopted in 2008, giving the same UPA government handsome amount of money to fight its ever worrying fiscal deficit.

Some people in the UPA ladder understand this conundrum genuinely. This may be the other explanation why the government has not gone out lambasting the CAG like it did in the recent past after the auction of 2G spectrum. Moreover, the low bidding prices are being attributed to perceptively high base price set for different circles in the auction.

Of all the 14 circles put on auction, mega-circles of Delhi and Mumbai attracted no bids at all. Interestingly, Delhi and Mumbai account for more than 40% of the total earning from the mobile phone communications. The base price for these two circles was Rs 14,000 crore for 5MHz of 2G spectrum. Moreover, none of the companies, which took part in bidding, bid for pan-India spectrum for which the reserve price was set at Rs 14,000 crore. It further reflects telecom companies’ mindset towards Indian mobile phone communication market.

So, before concluding that the CAG had wrongly and deliberately calibrated the loss figure (at Rs 1.76 lakh crore), must bear in mind the market realities of 2008.

Kashmir: Militants, Panchayat, Pakistan and Problem



Two incidents or coincidences pertaining to Kashmir problem have brought back the centrality of the long standing dispute between India and Pakistan, as well as among the political regime and people in the country into focus. The first set of incidents is rather disturbing as it has thrown the democratization of Kashmiri politics completely out of gear. Lashkar-e-Toiba militants have threatened the Panchayat leaders and carried out the threats by killing Sarpanches and Panchayat members in the valley forcing more than fifty resignations within a couple of days. The state government has clearly failed to infuse confidence among the elected representatives that it is equipped to deal with the militants, on one hand and that it can provide security to all including the Panchayat leaders, on the other. Fear, confusion and blame game have taken firm roots in Jammu and Kashmir.

Second incident is not at all surprising but looks part of the same strategy, ostensibly formulated across the border. While democracy takes a backseat in the Kashmir valley, Pakistani President Asif Ali Zardari has raked up the issue of self determination by the people of Kashmir. Zardari has reiterated Pakistan’s support to Kashmir’s separatists. Incidentally, the intelligence and security agencies, and politicians have pointed fingers at the Pak-based LeT, generally supported by Pakistani establishment, for the recent killings of Panchayat members in the Kashmir valley.

These two separate looking developments throw a pattern, which many, including this author, cannot deny. This warrants rewinding tapes of time and taking a look at the origin of the K-issue.

(Hereunder, I am reproducing a piece written (by me and rejected by a reputed journalist of a very reputed news organization) long back in 2004-05. But, somehow, I find it relevant today. I agree that were I to write this again, I may improve its structure a bit.)

Kashmir  ……. whenever this word is uttered, a part of our conscience and sentiment gets stirred up. We start feeling like having been cheated. We become staunch nationalists. We get angry and confused. Ironically, we seldom have a real understanding of the problem called, Kashmir, but we feel deeply about it.

                               Whether we wish it or not, whether we like it or not, it’s a fact that in this age of global terrorism the problem of Kashmir is more like global issue. All the five so-called major powers of the world are directly or indirectly interested and to some extent involved in it. The U.S. and Russia (erstwhile U.S.S.R.) have been interested in it since the days of cold war. For that they have had their own understanding of the international milieu and hold-sharing game. Although China has never expressed anything explicitly but on every bilateral platform sharing with India or Pakistan it has shown some concern about Kashmir. As for the U.K. everyone agrees that the Kashmir problem is a legacy of British colonialism.

                            When the British withdrew from India, three states were ostensibly born: India and Pakistan on the basis of the infamous two-nation theory, and Jammu and Kashmir. The ruler of the third entity, i.e. Kashmir decided not to go along communal lines and declared his state as independent to preserve its composite culture and life-style. Or, may be, he did not want to give up his royal and princely character. Maharaja Hari Singh was willing to join neither India as he felt his majority Muslim subjects would not like joining a Hindu-majority nation, nor Pakistan, which as a Hindu he was personally averse to. On the other hand, Pakistani leader Muhammad Ali Jinnah coveted the Himalayan kingdom, while Indian leaders Mahatma Gandhi and Jawaharlal Nehru hoped that the kingdom would join India. That is why Hari Singh thought of making Jammu and Kashmir an independent nation, and did not make his decision by August 15th to merge with either.

Anyway, the result was the same, i.e. the birth of three different states or nations for that matter. Though, all were not admitted into the U.N.O. as separate entities. But then who knows, had the tribal invaders mixed with the Pakistani army not invaded Kashmir, it would have emerged as a separate nation. And, our nationalist feelings for Kashmir would not have developed even. But that was not to be and India fought three wars (excluding 1971-war) and hundreds of skirmishes, without getting any solution. However why the able leadership of the two countries could not reach to a solution is itself a mystery.
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                              Take a look at history. Pakistan sponsored militia-invaded Kashmir in September 1947 under the guidance of Major General Akbar Khan of Pakistani Army. This was an unbearable shock for the King of Jammu and Kashmir, Hari Singh.  He did not have enough means to protect his state or himself. At that time, the King did not have too many options to turn to. After hurried deliberations, the King asked the Indian government to come to his rescue. Interestingly, the Indian leadership headed by Pt. Nehru and Sardar Patel did not accept the request immediately. They first asked the King to sign a treaty for merger with India saying that similar treaties had been signed by other princely states. This treaty with the King is known as the Instrument of Accession.

                                                   The Instrument of Accession was signed in October 1947.  And, only after that India took the task of protecting Kashmir, rather India. Indian forces landed on the territory of Kashmir. But by now Pakistan backed forces had occupied almost one-third of Kashmir. Here, behaviour of the Indian leadership looked quite baffling.

                                                India decided to protect the capital of Kashmir and the princely house there. It did not wish to push Pakistani forces beyond Kashmir, by now the territory of India. Considering the comparative strength of the troops, India could easily have driven out Pakistanis forces and thus nipped the Kashmir problem in the bud itself. This was a fatal blunder committed by new India. We need at first to accept this with an open and non-maligned hearts. It is difficult to ascertain that who was responsible for this decision. May be, the logic for this happening lay in the fast changing history of India then. As our leaders of the time, though were great nationalists and had brought us independence, but perhaps could not understand the meaning of Kashmir’s merger with India.

                                         This was not the only mistake that India committed. India took the matter to U.N.O. It is often said that India did so on the advice of the then viceroy Lord Mountbatten, the person most probably responsible for the decision of protecting only the capital and princely house of Kashmir. India could have resolved the matter with Pakistan in the light of the India Independence Act of 1947 whereby India’s legal position was strong in the wake of the Instrument of Accession already signed between Jammu and Kashmir and India. The Act provided that any of the princely states could join India or Pakistan by choice, the only prerequisite being the geographical continuity of the princely state with the merging nation. Thus, Kashmir had legally become an integral part of India because the King of Kashmir was the legal head of the state and his decision of merger was legal under the India Independence Act. Obviously the India Independence Act would have invalidated the Pakistani attempt of sabotaging Kashmir.

                                                     Further, even at U.N.O. India complained in a manner that was short on research and logic. Here, India filed the case under Article 37 instead of Articles 36 and 51. Simplified, Article 36 refers to the invasion of a sovereign territory by an outside power. While Article 37 refers to the invasion of a territory disputed between the two countries, one of them. Thus by filing the case under Article 37 India legally accepted the disputed status of the territory of Kashmir. This step was in a way a negation of the India Independence Act, the very Act that was the legal source of the creation of an independent and sovereign India from the British Empire. Simply put, despite Kashmir becoming an integral territory of India, the government of India admitted at the UNO that a part of it was not surely under its sovereignty.

                               Later on, Indian leaders realized the blunder but by then the problem had born. The UN Resolution was passed. It asked for the appointment of two neutral observers by the U.N.O., and holding a plebiscite in Kashmir to determine the democratic will of the resident population. But, it also clamped two conditions. One, that Pakistan should withdraw its troops from Kashmir and second, having seen that India should do the same before actual plebiscite could be held. Since, Pakistan never thought of going back, so India was not bound to either withdraw or hold plebiscite. Though, India has been holding parliamentary and state elections there and it is forwarded as a sort of plebiscite by the Indian think tank. But, technically nothing could be done on the U.N. Resolution.

                                  Perhaps all the politicians at the helm of affairs have clearly understood this technical complexity of the issue and hence most of them have just played with the issue and people’s sentiment for Kashmir. They first sensitized the issue by projecting it as the symbol of national prestige and honour. Although they have generally overlooked the similar problem of Aksai Chin. The reason is simple, that Kashmir could be easily related to the psyche of the two- nation theory.

                                                            Before going for any concluding thought it would be better to have a look at one integral part of the same problem, i.e. the Siachin issue. It takes us back to the U.N. Resolution of 1949. It provided for a Line of Control, a position held by the two countries when they accepted the ceasefire as per the resolution. The LOC is a demarcated line up to a point in the Karakoram Mountains called NJ-9842. Demarcation could not be carried out beyond this line because of the geographical adversity of the territory. The UN Accord says that beyond NJ-9842 the line of control would follow the crest line of the Saltotras and Siachin ranges towards northeast up to the border of China. But, the tangle here is that the crest of these ranges does not go along northeast direction. Rather, it takes a backward turn to north and a bit northwest. Here Pakistan is stuck at northeast direction while India favours crest line demarcation. But the problem had not been realized here till 1984.

          In 1984 a French mountaineering group applied with the Indian government for a research tour of the Siachin but the government of India turned down the request. The same group approached the Pakistani government, which permitted them to do so. India thought it as an incursion on Indian Territory from the Pakistani side. So, the Operation Meghdoot was carried and the Indian army occupied the crest line there. Here, India is in advantageous position after having occupied the crest line physically but the cost is enormous. There is one more chink here. Pakistan has gifted about 10,000 sq. km. of area in the Karakoram region to China for developmental purposes. The land, obviously, is claimed by India. The strategic importance of the gift is more than the physical one if seen in the light of Chinese occupation of Aksai Chin.

                                            Obviously, the complexities involving Kashmir are not easy to comprehend and resolve. To add, Pakistan has created the headache of sponsored terrorism. In fact, terrorism has given a new dimension and publicity to the Kashmir problem. It has forced all the concerned powers to look at the problem afresh. Its devastating and negative nature has also convinced the world of India’s stand on it and has unmasked intention of Pakistan, which has now allowed terrorism to move from institutional framework to individual mode. The latest killings of Sarpananches and elected Panchayat members by LeT sponsored militants make this point amply clear. The governments of India and Pakistan must look forward to resolve the issue for the mankind on the sub-continet.. Though, it is highly improbable to predict any amicable solution, and that only the brains of an Aristotle or a Chanakya can do so. 

Understanding FDI in Retail in India


The decisions taken by the Manmohan Singh government in last cabinet meeting have evoked sharp and varied reactions from different quarters. One of the long debated and perhaps equally awaited decisions has been relaxing the norms for FDI in retail, both single brand and multi-brand. The voice of dissent seems louder than the assenting one. The market, however, has responded positively with stock market beginning to fly north. But, the two contrasting behaviour or reactions to the decisions taken by the UPA government apparently killing the bug of policy paralysis have left ordinary people confounded. Confusion is over the nature of the FDI in retail and its impending impact on Indian economy and employment scenario.
Let’s first understand the nature of FDI in retail. The foreign capital can come into India either in collaboration with a home player or via single handed investment by a global player. The government has relaxed the norms for both. It has allowed FDI in multi-brand retail upto 51% and single brand retail 100%, albeit with certain conditions.
Retail is a lucrative business in India as the industry is valued at over USD 450 billion. Interestingly, 90% of it is controlled by unorganized small and medium scale traders. They fear that the big organized corporate retailers would ruin the prospects of the age old profit making gallawallas. However, the government argues that the entire scheme will benefit bot the producers, that is, farmers and the consumers, that is, the aam aadmi. It also says that the move will create more employment in comparison to the job creation by traditional retailers. Moreover, the government allays the fear of elimination of traditional retailers.

The initial reactions from the economic experts are somewhat positive. But, many believe that in the long run neither the aam aadmi nor the farmers will be benefitted. The argument here is this; the global retail giants would have their monopoly in the Indian market in few years from now and then they would manipulate procurement price while dealing with the farmers and selling price while selling the articles to the consumers, the aam aadmi.The answer lies in the realm of future.

The union cabinet has put certain significant conditions for the FDI in retail. It says that only those players will be allowed to operate in India, who will invest a minimum capital of USD 100. Secondly, retail outlets by foreign players can only be opened in the million-plus cities. It effectively means that only 35-40 cities would be entitled to have an FDI-based retail outlet. The state governments can, however, make some amendments to make ineligible cities eligible. Thirdly, the states are not compelled by the centre to give licence to such stores under their respective shops and establishment acts. So, if a state government does not want to have a Walmart store or a Best Buy store, it won’t have one.

However, this argument of the centre that the latest decision is only an enabling policy and the states will have the final authority in this matter looks misleading. If states decide not to issue licence to any such player, it will be in direct conflict with the government of India’s commitment of ‘national treatment’ to investing countries. India has signed the Bilateral Investment Promotion and Protection Agreement (BIPAs) with 83 nations. 72 such agreements have already come into force and according to the information available with the official websites of the government, remaining are in the process of being implemented. This commitment of national treatment means that if one store is allowed in Uttar Pradesh, Gujarat can not say ‘NO’ to that store if it applies for a licence there. One such instance has happened in Kerala where the matter was decided by the court in retail chain’s favour.

The government has argued repeatedly that inviting foreign capital was the last but the most required resort lest India slipped into deeper economic crisis comparable only to Eurozone crisis and the balance of payment crisis of our own in 1991. Moreover, it also says that adequate protection has been given to small traders. The global retailers will have to bring at least USD 100 million to be able to open a store in India with 30 percent of the capital going into creating basic infrastructure. And, such stores can only be opened in a million plus cities, numbering just over 35.
But, here government has failed to satisfy the people as it has shied away from coming up with figures suggesting as to how many jobs will be created annually should global retailers come over here while giving a comparison as to how many local retailers and their employees would lose their jobs.
The opponents of the FDI in retail policy fear that the global players will change the contour of Indian markets and make it skewed rendering many jobless and wealthless. The age old truth is that the markets have been the chief source of wealth generation and livelihood for many. Millions of retailers, traders and vendors make a living off the markets in India. And, this is precisely the reason which will attract global retail capital to India, and obviously they will work towards creating their own wealth. They will analyze before investing as to whether there will be net gain in wealth should they come to India, which may be the net loser in that case. If and when this happens, the local markets would end up serving the interests of a few multinationals. There is also possibility that the multinational retailers would restrict farmers/ producers access to market on one hand and manipulate prices of commodities on the other.
A recent research by researchers at IIM-Ahmedabad suggests that the globalization of retailers has not succeeded. “A study of top 250 global retailers reveals that 110 of them operate in single local home country. 175 retailers operate in less than 5 countries, mainly neighboring countries. Only 50 retailers operate in more than 10 countries. Only 36 of them have entered into China since the opening up of retail sector in late 1990s. Out of these, 17 retailers are already present in India. Therefore the scope for entry of global retailer entry into India is limited,” says the research.
So, the FDI in retail in India is still an inconclusive matter and most of its aspects can only be understood in future.

Ramdev Shows Why Anna Failed

While Anna Hazare and his disbanded team worked day and night to ensure that their fight against corruption could keep its sanctity intact, they failed miserably. And, one year since August 16 last year is not too short a period to write off Anna and his defunct team, given the fact that they are in tatters now. In my private discourse, I have been comparing Anna's movement/agitation with a rather completely contrasting in both degree and nature phenomenon of Revolt of 1857. Both proved great headache to the ruling dispensation at their very outset, but ultimately vanquished by the government's strategy. And, both prepared a mindset in the nation for a greater fight. The massive movements failed because they lacked organization and a clear strategy.

This strategy makes a clear distinction between Ramdev's movement and Anna's agitation. This explains why Anna and his erstwhile team failed to preserve the mass support and pouring that they got at the Ramlila Ground following the Independence Day celebrations last year. On his part, Ramdev has a better organization and a discreet but seemingly clear strategy to counter the government. Emotion can make people join a mass movement, but only an organization can keep them moving along the movement. This is where Ramdev is an improved Anna.

After last year's midnight swoop on sleeping protesters and supporters of Ramdev, who showed an utter cowardice while dealing with state action, the saffron leader looks wiser. He is drawing crowds, through his well established network throughout the country, close on the heels of a flop show by Team Anna. With latest act, Ramdev has somewhat salvage his lost pride. This may give some sleepless nights to the already weary UPA government, but if Ramdev supporters remain peaceful and do not misinterpret the yoga teacher's call for revolution, the anti-black money movement augurs well for India's democracy.

Anna: From Movement To Agitation


(Reproducing the article that I wrote for Merinews yesterday)
The British ruled over India for about 190 years during which they sustained what they believed the biggest jolt to their rule in the form of Revolt of 1857. Historians, now, say that the revolt of 1857 failed to live upto its promise because of its inherent weaknesses, biggest being internal dissensions. And, the British continued to rule for another 90 years. There seem to be a parallel in Anna’s movement for Lokpal Bill which is evidently directed against the present UPA government.

It was only last year, when the entire nation made beeline behind an old man, who finds Gandhism thrust upon him. Anna Hazare has tried to emulate the Mahatma, but despite his personal integrity and grit, his movement has all the signs of frittering away and waning. People of the country are no longer moved by his call for fight against corruption. The government prepares for his call for fast, agitation and mass gathering, but somewhere within, it knows that Anna is more like a spent force now.

There are three important components of the Anna Movement, Anna, himself, his Team and people. Anna, first. The supposed Gandhian leader took up the cause floated by India Against Corruption and championed it and on the way to mercurial popularity he expanded his arena of fight from Maharashtra to cover entire India. He was clearly swayed by the volumes of support that he got from the people of this country, who felt that a new Gandhi had emerged to take on the might of the government, which had been disconnected from the people it governed. People’s anger found a genuine expression in Anna’s call to stand against corruption. Similar emotion had already been experimented successfully in Bollywood through films like Lage Raho Munna Bhai, where people clapped when an old man, a retired school teacher embarrasses a government official to secure his pension.

People are fed up with the all pervasive corruption for long now and Gandhianised Anna gave hope to them. But, somehow, Anna Hazare failed to keep that mass support intact. One has to accept this as Anna’s inherent weakness. He is no Gandhi. People failed to realize this and their expectations of Anna remained so high that he could not have lived upto. He lacks the organizational skill and the understanding of public mood of the Mahatma. Also, Anna Hazare has not been consistent in his speeches and actions over past one and a half-year, which is so un-Gandhian. This drifted the masses away from him and his movement.

Anna’s team is, at its best, pulling in different directions. Allegations of nepotism and dictatorial attitude have been the biggest obstacle in accomplishing the task that the team has taken unto itself. Chief architect of the Team Anna, Arvind Kejriwal has, somehow, alienated all colleagues but a few. Even Anna Hazare does not seem to be in sync with his team all the time. This has exposed an organized bunch of activists to the ruthlessness of the government. Also, the allegations against Kiran Bedi of malpractices and of having communal tinge against the team have not done any good for it. The inevitable result has been loss of credibility of Team Anna among the masses.

On their part, people have also behaved in an intriguing manner. All of a sudden, when the middle was rising, the masses in India rallied behind Anna Hazare, giving hope to the old wise man. Anna mistook this momentary exuberance of people as their readiness for a long drawn battle against the government. This was not. The hope of Ramlila Maidan in Delhi, the political capital dashed in the Azad Maidan in Mumbai, the commercial capital. It also served the Team Anna a clear message that people cannot sacrifice their economic/commercial interests for some wayward political gains. This is precisely why and how Anna’s anti-graft movement became a pro-lokpal agitation. The coming days, beginning today, are likely to follow the same pattern.

Manmohan Under Attack, Why?



Suddenly, Indian government and Prime Minister Manmohan Singh have come under sharp attack of international community. Recently, the Time of the US, the Independent of the UK and US President Barak Obama have criticized Manmohan Singh in no uncertain terms. Each of them chose to lash out at the UPA II government and Singh for their failure to push economic reforms in India. This trend of taking on a ‘proclaimed world leader’ and eminent economist is, somehow, baffling and it smacks of some other inherent designs.

Let’s first see the case of the Time magazine, which carried out a cover story on Manmohan Singh dubbing him as an underachiever and concluding that India’s economic software had crashed and needed to reboot. The magazine wants India to reboot itself. But, for whom? India or the crashing hardware of the US and Europe’s economy? Surely, the Time is not so generous to think of India exclusively. It didn’t think of any such reboot while India was going through a worse phase and the US and the European Union were in sound economic health.

The Independent, a daily in the UK took cue from the Time, but went far ahead in castigating Prime Minister Manmohan Singh. It termed the Prime Minister as Congress chief Sonia Gandhi’s Poodle, a breed of dogs.  How audacious this daily is! And, why for? If Indian economy is in tatters, if we accept the west’s parochial definition of the economy slowdown and policy paralysis in India, why should a newspaper of the UK be so worried and anguished that it resorts to profanity against the Prime Minister?

While the dust caused in motion had not settled yet that the US President Barak Obama found fault with India’s economic policies, thus attacking economist Manmohan Singh. Obama found Manmohanomics obstructive in nature and that it did not allow foreign direct investments in many sectors in India. He practically went ahead to blame India for economic downturn in the EU and the US.

Thankfully, this time around the Indian politicians stood by the government while lashing out at Obama for targeting India and infringing upon its sovereign (albeit, hugely diluted) right to choose its economic course. It was nice to see BJP leader and former Yashwant Sinha come out and take on Obama and the US’ hegemonistic tactic in exhorting India to expand reforms. India cannot and should not be dictated by the US or any other country or bloc.

Clearly, the pressure that is being applied on the Indian establishment led by Manmohan Singh is an attempt by the west to seek more ground for their big corporations, which are rapidly going bankrupt putting enormous socialistic burden on the capitalist governments. India and China can easily provide them the required space as these countries have big areas, resources and markets/ population.

While China has improved its technology and has socialistic capital to take on both the capitalist capital and market, India is an easy hunting ground for the US and the EU. They hope that if India opens up more sectors for their corporate money, it would help them revive their markets and sentiments. This explains why there has been an entire gamut of sustained efforts through leadership, diplomacy and press to put question the credibility of Manmohan Singh his UPA II government.

This is where Manmohan Singh government’s policy paralysis is working in India’s favour. If the much criticized policy paralysis is a conscious effort by this government, it is praiseworthy. There is no reason as to why should India be used as a growth engine for the EU and the US.

Prices, People and Politics



Home Minister P Chidambaram makes sense when he laments consumers’ behaviour pattern vis-à-vis inflation and economic growth in the country. It is now a known thing and also a submission from the government that it suffers from policy paralysis, and that it is waiting for Congress’s next generation leader, Rahul Gandhi to stop playing cameos but to lead from the front. In short, the UPA led by the Congress admits that the hour has come, but the man is yet to arrive. This would a unique situation when time, which is known to have waited for none, is waiting for Congress’s saviour.

In the meanwhile, the UPA continues to battle its own agonies complicated by people’s frustration owing various factors albeit dominated by the almost ever rising prices of all commodities of daily purchase, and the leaders of UPA continue to throw some light on the reasons for this hapless condition prevailing in the country. For most of the things going wrong, the UPA blames not itself but some other element, many a time irrationally, though. But, on Tuesday, P Chidamaram seemed to make a valid point when he pointed finger at people’s spending pattern. He quipped that while people are ready to spend Rs 15 for a 300ml cold drink bottle and Rs 20 for an ice-cream cone, they are outraged at spending Re 1 extra on rice or wheat if it means some cushion to millions of farmers across the country.

There are three definite aspects of inflation-people-government axis. Let’s first take the case of prices. Prices are on the rise for past few years. In fact, when UPA went into 2004 general elections, rising inflation was one of the prime election issues. But, people defeated that issue and made price-rise a non-election issue. However, political tempers on price rise kept rising. Prices are rising due to simple reasons, both external and internal. To begin with government’s argument, which reflected in P Chidambaram’s latest statement as well, that procurement prices for most of the food-grains have been increased pushing the prices at consumers’ end higher. But, procurement prices were increased not for the concern for the farmers but to score some political brownie points. Whatever may the case be, it resulted in some relief to farmers, but some additional burden on the consumers.

Another important reason for price rise is, manipulation by medium and big market players. Hoarding is still rampant across the country. Sadly, gone are the days when even Bollywood films produced angry young men fighting against hoarding and kalabazari. This makes a cabbage or a cauliflower available throughout the year, but at an elevated price, which does not fall even during its flowering season. But, none seems to spare a thought for this aspect of price rise.

Third important reason for rising inflation is gloomy world economy complimented by the fluctuating but rising crude oil prices. This has put a huge burden on the macro-economics of the government of India which is much concerned with managing fiscal deficit and keeping good vertical growth figures. In the nutshell, the situation has come to the point where the governance is a failure under the UPA regime. Policy paralysis is both now the cause and result of this hapless situation.

Second aspect of the axis is people’s behaviour. People, rather voters, have shown in past few years that price rise is not an issue for them. We may deny, but can’t denounce this evidence of India’s democracy. Here comes the relevance of P Chidambaram’s statement on consumers’ behaviour pattern. His astonishment is valid when he wonders why people are ready to pay Rs 15-20 on something that is not going to affect quality of his life. This shows that those who have are not really bothered about spending money on things of their choice. But, somehow a mindset has emerged on the national scene which demands and argues that all the life sustaining essentials should be almost free of cost. Buying a kg of potatoes with Rs 15 looks a costly purchase but spending Rs 35-75 on a burger is nothing. This leads us to the third aspect of the inflation-people-government axis, politics.

Prices are here to stay. The last decade has proven this beyond any iota of doubt. In fact, the increased prices are the new bases for family expenditure. But, politicians think it fit to keep the anti-price psyche in the top-most quarters of priorities. This is coupled with news-starved news media, which harps on flying prices. Somehow things have come to such a passe that everyone the same tune but none is listening, not even the singer.

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