The Change in India's Social Landscape since the Fall of the Berlin Wall

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How does India relate to the fall of the Berlin Wall? And what is the effect of the fall of the Berlin Wall on India?

These are some obvious questions that might spring in the reader's mind on reading the title of this post. This post aims at not only answering these questions but also ponders on the path that this great ancient nation took after this historic event, which in many fundamental ways changed the political, economic and social landscape of the country.

The Berlin Wall, the wall which divided Berlin into two parts - East and West, was an emblem of the Cold War. The German nation was divided into a capitalist West Germany and a communist East Germany (officially the German Democratic Republic). On the west lay the capitalist western powers of Europe consisting of the NATO (North Atlantic Treaty Organization) and to the east laid the communist European nations and the then erstwhile USSR (popularly known as the Soviet Union).

The fall of of the Berlin Wall on 9th November 1989 heralded what is now considered the beginning of the end of communism in Europe and the end of the Cold War. Following the fall of the Berlin Wall there were major revolutions in many countries of eastern Europe that led to the fall of communism in these countries and heralded a major change in the system of government in these countries from a state controlled communist economies to a market economies. By the end of 1991 the Soviet Union disbanded. This event led to the end of the Cold War.

Interestingly, Europe was not the only part of the world that was affected by the fall of the Berlin Wall. Since the Wall fell, many other countries had started pondering on the issue of how prudent it was to have a command economy or a centrally planned economy. India featured among the list of such nations.

Since independence India had adopted an economic model what many economists like to call "Nehruvian Socialism" which meant a centrally planned economy based somewhat on Soviet models of economic planning. This model made it nearly impossible for private players to operate in the country. The government made almost every possible move to smother private enterprises by running a "License Raj" and production based on strict quotas and international trade burdened by heavy tariffs.

By 1991, it was evident that this system of socialism and centrally planned economy was a horrible failure by any standards. The country was riddled with debt, had no infrastructure to speak off and had nearly half the population living in abject poverty. Exports were reeling and imports were surging. This led to the infamous foreign exchange crisis which left India with forex reserves enough only to meet imports for a few weeks and threatened the country with defaulting on international loan payments.

All this led to some serious thinking on the part of the then P.V. Narismha Rao led government on the path that India had taken since independence with the economy. 1991 was the year that heralded in India's economic liberalization. The License Raj was abolished along with the quotas and barriers to international trade were heavily neutralized. Foreign firms were allowed to set up shop in India. The Indian government also started the process of disinvestment (privatization) of some state controlled industries.

Fast forward today to 10th November 2009. A little more than 18 years have passed since the country's economy was liberalized. India is one of the most powerful economic and military nations on Earth and a declared nuclear weapons state. Our industry is growing at a ferocious rate even as most of the developed world has sunk into "The Great Recession" and many of our companies have an envious global footing across multiple industries.

Sure, that is the change in the economic scenario. But now, lets take a look at the social scenario against the backdrop of this change which was thoroughly described above.

18 years ago we had a system of joint families even in the most elite urban centers in India. Today a joint family is considered to be "too burdensome" and nuclear families as "hip" and more associated with "independence and individualism". 18 years ago social evils and crimes like extensive alcohol consumption, prostitution, child abuse, incest and so forth were at the least "manageable". Today, these evils are endemic and are some of the biggest epidemics plaguing the moral and social fabric of the country. Although I agree that the widespread penetration of the media to large swathes of society has highlighted these problems. At the same time it can be argued that the media is one of the biggest propaganda tool for such evils. Whether the propaganda is good or bad for the society is another topic of debate.

18 years ago the number of people who suffered from stress related physiological and psychological disorders were relatively few in comparison of today's bloated number. People from all walks of life, across castes and religions and across all social classes fall prey to these diseases and disorders in large numbers today.

I can go on giving such examples for the next 20 paragraphs if I want but that is not the objective of this post.

The question is - "Why is all this happening in our country to such a large number of people in a very short time?"

The answer in my opinion is the nature of our culture.

Indian culture is on of the most "resistant" cultures in the world. Resistance here, refers to the resistance to change of any sort in the society.

This can once again be explained by the help of examples.

In the late 1970s China had started shedding its grab of Maoist communism and started gearing towards western style capitalism albeit, in a closely guarded communist environment. The success that they received as a result of this adventure is visible today. China is an economic and military superpower in a period of almost 30 years. This move of China and the resultant success of it were not invisible to India in the late 1970s or early 1980s. The leaders of India were smart enough to understand that this kind of a move was also required in India in order to spur economic growth. But the leaders also knew the attitude of the masses. The masses would not allow such a change too easily and without severe political repercussions. The revolt of the masses against their elected leaders in a democracy is also a deterrent to progressive ideologies at times as is evident here. Rajiv Gandhi initiated some changes but those changes were too little too late.

Even after liberalization our resistance has almost always shown to be a cliffhanger in positive change. Examples range from very slowly evolving social and economic policies of the central and state governments which even after liberalization held a powerful sway over such policies and were the biggest and most powerful bodies to act as change agents in a powerful way to benefit society. The Reserve Bank of India's (RBI) policies comes to mind when it comes to economic strong arming of the economy. Even today, the lending rates are one of the highest among major world economies. An example of social resistance is the abysmal way in which AIDS prevention campaigns worked in the country in the 1990s, the time at which awareness of the disease was very little and the infection rate very high.

The legalization of homosexuality is another such resistance that comes to mind. It was only recently, that a law considering homosexuals to be criminals was struck down by the Delhi High Court. The social acceptance will still take years to come. As educated people, the masses should understand that ignoring a issues such as homosexuality will not make it disappear.

The main problem lies in our fear of accepting the change as a collective. As individuals many people understand that change is a part of life and that it has to be confronted in a positive manner rather than burying one's head in the ground. But even these individuals lack the courage to come forward and help make society accept these truths. Instead, they fear (many times rightly) the ridicule that the society will subject him to if he dares to proclaim his beliefs in public. This leads them to inheriting the number of evil of our society - HYPOCRISY.

This entire cycle of hypocrisy has continued from many generations above us and is inherited by a stunningly large majority of us. This "No. 1 Evil" is the primary reason for the plagues that infest our society.

Thats my take on it. Please leave your comments (even Anonymously!!) and let me know your take on this.

Mitul Choksi

Tuesday, November 10 2009

20 Years since the Fall of the Berlin Wall :)

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A note on the world's ageing population

STOP thinking for a moment about deep recession, trillion-dollar rescue packages and mounting job losses. Instead, contemplate the prospect of slow growth and low productivity, rising public spending and labour shortages. These are the problems of ageing populations, and if they sound comparatively mild, think again. When the IMF earlier this month calculated the impact of the recent financial crisis, it found that the costs will indeed be huge: the fiscal balances of the G20 advanced countries are likely to deteriorate by eight percentage points of GDP in 2008-09. But the IMF also noted that in the longer term these costs will be dwarfed by age-related spending. Looking ahead to the period between now and 2050, it predicted that “for advanced countries, the fiscal burden of the crisis [will be] about 10% of the ageing-related costs” (see chart 1). The other 90% will be extra spending on pensions, health and long-term care.

The rich world’s population is ageing fast, and the poor world is only a few decades behind. According to the UN’s latest biennial population forecast, the median age for all countries is due to rise from 29 now to 38 by 2050. At present just under 11% of the world’s 6.9 billion people are over 60. Taking the UN’s central forecast, by 2050 that share will have risen to 22% (of a population of over 9 billion), and in the developed countries to 33% (see chart 2). To put it another way, in the rich world one person in three will be a pensioner; nearly one in ten will be over 80.

This is a slow-moving but relentless development that in time will have vast economic, social and political consequences. As yet, only a few countries with already-old populations are starting to notice the effects. But labour forces are now beginning to shrink and numbers of pensioners are starting to rise. By about 2020 ageing will be plain for all to see. And there is no escape: barring huge natural or man-made disasters, demographic changes are much more certain than other long-term predictions (for example, of climate change). Every one of the 2 billion people who will be over 60 in 2050 has already been born.

The reasons why

What is making the world so much older? There are two long-term causes and a temporary blip that will continue to show up in the figures for the next few decades. The first of the big causes is that people everywhere are living far longer than they used to. This trend started with the industrial revolution and has been slowly gathering pace. In 1900 average life expectancy at birth for the world as a whole was only around 30 years, and in rich countries under 50. The figures now are 67 and 78 respectively, and still rising. For all the talk about the coming old-age crisis, that is surely something to be grateful for—especially since older people these days also seem to remain healthy, fit and active for much longer.

A second, and bigger, cause of the ageing of societies is that people everywhere are having far fewer children, so the younger age groups are much too small to counterbalance the growing number of older people. This trend emerged later than the one for longer lives, first in developed countries and now in poor countries too. In the early 1970s women across the world were still, on average, having 4.3 children each. The current global average is 2.6, and in rich countries only 1.6. The UN predicts that by 2050 the global figure will have dropped to just two, so by mid-century the world’s population will begin to level out. The numbers in some developed countries have already started shrinking. Depending on your point of view, that may or may not be a good thing, but, as this special report will argue, it will certainly turn the world into a different place.

The temporary blip that has magnified the effects of lower fertility and greater longevity is the baby-boom that arrived in most rich countries after the second world war. The timing varied slightly from place to place, but in America—where the effect was strongest—it covered roughly the 20 years from 1945, a period when nearly 80m Americans were born. The first of them are now coming up to retirement. For the next 20 years those baby-boomers will be swelling the ranks of pensioners, which will lead to a rapid drop in the working population all over the rich world.

As always, the averages mask considerable diversity. In the richer parts of Asia the populations of Japan, South Korea and Taiwan are already old and will rapidly get even older. Europe is split several ways: Germany, Italy and Spain, for instance, now have tiny families and are therefore ageing fast, whereas France, Britain and most of the Nordic countries have more children to keep them younger. In eastern Europe, and particularly in Russia, birth rates are low and life expectancy has also taken a knock. America, thanks to a resilient birth rate and high immigration, will still be fairly youthful by mid-century.

Most developing countries do not have to worry about ageing—yet. Although birth rates have dropped, populations are still young and will remain so for a few decades yet, even though HIV/AIDS has killed off many active adults. But in the longer term the same factors as in the rich world—fewer births, longer lives—will cause poorer countries to age too. And even before that happens, the absolute numbers of older people there will swell alarmingly, simply because these countries are so populous. They already have 490m over-60s, and that total is due to more than triple by 2050. Since most poor countries have little or nothing in the way of a state-funded welfare net, those numbers will be hard to manage.

Alone among developing countries, China is already ageing fast. This is mainly because for the past 30 years it has been keeping a tight lid on population growth. This did not quite amount to a “one-child policy”, as it is often called (the average number of children per woman was closer to two), but it was highly effective in stabilising numbers. The population will peak at about 1.46 billion in 2030 and then decline gently. Although China has seen stupendous economic growth in recent years, it is still some way off being rich, so it will have trouble absorbing the cost of this rapid ageing. This special report will take a closer look at what it is doing about the problem, but will otherwise confine itself mainly to the developed world.

Fewer hands make heavy work

Macroeconomic theory suggests that the economies of ageing populations are likely to grow more slowly than those of younger ones. As more people retire, and fewer younger ones take their place, the labour force will shrink, so output growth will drop unless productivity increases faster. Since the remaining workers will be older, they may actually be less productive.

In most rich countries the ratio of people of working age to those of retirement age will deteriorate dramatically over the next few decades. In Japan, for instance, which currently has about three workers to every pensioner—already one of the lowest ratios anywhere—the number will halve by 2050. True, there will be fewer young people to maintain, but children cost less than old people and the overall burden will be much heavier than it is now. The OECD has estimated that over the next three decades the age-related decline in the labour force could cut growth in its member countries by a third compared with the previous three decades.

Ageing will affect financial markets too. According to Franco Modigliani’s and Richard Brumberg’s life-cycle theory of savings, put forward in the early 1950s, people try to smooth out their consumption over the course of their lives, spending more in their youth and old age and saving more in their middle years; so as populations age, savings in the economy as a whole will be run down and assets sold off. This has led to fears of an “asset meltdown” as everyone sells at the same time. But a number of academic studies have so far failed to find much evidence of this. Older people in America, for instance, do save less than those in their middle years, but as a group not much less.

James Poterba, an economics professor at MIT, says America has three kinds of retirement households: the least well-off, perhaps a quarter of the total, who will maintain something close to their previous standard of living on Social Security and Medicare, even with few savings; the richest 10-15%, who hold significant assets and may not need to draw them down; and the large majority in between, who will have to rely on their own, often inadequate, savings in retirement.

For the public finances, an ageing population is a huge headache. In countries where public pensions make up the bulk of retirement income, these will either swallow up a much larger share of the budget or they will have to become a lot less generous, which will meet political resistance (and remember that older people are much more inclined to vote than younger ones). Spending on health, which in most rich countries has been going up relentlessly anyway, is likely to grow even faster as patients get older. And because of a huge increase in the number of over-80s, a lot more money, and careful thought, will be needed to provide long-term care for them as they become frailer.

What can be done? As the IMF puts it, “the fiscal impact of the [financial] crisis reinforces the urgency of entitlement reform.” People in rich countries will have to be weaned off the expectation that pensions will become ever more generous and health care ever more all-encompassing. Since they now live so much longer, and mostly in good health, they will have to accept that they must also work for longer and that their pensions will be smaller.

Will the recession make it easier or harder to introduce the required reforms? If people are feeling poorer, they may think that their government should do more for them, not less. Yet some say that if everything is in a state of upheaval already, change becomes easier to bring about. They cite a phrase currently much used in the Obama White House: “Never waste a good crisis.”

Mitul Choksi

September 10, 2009

The "State" of Pakistan

Pakistan has been in the limelight of the world's media since its very bloody yet infamous inception in 1947. Since then, it has been in the news mostly for reasons that would shame the citizen of most modern nations. Born in a unique way from a uniquely ruled British colony with unique ideals, morals and principles of "Unity, Discipline and Faith" it has been reduced to the exact opposite of what it set out to be. Unity is a pipe dream as all provinces constantly point fingers at other provinces for wresting them from their fair share. Discipline? Well, to be fair to Pakistan it has to be said that the entire South Asian region lacks discipline. So Pakistan and Pakistanis are not there alone. Indians and Bangladeshis are equally undisciplined. The biggest disappointment would have to be Faith. Because Pakistan was itself built on the foundations of a unified faith of Islam. That was the vision of Pakistan's founder Quaid-e-Azam Muhammad Ali Jinnah. Unfortunately, Mr. Jinnah forgot to account for the very toxic feelings that Muslims of Pakistan had for their ethnically diverse brothers of the same Islamic faith. The result is what we see today as the infighting between provincial governments (provinces in Pakistan are divided according to ethnicity) for a getting a stranglehold on resources from the federal level for "their people" continues.

Despite all this, the Punjab (Pakistan's richest province) controls most of the political scenario and also the much more influential armed forces with the North West Frontier Province (NWFP) coming in a distant second. The Sindh province does not have a voice in the army and its only political voice is the Bhutto dynasty's Pakistan's People Party (PPP). Balochistan, Pakistan's largest and least populated province gets the worst of all deals with practically no political voice and hardly any major representation in the army.

In spite of all the poverty, infighting and above all an absence of a national identity, Pakistan as a state has been able to survive on its one unifying strength - the hatred of India. India has been considered Pakistan's biggest enemy since its creation and that remains the status quo to this day. In fact many Pakistanis themselves say that the only time when the country has been unified as a whole was when they came at odds with India, especially on the issue of the troubled region of Jammu & Kashmir. Many analysts including myself believe that had it not been for the "Indian threat" the Pakistan would not have survived. Now before calling names to my Indian bias please consider the following points carefully.

1. Pakistan was created in 1947 in an extremely chaotic situation. It has hardly any state machinery at the time of its inception. The civil service was in shambles as most civil servants were Hindu and had opted to migrate to India. Same was the case with banks as most of the officers in banks were Hindus who ran away to India. A similar fate was shared by almost all public services barring a few. So practically the country's entire think tank, tanked overnight. The police was a very communally charged force which was busy with keeping rioting down in major cities which were the new commercial hubs of this infant nation. Trade and commerce could not be allowed to be hampered as the nation needed money to run its bread and butter expenses. It is common knowledge that Pakistan only had 20 crore rupeers (200 million rupees) before partition. The rest was controversially remited by India after quite some time of its creation. It looked like and was indeed a pretty dystopian picture except for one thing.

2. The armed forces were the only institution in Pakistan at the time of its inception that had any structure. Moreover, it had a order, an almost unbreakable chain of command and above all a professional knowhow of how to deal with crisis. And the birth of Pakistan was in many ways a crisis for Pakistan itself! Historical evidence points out to that the help of the armed forces of Pakistan to its people at the time of its inception was one of the major factors why it ever managed to survive and not end up as a still born nation.

3. In order to get some think tank started on how to deal with nation building the government of this newly formed country required to get help once again from this "pillar of strength". The army was well conditioned, well funded and well conditioned to take on such kind of nation building efforts as its top brass consisted of some of the most intelligent people in all of Pakistan at the time.

4. The army knew that barring a the ailing Mr. Jinnah, Mr. Liaquat Ali Khan and hardly any others, the government and the civil service lacked any teeth and didn't have the faintest idea of what to do with the future of this country. This was the perfect base from which to initiate a coup.

5. An early attempt for a coup (The Rawalpindi Conspiracy) by General Akbar Khan failed miserably but that did not weaken the resolve of others in the army to replicate a more successful version of what Akbar Khan had attempted. The civil administration made the work for the army easy as there was lack of any vision on the future of Pakistan. Nine Prime Ministers had taken office in Nine years since partition. Constant infighting within the civil administration made the army's work more easy as a coup would herald the army as saviours rather than evil dictators.

6. That is what eventually happened as Field Marshall Ayub Khan took power in 1957. Three other military rulers ruled Pakistan for more than half its history with spurts of sham democracies in between.

7. It is difficult to make certain that did more damage. Dictators like Zia-ul-Haq, the longest serving dictator in Pakistan history totally changed the landscape of Pakistani identity by almost completely repealing Anglo-Saxon law prevalant up till then and replacing it with a perverted version of Islam Sharia law which to this day lingers in Pakistan. On the other hand the sham democratic governments the Sharifs and the Bhuttos destroyed Pakistan's economy and nearly bankrupting it in the late 1990s up until when General Pervez Musharraf seized power in a coup.

Today, another sham democracy holds power in Pakistan. But the Pakistan of today is the centre stage of the world's attention as it is dangerously affected by Islamic fundamentalist terrorists that threaten to take the whole of Pakistan in flames. Pakistan's importance increases more so as it is declared nuclear weapons state with an estimated 60 warheads. The danger of even a single warhead falling in the hands of Al-Qaeda or the Taliban would leave the entire world at ransom to a few mad men. Pakistan is struggling to fight the same terrorists it once funded (well actually Pakistan was funded by the Americans) to fight the Soviets in Afghanistan. At the same time, the army is ready to de-tag India as its biggest enemy even when the country is being threatened to implode from within due to terrorism, poverty and health problems.

Pakistan needs to realize something that has been written in the holy Quran itself. "Jihad" is a war but not a war against people of other religions (non-believers) but an internal struggle to open one's own eyes (the non-believer within thyself) and when Pakistan as a nation performs this "Jihad" it will realize that the problems are seldom around but are within.

Mitul Choksi

Is Blu-Ray the end of the road for optical media?

As most of us have been experiencing for the last couple of decades storage media is getting cheaper and cheaper as the days go on and the capacity of the storage media too has been
increasing at a rapid pace and by exponential factors.

Many of you reading this blog would remember (with frustration, jest and wonder) the good old floppy disks of the 90s. Many of us (especially in developing countries) still use the CD on a
large scale even though it is now almost a dinosaur in the developed markets of the west and Japan. Then came the DVD with its almost 5-10 times leap in storage capacity. And now, the new kid on the block seems to be Blu-Ray, a format that won the bitter format war against the HD-DVD. Blu-Ray boasts of a 5-10 times rise in storage capacity against the DVD thus boasting a 25 GB capacity on a single layer disc and a whooping 50 GB on a dual layer disc. By any standards, that seems impressive. And now even before the Blu-Ray becomes mainstream in any major market (it does have a small share in western markets where DVDs still continue to reign supreme) many people have even started to think “What next?” 100 GB? 200 GB?

The answer in my opinion to the “What next?” question is a little different. But first, lets make one thing very clear. What are CDs, DVDs, Blu-Rays (and even HD-DVDs for that matter)? They are in essence a content delivery mechanism. The content in this case largely being data with large sizes like movies and other multimedia content.

This large sized content was shipped in such optical discs for the last decade and a half for a three primary reasons.

1) These optical media allowed data/content with large sizes to fit on relatively small form factors (the discs) and be transported easily without many chances of damage.

2) The data/content was so large that it could not be transported over the then existing network infrastructure in reasonable time frames and without incurring large costs in terms of
time, money and productivity.

3) The existence of large, cohesive and powerful networking tools as well as highly evolved cloud services was not ubiquitous.

We can all agree today that points 2 and 3 are almost irrelevant for the most of us (even in relatively bandwidth poor countries like India). Today, data with large sizes can be downloaded
in a matter of hours. As most of you might know, the time required to download a 700 MB file (the size of a CD) takes less than 4 hours on a 512 kbps connection. This is a far cry from the
days of dial-up (the time when the CD was popular) when downloading a 700 MB file was only something you could dream about.

The relevance of point 3 has almost also vanished completely due to the prevalance and large scale popularity of cloud services like YouTube, Hulu and NetFlix which provide you with the
ability of streaming content directly from the Internet instead of actually purchasing hard media containing the actual content.

It is obvious that the content is more important than the medium through which the content is deliverd. And as the optical media whatever it may be DVD or Blu-Ray, is facing stiff competition as the entire model of content storage and delivery change. From the days when a burning an optical disc and distributing it stores from where they are sold to consumers was
popular we are now seeing a paradigm shift in content storage and delivery where content is stored in the cloud on some remote server (ala YouTube and Hulu) and then are streamed directly to the consumer on his computer using a high speed broadband connection.

As the Internet Service Providers keep upgrading their backbones and provide connections to businesses and consumers with higher and higher bandwidths the importance of optical media will keep on diminishing.

The prediction of most analysts and computer industry veterans that sooner rather than later our TVs will be connected to the cloud in one way or the other could be a death knell for the
optical media industry. We are seeing examples of this starting to happen. Apple recently announced that its Apple TV (which is basically a DVR) will not only allow streaming of content
from your PC’s iTunes library but also enable you to stream content from YouTube directly on to your TV screen.

This does not look good for the optical media industry in general. According to a Harris Interactive Poll found that 93 percent of those surveyed have no interest in purchasing a Blu-Ray

DVD player, despite HDTV ownership rising to 47 percent, up from 35 percent a year ago. The only way most of us will even own a Blu-Ray player will be if we buy a new PC or laptop with the Blu-Ray player included or if we buy some console like the PlayStation 3.

And even then whether the sales of Blu-Ray discs will pick up radically as they did in the cases of the transition from the CD to the DVD is a big question due to the rising competition of
HD cable and cloud services.

What will happen? Lets wait and watch...

Mitul Choksi
23rd June 2009 00:02 AM Indian Standard Time

Can Oil prices in India be deregulated

The prices of petrol (aka gasoline) and diesel have almost always been a pain for the Indian consumer as well as the Indian politician. For consumers rising oil prices represent an obvious dent in the pocket and for the politician it can mean either winning or losing popularity amongst the masses.

But besides these two groups of people there is another sufferer. Oil marketing companies like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) are the biggest losers in terms of money when it comes to oil prices. Oil prices in India are fixed by the Central Government and on many occassions these OMCs (Oil Marketing Companies) are forced to sell petrol and diesel way below their cost price.
This results in them bleeding profusely in financial terms as they incur losses of tens of crores (1 crore = 10 million) of rupess everyday. This is ultimately a loss that has to be borne by the exchequer.

The obvious solution to this problem would be to deregulate oil prices and thus link the prices of petrol, diesel and other ancillary petroleum products to the price of crude oil in the international market. But this again would be a major problem for consumers and politicians. If international prices become too high and are thus reflected in the prices of petrol and diesel the consumer would have to pay very large amounts for obtaining fuel. Higher prices of petrol and diesel would also be a hindrance to industrial development which is already slowing down due to the international financial crisis. Higher oil prices would also get politcians into trouble as they would become very unpopular among the consumers as well as industry.

A middle path to this problem which would be fair to consumers, industry, politicians and OMCs would be to partially deregulate the oil prices up till a certain limit. For example, the OMCs should be given to fix the prices of petrol and diesel (which would give them an opportunity to make some profits for a change) up until the price of crude oil reaches somewhere in the range of $80-$85. If the prices of crude go above say $85 then the government should kick in and put a cap on the prices of petrol and diesel and thus give the consumer and industry some relief from very high prices.

Besides this model of de-regulation the OMCs should also be allowed to be exempted from paying of duties like excise and octroi when international crude prices cross a certain threshold. This would help bring their costs down and thus minimize their losses.

Other related measures to aid OMCs should be to allow petrol pumps to charge some sort of extra service tax or surcharge for expensive luxury cars.

The measure discussed above do sound far fetched in some cases but are very necessary to implement in the near future as the government does not have money to throw around to help the OMCs. The fiscal deficit has risen to a high of more than 5.5% of GDP (thanks to the two fiscal stimulus packages). The real deficit hovers at around more than 7% which is extremely unhealthy.

It has been reported that the petroleum ministry is working on restructuring the current methods of fixing oil prices.

The only thing to do un till then is to wait and watch

Mitul Choksi
20 June 2009
8:36 AM Indian Standard Time

The myths about Pakistan

"60 years. That is all it took for it to crumble down." said one of my relatives in reference to Pakistan.

That statement was a result of 60 years of wrong thinking, thinking that has got us into trouble when we least needed it. I believe that one of the core issues that tickles us when it comes to our identity of being Indian is that most of us cannot live with the fact that British India was divided into two states of India and Pakistan and not the idealistic undivided India as many had hoped for back then. That hope sadly still percolates in our national psyche till this day when four generations have passed since 1947.

Indians as a mass in general are still not ready to accept that Pakistan was carved out of its former north western parts during independence. The problem with this attitude is that it gets us into trouble a lot of times as such a way of thinking influences our actions as a nation when we deal with Pakistan.

Some things that have been widely circulated in the public (though not through official channels) which give us a glimpse to this national psyche are that

ISSUE No. 1 - Pakistan was created because Hindus and Muslims cannot live together due to their cultural differences which are diametrically opposite.

My View - Though I do acknowledge that Hindus and Muslims do follow very different lifestyles and sometimes have views on issues that are in fact genuinely opposite (examples include killing of cows and pork) its not as if Hindus and Muslims didnt live side by side before. Before the days of tyrannical British Empire Hindus and Muslims used to live side by side, go to each others homes, celebrate each others festivals with equal pomp, fight wars side by side and die side by side for the same cause. It is no secret to any educated Indian or Pakistani that the British used our foolishness to exploit to raise swords against each other to the extent that all the bonds we shared were heaviliy damaged in the run up to independence which resulted into partition.

I don't blame the British for using their minds against us. I blame our own people for not using theirs.

ISSUE No. 2 - Muslims would not be allowed to have an equal voice among a numerically larger Hindu population in a democratic India.

My View - Absolute hogwash. India has been known the world over for the great efforts it has made to uplift the socially and economically weaker sections of the society. The Indian constitution has special provisions for these weaker sections of the society like caste based reservations, reservations for tribals etc. There is no reason why such provisions could not have been architectured to encompass Indian Muslims which at the time and even today are a socially and economically weaker than the Hindu community in general.

As for as elections go, history is witness to the fact that Mohammad Ali Jinnah (the father of the Pakistan movement) was given an option of reserving 33% of all Parliamentary seats for Muslims if he chose to drop the movement and live in an undivided India. He rejected the proposal. Now tell me how in the world can Muslims not be heard if they had guaranteed 33% seats? I still dont have the answer to that one.

ISSUE No. 3 - Pakistan has no natural resources to talk of so they are as good as a bankrupt country. The areas that consist of Pakistan had nothing in them when Pakistan was created and there is nothing now which can salvage it.

My View - First of all, let me clarify that this is wishful thinking in the mind of Indians who wish deep down inside that Pakistan will eventually re-unite with itself.

Grow up people. Just because you never read about the positives of Pakistan does not make it a bad place.
Pakistan is one of the world's largest producers and suppliers of the following according to the 2005 Food and Agriculture Organization of The United Nations and FAOSTAT given here with ranking:

Chickpea (2nd)
Mango (3th)
Apricot (4th)
Cotton (4th)
Sugarcane (4th)
Milk (5th)
Onion (5th)
Date Palm (6th)
Tangerines, mandarin orange, clementine (8th)
Rice (8th)
Wheat (9th)
Oranges (10th)

Pakistan ranks fifth in the Muslim world and twentieth worldwide in farm output. It is the world's fifth largest milk producer.

The Baluchistan province of Pakistan is estimated to have one of the world's largest untapped natural gas reserves.

I think that should be enough to deal with this issue.

ISSUE No. 4 - The only thing holding Pakistan together is its hatred for India.

My View - This one has some truth to it. But not the way most people think of it. While there is widespread anger against India in Pakistan due to obvious issues (like Kashmir) there are other problems that hold it together. One is Islam. Islam is what was the basis for the Pakistan movement that led to its creation. The second issue is the same as is in India. Development. Uplifting the poor so that they too can live in a decent manner. The only thing that makes many people in India and not to mention Pakistan that India is a huge threat is the Pakistan Army. To make sure that their importance and power remain unchallenged and that no civilian leader is ever able to boss them (like in India where the PM is the boss and not the Army chief). The corrupt, powerless, and inept civilian leadership only bolster this sentiment leading to a permanent status quo of undeclared hostilities between the two nations.

I urge all the people of India and Pakistan to understand one thing. We have only made each other lose something or the other in the last 62 years thanks to our leaders. But there are many things that we can gain from each other. Just think of the trade that the two of us can do with each other. Think of the geo-strategic and geo-political advantage of a peaceful subcontinent against a communist and militarized China. Think of the weak Al-Qaeda and Taliban that will be a direct result of Indo-Pak peace. Think of the tourism income that can be generated between the two of us. Think of the benefits of cultural exchange between our two nations.

If we just understand our use to each other rather than our bickering over petty issues there will no longer be a need of an undivided India. The love that we can generate will make crossing the border only a formality just like the formality of entering Germany from France or the US to Canada.

Just think.....

Mitul Choksi
22 May 2009, 9:55 PM Indian Standard Time

The 4th Wing of Defense

I know you are pondering - "Hey, there are only three wings of the armed forces, the Army, the Navy and the Air force. What is the fourth one?"

Well to answer your question let me first welcome you to the 21st century. An age where wars are not limited only to the physical domain but also to the virtual domain of cyberspace. I am not talking about something out of a science fiction movie. The threat that we face in cyberspace can be very well conceived by most us as we analyze our overwhelming dependence on Internet based applications and services and the notion of being "connected".

Threats to citizens on the Internet like being swindled out of some credit card balance by some foreign based cyber-hoodlum is commonly heard of by most of us but what we dont realize is the scale at which we as a nation can be crippled by armies of hackers and crackers residing in some foreign land. I know this sounds like a plot of a science fiction movie but consider the points mentioned below:

1. On April 8th the Wall Street Journal quoted “current and former national-security officials” who warned that “cyberspies” from China, Russia and elsewhere had broken into the systems that control America’s electrical grid and had installed software that could be used to disrupt it.
2. And on April 21st the Wall Street Journal said foreign hackers had penetrated computers containing data about the F-35 Joint Strike Fighter.
3. Estonia (a former member of the USSR) had suffered very much at the hand of 'unofficial' cyber criminal groups that created havoc in its Internet networks. These cyber criminals were suspected by many intelligence agencies as being sponsored by the Russian government who were allegedly not happy of the pro-west and pro-NATO stance that the Estonian government had taken.
4. Many government sites of the Republic of Georgia (another former member of the USSR) which fought a 5-day war with Russia last year were defaced and in many cases forced to shut down due to attacks believed to have originated in Russia.
5. Recent reports by the Indian news channel Times Now stated very clearly the threat to India of hacker armies in China which reportedly possessed the potential to cause serious damage to Indian Internet networks in times of war.

These are just some of the excerpts from many such instances of reports that have gone on to state the tenacity that such armies of hackers and crackers can cause to a country in times of war.

Such a threat is multiplied more so in the case of India which prides itself as an IT outsourcing giant and is an emerging superpower. Moreover, India does share tense relations with Beijing and Islamabad not to mention its other smaller neighbours.

In such a case is it not viable to establish a so called agency like America's NSA that can act as a 4th wing of defense on the frontier of cyberspace by securing Indian networks from foreign hackers and crackers.

Such an agency can also double as a monitor of traffic that flows in and out of India to sensitive places in addition to act as a censor to certain traffic that is considered inflammatory and anti-national. This was done in 1999 during the Kargil war when the website of the Pakistani newspaper Dawn was blocked by VSNL servers at the national level. That was OK considering it was 1999 and most of the traffic that came into and got out of the country was through VSNL (Videsh Sanchar Nigam Limited) servers. But today represents a very different scenario as there are many points of entry and exit in India. So my argument of having a national agency to sort out problems like these seem more relevant.

Again, the establishment of such an agency requires checks and balances to be placed in order to control the purview of its authority and ensure the government's responsibility to its citizens' right to privacy. A detailed and better (but not necessarily complex) law needs to be in place for the policing of the online world by government agencies. The current Information Technology Act 2000 (the 2008 Amendment is not active as it is still to be published in the Official Gazette) is not cut out to meet the requirements of today's online world which is moving at an amazingly fast pace. In such a condition the power of enforcing censors by government agencies can prove to be too powerful a tool.

An even more problematic thing could be the power of the agency to police the cyber world by tracking activities of citizens. Inefficient legislation can lead to such a power being directly given to such an agency which would be equivalent to America's very hated PATRIOT Act which authorizes policing of citizens' activity in the online world.

Legislation and initiative are not the only problems that the Government of India faces. An acute shortage of manpower (due to poor educational facilities) is one of the major obstacles in the establishment of this 4th wing of defense. The government needs to tackle this issue of poor education by firstly providing the proper means of education, motivating the younger generation and persuade them to take up cyber defense as a serious career option just like service in the other wings of the armed forces.

Cyber defense is no longer a science fiction story. Its the need of the hour and an investment in maintenance of national security.

Mitul Choksi
29th April 2009
10:32 PM Indian Standard Time

Elections 2009

While I know that you must be letting off a deep sigh with the title of this topic thinking "Haven't I read or heard about this topic since this morning at least half a dozen times?", I would still like to put down my opinion and two cents (I mean paise) for what I think would most likely be the outcome of the 2009 Indian General Elections.

While most of us who haven't been living under a rock for the last 5 years know that this was shaping up to be one of the most complicated elections in world history. Dozens of parties, hundreds of politicians, crores of people and limitless confusion in the minds of voters all make a recipe for a coalition hotch-potch that might not be too tasty for the masses, especially in this kind of a tough economic atmosphere that has engulfed us courtesy of some speculating primarily western bankers.

Although this election is one which is a real tough one to predict the outcome of, it is safe to say that the following things are almost guaranteed.

1. There will be a coaltion government (obviously!) as no single party can even come close to expecting something like a singular majority.

2. The coaltion partners of whatever government that takes power at the centre will play an extremely crucial role in maintaining a stable and sane government. (did I use the word sane and coaltion partners in the same line? So stupid of me!)

3. If any of the national parties (read: Congress or the BJP) are part of the government then they will almost be held hostage by their allies, similarly as was the case in the Congress-Left coalition that took power in 2004.

Now lets get to the topic of individual party performance.

First, the ruling Congress. The Congress has no doubt put on a good show in the last 5 years with good governance and performed rather very well in its first major coaltion government. It has eluded all the doubts of naysayers who said that the Congress would not be able to let go of its bullying as in the socialist days of India. Congress has put on a good show in terms of the economy with an average rate of 9% GDP growth in the first 4 years of its rule. Even in the economic downturn of late 2008-09 it is predicting a 6% GDP growth rate in 2009 which though 2/3rd of what it accomplished in the first 4 years is no mean feat considering the current economic downturn and is very good performance in comparison to other developing countries like Russia and China.

Still, the Congress may have problems in obtaining the vote of right-wing minded Hindus who still feel that Congress is a Muslim appeasing party. The delay in hanging of the 2001 parliament attack convicted felon Afzal Guru since the last many years and the failure of the Congress government in protecting citizens in various states from Islamic terrorists and the Mumbai Massacre of November 2008 can severely dent the number of votes it obtains. I predict somewhere between 130 and 155 seats for the Congress.

The other big fish - the BJP looks to be in even murkier waters than its main national opponent, the Congress. Fresh on losses of Rajasthan (after the Gujjar fiasco of the government) and Delhi (strong showing of the work done by the Sheila Dikshit government) have loosened the BJP somewhat. Although to be fair, the BJP swept the legislative assemblies in both Madhya Pradesh and Chhatisgarh. The hold of the BJP in Karnataka is quite powerful and its iron grip on Gujarat makes one feel that BJP will sweep Gujarat in the general elections.

But BJP has a fair share of its problems too. Prime ministerial candidate L.K. Advani is seen by many on the centre-left (Congress leaning) and left leaning (socialist and communist leaning) as a hardline Hindu leader who will always marginalize the minorities (read Muslims and Christians) at any cost. His perceived image in connection with the 1992 Babri Masjid demolition and the ensuing Ram Mandir saga does not help his image in the aforementioned circles. Another problem that the BJP needs to be wary of is the confusion in voters regarding the succession of L.K. Advani once he decides to pass the baton. Many people project Gujarat Chief Minister Narendra Modi to succeed him but there are many other senior leaders to block his path at the helm of the party like Rajnath Singh and Arun Jaitley.

Another major problem that may haunt the BJP is its perceived extremely right-wing school of thought in the secular (I should say pseudo-secular) media. Finally, BJP's poll campaign was (at least in my view) poorly designed as there was hardly any focus on the economy, very less advertising (when compared to the Congress) and verbal mud-slinging with the Gandhi family of the Congress. I see the BJP with around 100-110 seats this time round.

As for the other major regional parties somehow I feel the Left parties will suffer a major blow in West Bengal. The Left sufferred a big loss of reputation with the entire fiasco of the Tata Motors project in Singur. And its no big secret that their work in West Bengal is horrible to say the least as despite all the natural and human wealth that one can imagine of, West Bengal remains in a horrible state when compared even to states like Orissa.

The AIADMK will get a good result in Tamil Nadu as the ruling DMK government looks weak and has suffered loss of popular support with the comments of the state's CM on Lord Ram. Although the DMK may get a last minute surge of votes after the end of hostilities in Sri Lanka. Pretty much even in Tamil Nadu. The other parties will be limited to a minor fringe.

The other big thing to look out for would be Mayawati and her Bahujan Samaj Party (BSP). Although she swept the assembly polls last year in UP (the king maker state) and the odds favour her its very difficult to predict UP. Mayawati's rival, the Samajwadi Party led by Mulayam Singh Yadav has also been working round the clock to entice voters. The BJP holds a small fraction in UP whereas the Congress will most likely fall after the Muslim vote but be limited to a fringe nonetheless in the state just like in the assembly polls.

To sum it all up, the election looks pretty tough to call but I reckon that the Congress will somehow manage to come at the centre. Although in what type of arrangement and power sharing deal will they come at the centre cannot be imagined by me at this time. Perhaps they may tie-up with the Left once again or Mayawati. As is the case in Indian politics right from the pre-partition days.

GOD KNOWS what will happen!

Mitul Choksi
27th April 2009
11:53 PM Indian Standard Time