The need for a Uniform Civil Code in India

A recent observation by the Supreme Court of India regarding the failure of every post-Independence government to adopt a Uniform Civil Code (UCC) which applies to all religious communities equally across the spectrum has made headlines in many regional and national dailies.

The observation was made during hearing petitions of the National Commission of Women’s Delhi chapter.

Provision for UCC is incorporated in Article 44 under the Directive Principles chapter of the Constitution, which says, “The state shall endeavour to secure for the citizens a Uniform Civil Code throughout the territory of India”.

The Supreme Court went on to remark specifically that the majority Hindu community has been more tolerant and receptive of changes brought in their personal law but the government has failed to replicate that success in upgrading the personal laws of minorities.

The other major issue is the contradictory provisions laid down in various personal laws when it comes to issues like marriageable age. For example, the legal age of marriage is 18 for girls and 21 for boys. But the Hindu Marriage Act and the Prohibition of Child Marriage Act 2006 render different interpretations on what constitutes the legal age for marriage. Under the 2006 law the marriages of girls below 16 are void and marriages in the 16-18 period is voidable. Needless to say, this leads to confusion.

It takes no genius that by using the term “minorities”, the Court is referring to the Muslim community which has always shown tremendous resistance to any effort made by the government (or even some members of their community) to make changes to their personal laws. A popular example of this is the Shah Bano case which achieved tremendous infamy during the tenure of Rajiv Gandhi.

In my humble opinion the personal laws need to work side by side with a newly drafted UCC which is applicable to all communities except in a few matters regulated by the applicable personal laws. This sounds simple enough on paper but in reality this would be a monumental task keeping in mind the convincing required to be done to various communities and their religious leaders. Also because of the overwhelming political will required to undertake such a monumental effort which would affect every citizen in one way or another.

“Upgrading” ourselves to the UCC would enact the principle of “The Law is One” for all communities irrespective of cast, creed, sex, colour or religion. This would also smoothen inter-community disputes on various issues like inter-faith marriages, inheritance etc. whose cases form a large chunk of pending matters in all levels of judiciary.

Whether such a day will come when all this rings true is questionable. But let us hope anyway like we do about a lot of other things…..

Mitul Choksi

10-February 2011

2:05 PM Indian Standard Time

Why has the Crescent fallen behind?

A report authored by a group of Arab scholars in 2002 has pointed out broadly, the reason why the Middle East and the Islamic world by extension had fallen behind the West in the last few centuries. The chief culprits as stated by the report were the deficits in knowledge and freedom. A salutary debate ensued. Now Timur Kuran, a Turkish-American economist has come out with an equally if not more bold book entitled “The Long Divergence: How Islamic Law Held Back The Middle East”. Let us hope that another equally salutary debate ensues once again.

For the period since the beginning of Islam up to 17th century, the Middle East was a dynamic place comparable to the Europe of today. Muslim traders flocked various parts of the region trading in items ranging from spices and silk to imported prostitutes and slaves. But somehow, the Middle East’s share of world economic activity has gown downhill since the year 1000. At that time, the Middle East Gross Domestic Product (GDP) was 10% compared to Europe’s 9%. By the year 1700 the Middle East was a paltry 2% compared to Europe’s 22%.

The standard explanations offered for this have mostly till date been unsatisfactory. It is widely believed that Islam by its very nature is hostile to commerce. But if anything, Islamic scripture is more business friendly than Christian or Hindu texts. The prophet Muhammad was a merchant and the Koran is full of praise for commerce. The second perceived reason is that Islam bans usury. But so do the Torah and the Bible. A third widely perceived belief is that Islamic countries fell behind as they were victims of Western imperialism.

Mr. Kuran’s work goes down to the very core of the problem. He reasons that the principle underlying reason for the fallback of the Islamic countries was because these countries failed to build commercial institutions – most notably Joint Stock Companies which are capable of mobilizing large quantities of productive resources over a period of time.

Europeans on the other hand inherited the Joint Stock Company from Roman Law. They built on this concept to form the modern day corporations of the 19th and 20th centuries. Islamic law on the other hand has queasy rules when it comes to managing commercial institutions. For example, according to the Islamic partnership law, a partnership can be dissolved simply by the whim of another partner. Obviously, these kind of quirks cannot work in a modern day business environment. Moreover, the widespread practice of polygamy led to the dispersion of wealth among many inheritors descending from the same paternal ancestor.

None of these things mattered when business was simple. But as business grew with more advances in technologies and the resultant technological and legal complications, these laws became a thorn in the path of developing the business. While the western concept of the joint stock company evolved along with time, the concept in Islamic law didn’t adapt itself to the changing conditions.

From the 19th century, the Middle Eastern rulers with a more outwardly looking take on things started to adopt Western style companies and institutions at home. They imported the concepts, the technologies, the people and in many cases even the style of government. The most notable example of this is the Ataturk’s introduction of a secular legal system in Turkey in the 1920s. Countries whose rulers adopted similar importation of business ideology from the West have benefitted the most (notable examples include Turkey, Egypt, Iran and the UAE).

Still, the Middle East has a lot of catching up to do. Its income per capita still remains less than 30% of Europe’s, the infrastructure in many countries is quite weak, economies are heavily dependent on export of commodities like oil instead of value adding industries and political stability is but a rarity.

Business remains complicatedly intertwined with the state as the region lacks strong commercial institutions. The Global Entrepreneurship Monitor suggests that rates of entrepreneurship are particularly low in the Middle East and north Africa. Transparency International’s corruption-perceptions index suggests that corruption is rife: in 2010, on a scale from one (the worst) to ten, Western Europe’s five most populous countries received an average score of 6.5, whereas the three most populous countries in the Middle East averaged 3.2 (Turkey scored 4.4, Egypt 3.1 and Iran 2.2)

Culture’s long shadow

The “long divergence” also helps to explain some of the Islamist rage against capitalism. Traditional societies of all kinds have been uncomfortable with corporations which, according to Edward Thurlow, an 18th-century British jurist, have “neither bodies to be punished, nor souls to be condemned”. But that unhappiness has been particularly marked in the Middle East. Corporations and other capitalist institutions were imported by progressive governments that believed the region faced a choice between Mecca and modernisation. Local businesses—particularly capital-intensive ones such as transport and manufacturing—were dominated by Jews and Christians who were allowed to opt out of Islamic law.

Mr Kuran’s arguments have broad implications for the debate about how to foster economic development. He demonstrates that the West’s long ascendancy was rooted in its ability to develop institutions that combined labour and capital in imaginative new ways. The Protestant work ethic and the scientific revolution no doubt mattered. But they may have mattered less than previously thought. People who want to ensure that economic development puts down deep roots in emerging societies would be well advised to create the institutional environment in which Thurlow’s soulless institutions can flourish.

Mitul Choksi

31-January-2011

2:37 PM Indian Standard Time

Rise of the 'redback'

IN 1965 Valéry Giscard d’Estaing, then France’s finance minister, complained that America, as the issuer of the world’s reserve currency, enjoyed “an exorbitant privilege”. China’s president, Hu Jintao, does not have quite the same way with words. But on the eve of his visit to America this week he told two of the country’s newspapers that the international currency system was a “product of the past”. Something can be a product of the past without being a thing of the past. But his implication was clear: the dollar’s role reflects America’s historical clout, not its present stature.

Mr Hu is right that America’s currency punches above its economy’s diminished weight in the world. America’s share of global output (20%), trade (only 11%) and even financial assets (about 30%) is shrinking, as emerging economies flourish. But many of those economies, such as South Korea, still sell their exports for dollars; many, including China, still peg their currencies to the greenback, however loosely; and about 60% of the world’s foreign-exchange reserves remain in dollars.

This allows America to borrow cheaply from the rest of the world. Its government has been able to overspend, secure in the knowledge that its IOUs will be bought by foreign central banks, which are not too fussy about price. America would show more self-discipline, many Chinese believe, if the dollar had a little bit more competition.

Could the yuan become a rival? China’s economy will probably surpass America’s in outright size within 20 years. It is already a bigger exporter. It is prodding firms to settle trade and even acquire foreign companies in its own currency. That is adding to a pool of “redbacks” outside its borders. These offshore yuan are, in turn, being tapped by borrowers, issuing “dim sum” bonds in Hong Kong (see article).

But as the dollar’s history shows, economic clout is not enough without financial sophistication (see article). If foreigners are to store their wealth in yuan, they will need financial instruments that are safe, stable and easily sold. Dim sum makes for a tasty appetiser. But the main feast of China’s financial assets is onshore and off-limits, thanks to its strict capital controls. The government remains deeply reluctant to let foreigners hold, buy and sell these assets, except under tight limits. Indeed, it is barely ready to give its own people financial freedom: interest on bank deposits is capped; shares are largely owned by state entities; and bonds are chiefly held by the banks—which are, in turn, mostly owned by the state.

Over time China will relax its financial grip. But even if it could usurp the dollar’s role as the world’s currency, it will not replicate the American set-up. The United States takes advantage of the dollar’s position to borrow cheaply from the rest of the world, selling its assets in return for goods. China is a mirror image of this. It runs a trade surplus, selling goods in return for financial claims on foreigners. Its firms, households and government save more than they can invest at home.

A different kind of perk

Rather than seeking to borrow in its own currency, China may harbour the opposite ambition: to lend in its own currency. The exorbitant privilege it may covet is a lower foreign-exchange risk on its savings. On top of the trillions China has lent to America’s treasury, it also holds stakes in Australian mines, African farms and Swedish car companies. But because none of these assets is in yuan, China suffers a capital loss whenever its currency strengthens. It would no doubt like to share some of this risk with the rest of the world. The model is not America, but Germany, an international creditor which holds 70% of its foreign assets in euros.

There is a catch, though. No one will want to borrow in a currency that is only ever going to strengthen, increasing the value of their debts. So if China wants to “yuanify” some of its claims on the rest of the world, it will need a currency that can go down as well as up. To make people believe the yuan can fall tomorrow, China will have to loosen its currency’s peg and let it rise faster today. China is different from America: it is a rising economic power and a thrifty one. But one rule still holds: China will have to open its financial system to the world if the yuan is to be the dominant currency.

Mitul Choksi

24-January-2011

8:31 PM Indian Standard Time

PC Models That Sound Like Alphabet Soup

Does it ever seem like PC manufacturers are clueless when it comes to actually selling products? or that they have no interest in making their products seem desirable, interesting, or fun? Let’s say that you’re in the market for a laptop. You do your research, and you narrow your choices to just a few likely candidates. “Hmmm,” you think. “Which one sounds best? Well, i could get a toshiba satellite L645D-s4036, an HP Pavilion Dv4-2173nr, or a Dell Inspiron iM501r-1459MrB.”

Don’t those model names just roll off your tongue?

Um, no. They’re a garbled grab bag of inharmonious numbers and letters. Can anyone really get excited about a product whose name can’t be recalled, much less repeated, without a teleprompter?

The products that i mentioned above aren’t exactly obscure items either; all three are best sellers at Amazon. so that means someone is buying them, even if their names have all the sizzle of a Microsoft security Bulletin code.

Why do PC names have to be so deadly dull? Consider the names of the latest phones: Droid incredible, iPhone 4, Samsung vibrant—simple, direct, zippy names all. Maybe this is one reason why throngs of buyers line up to snag the latest phone, whereas you never see a news report about people queuing up for a hot new notebook.

Sure, phone makers have it easier in some ways: fewer products in the line, fewer configuration options. But simplifying a name just requires a little discipline, creativity, and maybe—gasp!— even plain old fun. it works for car manufacturers, why not for PC makers?

Some manufacturers might argue that these unwieldy names are highly descriptive, giving an accurate representation of the internal options a buyer can expect. Te problem with that argument: PCs, both desk- and lap-bound, are now so configurable that no label can hope to encapsulate what’s really inside. Within any given line of laptops, you can chose from a panoply of processors, storage options, and more. Tat kind of choice is great; there’s just no need to call out every combination of options in the machine’s name.

Designed to Confuse

A cynic might say that computer manufacturers design their naming conventions to produce confusion. obfuscation isn’t accidental; it’s the point.

If a big-box store advertises a Widgettech Huzzah 5097B-15iJ laptop, it does not have to worry that a consumer may demand that the store match the price that a retail outlet across town is offering on the Widgettech Huzzah 5097B-15iK. in reality, there may be virtually no difference between the two units, but the consumer doesn’t know that.

Complex names also make online price comparisons impossible. Dozens of models; thousands of configurations; indecipherable, protean prices? Don’t sweat it; just click the ‘Buy Now’ button.

Still, i find it hard to believe that in - creasing customer confusion is an effective marketing strategy. Most manufacturers these days are selling a computing “experience,” not just a bundle of components. so why can’t they pick a name that conveys that experience and lose all the follow-on letters and numbers.

Customers would rejoice—and maybe even ask for products by name.

Mitul Choksi

7-September 2010

11 AM Indian Standard Time

Landmark decision: Vedanta denied mining rights

The Indian Government's decision not to permit the British company Vedanta to mine bauxite in the Niyamgiri Hills of Orissa is a landmark decision. The company has been known to publicly flout the local laws namely the Forest Rights Act and the Environment Protection Act, 1986.

The company has also been issued a show cause notice regarding its alleged non compliance with the provisions of the Environment Protection Act at its Lanjigarh refinery. The Government's decision insists that even the biggest companies must strongly adhere to the law of the land and not take it for granted.

It would be even more fruitful if the Government, in the interest of upholding the law and delivering justice punish the Government officials who helped Vedanta to break the law. It has been argued by some and accepted by the Government that the officials were acting in the best interests of the state and the nation at large. So in effect, they have been given a 'clean chit'. This decision raises the question whether this selective adherence to law involves some politics on part of the Government.

If the Government imposes this kind of punishment retrospectively then India will surely turn into an industrial wasteland as much of Indian industry has thrived in a similar fashion as Vedanta was attempting to.

Had Vedanta succeeded in acquiring this land the Government permission for mining it, it would have left the tribal people of the hills without their land which they consider sacred and as important to their livelihood as their arms and legs. It is in essence "the only place they can call home". They cannot migrate to nearby towns and villages as their lifestyle is totally different than those of people residing in urban and even "modern" rural centers. These tribes are in fact protected by the Schedule V of the Indian constitution and are entitled to some special rights which include the right of not being driven away from their land even in lieu of "suitable compensation".

The failure of Vedanta can be attributed to many reasons, the primary being its inability to create a warm image in the minds of the tribal people through its CSR (Corporate Social Responsibility) initiatives. The primary motive of any CSR initiative is to build positive long term relationships with its stakeholders (which include the surrounding community which it operates within).

If Vedanta had done its CSR properly, it might not have come to this. Thats a very big IF....!

Mitul Choksi

August 26, 2010

2:56 PM Indian Standard Time

To Save Africa We Need to Ignore its Nations

NOTE: PLEASE VOTE IN THE POLL ON THE RIGHT SIDE OF THIS PAGE

Yes, I know the title sounds a little odd. How can we ignore the nations of the "Dark Continent" in order to save it. Diving directly into the topic I explain how.

For years we have known African nations to be under the clutches of its so called "Big Men", ruthless dictators who have held on to power despite of anything and everything. These men led African nations to ruin economically, socially and politically.

Most African nations achieved their independence in the 1960s (in fact 17 nations celebrate their 50th year of independence in 2010). These nations gained independence with great hopes and aspirations of ridding their poverty and developing a sustainable standard of living.

Unfortunately, all but one nation fell under the clutches of ruthless power hungry dictators who did anything and everything in their power to hold on to power including repression, extreme press censorship and even genocide. Needless to say, the economies of these countries suffered along with its population who became more poor in the years after independence than they were before. The only notable exception is Botswana (in Southern Africa) which has a stable multi-party electoral system and regularly holds free and fair elections. Its economy is also an exception as it has a rapidly developing economy and is considered to me a middle income country with per capital GDP exceeding US$ 6000.

African nations have been able to survive for so long with so much impunity primarily because of two reasons, 1) Recognition by Western governments and 2) Foreign Aid from these nations

All this "help" from Western nations was basically to ensure that Africa does not get attracted to the Soviets in the Cold War.

But the Cold War has ended and there is no major need for the West to continues supporting Africa like it did before the end of the Cold War. The first thing that these donor countries should do is to stop keeping these nations afloat with all their aid money. To do so, the international community should join hands in coming together and de-recognizing these nations and expelling them from the United Nations. This will force the African leaders to look for support inwardly as they will no longer have the support of the rest of the world.

This suggestion might sound radical but these type of actions were taken in the 1970s in Taiwan. The loss of recognition for Taiwan meant that it had lost support of the West in its fight for survival against China. The reigning Kuomintang party had no option but to liberalize the economy, legalize political parties, abolish martial laws and bring in a truly democratic system. The results are for all to see today is Taiwan is a major tech hub in the global economy today.

But what does this de-recognition mean in practice? It means that the international community will tell oppressive regimes like the ones in Chad, Rwanda, Sudan, Equatorial Guinea, Gambia, Togo and others to extract their populations from horrors that their governments have put them in and provide them with at least the basics of life like food, shelter, security and basic rights to begin with.

The logistics of derecognition would no doubt be complicated. Embassies would be withdrawn on both sides. These states would be expelled from the United Nations and other international organizations. All macroeconomic, budget-supporting and post-conflict reconstruction aid programs would be canceled. (Nongovernmental groups and local charities would continue to

receive money.)

If this were to happen, relatively benevolent states like South Africa and a handful of others would go on as before. But in the continent’s most troubled countries, politicians would suddenly lose the legal foundations of their authority. Some of these repressive leaders, deprived of their sovereign tools of domination and the international aid that underwrites their regimes, might soon find themselves overthrown.

African states that begin to provide their citizens with basic rights and services, that curb violence and that once again commit resources to development projects, would be rewarded with re-recognition by the international community. Aid would return. More important, these states would finally have acquired some degree of popular accountability and domestic legitimacy.

Like any experiment, de- and re-recognition is risky. Some fear it could promote conflict, that warlords would simply seize certain mineral-rich areas and run violent, lawless quasi states. But Africa is already rife with violence, and warlordism is already a widespread phenomenon. While unrecognized countries might still mistreat their people, history shows that weak, isolated regimes have rarely been able to survive without making significant concessions to segments of their populations.

For many Africans, 50 years of sovereignty has been an abject failure, reproducing the horrors of colonial-era domination under the guise of freedom. International derecognition of abusive states would be a first step toward real liberation.

NOTE: PLEASE VOTE IN THE POLL ON THE RIGHT SIDE OF THIS PAGE

Mitul Choksi

13 June 2010

12:57 PM Indian Standard Time

Rant - American Double Standards

US Attorney General Eric Holder categorically went on the record saying that the American government will be comprehensive and aggressive and will not rest until justice is done in respect the oil spill caused from the collapsed oil rig of British Petroleum (BP) in the Gulf of Mexico. The spill has reportedly caused tremendous loss to the coastal economies of the United States along with incalculable damage to the ecological environment and marine life.

The Attorney General even announced a criminal as well as a civil investigation into the disastrous oil spill in the Gulf of Mexico. The administration of Barack Obama has vowed to hold the oil giant BP accountable for the disaster caused by its collapsed rig for billions of dollars.

However the world's worst industrial disaster was the in Bhopal in 1984. It has believed to claim up to 15000 lives and damaged the lives of thousands others. When asked if the US government will put more pressure on Dow Chemicals which bought Union Carbide Corporation a decade ago for cleaning up the site and extraditing Union Carbide executives including former CEO Warren Anderson who fled India just a few days after the accident and is absconding ever since the State Department officials diplomatically said "No".

The judgment given of two years in prison and fines of a few thousand dollars with no mention of Anderson is a travesty of justice which has left even American lawyers aghast.

Had this entire situation been the other way round and had an Indian company (or any other non-US company) been responsible for a similar disaster in the US, I am sure that the Americans would have left no stone unturned in getting their hands around the necks of the foreign company's management. If the management would have fled the US just like Anderson fled India, the US would have used "big brother scare tactics" to get them extradited to the US. If this seems far fetched then let me point to an example of what the US did in Pakistan. The Pakistani authorities have regularly been apprehending "terror suspects" on their soil and handing them over to the Americans even though an overwhelming majority of Pakistanis disdain these acts.

America was not likely to extradite Anderson even if he was convicted in absentia in India. The possibilities are even less now at a time when the US is keen to sell nuclear technology to India and the Indian government is facing a lot of heat from its allies as well as the opposition for agreeing to a "limited liability" clause in the nuclear agreement which absolves American corporations from paying astronomical amounts of damage in case another Bhopal like tragedy ever occurs in the future.

Its time we stood up to this double standard of America and at the same time kick our government in its derriere for taking this softly and sitting back like towards.

Remember, we will not be able to blame people in Bhopal for chanting "Death to America" if this sham justice goes through just like another run of the mill industrial accident.

A single currency is not required for economies to prosper

The recent crisis in Greece has exposed the inherent problems of the Euro. A currency adopted by 16 separate countries of the European Union (EU), more commonly known as the Euro Zone countries, the Euro has been through an almost unblemished and prosperous existence in the last 11 odd years since it came into being when the Euro Zone countries relinquished their own sovereign currencies and adopted a single and unified currency under the Euro.

During the global financial crisis of 2008-2009, it was widely believed among a large majority of people ranging from laymen to hedge fund managers that the Euro was a haven of safety where people could park their savings and investments without any fear of degradation of the currency and thus shield them from the depreciation of their money. This was a time when the fall of the US Dollar was considered imminent (along with the end of American hegemony in the world economy). Oh, how the times have changed!

It is now evident that the kind of crisis that has occurred in Greece and is feared to occur in Portugal, Spain and even Italy was inevitable.

The reason why this kind of crisis was bound to happen is that the Euro has been adopted in a situation where the countries that have adopted it have done so in a semi autonomous economic fashion where the European Central Bank (ECB) holds the power to issue and regulate the currency but the member nations themselves hold the authority to regulate their own sovereign finances which are merely monitored at the Euro Zone level but not regulated by questionable and ineffective laws. The second reason is a mere extension of the first. The Euro has been adopted by an economic "Super State" (the Euro Zone) while the politics of the member states is still an internal matter of the member countries. Thus, while there is an economic union there isn't a political one.

The introduction of the Euro with a low common rate of inflation (the law of averages is at work here) caused sharp declines in the rates of interest in many of the member countries which until the adoption of the single currency, had high borrowing rates. This resulted in these countries succumbing to the temptation of increasing government borrowing at the now lower interest rates resulting into ever rising rates of debt to GDP ratios. The debt to GDP ratio is as high as 115% in Greece and Italy.

Until recently before the crisis most debt issued by Euro Zone countries was treated as equal resulting in maintenance of the low interest rates of high debt countries. This continued until a default seemed clear in the near term for countries like Greece which might now have to go for a massive debt restructuring (read: refinancing) with help from other rich Euro Zone countries (read: Germany) and the International Monetary Fund (IMF).

Even after the crisis has surfaced, Greece does not have the adequate tools to fight it as it is locked into the Euro. If Greece still had its own currency - the drachma, it would be able to fight this situation by devaluing its currency and thus help boosting exports and reducing imports. This is one of the biggest if not the biggest drawback of a single currency. Greece also loses the ability to control interest rates and use monetary policy effectively.

Economic blocs around the world have a unified mechanism for increasing inter-regional as well as intra-regional trade but do not have a single currency precisely because of the reason mentioned above. The North American Free Trade Agreement (NAFTA), the East African Community (EAC), the Association of South East Asian Nations (ASEAN) are examples of economic blocs with members agreeing on trade mechanisms but maintaining separate currencies.

Despite all these problems the Euro still looks resolute enough to survive this on going crisis but from the looks of things the Euro Zone may lose some of its members with only countries fiscally strong enough remaining in the zone with perhaps a resurgent and strong Euro. Looking back one can say that countries which were fiscally weak and having high debt-GDP ratios were allowed to join the union which ultimately lead to this crisis.

Even if the union manages to frame some sort of policy to control fiscal irregularities amongst members in the future, the problems of having a single currency will still remain.

Mitul Choksi

30th May 2010

11 PM Indian Standard Time

3G Auction Madness

While it is true that the introduction of 3G (3rd Generation) Mobile Services will change the way how me perceive the marriage of the cellular phone and the Internet the way the 3G services and its insanely precious spectrum is being treated by the government and telecom companies is sheer madness in my opinion.

The first thing that comes to my mind is how the exorbitant price of the spectrum can be justified by telecom companies in such a cut throat competitive market. This question becomes even more difficult to answer when one realizes that telecom companies do not have a proper business model in mind for attracting and maintaining 3G subscribers. Another complication added to the mix is the recommendation from Telecom Regulatory Authority of India (TRAI) to companies having more than the floor 6.2 MHz of spectrum to pay up.

If this recommendation comes to fruition then companies like Vodafone Essar and Bharti Airtel will end up paying around 18000-19000 crore rupees for 2G and 3G spectrum. Add to this capital expenditure of 8000-9000 crore rupees for establishing and launching 3G services and capital costs at around 12-13 percent or Rs. 3000 crore and you get a stock market panic in the telecom sector. The market rightly questions these extremely high costs for 3G services as it fears whether these companies will be able to get a sufficient number of customers who are willing to pay significantly higher fees to access high speed Internet services on their cell phones.

If this does not happen then the telecom companies will have no other option but to use the free portion of the 3G spectrum to provide 2G service (voice and text services ) which is already a very cut throat market and ultimately end up being big time losers.

This basically means that these companies will require one out of every five subscribers to generate a revenue of at least Rs. 500 (this is something Reliance Communications and TATA) are currently earning with their 3G Internet cards). But even they do not have the magic one out of five number. Converting 20% of their subscribers into 3G users in a relatively short to medium period seems quite unlikely for these telecom companies.

And then there is the big question of state owned telecom companies namely MTNL and BSNL.

Both companies have agreed to take 3G spectrum a year ago but haven't made much headway in getting subscribers, so their 3G revenues are minimal. The problem though lies in their agreement to pay the auction price for the 3G spectrum. MTNL could end up paying 6000 crore rupees for Delhi and Mumbai circles while BSNL will have to pay 9000 crore rupees for the rest of India (the total price for a pan India license is Rs. 15000 crore). Thanks to TRAI recommendations MTNL may also have to pay up Rs. 2700 crore for the extra 2G spectrum whereas BSNL will end up paying Rs. 3100 crore if the recommendation is accepted by the Department of Telecommunications (DoT).

The only hope for these two state owned companies lies in the hands of the government coming out with some sort of special dispensation for them. Whether private telcos will take that lying down and whether the Competition Commission of India (CCI) will cry foul remain unanswered questions.

Mitul Choksi

18th May 2010

7:57 PM Indian Standard Time

Only Fools will pre-order the Apple iPad

Friday morning, the fool's parade started. Apple is taking online "pre-orders" for its iPad tablet, which is supposed to begin shipping on April 3 in the United States. Buying a new kind of product sight unseen is foolish. Especially given how mysterious Apple has been on what the iPad can do and what restrictions on capabilities and media access it will place on users and content providers.

Why blow $500 to $830 on a device that may not be what you expect? Just wait a mere three weeks to see for sure what it actually does and what surprises, good and bad, Apple has packed into the iPad.

Don't get me wrong: The iPad concept is promising in many ways. And I have no doubt that the iPad will appeal to many people even if it's not perfect. But we've all seen promising product demonstrations that resulted in major letdown when we finally got a hold of the real thing. Why take that chance? After all, the first-generation iPad is particularly likely to have disappointments, as it's the version that will tell us what, after the hoopla dies down, Apple should have done.

Sure, we can expect Apple to make future innovations in the iPhone OS (which the iPad uses) available to the first generation of iPad devices through OS upgrades -- as Apple has nicely done for iPhone and iPod Touch owners. But the iPad's hardware isn't upgradable, so you'll be stuck with the iPad's relatively low amounts of memory and its lack of connectors such as USB that I would expect Apple to remedy inthe future. And you'll be stuck with whatever iTunes-based content locks Apple decides to place on media content and e-books.

Remember, the same thing happened with the iPod Touch, Apple's iPhone-based PDA. The first-generation iPod Touch could play only a few sounds and even then only at a whisper, so its calendar alarms and new-email alerts were useless unless you wearing its earphones. You couldn't change the volume without using the touchscreen -- a real issue when driving, jogging, or carrying groceries. There was no microphone, so you couldn't take voice memos or use services like Skype. (Apple even blocked external microphones from working on it!) Despite Apple making sure each iPhone OS revision has continued to support the first-generation iPod Touch, those hardware limits remain in the actual devices.

You can bet that similar types of issue will be discovered in the first iPad.

Maybe I'm wrong -- maybe the iPad will be the full "magic" that Steve Jobs promises. Wonderful! If that's the case, buy one when you know it really is magic --after people not employed by Apple have had a chance to really use it and put it through its paces. Until then, why send Apple your money until you know for sure? Doing so would be, well, foolish.

A fool and his money are soon parted, the saying goes. Let's hope most Apple fans are as smart as they claim to be.

Why do we need to thank Microsoft?

I know this might be a little surprising blog entry for most people who know about the famed history of Microsoft and the various trials (literally) and tribulations it has gone through since its inception in 1975.

Microsoft is generally considered as monopolistic uncompetitive software behemoth that rules the computer operating system and productivity software market with an iron fist and forces computer manufacturers, distributors and consumers with no other option than its Windows and Office products. The fact that Microsoft's software has historically been buggy and and plagued with countless security problems (remember Code Red) doesn't do it any good in scoring good points in the public image.

Yet, despite knowing all this I am saying that we should thank the Redmond, Washington based software giant. I go through my arguments in the following paragraphs.

Everyone in the technology and business community owe a big debt to Microsoft and its founder Bill Gates and CEO Steve Ballmer. These guys taking the concept of computing, revolutionized it and then made it ubiquitous.

It is generally considered 'hip' to criticize Microsoft for its failures (remember Microsoft Bob and Windows ME) especially on the consumer side of computing but even though they faced many failures ranging from bad marketing (Windows Vista), bad security (Windows 2000 and Windows XP pre-SP2) to simply a really poor products (Windows ME and Windows 98 First Edition) they have somehow managed the job of getting almost every consumer and every business on a single platform. Although the platform is still closed its ubiquity makes interoperability very easy.

While some argue that Apple has superior products (which is debatable) they don't realize that the recipe for such "proclaimed superiority" rides on the back of Apple's total control of the software and hardware platform of their products. This is true for all their products including Macs, iPhones, iPods and even the brand new iPad. Apple has this control whereas Microsoft does not. This same feature of Apple made it a niche product (even though it is superior in some aspects) and made Microsoft a ubiquitous product.

Since the boom of computing started in the 1980s Apple developed a certain monopoly not only over its products but also on its distribution channels. And just like any other monopoly in the world Apple kept the prices of its products considerably higher compared to cheap PCs with Windows. This situation made it a no-brainer for businesses to go for the Windows based PC rather than the more expensive Macintosh.

This eventually led to the increase in market share of the Windows platform which made it a no-brainer for software developers who obviously started to write programs for Windows as more and more people would be targeted through the Windows platform.

Meanwhile Microsoft made backward compatibility (the ability to run programs for older versions of Windows to run on newer versions of Windows) a key aspect of its software development. This inevitably led to code bloating and lessening of innovation but from a brighter perspective it made businesses rest assured that its mission critical applications would not break down on a newer version of Windows. This was not the case with Apple.

I must note here that this blog post is not meant as an attempt to bash Apple but is to make people realize that Microsoft is responsible for making computing ubiquitous and reachable and affordable to all.

Of course Apple has its bright side too. No one thought that Apple (a computer company) would revolutionize the music industry with its legendary iPods or the phone industry with its iPhone. The iPad too looks promising but we'll have to wait and watch how it turns out to be.

The only thing Microsoft needs to fear and work for is its gradually eroding innovation. They have shown in recent months with the launch of Windows 7 that they can innovate but they have their work cut out for them as now Apple is charging ahead with breakthroughs in technology and awe inspiring innovation.

But for the time being we should look at the brighter side and thank Microsoft....

PLEASE VOTE ON THE POLL ON THE RIGHT SIDE OF THIS PAGE

Mitul Choksi

February 10, 2010

2:32 PM Indian Standard Time

The trouble dealing with India's deficit

As we proceed closer and closer towards the Union Budget 2010-11 a question that is being commonly asked in the governmental as well as intellectual circles is that of India's bulging fiscal deficit.

The key points being discussed are whether the government will keep on upholding the various "stimulus" measures that it provided to the economy in the aftermath of "The Great Recession" (which to be fair was not so great in the case of India!).

But the question of fiscal deficit is not only being faced by India but rather by the finance ministries of all major and industrialized nations in the world including the US, UK and numerous nations of the Euro Zone.

According to the Finance Minister (FM), Mr. Pranab Mukherjee's own projections he sees India's fiscal deficit at 6.8% by the end of 2009-10. But there are signs already that the fiscal deficit may remain much higher and the FM misses his target. The Central Fiscal Deficit (CFD) stood at a whopping 7.9% in the first half of fiscal 2009-10 as compared to 4.4% for the corresponding period in the previous fiscal year.

The financial ministry is showing indications of curbing this stimulus and gradually removing it altogether in a gradual process but the road does indeed seem very tough and tricky for the FM to meet his target and reduce the deficit.

The key reasons why I believe that reducing the deficit is going to be tough for the FM are listed as follows:

1. Generally the activities for which the government provides various ministries with money take time to start and thus spending picks up gradually, only accelerating in the end of the financial year. Thus we haven't seen the real expenditure happening as of now and will only get a clear picture of the total expenditure towards the end of the FY that is still around 2 months or so away.
2. One of the other major reasons why the deficit won't budge is that the tax revenues of the government will not pick up this time unlike the previous years due to a sharp decrease in tax rates in various avenues, especially indirect taxes like CENVAT (Central Excise). Excise revenues of the government have declined nearly a quarter in the November-January period as compared to the previous year due to a sharp decrease in duty rates even though the industrial production has risen in the same period compared to the corresponding period in the previous year.
3. Direct tax collections have risen only marginally this year.
4. Customs and Service Tax collections are down significantly.
5. The Tax-GDP ratio which is a very important economic indicator has gone from 12% in the April-September period last year to 10.3% in the current fiscal year.
6. The government also has to provide for other expenditures like fuel subsidies, food subsidies, loan waivers to farmers and many other such expenses.
7. The government can't just forgo spending on the initiatives taken by it in the previous years which include many large social sector programs that require a lot of spending.
8. The government also needs to allocate sufficient funds to various ministries and departments in the upcoming fiscal so as to not hinder their working and ensure smooth working of these departments.
9. The 3G spectrum auctions which were earlier slated to be held this fiscal year are more or less likely to be held in the next fiscal (or even in the one after that) due to various bureaucratic hurdles. The auction was supposed to fetch the government anywhere between 30-50 thousand crore rupees which would have been a great help in covering the deficit

Looking at all these things, I think its safe to say that some sort of severe austerity drive and maybe even gradual tax increases are in store for us including monetary tightening by the Reserve Bank of India (RBI) to control credit growth (not to mention control the spiraling inflation).

I don't think the budget will have anything "stellar" in store for us although the government may concentrate on taking measures to ease tariffs and taxes for specific sectors who really do need its support in order to thrive or survive.

One thing is certain. The stimulus measures will go away fairly rapidly restoring the pre-recession tax regime in order for the government to facilitate an increase in its revenues. And anyway, we won't need the stimulus in a few months time as the economy will be almost back to the boom time growth rates.

As Union Finance Secretary Ashok Chawla recently said in a meeting of leading representative body of trade and industry "Too much stimulus when the body is getting healthy may not be a good thing. It can be injurious to health."

Let's wait for 28th February to find out what happens....

Mitul Choksi

4-Feb-2010

11:19 PM Indian Standard Time

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 :)

NOTE: Please Vote in the Poll on the Right Hand side of this page. Thank You

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