Around 1951 you could count the number of central government public sector units (PSUs) on the fingers of one hand: there were five. Twenty-five years later by 1976, that number had ballooned to 155. By 1984, there were 220. The central government added 70 PSUs in the following 30 years — for grand total of 290 by 2014. That’s a rate of increase was a little over two per year.
With Modi as the prime minister — and the de facto autocrat of India — the rate of increase of public sector units shot up to over 12 per year. In the four years 2014 to 2018, about 50 additional PSUs were added. Modi promised one thing — “government has no business to be in business” — and delivered precisely the opposite.
No sufficiently distant goal is achieved in one big step. But take enough number of small steps in the correct direction consistently, and you are guaranteed to reach your destination.
Recall the “digital” solution that Ajit, the archetypal Bollywood villain of the past, once adopted to get rid of the hero. He told his minions that they should put the hero in a computer. Why, the puzzled minions asked. Ajit said, “Bit by bit mar jayega.”
Indians are also getting that digital solution — where the means are technological and the end appears to be their total enslavement to the state. The government has all the powers that it needs to be in absolute control of what the citizens are allowed to do, what they must do, and what they must not do. It is using those powers, bit by bit. And the citizens merely adjust to the government control of their lives without protest.
Money is important. The real economy cannot function without a stable and predictable currency. Money serves as a numéraire, which the wiki defines as “a basic standard by which value is computed . . . the numéraire is one of the functions of money, to serve as a unit of account: to provide a common benchmark relative to which the worth of various goods and services are measured.”
These days, nearly all money is fiat money issued by the central bank of an economy which is controlled (indirectly perhaps) by the government. The quantity, and therefore the “price” of money (which is the interest rate), is controlled by the central bank. Continue reading “Ask Me Anything — The Demonetization Edition”
The Center for Civil Society convened a day-long conference on Nov 20th at The Claridges Hotel, New Delhi, to honor the memory of S V Raju. I attended and had the opportunity to meet with many friends and also some people I had heard about but never met before.
“Power tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men . . .”
The truth of Lord Acton’s observation gets confirmed with sickening regularity. Here I explore that point in the context of democracy. Why do democracies, particularly those with powerful governments, tend to elect bad people? What’s the analytical relationship between power, politics, money and corruption? Continue reading “Democracy and the Economics of Politics”
I am not a fan of the Modi government’s “Make in India” advertising drive. My view is certainly unpopular. I think that advertising cannot (and must not) replace real changes in policies that could make India attractive to domestic and foreign manufacturers. As it happens, the prevailing sentiment, even among many domestic manufacturers, is that India is really a very hard place to make things. Which partly explains why so much of what’s consumed in India is made in China. So trying to woo foreign manufacturers through advertising slogans is pointless.
I have been a long-time supporter of Shri Narendra Modi. But I am seriously disappointed at his performance as prime minister. Certainly he has done better than his predecessor, Sonia Maino. But she’s an Italian who really did not care for India. Doing better than Sonia Maino is no achievement. I expected better than this from Modi. I think Modi’s greatest achievement so far has been political. He disarmed the Maino mafia. But I fear that there are Maino moles in the Modi management team.