A tribute to Nehru

Sometimes I wonder that we Indians have a strange way of evaluation, we judge not by his/her performance, but how his grand daughter in law or great grandson perform. More over,

  1. A person who took the reign when whole country was in chaos, communal riots were rampant, language was a burning problem, even then integrates hundreds of parts with such diversity into one country is labelled as one who ruined the country. But another person who whips up communal feelings to win election, whose party labels 69% of the population anti-national is a great leader.
  2. A leader who takes over when the country faced decades of negative growth rate and is able to achieve 3.5% sustained growth rate for full decade, (that too highest in Asia) was a failure. Another leader who takes over after a decade of 7.5% growth rate, is lucky to have crude at one third price, booming world economy and manages to bring it down to 6.1% is a maverick.
  3. A person who loved dissent so much that he made a person, who was prominent leader of Hindu Mahasabha which openly supported British during Quit India Movement, is now being labelled his murderer.

Like any great man he also had some failures. But, Kashmir was definitely a different ball game, Raja Hari Singh wanted to remain independent and India could not have used force like Hyderabad, as it was a Muslim majority state. Only when Pakistan occupied almost one third through Kabalis, he agreed to sign accession but with special status (article 370). Anyway, by hindsight we can say it could have been handled better. Sardar Patel was another titan, who did great work in merger of princely States, but whether he could be a better PM will be purely a matter of opinion. We must realize that when whole country was facing gigantic problems, which at this age we can’t visualize, only a man of grand vision, extreme tolerance was probably the best choice. If you read any book on Asian history from 1950-1960, you will find that India outperformed all other newly liberated countries, even Ceylon, Burma, Indonesia and Malaya which were far better economically to start, now we are even surprised to see the name of Burma. Unfortunately, he became a tired leader after 1960 and India never produced leaders of Nehru Patel caliber after independence.

Regarding India-china war, Genesis was Nehru like most Indians of that time had great territorial ambitions for India. We claimed Aksai Chin, which even British never had in their possession, when china built up a long road, free India came to know about it after 2 years that also through Pannikar, India’s ambassador in China. In Arunachal, McMohan line was never recognized by China. Tawang valley came into British possession only 2-3 years before our Independence, that too with lot of protest by Tibet.

Nehru failed in making army strong, but he was successful in keeping army within barracks, otherwise we might have become another Pakistan or Burma. Moreover, could India afford to spend massive amount on defense at that time?

His another blunder was Krishna Menon and Lt G BM Kaul, but didn’t Modi made so many non-performers on highly important post including Irani as education minister.

RO water purifier: Do you need it?

Mineral water was in fashion a decade ago, today De-mineralized RO water is in fashion. I can understand the need of people who live near the sea, asking for desalinated water for drinking, but why the rest of the country is going for bottled water cans and RO purifier.

There is no single WHO report that corroborates that drinking hard water has any adverse health impact (as long as you are not drinking sea water or equivalent which is manifold higher than what most borewell or piped water has). On the contrary there is a WHO mandated minimum salt (TDS requirement) that any drinking water purifier has to maintain. Even the web literature on hard water talks about its impact on soap, boilers etc. There is no impact of dissolved calcium & Magnesium on the bones, kidney stones etc. In fact, human beings need calcium either through diet or supplements to maintain their bone density.

The claims of RO treated water has lesser microbes & dissolved organic matter is also without basis. RO is designed for controlling the amount of dissolved salts only, it relies on an inbuilt traditional water purifier/filter to decontaminate the pipe water before feeding it to RO. In fact, 100% salt removal adversely impacts the taste. So the so called TDS controller actually only blends the normal (purified) water with the desalinated water to achieve desired taste/salt content. Point being if traditional purifier were so bad in decontaminating water, the whole principle of TDS controller would fail.

Domestic RO machines are expensive units costing 5-10k each and every 6-8 months the membrane needs to be replaced which costs almost ½ the unit cost itself. Even after ignoring the cost of piped water & electricity, the personal RO water cost almost the same as the commercial bottled water. Also to generate 1 glass of RO water, the filter wastes away another 3 glasses of piped water through the thin white pipe from the purifier to the drain. In a country, where ground water levels are depleting and portable water not available to 80% of the households, this seems like an expensive luxury.

There are some regions which have dissolved heavy metals, nitrates and other dissolved contaminants for which RO is the only treatment mechanism. However just using a blanket RO filtration everywhere may be foolhardy. A simple 100-300/- water purity test can prove to you that the RO marketing campaign is nothing more than a gimmick to make you spend more.

Does anyone understand GST?

GST was a great opportunity for the government to make the tax code of India more lucid, simple & progressive. Why does Indian government have to tinker every business through a 1000 different categories? can we have a few broad tax slabs and classify which industry falls in which slab? Here are some other of the reasons for my opposition:

  1. Can for once we can do away with the various cess, surcharge etc. Anyways government collects more education cess than the incremental expenditure on education/literacy. Same with krishi kalyan. If government needs additional taxes to balance its budget, then why not it simplify the tax code by including them in the main taxes as well. GST was a great opportunity to simplify things.
  2. Indian tax code is a maze and subject to interpretation. There are so many categories, so many exceptions to the tax code that no individual in their lifetime can ever fathom to the truest extend how much tax they owe. GST was conceived as a uniform tax code, yet why the tax rate should vary by what price the seller sells at, what market it is tapping, which region it is made it, what kind of industry it makes etc. etc. to me GST is the plain old vanilla tax under a new wrapper.
  3. Why do restaurants that don’t have air conditioning have a lower tax rate? Is the government trying to hamper restaurants providing good service? Furthermore the tax planning & complex codes forces individuals & businesses to lock their funds into areas which are not the most economically efficient… hence destroying value for them & the nation. I am ok to have some basic macro level concessions made for social upliftment, but there needs to be a goal, a cause that needs to be fulfilled. Taxes should not be used as a political tool.
  4. If you buy furniture from a small unorganized shop, the price that you pay depends on your mode of payment, the fact that you require bill/invoice or not etc. While organized sector have better transparency & 100% payment against a bill/invoice. What is GST doing to stop this pilferage? On the contrary, the tax code is designed in a way to eat away bulk of the efficiencies away that organized retail brings.
  5. Indirect taxes by their very nature are regressive because they are applicable irrespective of the income of the payer & the burden of taxes is higher on the poor because their annual expenditure (as a % of their income/wealth) is higher. Hence higher taxes for poor. Yet GST has taken no steps to reduce the country’s reliance on indirect taxes. Furthermore we have stupid tax classifications:
    1. Not only capital gains tax is lower than regular income, it has so many exemptions that effectively results in labor taxed in full rate (which is how poor/middle class make their money) but capital practically tax free (which is how rich make their wealth)
    2. Holding stocks for one year makes them tax free. This is simply ridiculous way to deepen the pockets of the rick
    3. Dividend distribution taxes is a stupid way of making a slab based direct tax into a much lower rate indirect tax.
    4. Service tax for some stupid reason is categorized as a direct tax by India. It is linked to the revenue/invoice value and should be treated like an indirect sales tax.
  6. Farm income tax exemption is a ridiculous holy cow in India. The regular income taxes are designed that the burden falls on the rich & not on the poor. After tax exemptions, only income beyond ~3Lkahs INR is taxed, that is close to 3-4X of annual per capita income. Is it not a relaxation enough? Why are the rich from farm any different from the industrialist?

I am unable to comprehend how GST has reformed or simplified our tax code. Infact half hearted approach has let to yet another wasted opportunity. A very demeaning summary on the complex Indian tax code by a NRI friend of mine is:

An Indian mind cannot think of anything simple. It is in his culture to over-complicate trivial issues, graft manuscripts detailing out the rules, scenarios and procedures detailing out a million cases yet keep the crux of the matter unaddressed and subject to interpretation. Furthermore, appoint a bureaucrat/enforcer who will swear by this rulebook as if it is the god’s gift to mankind and an army of middlemen who will guide anybody and everybody how to circumvent this rule…. This parasitic organization was once confined to the public sector & administrative services but has not percolated to the private sector. Here this vicious force is thriving without any moral consciousness, though patronage of the promoters without any checks and balances and really crippling the nation.

Indian airport magazine: promoting whom?

I am unable to comprehend why a tourist magazine subsidized by Indian tax payers spend crores of money publishing detailed photogenic travelogue of international destinations and not cover domestic destinations. Furthermore, it forces the states to buy advertising space to promote their region but will give a much detailed articles on international locations for free?

Indian government has a campaign of Incredible India where they claim that there are more to see in India than what one can cover in a lifetime. Yet Indian government’s journalist seems to be more interested in a paid trip abroad to promote the economy there.

Assam, north east India, Himalayas are treasures which have not been fully explored by the tourist in India. Killing time at the airport, a magazine with the elephants & Rhinos of the Dooars at its cover. But imagine my surprise when I saw that the bulk of the magazine is devoted to international destinations like Switzerland, Vietnam, Romania & places outside India.

There were a few isolated pages about some tourist destinations like Gujarat, West Bengal, Jharkhand and Odisha but those were paid one page advertisement.

Furthermore Jhakhand government is more interested promoting its political leadership, then attracting tourist. I am unable to comprehend how this advertizement is relevant for the audience of Kashmir (where I picked up this magazine) but I am sure our geniuses must have a strong basis.

Human touch at Srinagar airport

Human touch is not always humane. Here are a few tips for anybody travelling/transiting via Srinagar airport:

  1. Set aside at least 90 extra minutes to navigate through the maze of security protocols & maze.
  2. Unless you are prepared to walk for a mile and can lift your suitcases with ease multiple times, please opt for special wheelchair assistance (a chargeable service provided by most airlines)
  3. Remember the pre-paid phones & data cards don’t work, news websites & social media is banned. So buy a book, but don’t buy anything that has the word human rights or harassment by gunmen on its cover.
  4. Don’t freak out at the sight of numerous birds at Srinagar airport. These are not carrions and are especially trained by ornithology department to steer away from any incoming aircrafts to prevent any mishaps due to bird-hits.
  5. Any knowledge of local customs, costumes or gestures will make you a prime target for special attention. Speak only in Hindi/English not Urdu/kashmiri and dress up in clothes worn by mainland Indians not local costumes.
  6. Have an enlarged print of your tickets & I card handy. Hanging them over your neck or pasting them on your forehead might not be a bad idea considering the numerous occasions you will be asked to produce them.

I am not trying to belittle the dire state of the law & order situation in Kashmir. Also this airport is shared by airforce which makes its security protocols determined by military. Lastly there are no all-weather roads to Kashmir valley. This airport is the only link to the mainland for the 700,000 security personnel deployed there. My experience last week at Srinagar airport was a stark contract with any airport in the world.

  1. I was stopped a mile before the airport building and asked to produce my I card & tickets.
  2. The moment you enter the airport vicinity (remember you cannot still see the airport yet), you, your driver etc need to walk up a 5 feet high ramp with all luggage. The x ray machine is another couple of feet high and your bags need manually lifted. Then after a round of through frisking, id check etc of the car & you. The bags need to be again carried back to the car & you can drive to the next security check.
  3. Drive through about 5 barricades where your car will be asked to make steep left-right turns and imagine you are playing a video-game.
  4. Volha- you have reached the airport building. Please disembark (again) and produce your papers.
  5. Please walk to the next available x ray machine, produce your papers and try not to complain about sore-wrists while lifting your bags (again)
  6. Go to the airline desk. I was lucky to be greeted by a charming smile which made me forget for a second that I am inside a military establishment. I handed the lady at the counter my bags, but apparently the bags were not done with me. (read point 14)
  7. Now produce your papers (this time onwards, it needs to be accompanied by your boarding pass as well)
  8. Go to the x ray machine (lift the bags again)
  9. Go for a really personal touch & try to cool yourself by imagining that the physical frisking is a spa massage. Don’t forget to get your boarding pass stamped, else you will be pushed back to step 7.
  10. The x ray machine guy will direct your bag to his superior officer who will personally open the bag and verify its belongings. Then he will put a a stamp on your baggage tags.
  11. You will be again required to produce your boarding pass and bags. The security will verify the stamping on them & dates etc. before you can proceed to the boarding gate
  12. At the gate, the airline employee will verify your boarding pass and allow you ahead.
  13. A security personal standing not more than 2 feet away will again verify your papers. If you have checked in any bag, you will be required to take a detour. You need to physically travel to the baggage handing zone and again identify your bags.
  14. Baggage handling guy will verify your papers, allow you to collect your bags. Then he will verify the code mentioned in your bags and in the small stickers attached to the boarding pass are the same. Then he will stamp his approval.
  15. Then you need to come back to the guy no 13 and show the identification marks before proceeding to the aerobridge.
  16. In the middle of the aerobridge there will be another security personal who will make you empty all your hand baggage and verify the contents.
  17. Another guy at the end of the aerobridge to verify your papers before you are allowed entry into the plane.
  18. The air-hostess will collect your boarding pass, guide you to your seat and smile to cool you off.

6 months ago, I had written about the state of Delhi & Bangalore airport security. I had made special reference to the employment opportunity created by deploying 12 different personnel to personally verify & escort a passenger to the seat. I also had some concerns on the effectiveness of the security protocols esp. when 47 instances were reported and 200kg of gold went missing from the customs vault over the six-month period of April to September 2016 at IGI airport alone. However last week police have nabbed Sanjiv Kumar, superintendent of customs department Sonipat and has contained the situation. Hopefully Srinagar airport can now receive its special attention and can rationalize the number of security provisions that one needs to go through.

Market of Lemon: Pashmina & Pampore Saffron

If you want to kill an industry or market, flood it with fakes and make it impossible for the customers to differentiate. The fakes will drive down the price that the customers are willing to pay forcing the quality producers to quit. This is the essence of 1970 paper by George Akerlof. Currently the exotic local produce is facing the same state of neglect and dying out.

Although almost all the saffron grown in the region is from Pampore, the GI labeling is not being used. So there is no way for the consumers to gauge the authenticity for this spice. Silver sells for 35-40/- per gram but saffron sells for 250-350/-. Yet something that sells for almost 8-10 times more is not packaged, branded, tested or certified? There is an ISO 3632 mark that is widely used in Iran & other middle east, but rarely for any Indian saffron. Government has also not been able to come up a viable alternative. So there is no way to gauge if I am buying a worthless twig that is dyed with harmful chemicals or the genuine product. Even if it is genuine, the loose nature of packing makes quality & moisture control difficult. High moisture content punishes the buyers twice. Firstly, it adds up to the weight of the product making the deal expensive for you. Secondly it drastically reduces the shelf life from 2-5 years to less than a season. As a simple test: dry filament should be brittle and snaps when folded, but a moist one that is typically sold in Srinagar markets is pliable, indicating high moisture content. Then amount of foreign materials/debris is a matter of concern when one does the trade. Lastly, one should not forget that buying products that has a history of employing underage/child laborers and is expensive enough to fund militants/extremist movement needs to have a certified, verifiable declaration stating that this is an ethical produce and not blood saffron.

Earlier the weight and size of the fiber were indicators used to test the authenticity of Pashmina. Today, man made fibers esp. micro-fibers can easily be processed to give the same look & feel. Some of them are peptide based which will give the same hair-burning smell if you do a quick flame test. Hence the need of GI marks & lab tested marks are needed to demonstrate the authenticity of these products. Woolmark, for Merino wool & silkmark-India solved these problems for these natural fibers. Egyptian cotton also suffers a similar fate, which was highlighted in the recent controversy where the total volume of fabrics marked as “Giza 45” Egyptian cotton in USA alone exceeded the total annual production in Egypt. Then comes a second problem, a genuine pashmina has to be grown in Kashmir valley and sheared from only the underbelly of the Cashmere goat. However natural fibers from rabbit also look similar. Unable to differentiate, consumers are willing to pay only for the utility and workmanship rather than for the pride & luxury of owning a genuine product.

There are some ethical ways of farming Shahtoosh (made from the hair of Tibetan antelope) which allows shearing live animals that are tranquilized (as opposed to traditional mode of hunting) but nobody can ever tell the difference between the two modes. Hence the whole industry that could easily be regulated is banned all together.

When the China glass imports threatened the Murano hand-blown glass industry they took corrective steps to brand, differentiate & market their produce appropriately and won the battle. Can we indians not follow them? The tourism, handicrafts or the trade council could easily establish some low cost testing facility to assure the customers of the authenticity of their purchase, but lack of it we see the industry slowly dying out. The Nepalese & Chinese have taken over the fine wool trade, the Iran has taken the leadership in the Saffron and the people in the valley are left high & dry. I could have discounted it as a transient problem that could be solved once the peace is restored in the valley and social media ban is removed. However after 70 years of occupation, its high time that the locals organize themselves.

One Belt, One road (OBOR) & China Pakistan Economic corridor (CPEC)

I am not able to understand is India is more unhappy about 29+ countries collaborating n this OBOR network or creation of CPEC (China-Pakistan economic corridor)? The way I see it, there are three kinds of actors in the art of international diplomacy: the heavyweights, that can lean and change the world balance; the opportunist, who are able to make the most of the situation and the whiners, who can make the worst of any situation. The Indo-Pak-China diplomacy is able to capture the best of these three worlds. Indian myopic minds do not have ability to comprehend beyond cows & Pakistan. This is probably the reason why our international clout is small compared to the country’s size & might. India has more than a dozen neighbors but unfortunately, we do not have warm relationships with any.

Indians have already been mute bystanders when America & China made it realize that “Indian Ocean is not India’s Ocean.” China & America have larger navy stationed there and control more ports than we do. While Indian coast guard is busy imprisoning a few fishermen gone astray, the bulk of the piracy & drug trade is tackled by these foreign countries who are thousands of miles away. India is closer geographically, culturally & linguistically to Central Asia than any other super-power. It has been repeatedly offered to play an active role in the Central Asia but except for exporting a few able bodies citizens we have not been able to scale up. Silk Road or OBOR project is already taken off and the trillion-dollar question is how we can benefit from this opportunity?

OBOR is an economic corridor that links Beijing with London costing China 150 billion dollars a year. Critics claiming that this is an economic folly because of the fact that the freight through this train is going to be more expensive than sea and 18 days is too long for a passenger train ride. However, the bulk of the trillion dollars is through loans & direct investment is in the Central Asia and connecting it with the rest of the world. This project is like an adrenaline shot for the China economy fearing slowdown in construction & export led boom. It hopes to repeat the success of the Hoover and other engineering marvels undertaken by governments to change the fate of the world.

Hoover Dam construction helped America greatly during depression. It directly absorbed thousands of unemployed workforce during the period 1931 to 1936 and created even greater indirect unemployment in steel mills, concrete factories, capital goods & machinery industry that were hit hard due to the economic slowdown. The $49 million that US government spent in 1931, helped create billions of dollars for the US economy. Today, 80 years after its commissioning, it still generates about 4.3 billion (KVH) annually in clean & cheap electricity, irrigates 400,000 hectares of land and serves 18 million people. All this wealth created in a region that was hot (120 degree Fahrenheit in summer) with less than 5 inches of rainfall and riddled with rattlesnakes & scorpions. The conditions were so harsh that the original surveyor, J. G. Tierney drowned and died during the scouting of ideal spot and today millions are able to live there because of the water & electricity it created.

Today China is facing a similar crisis. In 2016, it produced 2.35 billion metric tons of cement and 808million tons of steel which is more than half of the world’s productions. This is 5X more steel than whole of EU and 10X more cement that India (the world’s second largest producer). Hence there is no cheap exports that can help China absorb the excess due to slowdown of the China construction boom. Its 3.5 trillion of foreign currency is primarily in USA where it is barely yielding any returns. In addition, the growth in the traditional markets has slowed down with 2016 showing the most sluggish growth (8%) in this decade. The strong yuan, rising standard of living and demand for luxury & imported items is putting pressure on balance of trade (exports less imports).

Central Asia is an untapped territory ripe for investments & exploitation through linkages. Russia which traditionally dominated the region does not have the resources or the focus to develop the region. Its history of imperialist domination and occupation has not left it with much goodwill. China can easily export materials for the infrastructure, machinery & equipment for the various factories, refineries & processing plant to widen its resources supply base. Tap the local population (which has been witnessing declining wages & standard of living) to combat its own ageing population & decline in workforce participation (a problem witnessed by all countries when they transition to the develop nations league). Essentially with most of Africa & Asia politically & economically aligned to it, it will be able to create barriers for anybody trying to displace its position as the world’s second largest super-power.

EU whose key nations are still debating the issue of stay-vs-exit, controlling the flux of refugees & bailing out its own members are unlikely to invest heavily beyond the member states. Post the cold war, Europe invested heavily in Eastern Europe, but Turkey seems to be the border of its economic influence. America has huge influence in the Middle East & North Africa because of its thirst of oil. It did develop strong ties in the region esp. Pakistan & Afghanistan to combat cold war but not able to exploit the region fully. The new western political leadership are inward looking and are unlikely to invest in anything other than walls higher than skyscrapers.

Being land-locked & difficult terrain further adds to the cost of the economic corridor being opened between Central Asia and the west. After decades of neglect in infrastructure and exploitation from the communist the local governments are welcoming China with open arms. So many local jobs are being created by soft loans, infrastructure projects which is linking them to the global markets. India might not be able to replicate the long term strategy & planning required to match the international clout that China hopes to gain. However it needs to evaluate what is more advantageous for it. Non-alignment to any of the three power blocks America, China & Europe is a good strategy if you believe that the three will fight & annihilate themselves, but in all other cases its plain stupidity & arrogance to allow one to be isolated.