Is Subhas Bose and His Ideology Still Relevant ?

By Jayanta Roy Chowdhury

As we celebrate the 123^rd Birth Anniversary of  Netaji Subhas Chandra Bose, the “Prince Among Patriots,”  we must ponder over whether and why he is still relevant even after the interval of nearly 74 years since his last address to his countrymen through a radio dispatch towards the end of World War II.

After all three generations of Indians have been born since his disappearance or death on 18^th August 1945. Many ideas which were revolutionary while he was still alive no longer seem to find resonance with the world of today.  Communism has all but died out. Fascism in the form that Hitler propagated died out only to be reborn in the last two decades in other forms.

To understand the relevance of Netaji, we have to delve into his thought process and  understand what he stood for and re-evaluate them in today’s circumstances. Indeed we have to keep asking at all time, do these principles stand the test of time ?

To my mind Bose stood for three basic tenets -  democracy, secularism and socialism. Despite attempts to paint him as a fascist, by referring to his meetings with Hitler and Mussolini and his reported statement during the World war II where he said an election should be held soon after independence, but once a Government was in place it should be given emergency powers to rid India of its problems of caste and communalism, Bose followed the path shown by his political mentor Deshbandhu Chittaranjan Das and was a democrat to the core.

In his Presidential speech at the Haripura Congress in 1938, Bose made his political ideas on the future of India very clear : “ Our goal is that of an Independent India and in my view that goal can be attained only through a federal republic in which the provinces and the states will be willing partners.”

He was clear that this federal republic would be a multi-party democracy. Speaking on the form of India that the congress was striving for and the nature of party politics that should ensue after independence he made it clear :  “The state will possibly become a totalitarian one, if there be only one party as in countries like Russia, Germany and Italy. But there is no reason why other parties should be banned. Moreover, the party itself will have a democratic basis, unlike, for instance, the Nazi Party which is based on the ‘leader principle’. The existence of more than one party and the democratic basis of the Congress Party will prevent the future Indian state becoming a totalitarian one. Further, the democratic basis of the party will ensure that leaders are not thrust upon the people from above, but are elected from below.”

He also very clearly enunciated the fundamental rights which he felt Congress must grant to all citizens in his landmark Haripura  speech – “(i) Every citizen of India has the right of free expression of opinion, the right of free association and combination, and the right to assemble peacefully and without arms, for a purpose not opposed to law or morality; (ii)   Every citizen shall enjoy freedom of conscience and the right freely to profess and practise his religion, subject to public order and moral ity; (iii)  The culture, language and script of the minorities and of different linguistic areas shall be protected; (iv) All citizens are equal before the law, irrespective of religion, caste, creed or sex; (v) No disability attaches to any citizen by reason of his or her religion, caste, creed or sex, in regard to public employment, office of power or honour, and in the exercise of any trade or calling; (vi)   All citizens have equal rights and duties in regard to wells, tanks, roads, schools and places of public resort, maintained out of state, or local funds, or dedicated by private persons for the use of the general public; (vii)  The state shall observe neutrality in regard to all religions; (viii) The franchise shall be on the basis of universal adult suffrage; (ix) Every citizen is free to move throughout India and to stay and settle in any part thereof, to acquire property and to follow any trade or calling, and to be treated equally with regard to legal prosecution or protection in all parts of India.
These clauses of the Fundamental Rights resolution seem to have eventually found its place in our Constitution when it was drafted. It also in his own words “make(s) it clear that there should be no interference in matter of conscience, religion, or culture, and a minority is entitled to keep its personal law without any change in this respect being imposed by the majority.” 

However, for him democracy was not a borrowed idea taken from Europe. Making a historical survey, Bose in an address ten years before Haripura, cited the examples of Republics in ancient India and referred to the principle of democracy, as applied in India in the governments of villages and towns. He highlighted the fact that the doctrine of democracy was not unknown to India in the past “...from the above historical narrative it will be evident that democratic republican forms of government existed in India in the ancient times. They were usually based on a homogenous tribe or caste. In the Mahabharata, these tribal democracies are known as ‘Ganas’… (Even) in monarchical states also, the people enjoyed a large measure of liberty, as the King was virtually a constitutional monarch. This feat, which has been consistently ignored by the British historians, has now been fully established through the researches of Indian historians.”

Now let us take up his ideas of socialism – Communists and many others have termed it as “jumbled”. Possibly their rejection of his `Samyavad’ seems to have come from the fact that he  rejected the Marixian dogma of class struggle, despite admiring certain goals of Marxism and had described himself openly as a Socialist.

At the Rangpur Political Conference on March 30, 1929, he made it clear that he favoured  Swami Vivekananda’s socialistic ideas where he wanted to work for a classless, casteles society through social change and economic progress. “This socialism did not derive its birth from the books of Karl Marx. It has its origin in the thought and culture of India. The gospel of democracy that was preached by Swami Vivekananda has manifested itself fully in the writings and achievements of Deshabandhu Das, who said that Narayan lives amongst those who till the land, prepare our bread by the sweat of their brow those who in the midst of grinding poverty have kept the torch of our civilization, culture and religion burning,” Bose pointed out.

Calling this the doctrine of synthesis, Bose’s ideas stood on four pillars: 1) Freedom of Conscience, 2) Political Democracy, 3) Economic Democracy or Indian Socialism and  4) Dignity of Man.

That he clearly felt that Nazism and Hitler were an unmitigated disaster is quite clear to those who have read him and those who managed to interview  his close followers with whom he confided.  In a letter written in March, 1936 to Dr. Franz Thierfelder, the co-founder with Dr. Tarak Nath Das, of the Indian Institute of Munich, Bose wrote  “When I first visited Germany in 1933, I had hopes (of) the new German nation, which has risen to a new consciousness of its national strength and self-respect .... Today, I regret that I have to return to India with the conviction that the new nationalism of Germany is not only narrow and selfish, but also arrogant.”

When Hitler referred to white superiority in a speech in 1936, Bose denounced the Führer in a press conference in Geneva and advocated a trade boycott of Germany by Indians. Similarly, when  Hermann Göring’s made disparaging remarks about Mahatma Gandhi, Bose was stinging in his criticism. Later in conversations with his close associates Bose dubbed Hitler “baddha pagal” (raving mad).

However, the fact remains that Bose took the help of Germany and Japan in trying to win freedom for his motherland. This his followers would readily term as `Realpolitiks’ of the kind that  Chanakya or Machiavelli would have followed.

Many accused him of trying to replace one colonial power – Britain with another - Japan.  However, he was aware that this was a distinct possibility and had warned his closest associates in the INA Azad Hind Fauj to “prepare for a second war”, after India wins its freedom. He wanted the Army to be ready to fight his benefactors the Japanese  if the need arose.

The need would perhaps have arisen. The Japanese Imperial forces did much to hinder his rise even as they propped his INA up. This was despite his excellent political relationship with Japan’s Prime Minster Hideki Tojo and Emperor Hirohito. Early when the INA was being formed in 1943, when the Japanese liaison officers learned that Bose wanted to recruit more soldiers from among the Indian Prisoners of War beyond the approximately 26,000 he had recruited, many of those who had not made up their mind were abruptly shipped off to prison labour. He was denied any significant arms cache  and had to content himself with arming his men mostly with captured British weaponry, which also limited the numbers of local Indians, mostly Tamils he could recruit into his army to about 30,000, despite the fact that nearly 1 lakh volunteered.

The Japanese dilly-dallied on demands for transfer of actual control of the strategic Andaman & Nicobar Islands and did not agree with Netaji’s more sound war aims of reaching Chittagong district of United Bengal through the Arakan hills which could have triggered off a revolution in mainland India, preferring to attack Manipur and Naga districts of NEFA. The success of these two fierce battles  would at best have yielded some densely forested territory to the Indo-Japanese forces. The d extremely tenuous communication links of these areas with mainland India meant that British censorship ensured Indians knew nothing of these battles at that time and hence had no great reason to organize any supportive revolts.

It did not take a Napoleon to understand that to invade India a  more direct thrust towards Bengal was more logical. The British understood that well and decided to pre-empt such a move by removing or destroying the long distance boat services in the Bengal delta leading to the Great Bengal Famine.

Bose’s  secularism and his strong belief that India would have been better off without the curse of caste was also amply clear. A story told by Ambassador TCA Raghavan last  Sunday at Chittaranjan Bhavan about his visit to the famous Chettiar temple in Singapore should suffice to explain his beliefs.

The Chettiar Temple set up by the rich mercantile community of emigres from Tamil Nadu was anxious to donate to the INA war effort but wanted Subhas Bose to visit the temple. Bose refused complaining that the temple practiced orthodoxy and did not allow people of all castes and religion to enter its premises. Ultimately the temple authorities bowed down and urged him to visit with any associates he chose without any regards to caste or creed.

Major General A.C. Chatterjee, Minister for Finance in the Azad Hind Government who was an eyewitness to this historical incident  also gives a vivid description of it in his Memoir : ‘In due course, Netaji went to the temple, accompanied by his Muslim, Hindu, Sikh and Christian officers. They went not only into the inner courtyard of the temple, where previously non-Hindus were not allowed to enter, but even to the sanctum sanctorum, where only Brahmins could (previously) set their feet. This was an even more remarkable incident in the annals of the temple. Not only this, but the Brahmin priest of the temple put `tilakas’ (marks) over the foreheads of Netaji and the officers, irrespective of caste, creed and religion and gave them `prasad’ (food offering) of the deity. The officers in their turn willingly accepted the `tilaka’ on their foreheads and gladly partook of the `prasad’ offered to them. By such acts, the Hindus did not become less Hindus, nor the Muslims or Christians or Sikhs any the less Muslims, Christians or Sikhs. What did happen, however, was that they all rose to the plane of human relationships to a higher level. Their love and respect for one another increased manifold. Bose then delivered a remarkable speech  explaining what the Movement implied, emphasizing upon the unity amongst the followers of the different creeds and religions of India and the significance of universal brotherhood.’

In this day and age when religious and caste based difference have again raised their head and attempts are being to drive a wedge within India, remembering this lesson in true secularism is perhaps even more important than ever.

Jai Hind !

©️ Jayanta Roy Chowdhury

23^rd January 2019

RBI's Comeback as a Regulator

India’s banking regulator  RBI which had been reviled by many for not halting a economically devastating demonetization is slowly pushing back  and standing up to political and corporate pressures to lay down the law on banking and protect its turf as a regulator.
From laying down the law in ending the tenure of Bank CEOs who misreported bad loans to pushing back the government  over its bid to curb its powers by taking away significant powers such as that settling payments by banks and financial institutions or the power to decide how to deal with banks which went sick.

RBI: Protecting Our Money

Last week, it showed its resolve on ending the atmosphere of complacency on shoddy lending in India’s banking industry, with its decision to end Rana Kapoor’s term as chief executive of Yes Bank,  one of India’s largest privately owned banks which Kapoor had founded 17-years ago.
Kapoor has been asked to step down by January next year.  Before that RBI asked Axis bank to reconsider its chairman Shikha Sharma’s fourth consecutive term.
The hard decisions follow RBI’s orders last year to lenders to come clean in exchange filings on  difference between bad loans reported in their results and as assessed in subsequent central bank reviews, if the difference was significant by more than 15 %.
Yes Bank later reported a discrepancy of more than 300 %, one of the highest in the industry while  Axis reported a  26 % difference.
RBI has also involved itself in the affairs of ICICI Bank whose CEO Chanda Kochar is facing probes on loans given out by the bank after whistleblowers alleged mis-coduct and conflict of interest in the manner  in which the loans were given. Kochar is currently on leave from the bank.
Earlier this year, the RBI stood up to intense pressure from both Government and corporate circles to dilute a key circular it brought out in February 2018 which scrapped all bad loan
restructuring schemes and specified new norms that require banks  to classify a loan as non-performing even if there is a single day's delay in repayment.
This month, the regulator also opened up a front against Finance Ministry by disagreeing with it vehemently over its proposal to set up an independent Payments Regulatory Board of India, which many fear is designed to strip RBI of its powers.
The setting up of the Board has been suggested as part of a draft Payment and Settlement System Bill 2018, by a committee, headed by Economic Affairs Secretary Subhash Chandra Garg, has been opposed by the RBI which has pointed out that Central banks all over the world enjoyed the power of oversight over payment transfers and settlements by banks as this was essential for it to ensure smooth and orderly banking.
The Committee report comes after RBI demanded that it be given more powers to control PSU banks in the wake of the Nirav Modi scam which saw state-run lender Punjab National bank losing some Rs 14,000 crore through fraudulent settlement.
Patel, told a Parliamentary Standing Committee of Finance, in June that  the RBI has "inadequate" control over state-run banks,  flagging the issue of dual control over PSU banks by the government, on the one hand, and RBI on the other. Analysts have pointed out that besides ownership and governance-level controls, there is significant operational control exercised by the finance ministry, often bypassing the bank boards and RBI.

IFRD Bill wanted to set up a Resolution Corporation
with powers of bail-in of deposits

Last year the  RBI and the Centre were similarly at loggerheads over moves to curb the central bank’s powers of determining how to deal with a bank which went bust.
The  now-withdrawn Financial Resolution and Deposit Insurance Bill infamous for its controversial `bail-in’ clause also had a clause to set up a  `Resolution Corporation’. The job of this new body which would have had finance ministry representatives, along with representatives from RBI, SEBI and IRDA  would have been to determine the financial health of a bank and recommend remedial measures in cases it was on the verge of going bust, a power which now rests with the RBI.
Before that 3-year ago in a controversial move, the Modi Government took away RBI’s control over monetary policy by appointing a Monetary Policy committee with representatives from both the central Government and RBI, after the government found that the RBI was  raising  interest rates to curb inflation at a time when it wanted rates to be cut to try and spur GDP growth. 

Pax Indica

While demonetization, the sabre-rattling between India and Pakistan and the rancor filled  spat between India’s current political Goliath – Narendra Modi - and the Gandhi family scion – Rahul Gandhi – oft derided as `Pappu’ in social media, may have been what hogged headlines through the year, a little noticed statistical change underlined a trend that has been going in India’s favour  for the last several decades now.

India’s economy pipped that of its former colonial master Britain on the back of a  spectacular growth story spanning two-and-a-half decades and a drastic fall in the value of the British Pound after a vote in the island nation to exit from the European Union.

This makes India the 6th richest nation in terms of nominal Gross  Domestic Product or GDP, just behind France, though in terms of per capita income, the Asian giant remains at a lowly 149th .  In terms of GDP calculated using a complicated purchasing power parity formula which takes into account how much a dollar buys in a particular country, India is already the third richest nation after the US and China.

A 20 % decline in the value of the Great Britain pound through 2016, saw the former colonial power’s GDP slipping to $ 2.29 trillion, compared to India’s $ 2.30 trillion.  This gap is however expected to widen as India grows at between 6 – 7 % per year compared to Britain’s 2-3 % annual growth.

India was supposed to surpass Britain’s economy by 2020. However the quicker overtake by the former colony happened partly because she grew faster over the last decade or so and partly because of Britain’s own economic woes.

This marks an milestone of sorts for India’s economy which went into a decline after the British invaded the sub-continental nation taking advantage of India’s political disunity after the decline of the Mughal empire.

India in the 18th century produced 22.5 % of the globe’s GDP. In contrast in the same era, Britain accounted for just 1.8 % of world GDP. By 1820, when the British had more or less conquered most of India, the sub-continent’s share of the world economy had started declining and accounted for 16 % of world GDP.

Colonial rule turned India into a market for Britain’s industrial revolution as compared to a net exporter of spices, silks, cotton textiles and luxury goods. At the same time, high taxes which an arrogant  East India Company and afterwards British Queen  imposed on its conquered people  helped transfer India’s silver stock to the wind-swept, previously impoverished British Isles.

History has had many milestones which underline or accentuate a trend. India’s defeat at the hands of the British at Plassey in 1757, is widely considered a symbol of India’s and Asia’s fall from power. Similarly, Japan’s victory over Russia in 1905 is seen as marking the resurgence of Asia, giving revolutionaries in India and China confidence to fight to shake off their respective colonial shackles.

While the US victory in World War II  was seen as the beginning of the end of European dominance and the start of a bi-polar world, where besides the power which the USA emanated and used, America’s icons – jeans, pop music and Coca-Cola along with Hollywood movies - became pan-global symbols.

It may not be correct to place India’s upsetting Britain in the economic rankings at par with these epoch making events,  however, it does mark a trend.

Since 1947, when India won her freedom, economic growth grew at a leisurely 3.5 % annually, dubbed by the economist KN Raj as the `Hindu rate of growth',  as the country tried to cope with the aftermath of partition with its mass migration of millions of people; several wars; an unprecedented refugee crisis triggered by Pakistan’s 1971 civil war; natural calamities;  even as it built up an infrastructure for steel-making and machinery manufacture, harnessed its turbulent rivers to produce hydro-electric power, built colleges to produce one of the largest army of  scientists and engineers.

In the 1980s, a spate of trade and currency reforms ushered in under the tutelage of Pranab Mukherjee, then finance minister quickened the pace of growth to over 5 % for the first time. A burst of reforms which unshackled the economy  in the 1990s, curated by Dr Manmohan Singh saw growth leap to beyond 6 %. Through the last two-and-a-half decades the average GDP growth has averaged between 6-8 % annually, helping India turn into a two trillion dollar plus economy.

India’s ability to win a spectacular military victory in 1971, in just 14 days liberating Bangladesh, a nation the size of Greece, its ability to test a nuclear bomb in 1974 and launch a satellite in the very next year had marked India’s arrival in the global power stage. However, its image as a poor, third world nation with its crowd of motely beggars and snake-charmers and streets where elephants and camels still roamed persisted for decades afterwards.

By the late 1990s, by when the impact of India’s Perestroika were visible and by when the nation had been hailed as the software factory of the world, that image started changing. The overtaking of Britain, its former colonial master, was in a sense a continuation of the new narrative that India had started building for itself.

Psychologically, India overtaking Britain in the GDP rankings underlines an emerging trend, which acknowledges India’s arrival at the head of the table and marks a sea- change in relations’ between a former colony and the rest of the world.

British Prime Minister Theresa May at an Indian temple

This economic strength acquired over decades is what gave  India the ability to tell off British Prime Minister Theresa May when she refused to relent on the tough visa norms her government has adopted against Indians, while seeking a free trade deal with the Asian powerhouse. The new `Iron Lady’ had to fly back to London without a deal. 

However, before our rulers of the day pat themselves on the back and lay claim to this milestone, let us be very clear that the credit for this goes to the hard work put in daily by more than a billion ordinary Indians and their sacrifice of saving nearly a third of their incomes for the betterment of future generations, despite the glitter of consumerism unfolding before their eyes.

Our leaders need rather to remember that India still has a long path to traverse as it strives not only to feed, educate and keep healthy a huge population but to increase their average wealth at a fast pace so that they enjoy the benefits of a standard of living nearer  to that of the first world citizens.

Demonetisation Hiccups

The New Mysore Printed Notes

Mysore’s bank note printing line is of recent vintage, though the press has been around for several decades.  Despite its limited capacity to churn out notes, the Narendra Modi Government decided to use it to churn out the new Rs 2,000 and Rs 500 notes as it was supposed to be one of the most secured printing locations, manned by staff who could be counted upon to keep a secret. Next to it was a security note manufacturing plant set up in collaboration with the European security printing giant De La Rue.

The historical town also had a small, sleepy airport which could be used to fly aircraft to ferry the notes to major centres where RBI had currency chests. However, this need to keep secrecy mean that only 48 crore Rs 2000 notes and an equal number of Rs 500 notes could be manufactured and printed in the four to five months that led up to the sudden demonetisation of the money.

The total value of the new notes printed being just Rs 120,000 crore. The problem that the Government faced was that when it demonetised all Rs 500 and Rs 1000 notes, it sucked out some 86 % of all money in circulation in the country. With some 16 lakh crore rupees worth of money in circulation, this meant that 13.76 lakh crore rupees was being sucked out.

The replacement money was just not in place to take care of the huge demand.

Till now banks have been able to dispense just about Rs 50,000 crore worth of money.  Except a few top officials in North Block, the prime minster,  the finance minister and home minister, as well as the RBI Governor, very few officials were kept in the loop.

Officials who were in the know seemed to have been in a hurry to get the scheme going instead of taking stock of the logistics which needed to be worked out for such a huge operation. Hopefully in the weeks ahead things will improve as more security presses including Bengal’s Salboni are pressed into action.

The secrecy again meant that not too large a stash of extra Rs 100 notes could be printed and kept in storage. Added to that was the imperative of another decision prompted by intelligence inputs that Rs 100 notes too had been counterfeited by the secret service of a neighbouring country. “It has been decided in principle to replace all notes in  a gradual manner,” said officials. Some 6-7 % of all Indian notes in circulation are believed to be counterfeit, and this was probably the driving reason for the note replacement excercise. 

For the ordinary citizen of course to the `pain’ of sudden demonetisation, was the added discomfort of non-functional automatic teller machines. Again secrecy meant banks were not told to recaliberate ATMs which dish out notes to recognise the new notes.

All ATMs in India need to be calibrated afresh to recognise the new notes by  their weight, dimensions, design, and security features. Bankers say this could take over a month to complete as some 2 lakh ATMs will have to be worked on. Finance Ministry is working to a deadline of 3 weeks.

The recaliberation, Which would involve readjusting the cash trays, or cassettes, and the software running the machines, has to be done by technicians and takes about 4 man hours of work on each ATM. This translates to some 8 lakh man hours of work. With security cleared technicians in short supply, this means long work hours and the possibility of the 3 week deadline being missed, admit officials.

Till then, as consumers of money, citizens will have to grin and bear the “pain”. 

The GST Fire

An exhibition of tanks by DRDO coincided with
the passage of the GST BIll in Rajya Sabha

The Goods & Services Tax which India has voted to bring in from April next year,  may while uniting the fragmented Indian market to the delight of India Inc., also exacerbate that `Elephant in the Room’ which the country’s economy has been grappling with for decades now – Inflation.

Global experience has shown that GST brings in its wake a rise in prices all around for at least a year before, prices settle down and even decline. Knowing India, and the way our businesses work, one cannot doubt that it would indeed be a small miracle if prices come down after rising. India Inc., is obviously happy with the tax as it means a uniform tax regime all over the country and an end to the hassles of delayed shipments due to Octroi queues at state borders. However, those who will have to bear the burden of the tax may not be as happy despite the news media trumpeting how the tax structure will make India more competitive.

That dreaded word which every retiree living on a fixed income and every salary earner whose increment is slower than the rate of price rise fears, is inflation. Will this fear which if and when proven true,  turn voter ire into a raging resentment around the time of the 2019 General Election ?

Are we already paying too high a price ?

Malaysia which adopted GST in 2015, saw an increase in retail inflation despite careful planning and leaving out many essential products from the taxation altogether. Australia’s John Howard Government almost lost the general elections after bringing in GST.

Canadian Conservative Prime Minister Kim Campbell actually lost the 1993 elections after the electorate protested price spikes induced by her predecessor Brian Mulroney introduction of the GST.   The Indian example is nearest to Canada with its two stage GST rate – one levied by the state and one by the Centre.

The Congress while demanding a cap on the nation-wide GST tax’s median rate, is possibly taking a leaf out of economic history and trying to position itself for the next General Elections, when it may well look to channel protests against  the initial bout of inflation which GST may usher in.

Former Finance Minister P Chidambaram has already made it clear that the Congress will campaign throughout the country demanding a low GST median rate. In case, (and it looks like they will), the Government chooses a higher median rate  and an even higher rate for luxury and sin goods, rest assured the Congress and other political parties who would include the BJP’s own allies, will lose no time in pillorying the ruling  party for its folly in unleashing the Inflationary monster.   

Goldman Sachs in a research note found that Asian countries which brought in GST between 1977 and 2015, all reported an average increase in inflation of 1.1 %  higher on average in the year of its implementation. Sachs also estimated, based on cross-country evidence and the evidence from state VAT implementation, that retail inflation in India could rise 0.9 percentage points if the GST rate were to be 20 per cent.

With retail food inflation having built up over the years, any further increase in inflation is likely to prove to be an incremental burden on the populace. Consumer price index was just shy of the 6% mark in June. Even more worryingly, Retail inflation in rural areas has consistently outpaced urban areas in the past 18 months, hitting 6.20 per cent in June, well above 5.26 per cent in cities such as Mumbai.

Reserve Bank of India Governor Raghuram Rajan’s harsh inflation targeting, which often led him to refuse to bow down to pressures to ease interest rates had put him at odds with successive finance ministers looking to pep up Indian growth suffering from a global industrial slowdown.

As a response to that `Nay-saying ' by Rajan, a new mechanism which the Government is ushering in may give the Finance Ministry a larger say in setting interest rates. Not so judicious decisions lowering interest rates to unleash growth may well upset the battle against rising prices and with GST fueling the price spiral, it would not give rise to just another academic Growth Vs Price Rise debate but perhaps another political Tsunami which would have the potential to shake not merely Mr Narendra Modi's government but also upset other apple-carts in forthcoming state elections to a number of key states. 

Rockstar Rajan of Mint St

That Reserve Bank Governor Raghuram Rajan would not last much longer as the Rock Star of Mint Street was foretold. However, what Ministers and Mandarins running India from the heights of Raisina Hill had not anticipated was his sudden resignation one June evening, creating shock waves in the bond and money markets as well as on news and social media. Not to speak of the considerable embarrassment for their ilk.

Finance Ministry officials have for long been haranguing the Reserve Bank of India Governor Raghuram Rajan on what they considered to be his obstinate stand on controlling inflation ahead of cutting interest rates.

North Bloc top brass as well as the ruling BJP were impatient to post a rosy picture of the economy, especially of industry given the fact that the Prime Minister had launched a `Make in India’ programme with much fanfare. Despite their reasoning with numbers that industry was not growing and in some months was actually shrinking, Rajan very rightly pointed out that a half percent or a percent cut in lending rates would not really see a rush of investors. Instead he pitched for controlling a runaway inflation which was severely shrinking the Common Man’s ability to buy goods and services needed to have a decent life and to create a demand pull for the economy.

The other issue on which the Government did not see eye to eye with Rajan though they did not have the gumption or courage to talk to him on, was his extremely strict norms for recognizing bad loans and his policy that business houses which had run up large bad loan portfolios would not get any new hand-outs.

The power, finance and transport ministries on the contrary were asking the RBI and banks to consider a regime which would let defaulters access fresh debt to finish what they called pending projects – power plants, highways and ports - stuck in limbo as the economy faltered post the 2008 Wall Street crash which saw  investors dithering on taking fresh risks.  The Reserve Bank’s point was that India's stretched banking sector alone could not be exposed to risks. If projects were to be completed by the promoters who had not paid back loans, then they had to bring some money and guarantees on the table or the Government had to give subsidies. Not a very comfortable situation for an industry and government machinery used to treating banks as their personal piggy bank.

Even after multiple investigations had found several private sector investors guilty of padding costs and siphoning off loans to fund other business or private expenses, precious little had been done to bring them to book. Instead in many cases in the past they had been rewarded with fresh cheap loans, something which Rajan wanted stopped.

In private, top bureaucrats are believed to have warned Rajan that his stand could cost him a second term in office. Rajan however publicly made it clear that the culture of impunity for big business would have to end, stating very aptly in one conference “No one wants to go after the rich and well-connected wrong-doer, which means they get away with even more.”

Rajan is considered one of the brightest young economists, globally, having earlier forecast the coming global financial crisis in a lecture made to the world's central bankers at their annual retreat in Jackson Hole, Wyoming, USA in August 2005. Not something which the central bankers exactly appreciated at that time.

Writing later in his bestseller `Fault Lines: How Hidden Fractures Still Threaten the World Economy’, Rajan described the situation as :  "I exaggerate only a bit when I say I felt like an early Christian who had wandered into a convention of half-starved lions." Possibly that is exactly how his relationship was with the powers that be in New Delhi.

The academic-turned central banker, who enjoyed almost rock star like status with the media, had not either endeared himself to the Government by his plain speaking on various issues including the hype around `Make in India’, where he had pointed out that the global economic situation was not conducive to an export-led growth strategy and that India would have to carry out hard nosed reforms to pep up its own home markets. Nor was his use of the adage "in the land of the blind, the one-eyed man is king” in the context of much tom-tomming about India’s economy growing at a fast clip, taken kindly. Especially when both the prime minister and finance minster were repeatedly stressing in global forums that India was “the bright spot” in a faltering global economy.

Despite finance minister Arun Jaitley debunking sharp and acerbic criticism of him by BJP MP Subramaniam Swamy, the fact remained that he had angered the powers that be and they wished to see the back of Raghuram Rajan as RBI Governor. Tellingly, a month back Prime Minister Narendra Modi told a Washington Post interviewer that  he did not “think this administrative subject can be an issue for the media. And that issue is only in September, not now,” when questioned on whether Rajan would get a second term.

That the Government had no intentions of giving the RBI Governor a second term was  also made clear in its reaction to his resignation. No calls were made by the finance minister asking him to reconsider his decision. Instead Jaitley chose to put out on his facebook a bland statement : “Dr. Raghuram Rajan has announced his intention to go back to academics at the end of his current assignment.The Government appreciates the good work done by him and respects his decision. A decision on his successor would be announced shortly.”

Former finance minister P.Chidambaram who had helped appoint Rajan to the hot seat, like his successor possibly did not always see eye with him on India’s interest rate regime while still at North block. However, with Rajan delivering a resignation ahead of the BJP saying no to a second term, Chidmbaram came out in his defence. "I am disappointed and profoundly saddened by the decision of Dr Raghuram Rajan to leave the RBI on completion of his term on September 4, 2016, but I hasten to add that I am not surprised at all," he said in his reaction.

"As I had said sometime ago, this government did not deserve Dr Rajan. Nevertheless, India is the loser.”

India-Pakistan : Budget Quirk

Jayanta Roy Chowdhury

If there is one figure which is repeated in every single Indian budget document since the 1948 budget framed by the then finance minister late R.K. Shanmukham Chetty, it is a debt of Rs 300 crore which Pakistan is supposed to owe India.

The figure is never written off nor padded up with supposed interest due as any banker would do if a debtor fails to cough up moolah on time. The current finance minister, Arun Jaitley, will be no exception in mentioning this tiny debt in his Receipts Budget as a liability of the central government.

Old timers in North Block, home to the finance ministry admit that this a sum which India is unlikely to ever recover but say they would not write it off as this could give Pakistan an unfair advantage during any “future financial settlement” as Pakistan too shows a sum Rs 580 crore as dues against the Government of India !

This little quirk in the  history of India’s budget making is a relic of a pact that India signed with her western neighbour and twin soon after Independence in December 1947.  While the legendary Shanmukham Chetty, an economist-turned politician who had served as Diwan of Cochin earlier, signed on behalf of India, lawyer-turned civil servant Malik Ghulam Mohammed signed for Pakistan. 

Independent India's first Cabinet 

Undivided India as on August 14, 1947, had more liabilities than assets. So the two sides decided they would while dividing assets also divide the liabilities and agree to pay each other the difference between the two. 

A complex piece of calculation figured out that all outstanding debt and obligations including Post office deposits, National Savings certificates, Government Provident Fund etc., worked out the princely sum of Rs 3,300 crore. 

While the assets of the Government of Unidivided India which included the Railways and the Posts and Telegraphs, the Security Printing Press, the Central Government’s  irrigation works, the Port of Vizagapatnam and Lutyen’s New Delhi; besides buildings, stores and equipment of the Defence Services as well as cash balance of RBI and subscriptions to the International Monetary Fund and the World Bank, amounted to Rs 2,800 crore.

After much haggling the two sides agreed that Pakistan’s share of this debt would be Rs 300 crore  to be payable to India.  Chetty in his 1948 budget speech made to the Constituent Assembly said :” On a very rough estimate this debt is likely to be of the order of Rs. 300 crores and the rate of interest may be near about 3 per cent. Pakistan’s total debt is to be repaid in Indian rupees in fifty annual equated installments for principal and interest. As a measure of assistance to the new Dominion in its earlier years it has been agreed that the first repayment should commence only in 1952.” 

Though the late C D Deshmukh, another legendary finance minister, claimed a credit of Rs 9 crore in his budget of 1952 as payment from Pakistan towards this debt, no money actually came in. 

Pakistan on its part refuses to pay up and instead has come up with a counter claim that its bigger neighbour owes it Rs 580 crore instead. This claim is similarly reflected in The state Bank of Pakistan's annual documents since July 2, 1948. just a few days after it came into being!   

Pakistani accountants argue that India owes the nation Rs 410 crore in gold bullion, Rs 50.16 crore worth of British Sterling Pounds and the remainder in Indian notes and coins as its share of the money held by Reserve Bank  on August 15, 1947.

Luckily for the two sides, Bangladesh which as a successor state to United Pakistan and who could well claim at least half of whatever notional amount India allegedly owes Pakistan or Pakistan owes India, has not made any counter claims to muddy the waters ! 

Finance Minister Shanmukham Chetty

Did Sajan Jindal help set up Modi’s Lahore flight ?

When Prime Minister Narendra Modi made his surprise trip to lahore via Moscow and kabul, steel baron Sajjan Jindal  was part of the entourage, and this set off toungues wagging on how Big Business was helping guide the two nations foreign policy !

Modi with Sharif at Lahore

Media revelations had it that  exactly a year ago that the Haryana-based business tycoon  had secretly organised the meeting between Modi and Pakistani Premier Nawaz Sharif at a Kathmandu hotel as part of a backroom peace initiative pushed by Big Business. Sharif is a fellow steel baron from the Pakistani Punjab whose steel mill - Ittefaq – is run by his son.

Jindal whose  firm JSW has a 16 % stake in theIndian  consortium which won rights to mine the iron rich Hajigak mines in that landlocked country, is being seen as a key corporate go-between for Modi’s diplomatic overtures to India’s estranged neighbor, Pakistan.

For several years now the state-run Steel Authority of India Ltd.  consortium has been trying to make some headway in its projects to mine Hajigak which is believed to hold 1.8 billion tonnes of high grade iron ore, but have been trumped by the logistics challenge posed to shipping the ore to India.

The easiest and cheapest route is by road or rail through Pakistan. However, with Pakistan refusing to let India ship goods through its territory to Afghanistan on Indian vehicles or rail wagons, such a project has been a non-starter.

The support which Pakistan lends to terror groups which operate in Afghanistan – including the Haqqani network – also make it a security challenge to have long term mining operations in the central Bamyan province where the mines are located.

Interestingly, Jindal’s brother and Congress politician Naveen  Jindal owns another 16 % stake in the mining consortium, while other family members have stakes in it through various other corporate entities, which analysts calculate could tote up to a 44 % stake.

The corporate grapewine has it that the interest Jindals have in Afghanistan’s future potential have made them keen to involve themselves in commercial diplomacy between India and Pakistan.

Indian corporates who have invested huge sums in gas based power plants and fertilizer factories are also keen that an American backed gas pipeline project – TAPI (Turkmenistan-Afghanistan-Pakistan-India) – too gets off the ground to bring cheap gas from former Soviet Bloc countries of the Central Asia to North India.

Jindal : ties cast in iron

Again analysts point out that the pipeline could remain a pipedream like the Iran Pakistan-India pipeline unless India and Pakistan could come to an agreement between the two on  peace in Afghanistan and between India and Pakistan, besides negotiating safe passage for gas through the sub-continent.

This is not the first use of corporate leaders in back-channel diplomacy between the two countries nor the first time corporate interests were suspected to be the reason for Tycoons taking an interest in the estranged neighbours’ peace process.

Earlier Dhirubhai Ambani's trusted aide R K Mishra had played an important role in Indo-Pak diplomacy during Atal Baheri Vajpayee's prime ministership.

Reliance owns the world's largest oil refinery in Gujarat and analysts had then speculated a three-way deal could allow it to import Iranian crude and gas on the cheap for its refinery.

Vinod Mehta RIP

Vinod Mehta with his wife Sumita

Vinod Mehta is no more. RIP Vinod, in whatever heavenly newsroom there might be up there, where I am sure you would have wound up with your irreverent pen and favourite tipple.

In 1992, I joined Vinod’s team at the 150-year-old The Pioneer newspaper then recently re-launched from Link House on Bahadur Shah Zafar Marg, New Delhi’s Fleet Street.

It was the best of times and the worst of times, to be a journalist in India. India was opening up to the world, with its own version of `Perestroika’ while combating old passions which manifested itself among others, in the demolition of the Mughal-era Babri Masjid in Ayodhya by an impassioned, partisan crowd. Preceded as these were, in Vinod’s own words “ Rajiv Gandhi’s tragic assassination, P.V.Narasimha Rao’s erratic prime-ministership (and BJP leader) L.K.Advani’s frightening rath yatra and its consequences.” 

At The Pioneer, under Vinod Mehta, we had the right to report on it all, with all its warts and quirks – without fear or favour, as long as we got our facts right and told the story well.

Vinod was arguably among the first modern newspaper editor in India who understood what made the new kind of newspapers tick. As against the old league of Editors who lived in Ivory towers, Vinod lived, breathed and dreamt of the ink that flowed from the newsroom and realised that newspapers could survive only by combining reporting with commentary and splashing news pages with feature stories and large, tell-all photographs,  pushing into the space reserved till then for magazines.

Vinod, after a stint at various jobs in the UK, had started his journalistic debut in India by editing the risqué men’s magazine Debonair, which he turned into a classy magazine with a great choice of reading and  stylishly clicked `For Men’s Eyes Only’ center-spreads.

However, Vinod’s heart lay in launching a Sunday paper on the lines of newspapers he was fond of reading during his stay at England. He got his first big break with a new launch – The Sunday Observer – which a popular publishing house came up with. After that, several Editor-ships later, he was picked up by industrialist L.M.Thapar to run the venerable `The Pioneer’, which the Thapars had bought over for a song.

He redesigned the old newspaper which at one time had Rudyard Kipling, the `Bard of the Empire’ on its staff, into arguably the best looking, modern, newspaper in the country. He brought in a fresh whiff of air into the stodgy BSZ Street which housed most of the Who’s Who of Indian newspaper industry – from Times of India to Indian Express to Patriot, with juicy, breaking news in virtually every sphere – from cabinet meetings to business boardrooms to the world of art.     

He understood the art and science of modern newspaper design, what his readers wanted to read, the value of a photograph to tell the tale, the value of giving his `boys’ and `girls’ freedom to write as they chose and the need to bond his young team together by partying with them as hard as they could stand up to !

In the words of a colleague, Madhumita Ghosh, the grand-daughter of a famous previous Editor of The Pioneer, “Vinod combined the greatest asset of an Editor. An infallible nose for news, and a management style that encouraged complete freedom with an uncanny market sense without giving in to the marketeers.”

However, many on New Delhi’s `Fleet Street’ still castigated him for being a `non-political Editor’, an euphemism for someone who does not understand Indian politics, then the life and blood of Indian journalism. Vinod broke that mis-conception when he wrote a front page news story based on a meeting with then Prime Minister Rao, asking readers to contemplate on the fate of a nation `where the prime minister’s reaction to blood curdling, nation shaking events went no further than (stating) “the soul of India is peaceful”.’

The newspaper’s owner separately confessed to Vinod that the demolition of the centuries old, ruined Masjid by religious zealots who believed it to be the site of an older temple and ostensibly Lord Rama’s mythical palace had him (Thapar) `jumping with joy’ ! However, Vinod, being Vinod merely brushed that aside and continued with the newspaper’s reports on what he considered tragic events for the nation’s secular credentials.  

However, Vinod was not a political animal. He forte lay in being a thorough newsroom man. He would hurl chaste Hindi four letter words at deskmen who could not meet the deadline to print the newspaper and call the same people up for a cup of tea and encouragement on days he felt the page was especially well designed.

He understood the import of news, like no other man I have met. One morning he rang me and my equally young colleague Jay Shankar to his `den’. We went trembling, only to be congratulated for two stories we had broken – one on an American cola giant being allowed to make a comeback in India after being thrown out of the country in misplaced socialistic zeal a decade-and-a-half back, and the other on a state run firm pioneering perfumed condoms! He told us in clear terms, `it’s all right to report on what ministers’ think is policy, or on the GDP going up or down, but what readers really want is news like this …”

Vinod was also the right kind of Editor for young reporters, who wished to follow his equally irreverent style of thumbing their nose at the high and mighty. In the early ’90s, I was assigned along with photo-journalist Arun Jetlie, who later on went on to work for the Indian Express, to cover the opening of a Global Cola giant’s first Indian factory near Agra. We shockingly found under-age child labourers in that plant. I carried out a diversion of the assembled cola officialdom and Jetlie, despite his girth, jumped across bottling lines to take pictures of the kids in question. The race back to The Pioneer to file the story was enlivened by the bus, organised by the Cola firm breaking down and their offering us free stay at a 5-star hotel in Agra.

The Pioneer team still found a way of getting the story and pictures to our newspaper to be printed the next day. I was told much later, that Vinod faced the music for that irreverent story all alone. The proprietors whose business interests seemed to have been hurt,  took him to task for our `misdemeanour’. We never got to know of the storm which brew over The Pioneer that day. All that we knew was that we soon received letters promoting us!

That was Vinod’s way.