Wednesday, 23 May 2018

Modi squander's away low oil price advantage

  • Every $10 price variation in crude oil price, simply means for India as GDP 1% and loss/gain of 1 million jobs lost/added, without doing anything.
  • While UPA II under Manmohan Singh suffered above $100 per barrel oil price, Modi was gifted by God with $50 per barrel oil price regime. The difference simply means 5% GDP growth and 5 million jobs added without doing anything by central government. 
  • Modi retained 85% of lower oil rices to government by increasing excise duty while passing on benefit to consumer - limited to just 15%. This amounts to nearly Rs.7-8  lakh crores additional money with central government and no one knows where it has gone?
  • Modi and FM Jaitley also changed series for GDP growth calculations which has added another 2% totaling to 7% advantage.
  • Average GDP growth rate during the period of UPA Government (2004 to 2014) has been 7.7% despite two global slowdowns in this period.
  • It was 6.9% GDP growth rate, when Modi became PM in 2014. Year-on-year GDP growth was increasing when Manmohan Singh assumed office in 2004, but was falling after Modi took to the helm. Modi inherited a sluggish economy stricken by policy paralysis and corruption. 
  • FM Arun Jaitley, inherited a situation where there was little room left to increase public expenditure. Growth has slowed down but consumption hasn’t gone down, while demand is still there in the market the same was fulfilled by imports.
  • The Demonetisation and the GST rollout have caused major disruption, effecting GDP numbers.

The impact on GDP growth rate with variations in economic activity is never simple. Despite high oil prices, corruption, policy paralysis etc - UPA's economic performance was exuberant where as aided with low oil prices, Modi's reckless fiscal reforms boomeranged and almost destroyed economy. However Modi & Jaitley squandering away the huge savings due to low oil price regime, not solving any of the ailing sectors, their inaction leading to huge pile up of NPAs and banks pushed to brink of collapse etc are unpardonable. Neither Modi nor Jaitley has any depth of knowledge of economics nor have any good people to assist them and most of the time seemed helpless. Definitely we don't need helpless leaders!

Cartoon of the Day

Delhi archbishop warns of threat to India's secular fabric


The archbishop of Delhi has called for a prayer campaign until the next general election in an unprecedented political intervention, citing a threat to the country’s secular fabric, triggering angry reactions from the ruling Hindu nationalist party. "We are witnessing a turbulent political atmosphere which poses a threat to the democratic principles enshrined in our Constitution and the secular fabric of our nation," Archbishop Anil Couto wrote in a letter issued this month to all parish priests and religious institutions in the archdiocese of Delhi.
  • Christians constitute less than 3 percent of Hindu-majority India’s 1.3 billion people. India is officially secular, but four-fifths of its population profess the Hindu faith.
  • The BJP said the letter was akin to calling people to vote along communal lines, and that it was unfortunate. The next election has to be held by next May.
  • The Archbishop’s secretary, Father Robinson Rodrigues sad that such prayer campaigns took place before every general election, but the exercise was being politicised this time.
  • The spokesman for the Delhi Catholic Archdiocese, Father Savarimuthu Sankar, said the archbishop only called for a prayer campaign not an election campaign. He said the letter, the first of its kind from Archbishop Anil Couto since he was installed in 2013, was prompted by continued violence against Christians over the past four years and following attempts to bring back to Hinduism people who converted to Christianity. We try to influence at least those people who are educated, who are balanced. So far we have been saying these are fringe elements who are behind the attacks. But there is a danger that fringe elements may become the mainstream. To some extent they are succeeding also.
  • Responding to questions about the letter, Minister of Home Affairs Rajnath Singh told reporters that minorities are safe in India and that no one is allowed to discriminate on the basis of caste and religion. Between 2014 and 2015, Couto and other Christians in the national capital region of Delhi told Rajnath Singh how violence had picked up after Modi came to power, detailing at least five cases of attacks on churches in New Delhi following which extra police had been deployed to protect 240 churches in the capital.
  • The prayer for our nation says, “Let the dreams of our founding fathers and the values of our Constitution – equality, liberty and fraternity – be always held in highest esteem. Let the people of all castes and creeds, all denominations and persuasions live in harmony and peace steering far away from hatred and violence." The prayer also focuses on the poor and the marginalised, saying, “Let the poor of our country be provided with the means of livelihood. Let the dalits, tribals and the marginalised be brought into the mainstream of nation building. Let justice and integrity prevail in every sphere of our life.”
  • The prayer further says, "Protect our legislature as a place of discerning minds. Raise our judiciary as the hallmark of integrity, prudence and justice. Keep our print, visual and social media as the channels of truth for edifying discourses. Protect our institutions from the infiltration of the evil forces.” 

While the letter and prayer has no inflammable content, the underpinning is very clear that minorities have apprehensions about their safety, rights and privileges compromised. They are all living with their mouth shut for the last 4 years, with fear gripping them choking. Now that Modi & BJP got weakened, vulnerable and uncertain of wining no more elections owing to his worst performance in all fronts, it is natural that all suppressed sections of people will speak out their mind ventilating their grudge reflecting their anger. With minorities at 20%, dalits at 18% thoroughly alienated, there is no way BJP can win 2019 general elections unless oppositions parties fail to put up common candidates. But with Karnataka episode, Modi has himself united all the opposition parties, underwriting his own defeat. 

Risk of doing nothing


Hardly a day goes by without a story that financial markets are in “bubble” territory. Stock markets around the world are at record highs and bond yields are at record lows. The former means that valuations are at the upper end of historic ranges. The latter has meant that many unusual things can be sold to investors anxious for yield. 
  • Investors remain nervous and many choose to hold significant amounts of cash. This appears to be a conservative strategy but in fact it is a rather risky one. The obvious problem is that with rates at record lows you receive virtually no interest on your capital.
  • The bigger problem is that with inflation running well above the level of interest rates the conservative strategy of putting money in the bank is actually destroying your purchasing power at an alarming rate. As inflation has been higher than the interest you have been receiving, your purchasing power has been declining.
  • Bank interest rates are likely take a long time before the bank rate gets above the inflation rate. Consequently this trend of real capital loss from holding cash will continue for years.
  • While we are conscious that there are fewer opportunities to find attractively valued investments, we continue to dedicate your resources to finding such opportunities.
  • Risks that affect investments are -- doing nothing risk, inflation risk, market risk, specific risk, currency risk, default risk, sector risk, liquidity risk, false confidence risk, duration risk and leverage risk.
A diversified equity portfolio, or a balanced portfolio of equities, corporate credit and government bonds, are expected to continue to provide investors with capital growth in real terms. In fact such portfolios may be less risky to your financial well-being than sticking your money in the bank.

The only certainty is uncertainty. There is no such thing as “risk free”. 
Even government and banks can or have the potential to default. 

Past performance is no guarantee of future results and the value of such investments and their strategies may fall as well as rise. Capital security is never guaranteed. Yields on investments may fall or rise on the performance of the investment and the financial markets.  As such no warranty can be given that the yields will consistently attain such levels over any given period.

Monday, 21 May 2018

DK Shivakumar: The man who checkmated Amit Shah in Karnataka

Tasked with keeping the flock together after the Karnataka Assembly Elections verdict revealed a fractured mandate, DK Shivakumar passed with flying colours on Saturday May 19, 2019.

The name of Doddalahalli Kempegowda Shivakumar is met with fear and awe in Karnataka in equal measure. The Congress’s master strategist, Vokkaliga strongman and former state Energy Minister will go down in history not only for engineering the loss of the Bharatiya Janata Party in the political thriller that followed the 2018 Karnataka verdict, but also for taking BJP National President Amit Shah head on and emerging victorious.  

Tasked with keeping the flock together after the Assembly verdict revealed a fractured mandate, DK Shivakumar could even be seen smirking by the time two-day Chief Minister BS Yeddyurappa said that he was stepping down. Shivakumar is credited with personally keeping the flock together, ferrying the MLAs to Hyderabad and back, and ensuring that the BJP didn't get through to the Congress-JD(S) combine.

However, this isn’t the first time he was tasked with the job. In 2002, when the then-Congress leader and Maharashtra Chief Minister Vilasrao Deshmukh was staring at a no-confidence motion, Shivakumar, a trusted aide of SM Krishna and the then-Karnataka Urban Development Minister, hosted the Congress MLAs at the now-infamous Eagleton Resort, and escorted them to Mumbai on the day of the trust vote, ensuring that they cleared it.

Less than a year ago, DK Shivakumar successfully prevented the horse-trading of 44 Gujarat MLAs ahead of the Rajya Sabha polls. This, just a week after there were Income Tax raids on 64 locations connected to him in a tax evasion case.

From his earliest days in Karnataka politics, Shivakumar has been an astute leader who has always played his cards well. When he filed his affidavit for the 2018 Assembly elections, he and his wife declared assets worth Rs 730 crore.

Born into an agricultural family, Shivakumar has been a member of the Congress since the beginning of his political career, after playing a leading role in the Youth Congress since his RC College days. He held the position of General Secretary of Karnataka State Youth Congress between 1983 and 1985. His first electoral success came when he was elected to the Zilla Panchayat in 1987.

At the age of 25, Shivakumar went up against seasoned politician HD Deve Gowda in Sathnur, where he lost by a slender margin. He contested again in the 1989 elections as an independent candidate and won. He became the youngest minister in the state just two years later, at the age of 30, where he served as a Minister of State under Chief Minister S Bangarappa from 1991 to 1992.

A seven-time MLA, Shivakumar was the campaign committee chairman – a post held by former Chief Ministers Siddaramaiah and SM Krishna earlier.

However, Shivakumar’s record is nowhere close to clean. He has been accused of illegal granite mining, encroachment of government land, tax evasion, Forest Act violations and corruption.

This record is said to be the reason former Chief Minister Siddaramaiah maintained his distance from Shivakumar when he came to power in 2013. The legislator from Kanakapura was then offered the Energy portfolio in 2014.


Even though Shivakumar has fought tooth and nail to install HD Kumaraswamy in the Chief Minister’s chair, there is no lost love between Shivakumar and the Gowdas. Both Vokkaligas, the battle has often been in Ramanagara district, the Vokkaliga heartland in Old Mysore. Shivakumar has gone head-to-head with former Prime Minister and veteran leader HD Deve Gowda in the past.

In the 2002 Lok Sabha bye-polls, Shivakumar lost to Deve Gowda. He then rose to fame during the 2004 Lok Sabha election, when he supported the candidature of newbie Tejaswini Sriramesh, a television journalist-turned-politician against Deve Gowda in Kanakapura. She went on to win by a landslide, and earned the reputation of being a giant killer. But it was Shivakumar, who was then the Urban Development Minister and Sathanur MLA – which was a part of the Kanakapura constituency – who earned the praise and trust of the Congress top brass by ‘discovering’ Tejaswini. 

He is also credited for the seven JD(S) MLAs rebelling against their party supremo and cross-voting in the 2016 Rajya Sabha polls.

The 2018 elections

A man with strategic prowess, D K Shivakumar has proven his mettle time and again, and has made clear that he intends to sit in the Chief Minister’s chair someday. With Shivakumar eyeing the post of Deputy Chief Minister for now, one will only have to wait and watch for what the Congress’ Chanakya does next.

Modi is so much vulnerable today


Akhilesh Yadav was first to discover that Modi's winning spree is in fact is defeat of other parties divided. Ahead of Gorakhpur and Phulpur bypolls he reached out to his arch rival BSP Supremo Mayawati for exploring national interest in defeating Modi rather than fighting among themselves. And BJP's 2014 victory of Gorakhpur & Phulpur by over few lakh votes got inverted into defeat in 2018, by few lakh votes in the hands of SP+BSP. Just double digit winning of Gujarat elections and falling short of majority in Karnataka elections and subsequent unethical adventures by BJP, Modi & Co that compelled BJP new CM Yedurappa resign with in 55 hours, left Modi & BJP so much vulnerable they stand top of non performance, corruption, subversion of institutions, economy in shambles, ever rising crude oil prices threatening economic disasters and fiscal deficits makes winning 2019 general elections with just under 31% popular vote share an impossible task, with opposition getting united with a single objective of defeating BJP, everywhere. 

It is worry some for the BJP that the Karnataka setback has shown that the extra effort put in by Narendra Modi by raising the number of his rallies to 21 in the state did not pay dividends. BJP might have fared worse if Modi had stuck to his original plan to address 15 public meetings. In hindsight, it might have been better for the BJP if it had conceded defeat when it saw that it had fallen short of the target of 112 in the 224-member House. Instead, by opting for a floor test, Modi & Amit Shah combine provoked all the avoidable controversies about horse-trading and corruption and to cover up resorted to innumerable lies and lost credibility. Congress party releasing audio clips of BS Yedurappa, his son Vijayendra, BJP leaders Muralidhar Rao and Sriramulu had sealed the BJP’s fate. The potential turncoats in the Congress-JD(S) coalition were doubly convinced that siding with the BJP was a bad idea. With Modi losing his cutting edge as the party's only star campaigner and any hint that he can no longer enable the party to cross the winning line is a major concern when the BJP faces crucial assembly elections in Rajasthan, Madhya Pradesh and Chhattisgarh in next few months' time. The burden he already carries as the spearhead of the BJP's campaign will become heavier after the Karnataka outcome.

Sunday, 20 May 2018

Supreme Court saves democracy

The fast-changing political scenario in Karnataka, where BJP & Congress-JD(S) alliance were trying to outsmart each other in reaching the magical figure of 112, has not only kept the political pundits on tenterhook but the Supreme Court judges had also to go through the sleepless night and restive day in deciding their legal battle. The battle to form the government not only confined to political arena but also spilled over to the court with Congress-JD(S) alliance approaching the Supreme Court by first challenging Karnataka governor decision to invite the BJP to form government and again on appointment of pro-tem speaker. The court first ordered floor test for BS Yeddyurappa by Sat May 19, 2018 4PM and later ordered the proceedings to be video recorded and telecast live to bring fairness to proceedings.
  • Had SC not intervened, BS Yedurappa would have successfully completed horse trading and won floor test in stipulated 15 days time. And BJP, Modi & Co would have resorted to high decibel campaign that JDS & Congress MLAs defecting on their own will, getting attracted to Modi & BJP's policies and so on. But SC reducing floor test time to just 35 hours preempted all BJP's evil undemocratic efforts of horsetrading of MLAs. And BS Yedurappa was compelled to resign and avoid floor test.
  • SC deserves credit for upholding the democratic values. But yet another Institution, the Governor of Karnataka has been reduced to just another wagging tail of shameless BJP. 
  • Kudos to Justice A K Sikri (bench headed by him) and comprising Justice SA Bobde and Justice Ashok Bhushan, for fearlessly passing orders and saving democracy much to the discomfort of PM Modi and ruling party BJP.
  • Utterly bitterly shame on BJP & Modi to have subverted the office of Governor and attempted horse trading to get themselves to power in Karnataka. Modi & BJP lost the right to talk about ethics now. The shameless Governor of Karnataka, Vajubhai Vala, must resign on his own or the President must sack him. Those who compel and impose fake nationalism were seen walking out when National Anthem was sung.
  • The beauty of democracy is that whenever executive tends to misbehave autocratically, in violation of constitution, other institution(s) shall rise to fill the void and correct the coarse of events. Hence it is crucial to ensure independence of press & media and all its autonomous institutions.

Democracy is a device that insures we shall be governed 
no better than we deserve ... George Bernard Shaw

In the 1996 general elections, the BJP emerged as the single largest party in the Lok Sabha and AB Vajpayee was sworn in as the 10th Prime Minister of India, but failed to muster enough support from other parties to obtain a majority. He resigned after 13 days, when it became clear that he could not garner a majority. He just needed 1 or 2 MP's to scrape through the floor test, which could have been easily managed, unethically. But Vajpayee preferred to stick to ethics and resigned after delivering emotional farewell speech in Lok Sabha. On the contrary, Yedurappa having failed in all his shameless unethical efforts to buyout any of the JDS or Congress MLAs, attempted to deliver emotional speech on May 19, 2018 in Karnataka Assembly, emulating Vajpayee, is ridiculed by one and all. Shameless Yedurappa, BJP and its leadership.