Can India 'whistle blow' its way into the future?

Aug 5, 2010

In this issue:
» Where is housing most unaffordable in India?
» Where do Indians invest most of their savings?
» The Chinese are buying their third homes!
» Rich Americans give US$ 60 bn to Buffett
» ...and more!!

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India does need more doctors, engineers, accountants, managers and teachers. But what it needs the most are whistle blowers. People who can save companies and the country from economic loss and embarrassment. The current state of the organizing committee of Commonwealth Games is pitiable to say the least. A disgrace to an economy of over a billion people making a claim to grow at the second fastest rate globally. And the government's solution is - 'whistle blowers'! It is now looking to pass a legislation safeguarding those who make an attempt to raise a voice against corruption. Given the kind of embarrassment that the Commonwealth Games has brought to India, it's probably too late. But as they say, better late than never!

Corruption has for long been the biggest drain on India's economic potential. And it is high time that a solution is sought to this problem. By the way, in an earlier issue of The Honest Truth, Ajit Dayal had suggested a different solution to this problem. That the post of 'Minister of Corruption' be created! He reasoned "The value of all products, goods, and services sold in India every year is about Rs. 49,50,000 crores (about USD 1.1 trillion). Wouldn't it be helpful if even 0.01% of India's annual GDP was spent on a Ministry of Corruption with its own investigations staff, its own courts and judges, its own jails?" Not a bad idea we think. But more importantly, what is needed to stop corruption is the spirit of pride in being an Indian.

What is your take on the corruption scandal that has hit the Commonwealth Games and the proposed solution of encouraging whistle-blowers? Tell us or make a post on our Facebook page.

 Chart of the day

Data source: RBI

Another area where corruption and greed have been deep rooted is construction of residential houses in Indian metros. And this has resulted in houses becoming unaffordable to a middle class household. As today's chart shows, house prices have risen by as much as 36% in metros like Delhi and Mumbai in the past 12 months. Thanks to artificial scarcity of space and faulty land policies. Mr. Deepak Parekh, Chairman of HDFC and a veteran on housing policies believes that multiplicity of approvals creates scarcity of supply, keeping prices elevated. According to him, land transactions have been made complicated to ensure that supply remains constrained and prices remain high.

Did you know that urban households in India earn 85% more than rural households? Or have you heard that an average Indian household spends 51% of its routine expenditure on food? Better still, are you aware that 63% of the households in India save for social ceremonies? Well, you need to go through the NCAER survey on Indian households if your answer to any or all of these questions is in the negative. The economic body has compiled many such interesting statistics in its survey titled How India, Earns, Spends and Saves.

Of particular interest to us was understanding where exactly does an average Indian household save its hard earned money? While it was heartening to know that 81% of Indian households save in some form or the other, the fact that 51% of those keep their savings in bank deposits did not exactly get our juices flowing. And it is this group that perhaps all the asset management companies and companies engaged in financial services will have to target if the Indian markets were to reduce their dependence on FIIs.

If you thought rising home prices was a phenomenon that was only taking place in Indian metros, think again! This problem has become acute in China as well. It may be recalled that prices of properties in China have reached unprecedented levels since the past one year. Indiscriminate bank lending was one of the main culprits of the same. So much so that people in Chinese cities such as Beijing, Shanghai, Shenzhen and Hangzhou are looking to purchase their third homes!

To curb this, the China Banking Regulatory Commission (CBRC) has instructed banks to stop extending mortgages to people buying their third homes. Especially in the four cities mentioned above. This puts to rest the speculation that China may ease curbs once again. Speculations that were doing the rounds because the economy had started slowing a tad. However, only time will tell whether the step will prevent the Chinese economy from having a hard landing.

The debate on inflation has been raging in the parliament these days. And why not? Inflation has become the bane of every Indian household. And in his defence, Pranab Mukherjee has said that a significant interest rate increase to tame inflation may not be such a good idea afterall. Infact, he went as far as to say that any such move could easily end up becoming a huge deterrent to investment, growth and job creation in the country. And so, the classic central bank dilemma of growth versus inflation continues. However, it must surely be added that one would be able to attach much more credibility to the RBI's policy moves had it not had the responsibility to double up as the government's debt manager.

The Tata Group will get its next Chairman by the end of 2012. This is if all goes according to the succession plan outlined by Mr. Ratan Tata, the current head. With a view to smoothly pass on the baton, Mr. Tata will be setting up a 5-member team to identify his successor.

We had recently read Mr. Tata tell the Wall Street Journal, "It would certainly be easier if that candidate were an Indian national. But now that 65% of our revenues come from overseas, it could also be an expatriate sitting in that position with justification now." In a country where family ties run deep and the successor is generally the promoter's son or nephew etc., Mr. Tata's plan comes like a breath of fresh air.

Anyways, Mr. Tata's shoes will be difficult to fill. This is considering that he has overseen the growth of the group's businesses with such a keen eye all these 19 years.

He did it in 1950s and now he is at it again. Back then he got people to give him money to invest in the markets and in turn helped them all earn millions. Now he is again asking people to part with their funds. But the difference is that this time it is for charity. We are talking about investment legend Warren Buffett. Buffett has managed to convince the richest Americans to pledge US$ 60 bn towards charitable and philanthropic causes. Buffett, famous for practicing what he preaches, has already pledged a large part of his assets to charity. He was joined by billionaire Bill Gates. Together they are now encouraging the wealthiest in America (as listed by Forbes) to join them in publicly pledging their wealth. The public statement is a way to encourage others to follow suit.

After a volatile session, the Indian indices moved closer to the dotted line as profit booking intensified in index heavyweights. The benchmark indices shed gains backed by profit booking in energy and banking stocks. Asia markets are trading a mixed bag with Japan and Indonesia leading the pack of gainers. The BSE-Sensex was trading nearly 37 points (0.2%) higher at the time of writing. The European markets have opened on a cautious note.

 Today's investing mantra
"The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future. If the margin is a large one, then it is enough to assume that future earnings will not fall far below those of the past." - Benjamin Graham

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56 Responses to "Can India 'whistle blow' its way into the future?"


Sep 20, 2010

corruption is now compulsion attitude of people of india actualy law of india is totally wrong it has been made leaving some loopholes in it for all the bribe taking people for this their shld be a quick punishment i.e a non bailable imprisonment and the person who tries to give him bail he shld also be punished the same but i knw this is india and its happen only in india. MERA BHARAT MAHAN SAU MEIN SE NINYANVE BAIMAAN.


Rajinder Singh Bhalla

Aug 24, 2010

We make big claims for cleaning the system. Just before creating an office, let there be email address where complaints can be sent without giving the name. The corruption can be checked in no time.

Second people helping curb the corruption should be given due recognition. There should be ranking of such people. The added benefit should be that there statement in a court of law should be above all other evidence. There are 100s of in direct ways of rewarding such people.

I am CA, CS, LLB. I wanted to join Civil Defence. But could not join till date. The systems are made lengthy and cumbersome.


lal nachnani

Aug 10, 2010

It's a pity no politician has a patriotic feeling. They are all just too busy filling their own coffers. They do this at the cost of national pride and there are no laws to punish them. It's high time, the public at large should come together and suggest/formulate ways and force government to tackle various issues including corruption.

Few suggestions :
1) Minimum qualification for MPs
2) Portfolio according to suiatability. eg minister not educated himself cannot be in charge of education ministry Or the one himself not observing family planning cannot be in charge of health ministry.
In fact any body having more than two children should not be allowed to come on board or even contest elections. Classic examples Lalu and Mulayam, who have made mockery of the whole system with a batallion of children. In case they have more then two children, then they must be forcibly sent to army.

3) No MP with criminal background should be allowed to contest elections. The whole constitution has to be revamped.

4) Harsh punishment for guilty, even if there is only circumstantial evidence against them, since most of them are skillful in Maneuvering the evidence. eg stripping of police medal as in Rathore case, and stripping away of their pension and other benefits.

5)We need to introduce harsh measures in legislation/ constitution. But who will do this? Where is our role?

The list could be exhaustive.

There has to be tremendous media and public pressure.

Somewhere begining has to be made.

Though tough, 'India can whistle blow' its way into the future


Sujit Bandyopadhyay

Aug 7, 2010

To Equity Master,
Reference your article on Whistle Blow as an ordinary citizen of India observing the proceedings of our Parliamentary Democracy and the activities of various parties and their self proclaimed leaders since 1947 Aug,(63 years) I can say its not a democracy but Hypocracy(dictatorship in a group:Politicians with Goonda gangs,Business mafias,IAS,IPS------ and lot more in power corridor) only to loot this countries wealth.
People of this country are disgusted with this set up.Thats why we see young generation all over the country are turning violent,they know law enforcing agencies are keeping their eyes shut against those people in power commiting crime and getting away scottfree(DGP Rathore),Scam Stars: Lallu Yadav,Mayavati,Jaya Lalita,Madhu Koda,Ramalingam Raju ----- many more to name are freely roaming in this country showing thums up to the law.Do we expect this political set up will take action against CORRUPTION when they themselves are CORRUPTED?It makes me laugh.When we see these people are ready to garb the land of poor tribals to hand over to Corporate sectors free of cost they term them as Maoist since they have picked up GUNs to fight against them instead of swallowing poison like poor farmers of Maharashtra have done,in such case it would have much easier for them to shed few drops of crocodiles tears and a bit of LIP service.When we see such thing is done by Manmohan Singh PM we have lost faith on such educated personality.ONLY SOLUTION to this desease is capital punishment(death - since they have looted this countries wealth) freeze their wealth kept on BENAMI also let their family realise the pain since they have not objected on such henious act rather enjoyed on it.In 60's people felt its only the Congress party ruined this country now after watching other parties for another 30 years ruling in Center and in many staes they are also the other side of the same coin.Its a real CIRCUS : before election speak against congress and ask vote from public and after election go and join hands with the same congress to enjoy the power of GADDI and loot this country.Now KASHMIR is on FIRE since so many years WHY? Let the congress party take all its responsibility.Why we see their is fight and killing in the name of North Indians in Mumbai? What action has been taken against Thakre clans ? Are they not TERRORIST? But PM Manmohan and PC , Sonia,Rahul Gandhi sees the Maoists are the only threats of the country not these CORRUPT people SCAM Stars.When Gangrin takes in any part of the body it requires amputation to save the remaining organs.Similarly immidiately after Independance such amputation would have been taken place had Netaji Subhash Chandra Bose would have been at the helm of this country.Its Unfortunate JL Nehru was gifted the chair by British to continue their RAJ in PROXY. Satendra Dubey (IIT graduate) Manjunath(IIM graduate) had to die for whistle blowing and who punished made people laugh and has dragged young generation to loose faith on our legal system.That's all I can say. Time will say what is going to happen.As far as CWG is concerned we as ordinary citizen of India feel really depressed but what can we do because people in power are SHAMELESS.Our democracy you go to polling booth to cast your vote(should be confidential) you see party cadre is standing in front of the Voting Machine too see to which party you are casting your vote and start torturing you the next day onwards,and POLICE is a mute spectator(because they are govt.servant).This is with all party CPM,RJD,SP,BSP-------- .



R N Gokhale

Aug 7, 2010

Dear Sir,
1. No politician has ever been convicted,no one will ever be in india.
2. In last 55 years,Together they have looted thrice or more than all the plunderers in history put together.
3. The finaly beneficiary are swiss bankers as most of them would let it lie there after they are dead and gone.
4. Whistle blowers will e blown away The solution,
a Limit the tenures of all appointments.
b Compulsory retiremnet age for all.
c All transactions in cheques, incl all payments
even to wage earners.
d Ban higher denomination notes
e No politician to man any post without qulification.
5. This is the only country where an illeterate can become a minister.



Aug 7, 2010

Corruption comes when there is scarcity. The politician-babu-industrialist nexus create artificial scarcity by creating various controls.Most of our laws are archaic & created by British to harass & control ordinary Indians.While in UK, certainly no such controls exist, Indians have patented it.
Therefore, the first need is to change laws.make them simple. So there is no need to go to courts. The controls are rationalized, so that there is no need to bribe.
Much more can be done. I disagre with Mr. dayal. We want less government but a better Government. No more Ministries. & no more ministerial dictats.
Openness removes corruption. Secrecy brings it. Since laws are complicated,& there is secrecy, and nobody explains you waht should be done, corruption arises as you need agents to explain things to you.
In short Simplicity of laws with effectiveness, less Government but better governance,servant leadership, & better availability of goods & products required in open market will reduce corruption.


harish maheshwari

Aug 7, 2010

Yes the Idea is GOOD, but question arises on it's implementation.

We need drastic steps and for that even we have to change the current base motto our law, we must do it.

Idelogoy and Fear are the two main factors, which can prevent one from being corroupt. As we are losing gradually our idelogies, it's time to bring up the Fear Factor.



Commodore S. Bhandoola, Indian Navy

Aug 6, 2010

Being a military veteran, my solutions to drastic problems are drastic solutions. And my solution is the age old method of using the carrot and the stick. Actually just the stick will do but then just to make the stick more palatable we need the carrot also. There is very little if any corruption that I know of in countries like Saudi Arabia. And punishment for crime there is ultimately drastic. One may say that we are a democracy and must use only democratic means to run the country. We must treat financial and economic including tax evasion cases as criminal offenses. (USA is an example for tax evasion). IRS is a dreaded word.

Come on folks. How long are we going to be squeamish? For how long are we going to keep saying that the system is corrupt. For how long are we going to be more than willing to go on paying money instead of waiting even a reasonable time to get a job done by a government agency. And both parties, the one who takes and the one who gives a bribe must be prosecuted. And let us cut out the simpliest way of getting away with crime by getting bail which is the easiest thing in India. Even confirmed criminals and murders can get bail and then walk away without ever having to go back behind bars again.
A quick word about the carrot. Honest officials must be rewarded. Quick promotions, special bonuses and these promotions and bonuses should be such that it becomes counter productive for such officials to even consider corruption.
I could go on in this vein indefinitely. But let me stop here hoping that I have conveyed what I started my opening remarks with: "Drastic problems need drastic remedies. And if there is a drastic problem in India it is corruption. Curb this and India will not be just the 3rd fastest growing economy but the fastest.



Aug 6, 2010





Aug 6, 2010

Absence of fear(This is India,Here everything goes.Sub Chaltha Hai Attitude) is the main reason.Greed for Money/Power is the second reason.Black Money is the third reason.So Solve these three problems like in CHINA/USA. AGAIN Government is the MOST CORRUPT (All Parties)Entity in India.Not the public/private industries.Corruption extends from bottom to top in all fields. Sowhistleblow willnot make a dent in the vast sea of corruption.May be a small role.Conduct a Survey of public&govt servants as to whether they have paid/recieved bribe in their Lifetime.%will be more than75%.

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