Yet another poll gimmick by UPA to woo voters! - The 5 Minute WrapUp by Equitymaster
Investing in India - 5 Minute WrapUp by Equitymaster

Yet another poll gimmick by UPA to woo voters! 

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In this issue:
» China least transparent amongst BRICS
» Mr Falciani does an Edward Snowden
» Congress prefers opaque approach on funding of political parties
» Why economic forecasts should be taken with a pinch of salt?
» ...and more!

Call this yet another poll gimmick. With elections nearing UPA government has stepped up the paddle to woo rural voters. And this time the promise is not employment, electricity, water or road connectivity. It is a mobile phone! Yes, you read that right.

In its most ambitious rural connectivity program ever the UPA government is planning to provide mobile phones to 25 m rural households. The beneficiaries will get the phone by paying a one- time connection fee of Rs 300. The balance amount will be borne by the government.

It is true that come elections and political parties indulge in all sorts of poll gimmicks to woo voters. Now, rural India needs both hygiene and tele-connectivity. True, that connectivity enables smooth transfer of information. It also empowers people by enabling them access to services that they are entitled to. However, connectivity cannot be a priority over sanitation, employment or electricity for that matter. Hence, probably rural India needs toilets before mobile phones. And it is the responsibility of government to ensure that standard of living in rural India improves. But nothing is being done in that regards. Why? This is because most political parties are hungry for power. They are least bothered about the upliftment of poor people.

Rural India forms a considerable proportion of total voting population. Thus, political parties cannot afford to displease them all together at least when elections are nearing. While most parties do nothing in their entire term; they dole out freebies like mobile phones, lap tops etc to appeal to the rural populace when elections are due.

And the irony is that despite years of deprivation, the rural voter gets easily lured by the last minute freebies. They don't realize that it is the duty of government to provide them with food, clothing and employment. And if the government fails in doing so they have the right to uproot the incumbent by exercising their franchise. Instead, they get lured by empty promises.

Lack of education and irresponsibility in exercising one's vote is the reason why India is in such a condition today. We need better governance, growth and eradication of poverty. This requires not just planning but also the will to do so. Unfortunately, the sad part is that no political party in India has this will. We can only hope that voters make a good use of their right to reject the government.

Do you think election commission should take steps towards political parties who try to lure voters through freebies? Let us know your comments or post them on our Facebook page / Google+ page

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01:40  Chart of the day
Just about one & half year back most mutual fund houses were witnessing mass exodus by retail investors. Most investors were redeeming their investments thereby putting the fund profitability under pressure. Redemption reduces assets under management of any fund and thereby reduces its profitability. However, things have completely changed within a span of 18 months. The MF industry's profits are poised to hit a 3 year high in FY14. Strong recovery in markets could be one reason for it. However, it is believed that revenues from advisory and other activities have resulted in better performance. Nonetheless, the most surprising aspect is that all the top 5 fund houses have seen their profits increase in FY13 from the previous year with the exception of Reliance. One reason could be that the regulator has now allowed fund houses to charge slightly higher fees from investors who belong to certain specific region. This may have boosted profits. A shift of investors towards debt funds could be another reason. It may be noted that debt funds bring in more profits for fund houses.

Another interesting aspect is that the fund which is ranked 10th has profits which are just 5% of the top performing fund. This means that the business is concentrated in the hands of few big players. In such a market, SEBI's propaganda to increase net worth requirements of fund houses does not bode well. It would eliminate smaller fund houses and further result in concentration of business amongst larger players.

Most profitable fund house in FY13
Data source: Business Standard

Which are the best mutual funds to invest in? We know it is questions like these that concern you these days. And your trusted source for views and opinions, The 5 Minute WrapUp, too has unfortunately not helped by staying silent on such questions. We understand that, in addition to broad views on global stock markets, you might also be looking forward to our views on few unexpected movement in stocks. And that is why we are taking steps to make The 5 Minute WrapUp more relevant to you. Watch this space for more details in the coming weeks!

If there's one field where people need to be judged solely by what they do and not what they say it is politics we believe. For more often than not there's a huge gaping hole that's found between the two. And we were reminded of this yet again recently. We all know what happened to the ordinance that was seeking to protect the career of convicted politicians. It had to be embarrassingly withdrawn after a few powerful politicians objected to it. And just when the ruling party got a chance to redeem itself, it has once again shown why it has totally shut its doors to reforms.

Apparently, the election commission was keen to bring better accountability and transparency to the finances of political parties and had sought the views from all the parties on a few suggestions it had made. Well, the suggestions have met with an outright rejection by the Congress party. And we won't be surprised if most of the other parties also follow suit. In fact all the politicians making noise about black money stashed abroad also have sealed their lips for the time being.

An independent agency, Transparency International has criticized the Chinese companies for their lack of transparency. As reported by Financial Express, the agency conducted a survey of 100 fastest growing companies in 16 emerging markets. It was to gauge the transparency of their disclosures. Chinese corporations ranked poorly on the survey. The Chinese companies have reportedly argued the authenticity of the survey. Some claim that they were never asked for any information from the agency. Others claim that since they are not listed; therefore their level of disclosure would naturally be lower as compared to listed peers.

Nevertheless given the increasing role that Chinese firms are playing in the global arena, there is a need for them to improve their governance standards. Disclosures and transparency is crucial when it comes to investing. And if the dealings of the company are opaque, it does nothing to boost investor confidence. Interestingly Indian companies, especially the Tata group firms, ranked high. If the survey is authentic; then maybe other Indian companies could take lessons from the group to improve their own disclosures and standards.

Tax evasion is not a phenomenon unique to India alone. Many developed countries around the world seem to be at it. At least that is what Herve Falciani set out to prove in 2008. As reported in the Economist, Falciani, who worked at the Geneva branch of HSBC for 3 years, decided to do an Edward Snowden. He gathered data from the bank focusing on information of its account holders. The intention was to make public various cases of tax evasion. This led to a series of raids and tax-evasion investigations across Europe. HSBC, which was accused of not having enough money laundering controls, had to resign itself to a settlement. Not surprisingly, Switzerland is the country at the centre of this. India too has been pestering the Swiss to reveal details of money stashed by Indians in its banks abroad. Whether Falciani's data is sufficient enough to bring the tax evaders to book remains to be seen. But this is just another instance of the murkiness that prevails in banking practices around the world.

As much as India's growth has been a reason to worry about, the predictions about the same have been very dodgy. Same is the case with data on inflation etc where different agencies have come up with different outlook. From the IMF to the World Bank to the CSO to rating agencies, there has hardly been any consensus with regard to India's economic outlook. While most agree that near term growth and inflation are both India's biggest concern. No single agency is willing to stick its neck out and pin point at the current estimate? What does that mean for investors relying on short term economic data? Nothing but uncertainty! While it will not take much for the economists to change their forecasts investors relying on their data could lose tons of money. We therefore believe that investing based on such dodgy economic forecasts is nothing less than speculating. And investors following such a practice need to be prepared to burn their fingers.

In the meanwhile, Indian stock markets gained further momentum after a positive start. At the time of writing, the benchmark BSE-Sensex was up by 387 points (1.9%). All sectoral indices were trading in the green with stocks in the metal and banking sectors leading the gains. Barring Malaysia and Japan, all other major Asian stock markets were trading on a firm note led by the markets in Taiwan and Hong Kong. Most European markets opened the day on a positive note.

04:50  Today's investing mantra
"The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs" - Warren Buffett
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12 Responses to "Yet another poll gimmick by UPA to woo voters!"


Oct 19, 2013

There have been cases of voters angrily telling poll candidates during campaigns that they don't want freebies but basic infrastructure like “ bijli sadak pani” and schools and hospitals and hygienic latrines . Freebies or no they will vote for the candidates of their choice. Voter awareness has increased enormously. The “None Of The Above” (NOTA) button will be there on the EVM. Definitely criminals will not be given seats, judging by the reactions of significant players in the political firmament to the Supreme Court's orders and to the mood of the people. It is a fair guess that freebies per se have outlived their potential as political leverage. Performance, integrity and strength of character, irrespective of party affiliations will slowly emerge as winnable qualities. Coalitions of such people across party lines post elections, not to be mistaken as the “aya Ram gaya Ram” horse-trading of the seventies and eighties, looks likely to hold and deliver.
The questions then are, where are such candidates? How and who is to identify them? Who will fund them? I think we have to answer these questions imaginatively and realistically at the same time.
Overnight we are not going to see a big bunch of exemplary men and women getting into the political process. However, even in the murky politics of today party leaders do know who among their followers and sympathizers in various constituencies are likely to fare relatively better and can indeed project a better image than in the past on the parameters of “winnability” as mentioned above. Such people are one source of candidates.
The second source could be an unpredictable number of individuals who will simply decide enough is enough and it is time to make a difference by straightaway jumping into the fray: the “Aam Admi Party” type. They are likely to cut costs and campaign smart with latest technology. A few of them might vibe with the urban, tech-savvy youth and win a few seats to the surprise of many. They will certainly be a miniscule part of the Parliament but their methods and presence will carry a message which cannot be ignored : we are different and we are here to make a difference. Who knows, one or two of them may insist on and succeed in using power-point presentations during their participation in the Lok Sabha, a small sign of sorely needed changes.
The third source of such candidates, hold your breath, will be the same old dirty faces but completely transformed from inside. You can't tell the change right away but, like born-again faithfuls, they will speak a new language, walk a new path. In the beginning cynics won't buy into their story; eventually they will re-energise the polity.
All this is imaginative, yes. How can it be realistic even remotely? Well, one has only to string together snippets of news from across the world that point to the emerging realism of what has been stated above. I'm not going to insult the readers' intelligence by doing this here, now that the world opens up to us in our palms by the touch of a finger. What we get is what we see. What we see is what we want to see. So let us want to see a new realism, what?

Like (1)

Pavan Jain

Oct 19, 2013

It is nothing but buying votes. I don't think we can call this a democracy. Since political parties have their vested interest, we will not see required political reforms taking place, unless the public starts demanding vehemently.
Also we need strong Election Commission and people of highest calibre managing the same.

Like (1)

vijay kumar sharma

Oct 19, 2013

I think the only way to teach them through one i.e they should implement their menifisto within 5 year otherwise their salary & perquesite will be deducted @20% each year.Secondly They will not get their salary for absent in Parliament. No Three that is most important that their increment should not be settled by themselveses. It should be settled through referendum so that they feel how the public like or dislike the work of the Parliament.

Like (1)

Wing Commander Shashank Bendre (Retd)

Oct 19, 2013

No need for EC to step in. The Congress's goose is already cooked, freebies or not! The same applies to other parties who dish out freebies. The voter is not a FOOL!

Like (1)

S S Kalia

Oct 19, 2013

It is unfortunate that public gets lured to such gimmicks. Political parties especially the congress for the sake of coming to power is feeding sweet poison in the form of freebies. Such acts are not the steps towards welfare but lead towards destruction It is bad for the people and the country.

Like (1)

nalin patel

Oct 18, 2013

they can do now, they will find 2500 toms of gold and they will finance it, also they will send them to heaven also and purify them from all sins

Like (1)

Umakant Pandya

Oct 18, 2013

More over; the previous night of election is more important when CASH, WINE, SEX etc is being offered to get vote in the next day morning. Society should organize a WATCH DOG Committee to eliminate such dirty activities of politicians and political parties.

Like (1)

Ramesh Jaradhara

Oct 18, 2013

In my opinion, the EC should ban the political parties, especially the ruling party/s from indulging in such freebies before one year to go for election. In addition, EC should take some steps to prevent sole-power-hunger political parties from indulging in adopting anti-economic policies against the national objectives of building a better India for all. It seems that the ruling UPA is not at all responsible for poor Indians. They need them only at the time of elections. Therefore, these freebies are showering on them on the eve of election 2014.

Like (1)


Oct 18, 2013

It is official corruption on eve of elections . It should be banned and penalised . Wasting ppublic money to earn votes . Even use of politiacians netas name. As long as they are alive , for work they do from public fund / cooperative should be banned . They show as if they have done from their pocket .

Like (1)


Oct 18, 2013


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