The spectacle and drama of democracy - Straight from the Hip by J Mulraj
Investing in India - Straight from the Hip by J Mulraj
The spectacle and drama of democracy A  A  A


One of India's strong points is a vibrant democracy, in which transfer of power has devolved peacefully through a democratic process for over six decades, an achievement we can be proud of.

Today, though, thanks to various factors, including the electronic media and the visual impact it has on millions of watchers, that democracy has become more of a spectacle and a drama.


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Thus instead of solving contentious issues through debate and discussion, as is proper in a democracy, we have the principal opposition party filibustering a whole session of Parliament, and then taking the route of street protest and 'bandh', something that affects most the daily wage earner.

We have no open discussion, as should be, on the merits or otherwise of issues such as allowing foreign direct investment into retail. Multi brand retail has existed in India for decades, with no adverse impact on the 'kiranawalas' or local grocer, under whose name the protest is taking place.

TV news then covers the 'bandhs' which demonstrates great angst by organised crowds. Political parties have a public show of protest against an inevitable hike in diesel prices; were they in Government they, too, would be compelled to do the same.

None of them care for the economy of the country or for its future; only of their own political future. Is this the democracy that we are proud of?

Stockmarkets also get swept in by such a spectacle of democracy. They fell when Mamata Banerjee's Trinamool Congress withdrew support, perhaps as a bluff to extract the concession the State has been seeking against the debt piled up by the previous, Left Front, Government. The UPA called the bluff, with the support of Mulayam Yadav, who, doubtless, would claim his pound of flesh. Is this the democracy we are proud of?

Nitish Kumar, CM of Bihar, openly declares pledging the support of his party to anyone who grants his state a special status. The fiscal pool of taxes commanded by the Centre is thus a bargaining chip in political alliances. Is this the democracy we are proud of?

Once Mulayam openly supported the Government on Friday, stock markets got swept in by the spectacle of democracy and rallied sharply.

The BSE-Sensex ended the week at 18,752 with a gain of 287 points and the NSE-Nifty gained 113 to close at 5,691.

Quo Vadis?

The sensex is heading towards the next resistance point of 19,500. It ought to break this resistance and move higher, because, shorn of the millstone of a recalcitrant ally, the UPA would move faster with economic reforms. It needs to, to divert public gaze from the stench of corruption the several scandals have unearthed.

Foreign investors have mountains of liquidity to invest, any time they feel welcomed. A series of reformative steps would give foreign investors the confidence of being wanted, and money will flow in. The money earns little in the developed markets where yields on bonds are low, and investment in equity inadvisable in economies that have tepid growth.

The Reserve Bank of India (RBI), in its monetary policy review, did not cave in to the pressure of reducing interest rates. However, it cut CRR by 25 basis points (0.25%) to release some Rs 17,000 crores into the system. Sectors that are interest-rate sensitive, such as automobiles and real estate, are affected.

If only our democracy was not about slogan shouting and street protests and stalling others; if only our leaders took time to study and read developments and plan for the future, why, then, the solutions would be manifest.

Thanks to new technologies such as horizontal fracturing, or fracking, the cost of natural gas produced in the USA from shale rock has fallen substantially. It is now $ 2.5/mmbtu, which is equivalent to around $ 15/barrel of crude oil.

Imagine what India could do if, instead of shouting, stalling Parliament and burning buses, our leaders studied the shale oil sector and produced it here. Our crude oil, imported at over $ 100/b, would cost much less, thereby bringing down the subsidy burden on petro products. The Government could then halve the cost of petrol and keep diesel subsidised, and maybe produce a fiscal surplus.

Using the cheap shale gas, the cost of electricity is (see chart in above article) brought down to 4 cents/unit, far less than electricity from new coal technologies (6 cents) or new nuclear (10 cents).

So however much shale gas we can produce, we reduce dependence on environmentally polluting coal, we obviate the need (and the political protests) for nuclear power and we have a cheap solution which brings down the cost of subsidies. Why don't we, as a mature democracy, do that?

In corporate news of interest, Vodafone has apparently recognised that prudence is the better part of valour and sees little merit in fighting the Government. It has offered to pay the withholding tax which Hutchison should have paid, provided the Government forgoes interest and penalty on it. Let's see if P Chidambaram will accept.

In the coming weeks one should expect a spate of reforms, and an Foreign Institutional Investors (FIIs) liquidity driven rally. This ought to carry the sensex past the 19,500 resistance. Next stop after that is 21,000. It will probably exhaust itself between 19,500 and 21,000. Its a liquidity driven game, which, in turn is driven by pronouncements of UPA's reform credentials. Of course, there would be a spectacle each time a reform happens. We do love our nautankis, don't we?

Note: This columnist is travelling and returning Saturday 29th so there won’t be a column next Saturday.

J Mulraj is a stock market columnist and observer of long standing. His weekly column on stock markets has run for over 27 years. An MBA from IIM Calcutta, he has been a member of the BSE. He is Conference Head - India, for Euromoney. A keen observer of events and trends, he writes in a lucid yet readable style and takes up issues on behalf of the individual investor. Nothing pleases him more than a reader who confesses having no interest in stock markets yet being a reader of his columns. His other interests include reading, both fiction and non-fiction, bridge, snooker and chess.

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13 Responses to "The spectacle and drama of democracy"
Oct 3, 2012
Dear Mulraj,
you talked about economy. Economy is first learnt by us in our home, not everybody goes to university to learn economy. When our income is low compared to income, we cut volume of essential commodities, reduce wastage, except expenditure in health and education. Now, please look at our Govt. (Indian thinks PM as God of Economics). No suitable measure has been taken for last three years. Common Wealth Games and other expenditure could have been avoided if we were short of funds. It is not wise to advocate lifting up of subsidity in LPG etc. Of-course when we earn profit in market we forget the people of our country.
Suresh A S
Sep 27, 2012
We have a priminister (previous finiance minister) who make a statement "Money will not grow in tree. but he clearly knows that now it can be printed (without pledging of gold) or even can be put more zeros in computers. (there is no money printed in word, if every one want the money in printed form). Our knowledgable prime minister is the first person making mockery of democrecy. Like (1)
Sep 25, 2012
1.Stalling of Parliament was started by Congress Party earlier during NDA rule. Bjp,which claims to be a party, with a difference has unfortunately followed the footsteps of Congress party.
2. Pranab promised a debate before introducing FDI IN RETAIL. This promise is forgtten, now that he is no longer a minister.
3. PM is ready to discuss anything with unreliable Pakistanis, but he is not prepared to even shake hands with Opposition leadres. For a democracy to be successful, ruling party should be trustworthy and be prepared to discuss all issues. Congress has lost all credibility, the way, they have handled all issues, including Lokpal Bill.
Like (1)
Sep 24, 2012
Even Arun Shourie (BJP) yesterday contended that what the BJP was doing in the Parliament and by way of the bharat bandh was nothing but nautanki. Sad, we are saddled with a corrupt CONgress on one end and a nautanki party BJPee on the other. Sigh. Like (1)
Tikam Patni
Sep 23, 2012
It is a matter of shame that the wealth generating citizens have to put up with the myopic visions of the class of people like Mulayam, Mamta, Maya etc etc who otherwise are good for nothing. Like (1)
Anupam Garg
Sep 23, 2012
You'll be missed for next week's edition Like (1)
sunilkumar tejwani
Sep 23, 2012
well written, the liquidity driven (cheap money printing spree by E C B & the U.S Fed) together with oodles of reform talking U P A government. But how long? Sooner than later, the economic reality will catch up with the fundamentals. Public memory is too short. People tend to forget the Euro zone mess (P I I G S) countries and precarious financial condition of some American financial institutions, where socialization of private losses and privatization of private profits is rampant.
God save the Stock markets and our country from rampant corruption and self serving politicians.
Like (1)
Sep 23, 2012
Jawahir Mulraj has given such a precious idea - generation of shale gas to reduce power generation and environmental costs, reduce street fights and protests and many more benefits. I havent read anyone else, including the top most political or economic advisors, giving advise like that. Is the government too arrogant to learn from simple people on earth? Do they have to rely so badly on foreign university certificate holders who dont have an innovative mind? We need politicians to take decisions that have far reaching solutions, not short-term, stop-gap, patchy & pasty solutions. And we need intelligent and innovative people (there are many in our country, Mulraj is just one example) to lead our policy making at the centre and not the ones who expect 'mota maal' from policy actions. Like (1)
Jai B. Sharma
Sep 22, 2012


The word “Political” and “Democracy” come from the Greek words “Polis” and “Demos”. “Polis” was the term for a Geek city-state and “Demos” constituted it’s people. Long terms of Military training and service in the battlefield was compulsory for all male citizens of ancient Greek. After several continuous generations of Military training and welfare, the Greek soldier-citizens developed a strong sense of Equality, Affection and Concern for one another because these characteristics are vital for survival in the battlefield. Out of this sense of “Political Nationalism”, emerged the “Polis” and “Demos”, where leaders of proven ability - to wage war and ensure the security of the state - were chosen by the popular demand of Greek soldier-citizens. Choosing the leaders was put to vote by raising hands and hence the term Majority & Minority came in to being and not by religion or communities as practiced in India and else where abroad.

The “Demos” and the thinking and behaviour of “Political Nationalism” does not exist in India . India is divided into castes and communities who dislike, distrust or hate one another. Indian politics is not motivated by feelings of Equity, Affection or Concern of people for one another. Indian politics is about the “leaders” of civil disobedience movements and agitator groups and the followers/supporters and descendents of such “leaders”. It is about “leaders” exploiting cultural differences and hatreds in order to gather crowds and get media publicity. It is about “leaders” squabbling and fighting among themselves in order to convert the publicity into position of power. These bogus leaders claim a right to rule India , based on their bogus concepts of Democracy, the disruptive power of their discontented followers and their ability to destroy normal life in India if their “Democratic right” to rule India is denied.

A political Nation can be as good as it’s Legislators just as a School can be as good as it’s Teachers, an Army as good as it’s Officers or a Business as good as it’s Managers. India belongs to all Indians collectively and equally. Indian citizen pay their taxes and obey the laws of the land as their part of the social contract. In return, they are entitled to equitable justice from the state. They are entitled to have competent and qualified MPs and MLAs governing their country just as fare-paying airline passengers are entitled to have competent and qualified crew members piloting their aircraft.

Decorated with "Sangram Medal: , "Raksha Medal" & "Paschimi Star", I am 63 years old Ex-soldier – suffered multiple disabilities while defending my Nation's borders, Her integrity and citizens during Indo-Pak war in 1971 and am proud of being a soldier-citizen of BHARAT.

Today I am pained and grieved at the deteriorating state of National affairs. Chaos, confusion and anarchy has engulfed the entire Nation and the situation is getting from bad to worse by the day.

Jai B. Sharma
Like (1)
sunil mahuvakar
Sep 22, 2012
This UPA has lost all credibility ( what ever little bit was left ) major scams have been unearthed but the perpetrators have gone unpunished. If only we can recover the billions of rupees siphGned off in 2g scams & coalgate , we can wipe off the fiscal deficit & there would be no need to increase the price of petrol & diesel & LPG.Why is that our lameduck prime minister becomes singhm only when foreign interest is concerned be it nuclear power or FDI ? Like (1)
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