Is the UPA Government 'fit and proper' to run the country? - Straight from the Hip by J Mulraj
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Is the UPA Government 'fit and proper' to run the country? A  A  A

PRINTER FRIENDLY | ARCHIVES
28 SEPTEMBER 2013

More than a month after a Rs 5,600 crore payment crisis hit the National Spot Exchange (NSEL) and after various of the Government's investigative arms have found flaws in its operations, the Government is not taking any action against it. Perhaps it has some other, unstated, agenda than to do its job, viz. to protect its citizens from fraud. It has not even re-considered whether the Financial Technologies group, which runs several exchanges, within India and abroad, is 'fit and proper' to run them.

The Government's approach, as well as inane comments made by people like Finance Minister P Chidambaram, disclaiming Governnment's liability in the issue, despite having first authorised and then criminally neglected to monitor, an exchange, makes one wonder whether this Government is 'fit and proper' to run the country.

That is a valid question, especially after an inexplicably insane attempt to allow criminals to continue as MPs despite having been convicted, over ruling, through an ordinance, a Supreme Court ruling that opined otherwise.

Now, under the Indian Constitution, the facility provided to a Government to issue a temporary ordinance (it has a life of six months and has to be ratified by the Parliament to become law) has been so provided in case matters of urgent national interest arise when Parliament is not in session. Pray, Manmohan Singh, what exactly was the matter of national interest to warrant extension of Parliamentary privileges to those conviceted of a crime, and whom the Supreme Court of the land had determined to be not 'fit and proper' to continue as MPs?

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The reason for the ordinance was not national interest but party interest. For, in the coming week, the court is to pass judgement in the Laloo Prasad Yadav fodder scam. He is a political ally in the UPA. So the Government, unmindful of its duty to the nation and bereft of any vestige of morality, passed an ordinance to allow him to continue retaining his privileges as an MP, which, even without the salary or the vote, are considerable.

The UPA's ethical coffers are empty.

The level of brazen corruption that Congress has allowed to spread is so high that a police officer in Delhi, openly asked, when approached by a victim of the fraud, for a 25% cut, (20% to be paid immediately) for advice on how to proceed. No action has, or would, be taken against such officers because the Government is busy promulgating ordinances to allow criminals, or those who have broken laws, to stay MPs and to pass laws. It is, then, 'fit and proper' to run the Government?

Contrast this with what the Chinese political leadership is doing to try and root out corruption. One of its former stars, Bo Xilai, has been sentenced to life imprisonment, for taking bribes, embezzlement and abuse of power. The amount involved? $3.2 m (Rs 20 crores). The lowly police officer in Delhi wanted 25% of Rs 5,600 crores, or Rs 1,400 crores, and he is undisturbed. This is the level of deep rooted corruption this Government has fostered. Is it 'fit and proper' to run the country?

In its quest to gather vote banks, it is bankrupting the country, in something called a 'scorched earth policy'. There was absolutely no need to announce the formation of the 7th Pay Commission, 3 years before it was due, and whose recommendations would be effective much later. No need except the 8 million voters (5 million employees and 3 million pensioners) who would benefit. The price would be paid by a future Government, hence a 'scorched earth' policy that destroys the path to make life difficult for followers.

In the case of NSEL, the Government seems to be washing its hands off, and misdirecting its efforts of investigation. This is apparent from several official pronouncements. The FM says that investors ought to have known that it was an unregulated exchange (pray tell us how they are supposed to know that?) and hence ought not to have invested through it. In the same breath he states that certain exemptions were granted to the Exchange, which it violated from Day 1. Ok, so did the Government not know that? If it did not know, why does it expect investors to know that NSEL was unregulated. And pray, tell us, Mr Chidambaram, what it means to authorise a body which deals with the public, if such a body is not regulated by you? Is that a 'fit and proper' statement to make?

Similarly the EOW (Economic Offences Wing) of the Mumbai police, want to put the entire blame on Anajani Sinha, the former CEO who has admitted fault, and his executive team, exonerating the promoters of the Exchange. This, again, smacks of a cover up operation.

What happens when a country is run not for the benefit of its people but for the benefit of a handful of influential politicians and corporate executives? The country's economic growth declines, as is happening, hence tax revenues fall, or grow less than they should, which is happening, hence the fiscal deficit widens, as is happening, and so its currency weakens, as is happening.

The country then loses its economic clout, as is happening. It lags others in economic and human development. And also in military development. The current account deficit is expected to widen to $25 b. in the June quarter, which would be 5.4% of GDP. This means that the rupee will continue to weaken.

The RBI shut down, last week, the zero interest financing option offered for purchase of consumer durables. The logic for its diktat is that, if the consumer factors in the discount for a full cash payment, plus the processing fees charged, he ends up paying a fancy price (some 36% a year) on the zero interest financing plan. Fair enough, Dr. Rajan, and thank you for the analysis. However, the days when consumer behaviour can be directed are over! You cannot withdraw a choice to the consumer but you can certainly inform him of your calculations about how expensive the zero interest option really is, and then leave it to him to decide. In the alternative, if you have so much empathy for the consumer, please provide enough low cost funding to banks, to allow them to offer the zero interest schemes at a rate which you consider reasonable. The consumer, Dr Rajan, is not a moron.

Governments globally act in a manner to further their own perceived interests, abusing their power in doing so. The US Government is now following a monetary policy that is so easy it could be termed harlotry. Interest rates are absurdly and artificially low in order to spur consumption, which accounts for 70% of its GDP. But consumption is not happening the way it should; instead the easy money is going into assets and creating asset bubbles.

The low interest rates are, however, acting as a disincentive for foreign investors to invest in the $, which is threatening to dethrone the $ as the international currency. Being an international currency helps the US to fund its growth through creation of paper money. So the US Government, in its policy of easy money and international acceptance of the $, is abusing its dominance to weaken other currencies and also gold. This must read article by Paul Craig Roberts suspects that the Government abused its power to artificially launch a concerted bear attack on the paper gold market, with multiple traders all taking a simultaneous bearish view on gold and shorting it at the same time.

Coming back to the ordinance sought to be passed to extend the shelf life of criminal MPs, a surprise development was an impromptu press conference by Rahul Gandhi in which he publicly opined that the ordinance was rubbish and ought to be torn up. It is, and should be! But for Rahul Gandhi to take a view that runs counter to the Government will lead to some interesting developments when the PM returns from the US next week. One wonders if the PM had made the decision to promulgate the ordinance without the knowledge of the party Vice President, or whether the latter had a subsequent change of heart after listening to public opinion. The former smacks of administrative incompetence, the latter of political expediency. How an exit would be made from this self created chakravahyu will be interesting.

The BSE-Sensex fell 536 points last week, to end at 19,737, and the NSE-Nifty declined 179, to close at 5,833.

The Federal Reserve's easy money policy has to end some day; you can only postpone the day of reckoning thus far. When that happens, asset bubbles will start popping, and the champagne will stop popping. Simultaneously, this Government's scorched earth policy of expenditure schemes simply to gain vote banks (right to food, setting up of the pay commission) will start taking their toll; you can only avoid monetary reality thus far. A Government depends on investors for savings to fund growth, but a failure to protect rights of investors would not endear it to them.

What the FM has forgotten, when it blames victims of fraud instead of accepting Government's role in facilitating the fraud, is that investors are also a vote bank. They would know the fit and proper thing to do.

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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10 Responses to "Is the UPA Government 'fit and proper' to run the country?"
Ajay Gupta
Oct 1, 2013
No doubt all parties are identical and full of members which have criminal dented records, at the same time all parties have gagged up in avoiding RTI act for political parties. Like 
Critic
Sep 30, 2013
I think it is quite fit because all parties are (sadly) identical when it comes to mismanagement, profligacy, lack of transparency, corruption etc perhaps with notable exception of the Communists. All parties have tainted MPs & MLAs. Similarly all parties do not want to come under RTI. Why single out UPA ? In fact the others are even worse. Like 
P V Ranganathan
Sep 29, 2013
"How an exit would be made from this self created chakravahyu will be interesting."

You mean "Chakravyuha"?
Like 
Mithun
Sep 29, 2013
First of all,there is a "Do not disturb" sign on the UPA's door as they are too busy to bother with a paltry 5500 crore scam.They couldn't care less about a 2G 1,76,000 crore scam directly causing a loss to the exchequer.This one hurts only the small investor so who cares?..and what are they busy with?-how to make the "Yuvaraj" the "Maharaj" come 2014.
Besides,if you bring in their spin doctor named Sibal,he will provide you with some Mickey mouse calculation to show that there is no scam at all and the loss is actually ZERO.
and what about our PM? During the British Raj,all letters addressed to the British Sahibs by the natives had to have the valediction:-
"I beg to remain,your most obedient servant"
Our PM is sincerely following it to this day.

Who says the British Raj ended in 1947?

A correction:$3.2 million is 20 crores and not 200 as mentioned in the article.

Like (1)
gandhi kc
Sep 28, 2013
Not Fit and Proper.
As they are working for vote bank, some how completing term of election with any kind of immoral adjustment with other parties and giving lollipop to voters when election comes, divide the society and rule, protecting politicians to any extent possible but not to citizens of country. Therefore right to recall elected members must be with the voters to stop way of their working after winning election. UPA II is worst govt. ever seen by all voters.
Like (1)
jainendra
Sep 28, 2013
the acceptance of mistake leads to find the solution of it , if one keep on blaming other rather than the self it will be kept on coming back & eventually become disaster
i agree with the writer view ...may god please give enough intelligent & wealth to our politician that at some point they may think of re making your own great country india a world power..
Like (1)
Noshir H. Gundevia
Sep 28, 2013
Nothing seems to shame this government. Mr. Mulraj has put very brilliantly what a citizen of this country really feels about the present position, the country find itself in. It wants to remain in power even when people feel that it is not fit and proper government to rule this country. Like (1)
RVRao
Sep 28, 2013
The government is unfit, incompetent and run by proxy by Sonia Gandhi and her cronies. It is best to rename it as "UCA" i.e., united corrupt alliance.Dr Manmohan singh is a bureaucrat not known to take any stand or decision except to bend and preserve his post and perquisites.
It is unfortunate that uneducated population have been tricked to vote them. A revolution is required like French revolution of the 12th century
Like (1)
Niraj
Sep 28, 2013
In addition to being insensitive, the FM is unleashing the full power under him by carrying out raids on investors to determine where the amount invested came from. That investigation can be carried out at any time, the urgency should have been to track down the amount from the recipients of the funds. What a country we are living in where the victim is raided....pathetic state of affairs...however, it is darkest just before sunrise. I hope this is the darkest where scamsters and criminals are sought to be protected and the victims victimised further. Like (1)
LOVEPAREEK
Sep 28, 2013
THANKS MR. MULRAJ FOR AN EXCELLENT WRITE AS ALWAYS.. THE BEST PART WAS YOUR COMMENTS ON THE RBI DIKTAT ON ZERO FINANCE SCHEME, MORE SO, COS INSPITE OF HAVING READ THIS NEWS MULTIPLE TIMES IN UMPTEEN DAILIES, I WASNT ABLE 2 GET ITS MEANING....BUT TODAY, FINALLY GOT IT AFTER READING U. TNX SIR. Like (1)
  
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