»Straight from the hip by Jawahir Mulraj

No one killed corruption
29 JANUARY 2011

The consequences of abysmal governance and the lack of will to tackle to cancerous growth of corruption is having horrible consequences. Danger signs are there for all people to see, except the Dhithirashtras who rule.

The continuation of subsidised diesel has created a mafia industry which steals it. Official estimates of the stolen diesel are 40% of the subsidy of Rs 30,000 crores, or Rs 12,000 crores. An amount large enough to kill for! The mafia burnt to death a district collector who was seeking to prevent thieves caught in the act. Will the Government finally stop the nonsense of differential pricing which has negative consequences? Does loss of human life matter at all to those sitting in the rarefied political echelons of Delhi? Or, like Nero, are they still fiddling away? A far better, and oft suggested, way to distribute subsidies to those deserving it, is to use the technologies available, of smart cards. If so, the social ends could be met and the single, market determined price for diesel would obviate the need for theft and, by the way, of murder of officials preventing it. The fact that the Dhithirashtras of Delhi are not even talking of different delivery mechanism and a single price for diesel suggests that they have other considerations.

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The evil portends for India emanate from the trend of citizens taking matters into their own hands. The wheels of justice need to be oiled. People are fed up of the guilty being let free because of poorly drafted charges by investigating agencies. It is for this reason that a vigilante knifed DSP Rathore, let off because the charges were poorly filed and slowly followed up on; the same vigilante knifed Dr Talwar, the father of murdered Aarushi, whose case has been closed following blotched up investigation. An MLA in Bihar was recently knifed to death by a woman who claimed to have been raped by him.

Poor governance also shows itself in poor planning for the future. When government does not do its job, the other pillar of our democracy steps in. The Madras High Court has given an order to shut down dyeing and bleaching units in Tirupur, which were badly polluting the Noyyal river. Some 50,000 workers will be out of a job and textile mills will see an increase in costs as these units shut down. Now, surely, pollution of the river is not an overnight phenomenon. Surely the units have been warned by the administrative branch of Government. Surely they, in turn, have bribed their way around it, continuing to pollute the river with impunity. Surely the political branch of Government turned the Dhithirashtric blind eye. The cost for all this laxity would be borne by the 50,000 unemployed workers. This is how bad governance and corruption affects, over time, the economy.

A similar thing will happen to the auto industry, perhaps 2 decades into the future. There is no official planning for the day of reckoning, when fossil fuel (crude oil) prices will peak as the world runs out of oil. Suddenly the capacities being added now, to produce cars, will need to be shut down, as petrol prices would be too high. A sensible Government would be busy building a network of efficient and affordable public transport and would discourage, through fiscal policy, the use of private transport.

A decade ago it was the Supreme Court that stepped in when the administrative branch of Government could not enforce norms to control vehicular pollution that was engulfing Delhi, and mandated the use of CNG. A responsible Government ought to have enforced it, instead of relying on the judiciary to clean up its misdeeds.

Now, the Supreme Court has stepped in again on the issue of black money and has asked why the Government does not inquire about its source. The Government claims that it is obliged to retain confidentiality of names of owners of Swiss/Lichstentien bank accounts but will recover its dues. Pardon me for being sceptical of that intention. It only means that it will give Government the option to pursue those people who are nettlesome to it and let go those who are a part of the coterie.

There is no denying that such rampant loot is a factor behind inflation, which is now a major cause of concern. Last week the RBI raised, as expected, its base rate by 25 basis points (0.25%) and will undoubtedly do so again. Foreign investors are selling in a big way, both on domestic as well as international factors. As re domestic factors, rising inflation and unbridled corruption are the main issues, as is the laxity of a spineless Government to tackle them. Globally, the US economy seems to be faring better, leading investors to shift part of the investments back home. The IMF has increased the forecast of global GDP growth to 4.4%.

The sensex dropped 611 points last week to 18395, for all the reasons mentioned above which are leaving investors filled with dismay. The Nifty dropped 184 to end at 5512. Corporate results for the quarter ended December are not too bad, but investor psychology has become so.

The sensex is above a crucial support level of 18,000. If this is breached, as seems likely, given the investor mood, the next stop is 16,000-16,500. Politically all parties are busy trying to bring down the other, instead of bringing up the nation.

J Mulraj is a stockmarket columnist and observer of long standing. His weekly column on stockmarkets has run for over 17 years. An MBA from IIM Kolkata, he has been a member of the BSE. He is now India Representative for Institutional Investor. 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 stockmarkets yet being a reader of his columns. His other interests include reading, both fiction and non fiction, bridge, snooker and chess.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and has not been authenticated by any statutory authority. The authors, Quantum AMC and Quantum Advisors do not claim it to be accurate nor accept any responsibility for the same.
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