Poverty. Or Lifestyle by Choice. And the Genius of Julius Nyerere.

Poverty. Or Lifestyle of Choice

Poverty alleviation to my mind is a patronising imposition on the unsuspecting impoverished as the rich see the poor. I have seen extreme ‘poverty’ at first hand in many parts of Eastern rim of Africa, East Asia and India in what are some of the poorest regions. Its not that the poor are exactly sending out distress signals for rescue.

Their smiles are broader, worry lines on their faces far lesser, leisure activities and small talks of humour reveal more enjoyable times, families better knit, better at peace with the rest of creation like Animals, rivers, environment, trees, etc. Their care for the rest – elders or younger- seems better and worries about what next and what will overcome their existence near non existent. Yes I am talking of the extremely poor. Of course I am talking of those in regions that would truly be called the poorest by any economic patronizers.

The rest of the paras is about a tribal village that we visited recently in Tanzania located between Gorongoro and Serengeti both world famous abodes of Wildlife – first a conservation area, which means both animals and native people are allowed to live together and the latter a National Park which means no human habitation is allowed.

There is nothing spectacular to further my arguments / conclusion in my description, so be prepared for some disappointment except some heat at the end.

Our Visit and What we were told

When one gets down from Gorongoro’s crater rim one could see from time to time people sleeping on hard rocks in baking Sun with just a crate of water. Or young children – alone or 3-4 at odd places with nothing else in visible distance. You wonder where they live and what they are upto – completely bewildering.

In the middle of nowhere is the tribal village (Bora by name) amongst the vast stretch from horizon on one side to the craters rim and small volcanic mountains on the other side. There is a small stream a KM or so away and a few trees near the stream.  There is a vast area of pebbles, sand grains, mixed with goats droppings, a few blades of grass visible here and there and a disproportionate number of sheep grazing or trying to graze them.

The Village has 122 people all belonging to the same person. He and his 20-odd wives, their children and grand children. They spoke a dialect of KiSwahili. They belong to the Masai tribe which stretches from south west Kenya to west and north west of Tanzania.

The driver called out and a man of the tribe who spoke fluent english (and of 24 yrs of age as i later enquired, Seiko by name) came out to negotiate with us. He had studied Secondary in nearby town in a boarding school and was in line to pursue graduate studies after a year or so – there seemed no reservation for them – perhaps for noone in Tanzania).

We were told that the fees for our visit per person was $ 20 and we negotiated a consolidated $ 100 which Seiko agreed only after checking with his head tribesman.

they performed a dance for us in which they invited us to participate. We never understood the lines but it was all about jumping about with a staff and a kind of oversized wooden hammer shaped like a scoop – spoon. (see pictures). But when we finished some of them asked us ‘Barabar?’ in Hindi with an approval seeking smile on their face.

The Village: The village boundaries are marked with some twigs and Acacia branches, more for warning animals than human intruders. We understand that the whole village takes about 3 years to build but a single hutment about 2-3 months – all entirely made of twigs, acacia branches to lend strength and cow dung and some ash for binding. There must have been 40-50 houses in 2 concentric circles, with a central open space where they were displaying handicrafts for sale.

Their houses have a master bed may be 6’X4’ and an adjoining 4’ X 5’ and a fire pit hardly a foot away from them. The drawing cum dining cum kitchen cum store must have been another 5’X6’ – fire seemed eternally burning. In one corner was some firewood, water for cooking and some vessels in place. It is the duty of women to build and maintain them. They let out the entire village in case they have to shift out somewhere and some other tribe is willing to take it, though i was not sure what that contingency might be.

Each lady of this polygamist society had a separate house for herself and children.

2           Divisions of duties: The society we were told is divided into Children (boys and girls), Women, Warriors and Elders. Children play and sometime help out (of late some attend primary school) in grazing cattle. Its the duty of women to construct houses and maintain them, upkeep of village pathways, raise children, housework and cooking. Warriors are males who are trained to ward off dangers primarily from Animals during migration. They train in using some acacia staves and some wooden hammer (they weigh quite heavy and just one blow might throw the lion or leopard out of its wits and leave the tribe to itself). They don’t hunt for there is nothing that they can or are allowed to. The Elders are the judges, rule makers, administrators, liaison people with external communities or government, deciders of any changes to their customs, etc.

3           They follow a religion called Engarai (not sure if I got that right), which worships the volcanic (long extinct) mountain and fire.   There was a lonely Christian (which the tribe had allowed) who had a neck chain with the cross. Apparently, he had attended some higher school or college in Kenya and had attended some Churches and developed some affinity to the religion. There were also a few others who had been to Iskcon temple but had not converted to the faith.

What to do with the dead seems to be in a state of flux of late. The long standing custom was to sacrifice it back to the God i.e the mountains. In between they thought it should be offered to water. But seas are a thousand kilometres away. So they thought that if they buried the dead they would be carried by the earth to the seas. They tried out cremations but are back to burying in the mountains now. Somehow they seemed undecided as of now, waiting for the next big thing.

4          Marriage custom. They are all polygamists each taking 3-4 wives. and there is no incest. so the women have to come from other villages. Once they come over, their contact with their parent community is near totally lost. The man has to propose and the female accepts or rejects. After the girls accepts, her parents have to approve and then they have to inform the village head which is usually the grand or great grand father. and then the Boys side, although none of them stand on their basic decision. (I could not get any answer as to how such a skewed ratio can be sustained unless the ratio of women to men is also similarly skewed). When the village headman dies his next eldest brother takes over and the line of succession is very clearly laid out.

 

5           Social upbringing. The children are born into the society, we were told – not just to the parents who biologically bore them. Its the duty of everyone to look after and bring up the children and the children in turn have to do whatever duty is assigned to them by the village elders – no saying no if not coming from your parents etc.  Male children take cattle out for graze and females house building, maintenance, cooking etc. So both ways there is nothing individualistic or home centric – everything is village centric – belonging, upbringing, duties and responsibilities.

The skin tone was great, no cragginess or folds despite the harsh Sun they have to face thru the year. No worry lines – not at least as much as you see in similar aged people in cities. Smile but no giggle or ridicule, quite disposition no cynicism is how I would describe.

No exaggerated exuberance or garrulousness that is typical of most Africans. It was more a guileless dignified ‘easy to make friends’ kind of welcoming ness.

6     The Culinary. Basically the entire food chain revolves around the cows and the sheep. For a group they claimed to have 3000 cows and an equal number of sheep. Cows give them milk and blood and meat and sheep mainly for meat. They drink the blood of cow every morning for breakfast along with milk. The extract the blood by puncturing some blood vessel and letting it ooze, without killing the cow. There is meat at Lunch and a soup of herbs and plant roots along with meat in the evening. There is no fruits or vegetables for them – ever.

We did not see any cows during our visit. We were told because of lack of grass and water, cows had been taken to a nearby place – 2 days walk, for grazing.

The entire medicine is made up of herbs and plant extracts and only in very rare occasions people are sent to outside towns for surgery etc.  Sanitation is primitive with near total open defecation out in the fields.

7           Economy : The entire economy revolves around Cows and sheep. When we entered they collected our fees in USD. They sell some handicrafts made by the women. The proceeds are used to buy their clothes – which looked neat and clean and i had no clue as to how they kept it that way, all in deep blue and red colour combination. The water in the stream  is hard and incapable of being used for cooking or drinking. They buy their water in tankers (stored them in syntex tanks) and a tanker of 22,500 litres last for about 3 weeks- some economy indeed.

8     The School visit: (see the photo with a man walking towards a small hut. Thats the school). The school is primary and sets them all together for 2 sessions each day one on the morning and one in the afternoon. We saw a glimpse of the 2nd session. The students stood up and sang a song in Swahili – led by one and repeated by others – welcome to Bora, our holy land, Welcome to Gorongoro, welcome to Serengeti, and welcome to Tanzania. The teachers are sourced from within their colony and teach them english and how their native tongue is constructed (that too thru english alphabet) and basic arithmetic.  Beyond that students go to boarding for secondary education and beyond that to distant cities in Tanzania or Kenya for even higher education. But those going outside are limited in number and is a recent phenomenon. The primary school itself was started in 2003/4 only. It will be interesting to see what influence the education has on their culture. There were 4-5 of outside graduates we could see and our guide was one. They spoke good english and one of them had become a Christian by choice and others had exposure to Hare Rama Iskcon movement.

The Warriors are trained in the use of their weapons and have the duty to protect their cattle and cows from animal intruders and from animal during migration. They smear some ash on their face – may be different patterns for different ranks. They don’t eat with others – they prepare and eat their meals outside the village near the stream – wonder what is the reason.

9     The Genius of Julius Nyerere – We also heard of another community of one Boni Louise who had 27 wives, 70 children and rest to make a community of 147 living somewhere in the stretch. The govt had offered to take them on board, provide for education and give them skills and jobs. But the Village headman had refused and the government had no problems with that. The Government made a standing offer for providing teachers for free should the village chose. After long years BL accepted it to forma school for his grandchildren and there ended the govt’s role. Basically Julius Nyerere has done a more commendable job of 2 types of integration after Tanzania’s independence – religious and cultural. Tanzania has 45% Muslims and 45% Christians and the rest making 10%. The population is one and no visible signs of tensions anywhere during the last 50 years. They are Tanzanians first and whatever religion they are, next.

Again he did not force development or education on any of the 120-odd tribes. They were given the option of integrating with the national mainstream but just an option. And where they just wanted to access only education they were allowed without precondition.

The net result after 50-60 years is that we have several societies or village communities who have their own rules and regulations, cultures, law etc. over which the nation has no say. But they also have a strong respect and love for the nation. Finest form of Democracy with no force or pressure tactics used anywhere, anytime – everything by choice. And no militancy or naxalism anywhere – all nationalists by choice. That explains the students’ song. In that respect Nyerere seemed to have done a far better job than his mentor Gandhi or even Mandela.

My Take on the people

The students in the school looked at peace with themselves like any of their city counterparts, seemed competent at what they were doing but not over eager to please us. The men looked healthy, again not too eager to prove themselves or ingratiate themselves as some of the country cousins tend to be when they come in contact with what they think are superiors. They dealt with us as equals I thought.

At a point in time when we asked them questions which appeared invasive, a silent pause to make us understand that we are off limits is exactly how you expect someone who is sure footed to handle a difficult situation. The ‘foreign returns’ and the outside educated did not betray any signs of dis-ease with their native surroundings nor any snootiness over the rest. They seemed well integrated and at peace with their community and no visible or subtle signs of dissatisfaction or Freudian slips anywhere that their true leanings were elsewhere or their desire to be in the cities or towns.

Their politeness, sensitivity, courtesy levels were laced by a sense of unhurried ease secure in the belief that the other person will not run away with what’s yours and hardly betrayed any rabid competitiveness. The village was neat and clean with no litter – even of food remains – to be seen.

On a Philosophical Note

My take is that they have lived exactly same lives the last millennium or perhaps the last million years. Other than perhaps the recent changes in clothing and education. It would be interesting to see how education affects them, whether it leads to any conflict between the educated and those without, whether it leads to younger ones challenging the Elders and all the civilizational conflicts. The younger ones seem to have come back out of choice and happy embracing the village life. As of now it appears that they wont move from their equilibrium. Happy as they are, with what they are, where they are, who they are…with their surroundings.

Their today is an exact carbon copy of yday, day before, last week, last year, probably the last 1000 years. The children would be doing exactly what their grandfather and head of the tribe would have done when he was similar age. The tribes head would be seeing his sons and daughters in law doing the exact thing he had observed his parents do. In a sense everyone had the script with him and his role was frozen in it.  Nothing to strive for or compete for that the society would tolerate. Seniors juniors  and young ones -they all have the same houses. There is no greed in such a situation, there is no competitiveness or need for savings or safety at individual level. Even concepts and words like regret, failure, lack of success, (all about the past) and fear, confidence, optimism, savings  (all about the future) may be largely irrelevant or lot less diluted.

They are the perfect example of sustainability in my opinion. They have already proved it in my opinion. Lets come back after a thousand years or a million years. The tribes will and can subsist exactly as they are – their lifestyle wont destroy the river nearby (unless it dies by itself), they wont destroy the trees, they wont dig the hills or mountains for minerals or metals, they don’t eat the wildlife, they wont mishandle the cattle since any quick reduction of cattle will threaten their own existence. All the current notions in the developed world seems an apology or euphemism at best, in comparison.

Makes me believe its an ideal most Oriental spiritual heads or religious heads crave for. They live in time zero. Somehow happiness is inextricably fused it appears with time. You move away backwards and you long for or regret yesterdays and with it the unhappiness. You move forward you develop fear, greed, despondence, confidence or lack of it or successive waves of it, and you find people in the most affluent societies walk to their office with heavy worry lines as if they will face the yellow slip on arrival or go back to their residence as if when they reached there their spouse would have deserted them for a better choice.

Choice may not necessarily mean Welfare. Just get rid of the words Greed and Individuality …life can have a completely different meaning altogether. Like particles behave completely unpredictably under zero gravity, greed and individualism seems to make humanity to go berserk – no amount of savings is enough, no measure of success enough to satisfy – we are in a permanent pursuit to prove ourselves to others and earn their certificate, no end to competitiveness to prove others are not as good as you, destroy nature and its various creations in the name of development and give euphemistic proselytization to others.

They may be called poor. But there is no poverty in my opinion. Its their lifestyle. By choice … choice not to move away from what they have seen work. And no good Samaritans have a right in whatever name be it religion, democracy, freedom, women’s liberation, human rights, etc.  have a right to interfere in their choice. For happiness you seem to need equilibrium not necessarily fly around in A380s or zip around in fast cars. And they seem to have that in plenty. They have inherited it from their forefathers and will bequeath it to their successors nth  generation. And in doing so they would not use up an iota of nature, But most certainly we, the development champions,  would have exhausted our Gas.

Team Work – Lessons from animal Kingdom

Lessons from Animal Kingdom – Serengeti
We seven of us from college took a Safari trip to Serengeti – which shall never die – and Grongoro crater. A few interesting lessons.
1 (See picture of Gnus which looks like a long line of Ants). We saw a long march of Gnus in G’ro. All of them one behind the other no jostling, wresting, trying to out-champion the other, no overtaking, almost equidistant from each other. May be 1-2 mile long. They were grazing on one side and crossing over to some other distant place for water of  fresh pasture. They would be grazing one minute and as if there token number had been called, abandon it swiftly and scamper and join the queue and continue their walk along the st line.

Gnus have been made fun of – as a creation when God had a few spare parts left but not the brain after creating all animals. It has the tail of a horse, torso of a cow, face of a bull, mane of a half adolescent lion, and the gait of a Hyena. Quite ugly looking.

But the Military discipline they demonstrated … well i would like them to come and teach Delhi vehicle owners the grace, functionality and benefits of discipline and perhaps anywhere in India the fruits of proper queuing. Cant figure out who is there leader and how he enforces such order.
Ironically we have the gall to call them Wild(e)beasts!!!

2 (Look at the Picture of Zebras- left extreme – some looking one way and others walking in the opposite direction). This was on the morning in Serengeti. We first sighted several Zebras and soon realised as we kept driving it was a whole colony or perhaps County of zebras – may be 20,000-30,000 of them… as much as the eyes could see and where the horizon threatened to meet the plains.
Soon realised they were queuing. There was a small pond on the other side of the road to where the Zebras are pictured standing. The pond must have been a part of a subterranean stream which has surfaced into a small pond in an irregular shaped rectangle of may be 15-20 feet (see picture) which could be accessed only from one side the other side bund being a little high.
One after the other the Zebras were trouping towards the pond to take their may be 30-40 seconds to drink water and return to the grazing side. The pool could max accommodate 15-20 heads at a time … so one after the other as if in a Tripathy Drashan they took their turn. There was a maximum of 15-20 drinking from the pond at a time, may be an equal number behind them and not many risking being on the road…
Again no jostle, no quarrels and no queue jumping, no nudges, no necking (do u see any in the picture?) … I don’t even remember them bleating ..
Such a large colony could not have been from single or a few groups, they must have been several groups but nevertheless the discipline and lack of friction was astounding! If you don’t believe me please verify it yourself next time your are there and observe them in the morning, during dry season (wet weather would make more streams available and hence you may not be able to see this).
Just the assurance that the water from the stream will not dry up seems to have assured them that they can patently await their turn.
Hats off to the Zebras!.

3 Early afternoon we saw two lions on a rock or rather the heads of two. We slowly moved around and found that it was a pride of 19 (as correct as we could be)  – equally split between grown ups and cubs. We soon saw a couple of lionesses approaching them. Don’t know what was the message … but the pride lying down and relaxing … all of them started moving in their direction. We moved keeping track over them and at a distance, may be of a Km or less, we could see that a Zebra had been killed by the two (or more) lionesses and they had perhaps come to invite the rest for the feast. (see picture of lions walking towards the kill).

We understood from the guide’s commentary that the lionesses after killing do not drink or eat their kill without the rest of the pack. They have it together. After the kill the two hunters had gone to fetch the others before starting the feast.
From the Guide we could understand that a Zebra would be full meal for may be 6-7 lions. But that shortage (they were 19-20 lions) did not seem to make the two who toiled to kill their prey greedy and desperate and have it first before inviting the rest.
An hour or so later after we had moved on, we heard from the wireless set that the same pride had killed yet another prey.

4 A little after Noon, we chanced upon another colony of various kinds of Deer, antelopes, Impalas, Gerenuk (a kind of deer that never drinks Water), etc. Again countless … may be 10-15,000 and this time along with some zebras, Buffalos, Gnus, etc. We saw a lioness with a blood oozing fresh kill of a deer in its mouth with another lioness walking behind. We must have watched them walk about 200-300 yards purposefully in one direction. With some difficulty dropping the fresh kill every now and them resting a few seconds before picking up and walk another 25-30 yards. And so on. The guide said that they must be walking towards the rest of the pride to share the feast.
Again no attempt by the two which had killed to have their fill first before calling in the others to join, as we understood. May be the pride had their kids also and the mothers felt it their duty to feed them first and hence the long walk and wait … one would not know.

There may be more than a Lion and 4-5 lionesses in a pride and more than 1-2 may be lactating at a time. We were told that the lionesses feed milk to any of the cubs unmindful of whether they the cub is hers or other’s

5 One would not know the origins of this nasty practice with Lion family. In most animal species, the line of succession is clearly specified … the oldest female (elephants), oldest Stallion (Deer), the strongest, etc. But with Lions they settle it with Wars. Detached young adult lions who are themselves driven out of their pack fight it out with older lions with a pride and if the intruders win, they take the pride. At that time they kill the older lions or drive them out. But they kill off all the young cubs less than one year old, we were told.

Lions also lose a lot of their cubs otherwise. When they go for their hunt they try to hide their cubs but the cubs are killed by Hyenas and Leopards. Hence ironically, the survival rate of the Lions is one of the lowest – 3 in 10. What fate the King!!!

6 Young elephants are accompanied by their mother or sometimes male elephants. But then they get tired fast and have to rest or sometimes even sleep off mid way. In such cases the accompanying big one patiently waits over the young one till it wakes up again to walk – be it mid way, mid road, or pathway or marsh. What baby care!

7 All in one frame. (see picture with Lion in front). This is a picture (in G’ro) with a lion and lioness (and there were three more behind anther bush), hippos (looking like rocks), birds, Buffalo may be at 25 yards distance from lions, zebras may be at a distance of 40-50 yards and deer some more distance. In another place we could see a similar frame with some jackals, hyenas and two large tuskers thrown in, all within a max 100 yards square. What peace with each other and harmony. Secure in each others company. Carelessly grazing unmindful about the threat to their life (or may be secure that once the lions have had their days fill, they are harmless creatures). Only Man treats everyone else incl other men of the same ilk (politicians), sometimes spouses, of other religion, sometimes Boss and reportee with total suspicion, mistrust, etc. And lives in permanent fear of the rest.

8 Finally the Hyenas, the much despised creatures. Scavengers we call them. Everday so many animals must be dying in these parks. You can imagine the stench …but you have to only imagine. All the left overs are cleaned up by the Hyenas and jackals leaving no matter leftovers. They can even crush an elephants heads between their Jaws, we ere told. So as soon as any of their jungle cousins finish with left overs they eat of all that is left and digest it within a short time so that there is no stench whatsoever.

Incidentally on the last day we saw 2 Hyenas near some bush may be 200-300 yards away from us. They went inside the bush and after about 2-3 minutes one of them came out of the bush running helter-skelter, desperate, helpless like someone running to escape from a killer/mugger on hot pursuit running in our direction and taking its first breadth after may be quarter mile distance, sad desolate he looked. I asked the guide ‘what happened to the other one?’. ‘Probably there is a lion inside the bush who must have killed him’.
Even the heartless Hyena seems to have a heart for its mate/sibling/friend… whosoever!
Animals should feel entitled to offer us an MBA in team work, I guess. Or perhaps basics of spirituality.
Remove just 2 words – Greed and Individuality – from the English dictionary, and we will have a entirely different harmonious world I guess!

Demystifying GDP numbers – as articulate a statistician as you will ever find

Demystifying the confusion around GDP figures

Attended an address today by Dr Pronab Sen, former Chief Statistician of India and Chairman National Statistical Commission. I must admit despite his slightly absent minded looks, he is the most articulate economist I have heard in a long time. Some excerpts. He threw a lot of light of issues generating lots of heat in the press nowadays. (Errors in figures if any is entirely mine).

Should we believe the new GDP growth rates reported

People confuse output for income. GDP is not the sum of turnover but income. A consumption good may be traded at 4-5 intermediate stages before it reaches the final consumer. Then GDP is not the summation of the turnover of the 4 intermediate trades but just the income (Value added) at each of these stages. Example: if an auto mfgr imports components of Rs 30, assembles and sells the car at Rs 55, the dealer to retail showroom at Rs 70, and the retailer to customer at Rs 80… the GDP will be Rs 50 (25+15+10) not Rs 235 (30+55+70+80) or Rs 205 (55+70+80).

Thus GDP is not summation of  Value of Outputs (VO) but summation of Value added (VA) at each stage.

GDP = ∑VA  or = ∑VO * (VA/VO). i.e output into Value Added ratio at each respective stage.

In India the long term average (1950-1998) VA ratio was 16% for manufacturing industries. Between 1998 & 2003 it increased to 18%. By 2011-15 this has increased to 22.5%. Thus a lot more value addition is taking place in our output than anytime in the past. Even if our output may not have grown at higher rates, the value added component in that output has gone up … giving higher GDP numbers. This is what is being witnessed now.

2             Typically in a downturn, industries invest in efficiency improvements rather than investments in physical assets. In Boom time they invest in physical assets (may be indiscriminately). During 2 crunch times of 1998-2003 credit squeeze and 2011-2015, India has invested and become far more efficient and is achieving higher VA in its output. We are lot more competitive globally today than 10 years back.

3             China also invested heavily in physical assets during boom years. Their VA/VO ratio was also fortunately high in mid-20s which has fallen and stands over the last decade to 19% now, less than India’s in several sectors – a sign of over investment. They are now investing in efficiencies and technologies. The World average (long term) is 18-19%. India is well placed now on cost competitiveness and more industries should identify their strengths and grow; they should not worry too much about our size being 1/5th or 1/10th of China’s in their industry.

Why corporate profitability is low in spite of higher value added

4             The VA  has 2 large components – (i) what is paid out as wages and salaries (WS) and (ii) other operating surplus(OS) (paid out as interest, dividend, retained surplus, etc.). In the last 5 years the average rate of growth in WS for India as a whole is 17% p.a. meaning far more is paid out as salaries and wages and the share of OS is 10% p.a. of which the share of interest has been high. Dividend payout has also increased dramatically affecting Corporate profitability and retained surpluses. Wages and salaries in rural India has risen faster than in urban areas/industries.

Shift in manufacturing profile

5             The share of unlisted firms is growing faster than listed companies. Unlisted firms are growing at 12% CAGR while listed firms output is growing at 7% CAGR. The share of informal sector has quietly reached 40% today.

India is becoming more entrepreneurial. It would not be surprising to see that in the next 5/10 years, the top 20 of the 40 construction companies will be totally new and unheard of now.

6             Black money distorts asset allocation.  Most of it is kept in black assets – gold and real estate. Now that there is drive against black money, real estate is suffering.

On Why IIP numbers (index of Industrial production)  don’t reflect our higher growth    

7             IIP numbers are constructed from select industries. Those mfg industries/product which contribute at least 2% of total is selected first. Some of these may have 8% some 5% and so on. 14 such products contribute 80%.

For these products/ industries, just the top 6 firms (turnover wise) are selected. Their rate of growth is taken and averaged and reported as IIP numbers. The index we are using has a base 2004.

During the last 10 years between 2004/5 and now, the small and medium scale sector in these industries have grown far faster (at 14% p.a) than the corporate sector (7% p.a) and the sample 6 have grown even slower. The share of small firms have grown from 30% to 50% in the last 10 years – a fact not captured by the index.

Construction of any index is a time consuming and costly exercise based on extensive surveys. Thats why they are not done frequently. A new series with base 2011 is in the offing, which might set right the anomaly between GDP and IIP numbers.

Why Indian industry is not investing even if it is growing

7             Informal sector which is growing the maximum does not have much savings – it is squeezed out by the money lenders – their main source of finance.

More is paid out as wages and salaries, who may not have the same investment urges as retained earnings.

and of course the High interest rates (see below)

Interest rates

8             Indian interest rates are very high. It attracts a lot of portfolio flows which come in and keeps Rupee artificially high and un-competitive. The way to correct it is to let the interest rates fall which will enable the industries to invest and absorb these flows. If the flows are properly absorbed the currency will find proper level ($ may be Rs 72/75 instead of being Rs 67-68) and portfolio flows will be moderated. This has not been allowed to happen and our real interest rates have been kept artificially high.  We are just accumulating reserves instead of putting it to productive use.

9             Indian industry is crying hoarse on high real interest rates. What they should be screaming at is the differential interest rates. Between 2008 and now these have moved significantly against India.

Our corporate interest rates were 9% average towards end of last decade when the global interest rates were 4.5 % – a gap of 4.5%. Today our interest rates are 10.5% when the global interest rates are kept at 1.5% a gap of 9%. Not an ideal situation for investments. It is better to invest overseas, even if to supply to India.

Thus Indian industry is caught between artificially high interest rates and artificially high forex rates which does not enable them to raise prices in line with costs.

Difference between Planning Commission and the current NITI AAYOG.

10           The previous planning commission had a 15 year, 5 year and 1 year plans/horizons.

15 years – There was a broad perspective plan which was not generally well known or publicized.

5 years – Better known as 5 year Plans. This was an approach paper.

1 year – laid out the expenditure for various programmes.

The NITI AAYOG has a 15, 7, 3 year cycles.

15 year. Vision document – the Government has asked the Niti Aayog to come up with this.

7 year – plans and programmes.

3 year – implementation plans for the above.

NPAs

11           The current NPA is entirely that of Corporate sector. The priority sector NPAs have remained at their usual 1.5%.

12           From financing just working capital needs from retail savings our Banks are now financing long term loans from the retail savings. More than 50% of lending today is for long term loans.  This is inherent mismatch. Our commercial Banks are not just designed to deal with NPAs.

13           It is not that we were without NPAs earlier. The long term loans were earlier met by DFIs (IDBI, ICICIs, IFCIs) which financed themselves with long term Bonds (15 year types) and were far better able to deal with temporary fluctuations in business and time taken to rectify/reconstruct even bad decisions. It is simply not feasible to deal with them on a quarterly basis, which is what the banks are expected to do now.

Of Pathein Wildrats and issue of sustainability

Of Pathein Wildrats and the issue of sustainability

Myanmar is a Buddhist country which is primarily non vegetarian in diet. Prawns, shrimps, snakes, wildrats, rabbits, fish, and poultry along with rice make up their staple diet. Wildrats from being widely available became a delicacy, then pricey and now a rarity due to excessive ‘harvest’.

The irony is that once the catch started diminishing due to its demand the prices Continue reading