Citizens' Issues
Public Interest Exclusive
Petrol price hike – I: Some people should be celebrating

The largest chunk of the petrol price hike goes to the government not just as taxes bit in other ways—only to perpetuate a colossal waste by netas and babus in the name of running this country. They should be happy with the price hike

Petrol prices are up. And political formation ‘A’ in power, has timed the announcement to divert attention from the collapsing rupee-dollar exchange or other the utter failure of the UPA-II in its second anniversary. Political formation ‘B’ announces protests and bandhs. The population join in the noise for a few days, and after a few more days, ‘A’ and ‘B’ and their cohorts, which is mainly the mantri/santri/babu combine, go back to loot and scoot some more.

Certainly, there are small rays of hope. Narendra Modi leads by example in the way public transport has improved in Gujarat and even the benefit of better commercial transport has re-energised Gujarat. But for the most, it is business as usual. You wish we had a different transportation policy but sadly we don’t. Take the case of the rise in price of petrol, something that affects two-wheelers more than any other segment. Given half a decent chance, pretty much every two-wheeler owner and operator would choose to use public transport—as over two million people on the Delhi Metro and another 7-8 lakh people on Delhi’s better and improved buses would agree. And similar numbers in Hyderabad, Kolkata and Chennai. But what about the rest? Are they not entitled to better public transport, in the smaller towns and cities of India, so that they too can leave their two-wheelers at home—especially when it is mostly about a commute to office and back? The answer lies in analysing, as always, who benefits from increasing prices and taxes.

1) Taxes and other levies, including customs duty, central taxes, state taxes, city taxes et al, are mostly with a few minor exceptions, levied on a percentage basis. Therefore, if the base price goes up, so do the realisations by ways of taxes and duties. And we are all aware of how these are misused, embezzled or diverted. Higher prices, higher taxes collected, higher the frauds—as simple as that. Just comparing the prices of petrol in different cities and getting the break-up from your filling station will give you an idea—especially in cities like Bengaluru, where it is amongst the highest in the country.

For example, over Rs2 for every litre of diesel sold and a higher amount for petrol is supposed to go to a highway development fund. There is no track of where this money is going, how it is being spent, or even when it will be accounted for. But the amount will go up every time the base price goes up, often in an arbitrary manner.

2) Whether in the public or the private sector, the tendency to misuse official funds so that personal expenses can be minimised, is reaching new highs. For example—a personal auto-rickshaw ride to drop the children to school may cost, say, Rs50. Summoning a government car for the same job, however, would cost over Rs1,500 after taking all costs into account. (This number was presented to me by a contact in the GAD—General Administration Department—of a government office).

Obviously, this sort of embezzlement will not survive without a downstream payout. In other words, the more the senior mantri/babu embezzles, the more there is for everybody to share down the line. An increase in the cost of fuel, therefore, simply increases the potential for embezzlement and therefore the payout for everybody. The introduction of low-cost CNG was considered to be a major ‘loss’ for many in the assorted GAD and finance & accounts departments of many offices, both government and private, and therefore strongly resisted. Till today, for example, you will observe, they rarely use CNG vehicles for their fleet.

3) The third group of people who will be celebrating the increase in the price of petrol will be those in the increasingly streamlined groups operating across formation ‘A’ and ‘B’ in their all-India business of adulterated fuel. The linkage here to the babu/santri/mantri combine is frightening, especially as it also impacts India's energy, military and economic security. As we all know, the price of subsidised kerosene and other components of adulterants has remained more or less static. But with the price of petrol having gone up, our mantri/santri/babu combine have presented themselves with even better margins and with lower efforts. The usage of adulterated fuel will also be market driven. The retailer will seek adulterated fuel to improve his margins. The vehicle operator, unmindful of the effect on his vehicle, will also not be averse to saving some money on fuel. And so it will go on.

In a side note, this adulterated fuel industry is so strong that single-handedly it can and is destroying every attempt being made to introduce renewable energy options in India. And it is strongest within the public sector oil companies, who by rights should have been at the forefront of developing methods to increase efficiencies and reduce basic costs of fossil fuels—but are simply refusing to do so, even though they can.

Is there no way to fix this? That is the subject of the next article.

(Veeresh Malik had a long career in the Merchant Navy, which he left in 1983. He has qualifications in ship-broking and chartering, loves to travel, and has been in print and electronic media for over two decades. After starting and selling a couple of companies, is now back to his first love-writing.)




5 years ago

If the govt had been serious about checking the inflationary impact of the high oil prices, it would have retained the excise and tax component fixed at the amount being recovered as on the date of the increase. By keeping the ad valorem percentage based taxation, the govt was actually benefiting from the misery of the common man, and adding to the inflationary fire, while sadly shaking its head about the "uncontrollable" high international oil prices. This was a sly way to boost revenue extraction from the people's pockets, without incurring any opprobrium, so that the government could continue with its profligate splurging, like buying 12 of the world's most expensive "specially fitted" helicopters from the Italian company, AgustaWestland, for use by India's rulers at a cost of Euros 556.23 million.

Economy & Nation Exclusive
Limits of government policies

While investors around the world wait breathlessly for the next stimulus from governments, the reality is that government policy options are quite limited. The paradox is that the one policy that politicians will not follow is the one policy that would actually work; the path of true reform

As a result of the recent elections in France and Greece the latest mantra among European leaders is that their policies have to change from austerity to growth. There is one problem. One has to wonder what exactly do they expect to use to stimulate growth? There are two standard ways. One would be to try and stimulate their economies using fiscal policies. They could either cut taxes to encourage people to spend or the governments could increase spending on government programs. Both would stimulate the economy, but for most European countries these two options are out because they already have exceptionally high debt.

Another way to stimulate growth is to use monetary policy by cutting interest rates or more exotic programs with less proven records like quantitative easing. These might work except that all of the countries have already used these tools. Interest rates are near zero and the European Central Bank (ECB) pumped a trillion euros into the European economy over the winter.

Perhaps the best way to promote growth would be to require structural reform and limit government over regulation especially of the labour market. But this has two problems. First it would take time to show results and second no self respecting European would ever continue working after the age of 62 or give up her/his spa leave. So it is politically impossible. So Europe’s policy makers and central bankers are trapped. Without viable solutions, Europe will be subject to an inevitable slowdown. Not to worry, emerging markets will save us.

Since the beginning of the Great Recession in 2008 the emerging markets have been the engines of the global growth. With youthful populations, relatively low debt levels and expanding middle classes, these countries seem set to drive global growth indefinitely. But there is a problem. Despite the happy predictions of analysts and economists all over the world, no economy can escape from business cycles and some of the economies in emerging markets are showing distinct signs of stress.

While inflation is not an issue in the developed world, it is in many emerging markets. One of the worst is Vietnam. Vietnam is one of the fastest growing countries in Asia. Its GDP (gross domestic product) increased by over 8% a year from 2003 to 2007. While it has slowed recently, it is still expanding at 6%, a rate that would be the envy of most governments. Sadly the price to pay is Asia’s highest inflation rate. Last year it topped 20% for the second time in three years.

Turkey and Poland are two large emerging markets on the periphery of Europe. Unlike Greece and Portugal, these two countries have been growing rapidly. Poland did not even experience a recession. Turkey declined in 2009 but bounced back to growth over 8% for 2010 and 2011. Both countries have benefited from large investments in foreign capital, but both countries have large exposures. Turkey is now running a scorching inflation rate of 10.4%. But the real problem is its current account deficit in excess of 10%. This makes Turkey vulnerable to capital flight.

Poland’s inflation rate is only 4%, but it is heavily dependent on its exports especially to Germany. So it is not only exposed to European problems but also problems in one of Germany’s largest trading partner, China.

It is not just the smaller emerging markets that are experiencing problems. India’s economy is slowing. The Reserve bank of India (RBI) felt secure enough in March to try and stimulate the economy with its first interest rate cut in three years. Sadly the RBI’s actions were premature. Inflation increased from 6.89% in March to 7.23% in April, so any further monetary stimulation is probably not in the cards.

And then there is China. China’s growth, upon which much depends, is definitely slowing, perhaps more than investors expect. What investors do expect is that if China slows, the government will step in and use its control of the economy to get it restarted. But like other countries China is also limited in it policy responses. New loans or ending real estate market restrictions would lead to more unaffordable empty houses and increase the mountains of bad debts.

While investors around the world wait breathlessly for the next stimulus from governments in developed countries and emerging markets alike, the reality is that government policy options are quite limited. They cannot undertake a fiscal or monetary policy to make things better without making other things worse. European stimulus wouldn’t ignite inflation, but it would exacerbate sovereign debt problems. Most emerging markets don’t have the debt problems, but they do have severe inflation, which has to be tamed. The paradox is that the one policy that politicians will not follow is the one policy that would actually work; the path of true reform.

Despite local demand, Chinese and other emerging market firms have not established their own brands. Instead they have often tried a short cut, purchasing western brands. The main problem for the emerging markets is learning the art of protecting their local brands

The growth of emerging markets is having an enormous impact on everything. However, marketing and brand management in these markets can be a bit of a challenge. This is true for both multinational companies attempting to sell into these markets as well as for emerging market companies competing with them and attempting to expand internationally.

One of the most interesting examples are brand named luxury goods. The sales of these products grew 13% in 2010 to $228 billion and another 10% in 2011 to $252 billion, renewing the growth trajectory that started in 2007 when sales hit a previous record of $224 billion. As with all things concerning emerging markets, sales in China have led the way. Sales of branded personal luxury items purchased by Chinese globally add up to a whopping $52 billion. This is 80% of the $63 billion in sales of the largest market, the United States.

But China is not alone in its tastes for brand names. Latin Americans led by Mexicans and Brazilians are raiding the posh stores of New York, Milan and Paris with reckless abandon. Local markets are growing, as well. Sales in Brazil grew 50% from $2 billion in 2009 to $3 billion in 2011. Sales grew in the same period by 12% in the Middle East and by 25% in Korea.

But catering to these markets often means adapting to local tastes, which are often quite different than in Europe or the US. For example Chinese women’s taste for whisky and sports cars is higher. In China, Maserati sells 30% of its cars to women, while in the west women buy only 2% to 5%. In contrast, Chinese men purchase more far more grooming products including face creams than in older markets. They also are large consumers of luxury bags. Coach sells $1.7 billion worth of leather bags in China, 45% to men compared with 15% globally.

Despite the local demand, Chinese and other emerging market firms have not, with a few exceptions, established their own brands. Instead they have often tried a short cut, purchasing western brands. This process has even been sanctioned by the Chinese government.

But government encouragement does not necessarily mean success for the Chinese any more than it did for their Japanese predecessors who did the same thing 30 years ago. The computer firm, Lenovo Group, purchased IBM’s personal computer business in 2004. Lenovo now sells computers under its own brand and the only thing left of the IBM brand is the name ThinkPad.  The problems with the IBM brand have not stopped the Chinese from buying others. The Chinese car company Geely bought Volvo last year and a Chinese bulldozer manufacturer bought the Italian luxury yacht maker Ferretti, owner of the legendary Riva boat brand. Not to be outdone, one of India’s largest industrial group, Tata, purchased the famous British tea company Tetley and more recently Jaguar Land Rover.

Still marketing success has proven elusive even on their home turf. Chinese car companies have been unable to pry the more lucrative parts of their own market away from VW and General Motors. The foreign-branded cars are seen as more reliable, stylish and a better value than their Chinese competitors. This leaves the Chinese car makers with the low end of the markets where competition is only on price and margins are razor thin.

Emerging market governments are all ambitious to make their mark in the world and have no problem supporting their locals. In China this means reviving a bit of socialist history with the Mao era Red Flag limousine. Like its Soviet counterpart the Zil, it was originally produced for the communist leadership in 1958. But it fell out of favour with the Chinese leadership who preferred the more polished Audi, which dominates 30% of the market. Discontinued in 2010, it is now back as the first choice of the upper echelons of the party.

But the main problem for China and other emerging markets in learning the art of marketing is the protection of the brands themselves. The Chinese governments, usually local governments in trying to protect home grown industries, have been ruthless in slandering foreign brands. Luxury brands including Hermès, Hugo Boss and Tommy Hilfiger Chanel, Armani, Christian Dior, Zara and Burberry have been attacked as substandard. Wal-Mart in Chongqing found itself the scapegoat for high pork prices, while Coke, Heinz, Procter & Gamble General Mills, Lipton Teas, Colgate-Palmolive all have been accused of selling adulterated products.

Besides slander, the Chinese are notorious for intellectual property violations and trademark infringement. This consistent disregard for property rights was supposed to damage multinational firms, but the real losers are in China, for without these basic protections, the locals can only hope to produce basic commodities and leave the more profitable higher end to foreigners.

(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected]).


Women in News

Making News, Breaking News, Her Own Way brings alive through the pens of forty of India’s most outstanding lady journalists from all over the country

Reviewing this book containing stories by winners of the Chameli Devi Jain Awards by forty outstanding women media persons takes me down the memory lane. As a distinction holder in Civics & Indian Administration with three languages at the school finals and a university rank at graduation, my ambition was to take to journalism. But I ended up taking up accountancy, which the Americans term bean counting. My high respect and regard for journalists continues unabated.

The dramatis personae of this thoroughly enlightening book are all ladies who have distinguished themselves as journalists in no small measure. The eminent columnist-author MV Kamath says, “I have the privilege of personally engaging female students in conversation as an elder whose advice is sought, serving as I do, as honorary director of an educational institution (Manipal Institute of Communication) with almost 80% of the students being female.”

Making News, Breaking News, Her Own Way brings alive through the pens of forty of India’s most outstanding lady journalists from all over the country from J&K, the North East, Bihar, right into the heartlands to the big bad metros of Mumbai and Delhi. It tells what earned for them the prestigious Chameli Devi Jain Award, instituted in the name of another lady who was an outstanding freedom fighter who valued independence, courage and dedication above everything else, writing on such varied topics on rural and social development, tribal uplift, consumer affairs, wars, financial scams, stock markets, internet sex workers,  communal conflicts, foreign affairs, city news, the state of environment, investigatory analysis, less covered naxal-hit regions, photography, culture, slum women and kids.

BG Verghese in his preface, rightly points out that the awardees hail from all regions and belong to all classes of the media—their stories more than just a series of individual portrayals mapping two current sociological phenomenon: gender assertiveness and expanding definition of  front page ‘news’. He goes on to add that the jurors preferred younger and lesser known journalists from small town rural India who lacked access and backing of large city media houses, from all  remote parts of India representing several languages depicting the “coming-of-age of Indian journalism”. Young women have shown great courage in reporting from conflict zones in situations of danger, where mainstream media vacate the field.

 Neerja Chowdhury rightly reports that the proprietor of a reputed English daily, when interviewing her told her that they were “more interested in employing women” because they found them to be “more hardworking and conscientious”.     

Today in public life I find myself engaging with more ladies and very few men.  My experience at activism in public life has brought me in touch with media persons across the board both in the print and electronic media and most of them have been dedicated ladies and girl cub journalists of high calibre.

Barkha Dutt, writing Yeh Dil Maange More and looking back, writes of her mother Prabha Dutt who began her journalistic career in 1965. She had “to fight” to convince editors that women were good for more than reporting on the local flower show in town. Despite being denied an assignment to cover the Pak conflict, on being sanctioned leave made her own way to the war zone Khem-Karan Sector “to file dispatches from the front that Hindustan Times found too good not to publish.” Incidentally, when reading Khushwant Singh’s autobiography I noticed that Prabha Dutt is perhaps the only journo who finds a favourable mention!

Sevanti Ninan on rural reporting writes that the demand was for “everything that had a potential for becoming a story; and that papers were not looking for gobar gas journalism”.

Sakuntala Narasimhan writes of a beginning with civic and community issues, bad hospital services, “selling tomorrow’s milk today”. After writing about the customs department corruption at airports, the commissioner called to declare that he had checked with the staff on duty that particular day and none of them had confessed to taking the bribe. “I had got anonymous calls of course, on threatening to have my income tax records reopened.” She writes she had to pay bribe to get her father’s death certificate!  

Sheela Barse writes, “But, for me, the best stories were those that gave voice to the voiceless... oppressive governance confiscated from people their status as citizens.”

Usha Rai on hazards faced, “I was summoned by the Russians and browbeaten by the officials of the ministry of water resources to reveal my sources on the Tehri hydel project. Though I held my ground, I was rattled to the point that I almost met with an accident while tying to cross a road.”

 In A consuming cause, Pushpa Girimaji, who has the distinction of being the only Indian journalist to have written on the issues of consumer rights for the last 28 years, with her syndicated and exclusive column appear in six leading dailies. She was a pioneer in reporting on consumer-centric reports from Bengaluru in 1976 when she faced the ridicule of her colleagues who dubbed her columns as subzi columns. She writes “Consumers have no voice whatsoever; no one cares for them, not even the government, safeguarding laws passed but rarely enforced or implemented. Despite the Prevention of Food Adulteration Act, sale of adulterated food is rampant... What kept me going was anger at the helplessness of victims of medical negligence. I remember being heckled and booed for my views at several of the meetings organized by medical professionals who wanted to be kept out of the Consumer Protection Act. It was a tough fight and finally we did manage to win. A friend who attended one such meeting jocularly told me that if I fell sick, I could be sure no doctor would treat me... We continue to be victims of unfair trade practices perpetrated by insurers... we are victims of ATM malfunctioning and ATM frauds.”

Alka Raghuvanshi, wearing many hats as an arts writer, columnists, art curator and artist said, “I wrote like there was no tomorrow! Did investigative stories of art institutions, fearlessly blew the lids off their skewered functioning, met and interviewed artists, dancers, theatre artistes that had just seen on stage and revered as great performers, and discovered their clay feet... They hated me and loved me, but couldn’t ignore me! I loved every moment of it.”

Manimala writes, “There are many vivid stories of social injustice that are routine to the powers that be, as a result of which the perpetrators roam free and with impunity... And I paid the price. One of bones was broken when I tried to save the life of my colleague, Milind Khandekar. There were attempts on my life and a bid to kidnap me. My sister was mistakenly abducted in my place!”  

Sheela Bhatt writes of her visits to police stations, asking why they were not handling law and order effectively. In 1985 she began visiting the income tax department to report on issues of black money among Gujarati and Marwari traders; in 1980 on the saffron brigade’s mass movement to send bricks to Ayodhya... Put simply, the journalists writing in English touch only a miniscule minority. But their perceived sense of ‘power’ remains in tact... you realise what a failure the Indian media has been in understanding, reflecting and empathizing  with the “other India”... How it contributes to making India a safer, functioning and stronger country, Sheela rightly demands!

Annam Suresh says that she focused on questions normally swept under the carpet in order to sensitize people to addressing issues proactively... Many stories elicited positive results.

Anita Pratap, in The Answer will find me is bang on when she writes very aptly—“Collusion between lobbies and media has always existed. The crucial difference between then and now is that this collusion, which once was marginal has moved mainstream, big time. Media is now widely seen as being cahoots with big business and big governments.” The massive 2G scam, with corporate lobbying for direct involvement of top honchos of leading business houses, with a media journo dramatis persona of this very book drawn in, that has just happened not long ago proves this right.          
The inclusion of  Sabena Gadhihoke’s write-up on and the best known photographs taken by exceptional Lifetime Achievement Awardee Homai Vyarawalla, India’s oldest, best-known and most admired photo journalist and chronicler of post-independence India who passed away at 98 in January this year has added tremendous value to this book.
It is just co-incidental that I have met and now actively interact with two distinguished ladies—Sucheta Dalal and Vinita Deshmukh—in matters of common interest in the matters of RTI, financial literacy awareness, civic, financial, banking, insurance and corporate concerns advocacy and redressal. Both of them have been very extensively writing on matters of contemporary interest.

Sucheta in Exposing Business unusual writes about 1991-92, “companies like Reliance and Essar Group were powering ahead by any means.” Early in 1992 doing a report on a secret meeting of leading industrialists that hatched a plan to lobby the PM against rapid liberalization and competition that they perceived would adversely affected their so far protected interests, that Sucheta dubbed Bombay Club that continues to date. This followed financial scandals—“soaring stock prices, outrageous corruption in corning public sector shares, misuse of public funds in public sector banks and investment institutions... Since I was not sold on Harshad Mehta as a market superstar, it was easy to believe the informant who walked into The Times Of India on 22 April 1992 to say that SBI’s top brass had discovered that Harshad Mehta had siphoned a whopping Rs5,000 crore.”  This expose got her the Padma Shri as well. She also reported on Rajan Pillai’s brush with the law in Singapore when the rest of the media was singing his praises. Then came the collapse of the CRB empire and the Bansali’s reach with the Times group chairman. Enron followed thereafter. She goes on to write—“Corporate India, the government, the regulator and even stock exchanges have blatantly used their financial muscle to suppress independent voices. ‘Placing articles’ and columns by CEOs and intermediaries in newspapers (who could not possibly be independent) was a norm.”  Writing post Anna Hazare, she wonders “whether the switch from investigative to campaigning journalism will be for the better or worse!”   I for one strongly feel that they supplement each other and no way substitute the other.

Vinita in her Right to Information - A formidable Tool has demystified RTI (Right to Information), this latest weapon that arms the aam janata to tackle corruption, even without Lok Pal, neither Sarkari nor Jan Lok Pal! She writes of her experiences in Maharashtra beginning with environmental degradation of Mahabaleshwar, Dow Chemicals abortive attempt to set shop at Chakan, trees felling, toll charges on the Pune-Mumbai Expressway, most memorable at helping out a beleaguered prisoner in Yervada Jail. She also assisted a slain IPS official’s widow in unraveling 26/11 shoot-out and the President’s attempt at the Pune land grab that had to be aborted.

 Much as I would have liked to write about others but space constraint prevents me from doing so. My profound apologies to the writers.

(Nagesh Kini is a Mumbai based chartered accountant turned activist.)


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