The writer talks about the latest government measure to relax cabotage and its dire implications on the shipping industry which could be non-existent within a decade
A few weeks ago, the Government of India, in its wisdom and consideration, released a press note on relaxation of cabotage, around the same time that the Indian prime minister visited Kerala and made other announcements which took precedence in the national media. The relaxation is currently applicable only for the new and not fully functional International Container Transhipment Terminal (ICTT) at Vallarpadam, Cochin.
Here is the link to the official announcement: http://pib.nic.in/newsite/erelease.aspx?relid=87542
It is interesting to note that, as of now, there is still no formal notification on this subject from the offices of the Directorate General of Shipping, the ministry, or any other agencies and authorities involved, including Indian Customs and Central Excise. It is unknown how ship-owners, operators and their agents are going to actually implement it.
Moneylife has, in the past, written on this subject, which can be accessed through these links:
What is the current view on cabotage in India? Is it as simple as domestic-versus-foreign, left-versus-right, or is it much deeper?
Within some segments of what could be called unbiased, right thinking, senior government sources, there is now something like a sense of dismal fatigue at this spate of announcements, one after another, which reflects a steady erosion in the steps taken and battles fought for our economic freedom and strengths. The refrain this writer got from more than one person was that national interest as well as basic common sense was not, in the least, a consideration taken into account when this announcement was made. In one specific case of a very senior person in the government shipping authorities, there was disgust that the shipping industry in India had been slaughtered to such an extent that there was no fight left in anybody who tried to revive it.
Within those who stand to benefit the most are the port operators and carpet-baggers; there’s an obvious feeling of glee and victory amongst these entities. It is a question of time, according to them, before relaxation of cabotage is extended to the other ports too. However, the deeper issue here is that some of them are not sure how their terminals and ports will perform even after cabotage is relaxed. In this case, a pertinent question arises—how would they then explain matters to their masters?
The state government concerned in this specific case, Kerala, has long been using the issue of cabotage as a whipping boy and touted for its removal of which was supposed to be the cure for all ills. There is apparently more than surprise on its eventual relaxation, tempered, however, by the reality that this opens doors for more business if it does succeed. The current level of co-ordination between the state government and central bodies like the customs, for example, is still an open issue. It does not help that the luxury cruise industry has quietly withdrawn from Kochi Port, citing difficulties in handling the multiple authorities, which will continue to be the case with cargo shipping also.
The list goes on.
For Indian seafarers, fewer jobs on Indian flagships means the line of jobless seafarers grows to unprecedented levels. Coupled with fewer people joining this profession, it is not difficult to foresee how, in a decade or so, there will be shortage of young, competent and qualified Indian seafarers. This is because there will be hardly any domestic shipping industry to induct seafarers in the first case. Likewise, the revival of the Indian ship-building industry has gone for a toss as low-grade and sub-standard tonnage of all sorts flows within a lax regime that has always gone easy on flag of convenience (FOC) rust-buckets, for obvious reasons.
There is also the issue of multiple laws, rules, regulations which prevail on the still unsolved issue of coastal shipping. Whether foreign flag or Indian, each one of them will want their pound of flesh and it is interesting to note that the official document, on how the relaxation of cabotage is implemented, is yet to surface. There are bound to be legal issues but the larger side-effect will be those who were looking at getting into coastal shipping, or are already there, will think twice.
What is this writer's view?
Put it this way, relaxing cabotage is like leaving the larder open for the rats to come in so the door had to be locked. Cabotage is implemented very seriously and strictly in countries like the US, Canada and EU. However, there is nothing left in the larder and hence no option but to leave the door wide open, and hope that something magical will happen, to fill it up again. But there is nobody left to ensure that somebody else does not take charge of the larder itself. If the office of the Directorate General (DG) of Shipping, which is supposed to be the nodal authority for taking Indian shipping forward, does not have an independent view of cabotage then what can anybody say? Might as well rename it to “DG FOC” and get along with life.
Relaxation of cabotage in this day and age is yet another reminder that those who do not learn from history are forced to repeat it. Do read up on how the Knights Templar and Freemasons, Clive, Hastings and Yale, for example, fought their way down Khambat, Konkan, Malabar, then up the Coromandel, Hooghly and then along the Ganges, controlling all avenues of water-borne trade. They destroyed those who resisted, with total local support. Oh yes, they were given titles, gun salutes, inducted into secret societies, and whatnot. India went back by centuries.
Indian shipping has been shot in the guts by those who swore to uphold it but chose to sell out instead.
(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.)
Unless the people do not come together to oppose corrupt practices across government, public and private sector organisations, the present situation will get perpetuated. This is not an ill that can be cured by another institution like Lokpal or by debates in parliament
“….will transform India’s 1.2 billion people into 1.2 billion opportunities”—Sam Pitroda, 25th September
The current decade is an opportunity for India to come to terms with her real problems and bring about a change in direction, not allowing back-seat driving by external influences, making a path motorable for coming generations and showing the world that the country’s inherent strengths and vision are intact. To make this possible, the fourth pillar of democracy, the people, should play their role effectively. The greed of the rich and the powerful is preventing this from happening.
The culprit is corruption. Let us find out whether this issue can be handled, if ‘people’ come together.
“The most common refrain is that Team Anna is a single issue movement which lacks the capability to manage the complexities of Indian politics. Such advice is indicative of the extent to which the intelligentsia is cut off from the public, groaning under the heavy burden of institutionalized corruption. Since unchecked graft in government cuts across every sector and segment of Indian society, by definition it is a multi-sector issue. The rotting grain mountains of the Food Corporation of India are the fallout of widespread theft and defalcations within the organisation, which has prevented construction of adequate storage facilities; the country’s ubiquitous urban and rural slums are the outcome of pernicious corruption in the real estate sector; mass illiteracy and unemployability of millions of youth is the result of chronic corruption in education, and poor health and nutrition of the general populace is also the natural consequence of rampant corruption in the public healthcare system.”
This is an excerpt from an editorial in September 2012 issue of Education World, the human development magazine. Quoted here to share my comfort that awareness about the cancerous corruption is growing and if the message gets conveyed in an effective manner in the education world in India, still there is hope of salvaging what is left of India, that is Bharat.
Our country’s faith in resurrection from all catastrophes is well-founded in the following stanza from Bhagavadgita:
yadaa-yadaa hi dharmasya
glaanir bhavati bhaarata
tadaa’tmaanam srijamyaham (Bhagavadgita, IV.7)
(Whenever there is a decline of righteousness and rise of unrighteousness, O Bharata (Arjuna), then I send forth (create incarnate) Myself.)
We have seen tens of thousands of such incarnations at Jantar-Mantar around Anna Hazare sometime back and seen and experienced the support of millions of others through the media during those days. By selective targeting, the rich and the powerful have delayed the fight against corruption which will erupt in one form or other and engulf the corrupt wherever they hide, sooner than later.
Let us consider a shortcut to bring the corrupt from their hideouts. There could be other methods which may work faster and better. But to initiate the debate let me introduce the idea of a domestic ‘Corruption Index’.
The intellectual leadership of India should take up a project to assess the extent of corruption in India. This could be done by scientifically evolving appropriate methodologies for having a ‘Corruption Index’.
There have been efforts to measure corruption with reference to various practices in different nations and rank countries according to their status in comparison with others in the group. But, one, it is no use knowing our position with reference to others and two, as we observed, corruption has more dimensions than illegal practices or bribes. As our government encourages ‘self-regulation’ these days in different areas, why not attempt a regulatory mechanism outside the statute book for assessing and quantifying corruption?
It is here the idea of a “Corruption Index” gets significance.
Imagine, one “Corruption Indexing Organization” (CIO) gives you a rating of the person, department, organization (including a political party)/institution on a scale of, say, hundred, how deeply sunk they are in corruption, based on parameters explained to you? There can be several such CIOs specializing in different walks of life. Of course, the functioning will be fee-based and independent of government except for overall regulation, may be through a registration arrangement.
Let us consider a couple of areas where this can be tried on a pilot basis.
• Candidates contesting election
Candidates themselves may furnish relevant information to the CIO and get their index commuted. The parameters could be, accumulation of wealth during the previous five years and source thereof, attendance in legislative houses where the candidate was a member during that period, participation in developmental efforts in the constituency and pending cases/charges of corruption if any(list is indicative). Once stabilized, index could be worked out annually.
• Government departments
Initially, the exercise could be confined to departments vulnerable to corruption. E.g. Excise, Motor Vehicles (Registration, etc) The parameters could be, number of complaints during the previous five years, pending charge-sheets/cases involving staff members, punctuality in disposal of cases and assessment based on internal reporting(again, the list is indicative). Periodicity for revising index could be annual.
It may also be necessary to develop skill through introducing corruption as a subject in Management Institutes and other professional schools so that CIOs are able to recruit experts for the purpose of functioning with professionalism.
Two years back, a national newspaper had, side by side, printed views for and views against corruption. One view was that corruption is the oil that lubricates the wheels of progress. Many seem to agree with this view. Very recently, I read in a magazine an observation attributed to Kaushik Basu, which said: “The rationale for corruption is economic; the best way to handle it is to legalize it”. Perhaps, this advice from the one-time economic advisor to the prime minister has been taken literally seriously by powers that be. Sometime back, the Supreme Court, while hearing a corruption-related case, though sarcastically, had suggested legalizing corruption and fixing specific amounts for every case. Perhaps, our private sector has implemented this suggestion long back. Service charges levied by the banks are one example that comes to mind. Now there are banks which charge separately for opening of accounts, issue of cheque books, certifying that an account holder is maintaining an account with the bank, for not maintaining minimum balances in deposit accounts and so on. The government is following suit and introducing levies/charges for every transaction in government offices.
It was Zail Singh (when he was president) who said that if an individual’s assets multiplies manifold in a short span of time, keep an eye to see how the growth happens. Obviously, he had corrupt means used by people to become rich and it was inconvenient for the rich and the powerful to take notice of the observation. If Zail Singh had been taken seriously, even the doubling of value of assets reported by Dr Manmohan Singh this year would have attracted scrutiny!
Last week, in one of my online comments, I had referred to the four pillars of democracy. A friend asked me whether I had the fourth estate (media) in mind, while including a fourth pillar in addition to legislature, executive and the judiciary. I answered that I had “WE THE PEOPLE” mentioned in the preamble of the constitution in mind when I commented (frankly, the idea of accepting ‘twitter’ as the fourth pillar of democracy was yet to get currency!). Let us go back to the preamble of the Constitution, which reads:
“WE THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a sovereign socialist secular democratic republic and to secure to all its citizens:
JUSTICE, social, economic and political;
LIBERTY of thought, expression, belief, faith and worship;
EQUALITY of status and of opportunity;
And to promote among them all
FRATERNITY assuring the dignity of the individual and the unity and integrity of the nation;
IN OUR CONSTITUENT ASSEMBLEY this twenty-sixth day of November, 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION”.
The Constitution is given to the people of India and it is the solemn responsibility of every Indian to protect it. Of course, the agent of the people carrying out this task is the government. This has been made abundantly clear in the Constitution through a bunch of directive principles of state policy forming part of the Constitution and explicitly stated to be not enforceable by any court, but with a clear direction to government to apply them in making laws.
I am convinced that unless the people, who do not directly participate in the affairs of legislatures, executive and the judiciary, those in the media and those who are part of these three wings, but are silent spectators to the goings on, due to various compulsions, do not come together to oppose corrupt practices across government and public and private sector organisations, the present situation will get perpetuated. This is not an ill that can be cured by another institution like Lokpal or by debates in parliament.
(MG Warrier is a freelancer based in Mumbai. He can be contacted at email@example.com.)
One needs to be alert for the slightest sign of a break of support
S&P Nifty close: 5,703.30
Short Term: Up Medium Term: Up Long Term: Down
After a flat opening the Nifty drifted lower to breach the weekly support of 5,648 points, intraday, only to recover and close above it on the settlement day. The new settlement opened with an upside gap and the Nifty finally closed a meagre 12 points (+0.21%) in the green. Volumes were, however, significantly higher as the Nifty formed a “high wave line” (though not classical as the candle should preferably have been longer), implying that there is equilibrium at current levels between the bulls and bears. The histogram MACD, which is above the median level, moved higher indicating that the bulls remain in control even though the short-term oscillators have ventured into overbought territory.
The sectoral indices which outperformed were CNX Media (+6.47%), CNX FMCG (+4.13%), CNX Realty (+3.94%), CNX Consumption (+2.82%), CNX Pharma (+2.12%) and CNX Auto (+1.19%) while the underperformers were CNX Metal (-1.75%), CNX Energy (-1.57%), CNX PSE (-1.20%) and CNX IT (-1.03%).
Here are some key levels to watch out for this week
■ As long as the S&P Nifty stays above 5,692 points (pivot) the bulls will be in control.
■ Support levels in declines are pegged at 5,649 and 5,595 points.
■ Resistance levels on the upside are pegged at 5,746 and 5,788 points.
1. The Nifty came very close to hitting the 61.8% retracement level of the decline from 6,338-4,770 points pegged at 5,740.
2. The Nifty is now moving within a sharp up sloping channel (in blue), support from which is pegged around 5,410 points and resistance is pegged around 5,795 points, this week.
3. We have closed above the previous weekly top of 5,629 points (24 February 2012) which is a sign of strength as long as it stays above it.
4. The weekly chart above also shows a channel (in brown) the resistance line of which should be closely watched in the weeks ahead.
5. We have completed 89 weeks (Fibonacci number) from the top of 6,338 points (05 November 2010) hence one has to keep a close watch whether the market starts correcting from this level.
6. The volumes were significantly higher as compared to the previous week which was also the case a week prior to the previous significant top of 5,629 points (24 February 2012). Hence one needs to be alert for the slightest sign of a break of support.
The bulls have managed to hold on despite the dullness for the better part of the week. There is a small body on very high volumes which is a warning that the volatility is likely to increase in the coming weeks. One has to keep a tight stop loss on longs because we have completed 89 weeks from the top of 6,338 points and the previous top of 5,629 points was also made on significantly higher volumes. The simplest stop loss that one can keep is the last week’s low of 5,638 points. Tighten your seat-belts as the volatility is likely to increase in the weeks ahead.
(Vidur Pendharkar works as a consultant technical analyst & chief strategist at www.trend4casting.com.)