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WHAT IS WRONG WITH US?
Sunday, 22 February 2009
The middle class in emerging markets
Mood:  flirty
Now Playing: The rise of a new middle class has changed the world. What if they sink back into poverty?
Topic: Two billion more bourgeoi

I am forced to reproduce this piece from the London Economist because, according to one friend, this is perhaps the most-read and most-circulated article in the journalist circles these days. That may not be credible but the writing, as London Economist is wont to, is incredibly insightful. Mark every word of it, it's gospel truth.

 _____________________________________________________________

PEOPLE love to mock the middle class. Its narrow-mindedness, complacency and conformism are the mother lode of material for sitcom writers and novelists. But Marx thought “the bourgeoisie…has played a most revolutionary part” in history. And although The Economist rarely sees eye to eye with the father of communism, on this Marx was right.

During the past 15 years a new middle class has sprung up in emerging markets, producing a silent revolution in human affairs—a revolution of wealth-creation and new aspirations. The change has been silent because its beneficiaries have gone about transforming countries unobtrusively while enjoying the fruits of success. But that success has been a product of growth. As growth collapses, the way the new middle class reacts to the thwarting of its expectations could change history in a direction that is still impossible to foresee.

The new middle consists of people with about a third of their income left for discretionary spending after providing basic food and shelter. They are neither rich, inheriting enough to escape the struggle for existence, nor poor, living from hand to mouth, or season to season. One of their most important characteristics is variety: middle-class people vary hugely by background, profession and income. As our special report in this week’s issue argues, their numbers do not grow gently, shadowing economic growth and rising 2%, or 5%, or 10% a year. At some point, they surge. That happened in China about ten years ago. It is happening in India now. In emerging markets as a whole, it has propelled the middle class from a third of the developing world’s population in 1990 to over half today. The developing world is no longer simply poor.

As people emerge into the middle class, they do not merely create a new market. They think and behave differently. They are more open-minded, more concerned about their children’s future, more influenced by abstract values than traditional mores. In the words of David Riesman, an American sociologist, their minds work like radar, taking in signals from near and far, not like a gyroscope, pivoting on a point. Ideologically they lean towards free markets and democracy, which tend to be better than other systems at balancing out varied and conflicting interests. A poll we commissioned for our special report on the middle class in the developing world finds that such people are happier, more optimistic and more supportive of democracy than are the poor.

These attitudes transform countries and economies. The middle class is more likely to invest in new products and new technologies than the rich, who tend to defend their existing assets. It is better able than the poor to leap barriers to entry into business and can therefore set up companies big enough to generate jobs. With its aspirations and capacity for delayed gratification, the middle class is more likely to invest in education and other sources of human capital, which are vital to prosperity. For years, policymakers have tied economic success to the rich (“trickle-down economics”) and to the poor (“inclusive growth”). But it is the middle class that is the real motor of economic growth.

Now the middle class everywhere is under a great threat. Its members have flourished in places and countries that have opened up to the world economy—the eastern seaboard of China, southern India, metropolitan Brazil. They are products of globalisation, and as globalisation goes into reverse they may well be hit harder than the rich or poor. They work in export industries, so their jobs are unsafe. They have started to borrow, so are hurt by the credit crunch. They have houses and shares, so their wealth is diminished by falling asset prices.


What will they do when the music stops?

Those at the bottom of the ladder do not have far to fall. But what happens if you have clambered up a few rungs, joined the new middle class and now face the prospect of slipping back into poverty? History suggests middle-class people can behave in radically different ways. The rising middle class of 19th-century Britain agitated peacefully for the vote; in Latin America in the 1990s the same sorts of people backed democracy. Yet the middle class also supported fascist governments in Europe in the 1930s and initially backed military juntas in Latin America in the 1980s.

Nobody can be sure what direction today’s new bourgeoisie of some 2.5 billion people will take if its aspirations are dashed. If the downturn lasts only a year or two the attitudes of such people may survive the pain of retrenchment. But a prolonged crash might well undo much of the progress the developing world has lately made towards democracy and political stability. It is hard to imagine the stakes being higher.

********


Posted by Anil Nair at 10:37 AM
Friday, 20 February 2009
Are secularists secular?
Mood:  d'oh
Now Playing: The other side of Indian hypocrisy
Topic: And is a spade a shovel?

This article from DNA has been forwarded to me by many friends who think equally strongly about the shrinking civil society. But Jaggi always writes with aplomb and candour, rarely seen in today's journalists. Enjoy!

 

____________________________________________

 

By R Jagannathan

 

Every thinking person knows that the secular-liberal space is shrinking. It is shrinking not only in India, but in the whole subcontinent, and possibly all over the world. Secular liberalism will take root only when like-minded people from all communities condemn the same things and talk the same language.Even in the stoutly secular European Union, growing Islamophobia has sharpened religious antagonisms within. This is evidence of the hidden threat to liberalism.

 

The various anti-terror laws enacted in Europe, the violent responses to the Danish cartoons, the French opposition to the hijab, the German angst about Turkish immigrants' refusal to integrate, and the subtle Europe-wide opposition to Islamic Turkey's entry into the EU are signs that a religious divide is opening up on the continent.

 

It's only a matter of time before liberalism and secularism shrivel under these pressures.

In and around India, various extremisms are taking root. The Taliban have arrived a few miles from our borders in Pakistan's Swat Valley. The Naxals are running riot in a huge north-south corridor from the Nepal border to Maharashtra and AP. The various Hindu senas are raising their ugly heads from Orissa to Karnataka. Muslim zealots are taking to the streets at the slightest provocation, real or imagined.

 

Where are the secular-liberals in all this? They are ineffective because they are confused and divided. Secular liberalism will take root only when like-minded people from all communities condemn the same things and talk the same language.

 

As things stand now, liberals defend only half the turf, while maintaining a deadly silence about the other half. In India, they tend to be vociferous in condemning Hindu communalism but look the other way when minority communalism rears its head.

 

We don't have to look too far for such examples. When the Sri Rama Sene decided to defend its version of 'Hindu culture', the entire liberal establishment pounced on it. A pink chaddi campaign was launched.

 

Around the time when we liberals were teaching the Sene's cohorts a lesson, an editor in Kolkata was fending off a Muslim mob that took offence over an article written by an atheist religion-baiter.

 

Thanks to our one-sided secularism, this editor had almost no liberal defenders. He was arrested for disturbing communal harmony before being let off on bail. No secularist thought it fit to send coloured undergarments to that riotous mob outside his office. Is this even-handed secularism?

 

If the same crime by different communities merits different responses, our secularism is fake. If liberals gather only to attack majority communalism, they are effectively encouraging minority communalism through silent eloquence. They take refuge under the weak argument that majority communalism is more dangerous than its minority counterpart.

 

Is it? I don't think so. First, the number of communalists among Hindus is very tiny. What we are fighting is a minority in the so-called majority.

 

Second, every time we raise our voices against Hindu communalism but mute the criticism for minority communalism, Hindu communalists recruit more to their cause. The Sangh Parivar has grown many radical new arms not because the RSS is so powerful but because it is perceived as weak by more and more Hindu youths.

 

Third, the idea of a Hindu majority is a partial myth. If you take the 25-30% of SC/ST population out of the head count, Hindus are not a clear majority even in India. This is particularly true in the context of efforts to give Dalits a different religious identity under Ambedkarite Buddhism.

 

We also need to look at Hindu numbers from a subcontinental perspective, given our porous borders with Bangladesh and Pakistan. Large parts of eastern India have already been inundated by Bangladeshis. But liberals don't want to take note.

 

If you take South Asia's demographics as a whole, upper caste and OBC Hindus -- who form the real Hindu core -- are merely the largest single minority. So when we talk of majority communalism, we are quite wrong. There is no such thing.

 

To expand the secular-liberal space in India we have to battle all kinds of communalism. This means liberals from all communities must band together. I find no sense in banners such as Muslims for Secular Democracy. If Muslims are secular, are they really espousing a different type of secularism compared to non-Muslims?

 

Liberals cannot have dual yardsticks on this. The world is one village, and the concept of majority and minority is a self-limiting one.

 

If secularism is worth fighting for, it is worth fighting for in all communities. If it is good for India, it is good for Pakistan, Bangladesh, Saudi Arabia, and China. India cannot be the only liberal-secular island in a sea of communal or autocratic states.

 

Even as Hindu liberals fight for secularism in India, liberal Muslims must take this idea to all Muslim fora everywhere in the world. It is difficult to rubbish the idea of a Hindu Rashtra when Muslim liberals choose to keep quiet on non-secular societies in our neighbourhood.

 

*********


Posted by Anil Nair at 2:08 AM
Updated: Sunday, 22 February 2009 10:38 AM
Sunday, 1 February 2009
Political parties will lose elections if they don't support Ram Sevaks
Mood:  cheeky
Now Playing: Majority in India approve of hooliganism
Topic: POLITICS OF DANCING
Have you ever realised why BJP will never tire of supporting Ram Sevak Sena who will thrash girls in Mangalore pubs, why Mayawati will support an MLA who has killed an engineer for not contributing enough towards her birthday bash, why Dr Manmohan Singh will repeatedly take a convicted murderer like Shibu Soren as his cabinet minister, why the ruling Congress government in Maharashtra will always support Raj Thackeray and his Bihari-bashing hooligans, why the CPI/ CPM will always support a terrorist like Mahdhani, why the Left will always justify Naxalism (though it is a bigger threat to this country than Islamic terrorism), why the People's Democratic Party and the National Conference will always support the separatist cause, and the very many other political parties supporting their pet issues.

We may all throw a fit watching television news every evening, well, almost all of us. Because many of us who are English educated, modern and given to following a western way of life will still be not against all the abominable actions of political parties. We have our own pet peeves.

On the other hand, English news channels in India may go hammer and tongs against these developments calling it uncivilized and talibanisation but even they make their choices according to their political proclivities. More so, because their constituency is the middle-class, which is the most fickle-minded and hypocritical.

The problem is that civil society in India is almost a non-existent society and democracy is all about majority opinion. When 3-lakh people gathered at the Gateway of India in Mumbai after 26/11 to show their anger against the political class one couldn't fail to notice that the crowd was mostly made up of young boys and girls from colleges around south Mumbai. There was no representation from the suburbs. Most of the youngsters though could speak Hindi with an irrepressible anglicised accent they could not help stop drawing examples of the fight against terror in the US. Many of those young boys and girls might have gone abroad and seen the world. But when Bollywood actors come on prime time news to explain that the days of indifference towards the victims of political violence as seen in Mangalore pubs are over you can't help smile at their naivety and grandstanding.

Howsoever we complain against uncivilised behavior we have to realise that the dice is loaded against the civil society in India. As pointed out in this blogsite earlier, media also would take sides not on merits but on political considerations. The words to describe events and people involved in all these incidents would be carefully chosen.

The best example of Indian civil society’s existential problem is seen in the support for Sanjay Dutt. Eight out of ten (actual survey done in a media house in Mumbai) among us support Sanjay Dutt who has been convicted in the first terror attack on Mumbai. We are same people who would hold candles at Gateway of India in a show of solidarity and our resolve against terrorists. Sanjay Dutt was one of the prime accused in the first terror attack on Mumbai, he was held for storing bombs and ammunition in his house used in the blasts, he was part of the conspiracy and was in the know of the terror plot for over one month since the ammunition was stored in his house, he also desperately tried to get rid of the evidence when the heat was turned on him and he has still kept in touch with the terrorists (Dawood and his minions) after the investigations started. Why all this breast-beating over some Ram Sevaks beating up a few girls in a pub, when we all in the civil society support and sympathise with a hard-core terrorist like Sanjay Dutt.

In a brazen display of hooliganism a few years ago dalits in Mumbai burnt down seven bogies of Deccan Queen after asking petrified passengers to alight midway between stations. Thankfully they didn't repeat Godhra. After that the dalit mobs went berserk the whole day in the almost-Singapore-financial-capital of India. They went into middle-class housing colonies, beat up people, vandalized and rolled out their TV sets and refrigerators while police roamed the streets looking the other way. The police did their best to prevent the middle-class population retaliate when the dalit mobs struck their colonies. The ruling Congress state government had given standing instructions to the police not to take action against dalits. But most of the next day's newspapers put the banner headline (with blown up pictures of the burning train): 'Dalit fury spills on the street'. It was as if dalits were justified in terrorising the city. The ostensible provocation for dalits to run riot in Mumbai was the desecration of Dr Babasaheb Ambedkar's statue in Lucknow. Why did the newspapers not have the headline, 'Hindu fury spills on the street' during Godhra riots? Why is high-caste Hindu anger not considered as legitimate as low caste Hindu or dalit anger. The post-Godhra riots were always about genocide, fascism and Nazi leaders in BJP. Though what dalits did in Mumbai is equivalent to what Hindus did to Muslims in Gujarat.

Television news channels during the dalit riots in Mumbai instead of condemning the act tried to corner dalit politicians in Delhi over their inability to control their followers! Poor dalit politicians were lost for words as they were themselves learning about the events watching TV. Again, it was as if the dalits were being misled into hooliganism by politicians.

The truth is that it is the people who force their leaders to do their bidding. In all the cases related above if the political parties took a decision in favour of the civil society they would have lost the next election.

The basic fact is that India still is a Third World country and the disparity in wealth, education, access to basic necessities of life as well as political maturity all contribute to the loaded dice. The defining majority in India belong to the immature, unsophisticated class who think reservation policy, for instance, cannot have any effect on quality of products and services. Rather, they don't even think it is worth their while to discuss issues like quality.

The most damaging and disappointing aspect of today's politics is the way the prime minister has given up on his principles for the sake of political expediency. Shibu Soren has been convicted for murder, that too for killing a Muslim during a Hindu-Muslim riot. He is today out of the Union cabinet not because the prime minister wanted him out but because Soren lost the election. The image of the squeaky clean prime minister is shattered by Shibu Soren's continued existence in the Union cabinet for best part of this government's life. And the second event that really did Dr Manmohan Singh in was the cash-for-votes scandal in the Parliament. The PM did not even institute a nominal inquiry into corruption charges at the highest levels.

But not many are feeling outraged by the goings on. The corruption charges of Rs64-crore against Rajiv Gandhi had almost brought the country to a standstill in the 1980s. People felt betrayed and the election of VP Singh to prime ministership revealed how every community, be it majority or minority, was outraged. It was not just the civil society that picked up the cudgels. All that came to a pass when prime minister Narasimha Rao maintained a studied silence when Harshad Mehta (please give a google search if you don't know who is Harshad Mehta because there is so much to know about him that it could fill a blogsite) accused the PM in an open press conference of taking Rs1-crore bribe (piddly sum by today's standards) from him. Narasimha Rao, clever as he was, clearly knew that his constituency has completely changed. When economic liberalisation took place in mid-80s the civil society simply shrunk. After liberalisation successful crime has become a virtue. Even today every scamster, Harshad Mehta to Ramalinga Raju, has ardent admirers amongst the white collar, highly educated class.

And it is not just about crime, even children are brought up in an environment today where misbehaviour is not considered as a bad attribute. In the 70s parents would spank their children if they behaved badly with their friends. Today such behaviour is considered hip and progressive. And competition has ostensibly made parents to even support their children suffering from AIDS on realty shows with counter-questions like: "you think your kid is not having sex with his girl-friend?"

Now don't get this argument wrong. This is not about right and wrong. It is not about pre-liberalisation being good and post-liberalisation being bad. It is only about tectonic changes that have taken place post-liberalisation. The best example of this change in attitude is seen in the usage of the word 'gay'. In the 1980s any Indian school student would tell you that gay means happy and nothing else. Today a school student will tell you gay means homosexuality and nothing else. Ask any newspaper sub-editor today, he will tell you he does know what else can gay mean.

To sum up, the middle-class in India is witnessing a strange but inexplicable trend in behavioural pattern. In the 1970s and 80s children were told by their parents that good behaviour was the hallmark of their family upbringing and distinctiveness. Any middle-class family would emphasise on its distinct value systems. But in the last two decades there has been a marked change in upbringing. Today's parents practice as well as preach expediency. Dishonest means adopted to score better grades in exams are considered wrongful by parents only if their children are caught. Successful crime is a virtue like never before. That change in attitude and middle-class values has made bad behaviour fashionable. Today a well-to-do corporate executive would behave like a street-corner imbecile, complete with four-letter local language expletives, only to impress his colleagues of his street-smartness. It is in this context that the Mangalore pub incident should be taken. The majority in this country who are uneducated as well as most of us educated in English language, only pretend to belong to the civil society. As most seen on the streets of Mumbai, show of arrogance is macho while polite behaviour is feminine.

Look at the Raj Thackeray's campaign against Biharis. The basic premise of freedom for Biharis to take railway exams anywhere in the country just as any other community or linguistic group as long as they are citizens of this country is being denied. When dalits are asking for equal rights which is considered a perfectly legitimate thing to do why is Biharis' right as a citizen of this country being denied? And there is groundswell of support for Raj Thackeray. People openly make racist comments on Biharis in Mumbai local trains.

Also, if Raj Thackeray is forcing shop owners to change English signboards to Marathi the logic of market forces is defeated in the financial capital of India. A businessman or an entrepreneur knows best when it comes to the language he must use to attract his customers or clients. No businessman would desist from using local language if that would enhance his business prospects. Branding is such an important issue to be competitive today in the global market. By forcing change in language free-market philosophy has been given a convenient go by. Neither Raj Thackeray nor his supporters understand the requirements of today's business though every politician worth his salt would vow to convert Mumbai into a financial hub of the world. But it is striking neither Dr Manmohan Singh nor leader of Opposition LK Advani who are seen as 21st Century leaders have taken Raj Thackeray head on.

Making Mumbai into a financial hub obviously would entail attracting international financial giants, banks and investment companies to set up base in Mumbai. And the obvious comparison for global financial hub is with London or Singapore. But in case of London as well as Singapore international financial companies don't get bogged down in language politics. They are given absolute freedom to build their business. Else, they will go to some other place which is more conducive to their business growth. And these days there are increasing number of cities in Europe and South East Asia trying to woo international financial giants. Look at the number of little known cities in Europe advertising on CNBC TV18 to attract foreign investors.

Where does that leave Mumbai in the race for global financial hub with its constant assault on civil liberties. People should force Raj Thackeray to change his agenda from language politics to providing the city with modern drainage system, transport system, cleaner environment, and efficient utilities and security systems to even qualify for financial hub of the world status. But for that you need Mumbaikars to be as mature and sophisticated as Londoners and Singaporeans.

If movie-stars and news anchors think beating up girls in pubs and parlours actually make the man on the street livid, they are terribly mistaken. There is a huge undercurrent against the pub culture and show of ostentation in the malls. Indians might have left the Hindu way of life far behind but they have miles to go before they can adopt the modern, western way of thinking of freedom, maturity and sophistication. And politicians only do what we the majority voters want them to do. You can bet your life on the fact that politicians, be they from BJP or Congress or the Left, know which side of the bread is buttered.

**************

Posted by Anil Nair at 12:00 PM
Updated: Saturday, 7 February 2009 10:34 PM
Tuesday, 27 January 2009
Slumdog Millionaire
Mood:  flirty
Now Playing: Learning lessons from a foreign movie on India
Topic: Movie Review
There are two starkly differing opinions on Slumdog Millionaire, the recently released pot-boiler on Mumbai slums, that is all set to become the first Academy Award winner with Bollywood actors. When you watch the movie on the first day of release at a multiplex in Mumbai back-to-back with Clint Eastwood's Changeling, you come out of the theatre feeling inured by all the debate surrounding Slumdog Millionaire. Changeling is by far the best movie to come out of Hollywood in the year past, and the best ever of Clint Eastwood. The period thriller is a true story of corruption, incompetence and high-handedness of Los Angeles police department in the 1920s. People in the Third World, rich and poor, would certainly identify with this movie, much more than Slumdog Millionaire. Angelina Jolie, as a victim of police subversion, lethargy and insouciance, plays her role with a conviction that is seldom seen in stars. Period movies have been Angelina Jolie's best performance platform. Last time when she played her role as an adulterer in the Original Sin the world sat up to take notice.

But full marks should go to Clint Eastwood's direction in Changeling. The narration of the story is simple and straight almost as if reading a book, shorn of much gimmicks that Hollywood is known for. His attempt at making audiences realise a mother's angst, misery and pain after having been given a different child by the police in place of her son who has been kidnapped, comes as a clean winner.

When it comes to
Slumdog Millionaire the debate is consumed by the right and wrong of it rather than the film's excellence. To begin with, the direction and the story narration is as melodramatic as the breast-beating in Tamil movies of the 80s. Vikas Swarup's novel adaptation could have been in all sense better put, as R.K. Narayan once said of his novel Guide which created history when its story was adapted in Dev Anand's all-time greatest hit. Needless to say, Allah Rakha Rahman's music is as bad as it gets. The music sounded as if he had to complete composing the score in one night. If Golden Globe judges had heard Rahman's earlier works in movies like Indira, Kadhalan and many others they would have realised their mistake. The movie was done in a hurry, admit many of the technical team members of Slumdog Millionaire, and A.R. Rahman is known to deliver his tracks in his own sweet time. This time the pressure of churning out a quickie for a white production team took an obvious toll on the music director's delivery.

The story of Slumdog Millionaire, on the other hand, encapsulates almost all the dirt and squalor that one could conjure up in the slums of Mumbai. Eyes being gouged out of young children who are introduced into beggary, children dipping into sewage tank (very similar to the scene in Steven Spielberg's black & white classic Schindler's List) and garrulous prostitutes in dingy rooms lining both sides of narrow lanes all make up for picture postcards of Mumbai slums. But portrayal of sex workers in Mumbai could have not been better than in Madhur Bandarkar's Page 3. The fact remains the story, the direction as well as the portrayal of various characters in Slumdog Millionaire get extremely predictable or in Bollywood parlance, 'filmy'. The movie only did not have the Hollywood hero's trademark let's-get-the-hell-out-of-here retort to impress the western audience.

If the movie was couched in realistic terms so much so that Anil Kapoor as Amitabh Bachchan in Kaun Banega Crorepati sounded like the original star of the show, then Danny Boyle does not have any credible answer as to why Anil Kapoor was mocking at the contestant (a 'lowly chaiwala') almost to the point of indignation. Amitabh has every reason to be offended at his portrayal. Nor is the editing of the movie anything great to write home about. The whole build-up of hype around the movie reminds one of the new found appreciation of Miss World and Miss Universe organisers towards Indian beauty after our economy was liberalised to allow international cosmetic giants to sell their wares in India.

But Irfan Khan, whose role as a typical Mumbai police officer in the movie, has a point of view. According to Khan, the poverty shown in the movie is not unknown or fake that we should be so outraged. The real picture of poverty is so overwhelming in most parts of the city including the plush areas of south Mumbai. And as Mahesh Bhatt said, if we Indians are outraged by the abject poverty, the dirt and the squalor, we should be working towards eradicating poverty than protesting against the portrayal of that poverty in movies. But the question is not of portrayal of poverty, but having an agenda to ridicule and show a country in bad light. It is that agenda which the Slumdog Millionaire production team is accused of. Well, if a book like The World is Flat written by an American journalist can sing paeans to the Indian genius and put India amongst the technologically advanced nations then we should take films like Slumdog Millionaire made by an Irish as the flip side of it.

*********

Posted by Anil Nair at 5:36 PM
Updated: Wednesday, 28 January 2009 11:36 AM
Wednesday, 14 January 2009
Satyam & lies
Mood:  don't ask
Now Playing: For corporates successful crime is a virtue
Topic: INDIAN HYPOCRISY

An Indian SME owner maintains two books of accounts -- one which is full of under-invoicing and depressed figures meant for his wife and the IT department, and the other which is full of inflated figures meant for his mistress. Ravi Mohan, MD & Head of South Asia, Standard & Poor's tells this joke quite often whenever he addresses seminars on corporate governance. Satyam would now qualify to be a SME unit after its market capitalisation eroded post-Ramalinga Raju's confessional scandal. What makes Satyam scandal so different from the earlier financial scams is that it is not just about the promoters. There seems to be incontrovertible evidence of foul play by auditors both within the company as well as independent firms which are amongst the world's most renowned ones, banks and top executives. On the sidelines politicians of all hues are shadow-boxing to bring their rivals down.

Though many in the media try to draw an analogy with the Enron scandal in the US, there is one big difference. The US Securities and Exchange Commission (SEC) officials had actually confessed during the inquiry proceedings in the open court that they could not understand and decipher the complicated financial statements submitted by Enron. That was not surprising for Indian journalists as the power purchase agreement (PPA) signed between the government of Maharashtra and the company was admittedly way beyond the comprehension of Maharashtra State Electricity Board officials. At press conferences Ms Rebecca Mark, then chief of Enron would tire journalists with formulas and calculations which revealed nothing. Till now no official in Satyam or outside has made a pretext of complicated accounting systems and practices for the oversight. It is yet an open and shut case of forgery and deliberate non-disclosure.

The media and stock analysts have also got to take equal blame for the Satyam scandal because it was their job to unravel the truth. The fact of the matter is that few media houses have employed enough staff analysts and reporters to go through every annual report with a fine comb cover to cover. That way Indian media houses are much less capable than their western counterparts to find the truth in listed companies which have millions of investors.

The way PricewaterhouseCoopers has been saying that they had to depend on the data provided by Satyam officials while scrutinising the company account books reminds one of the scandal in the 1990s wherein top LIC officials were taken for a ride by a lawyer consultancy firm in a real estate deal. The LIC officials had bought a plot of land to build residential flats in Mumbai for their life after  retirement. But the land owner had sold the same plot to two other parties earlier. Then it got mired in a legal tangle. When the lawyer firm was asked about its dereliction of duty as they had given a free-of-encumbrances certificate on the plot to the LIC officials the lawyer firm made a startling disclosure. It said that they depend on the documents provided by the land-owner and nothing else for issuing free-of-encumbrances certificate. It was incumbent on the LIC officials to check up municipal records to ascertain if the plot has any other claimant. In case of the external auditors of Satyam it is not just a case of dereliction of duty. It is like the police colluding with the culprits to share the booty.

We shouldn't be shocked, rather we should be amused, if several more corporates with large work force declare delinquency in the wake of Ramalinga Raju's disclosure. It is not the current downturn which forced Raju to resort to cooking up books, rather he started the window-dressing when there was a boom in the software industry. His calculations went wrong, according to reported revelations in the media, when he bought land at high cost along with his partners. He could not liquidate it when there was a slump in prices.

Though his partners gave up their holdings he alone prayed for better realisation. But the inevitable is taking too long to come as land prices are still in the dumps. The trail of money from the software giant to Raju's real estate venture will ostensibly be proved. It's just a matter of time. But many foreign investors might get unnerved by the callous behaviour of various parties involved in the scam. It is also inevitable that sweetheart deals between the auditors, top executives and promoters will be unearthed during the investigations. It is shocking that this went on for nearly 28 quarters. Quarter after quarter Satyam top officials sat at analysts meets with poker face glibly talking about their great performance and giving guidance on fantastic growth prospects. Investors lapped it up as they were not able to separate the chaff from the wheat. For them every top ranking software company was an Infosys and every promoter of these companies was a Narayan Murthy.

The fact that Ramalinga Raju could not cover up the losses of the conjured-up numbers in Satyam books even during the boom period makes investors, especially the foreign institutional ones, to ask if Raju had been able to turn the tide during the boom period the scandal would have never surfaced. Rather Raju would have become a hero in the software industry whose vision, foresight and the intrepid decision-making would have become case study material in management schools.

Now let me add a few personal notes. Honest businessman is an oxymoron, more so in India. Is there a single business leader in India who can say with his hand on his heart that all that he did in his business was ethical?! This includes the interim chairman of Satyam board Deepak Parekh, whose prophecy of real estate slump for the last five years has become a joke in industry. Millions of home-buyers have put off their plans to buy flats even as real estate sector bled on high cost of funds because of this man's statements. But perhaps the PMO could not get any better replacement for Ramalinga Raju than Deepak Parekh.

I have of late, come to realise that honest Indian is itself an oxymoron. As I explained somewhere else in this blogsite, have you ever wondered why Mahatma Gandhi was born in India to teach Indians honesty and truthfulness. And almost all religions emanating out of Indian subcontinent beseech its followers to abjure playing dirty political games in life. It is only because we Indians have unmatched quality in all these attributes, much more than our western counterparts.

Look at ourselves. How many of us pay income tax honestly. Rather, as I found much to my chagrin, paying taxes honestly only gets you a bad image of being a fool. You are considered smart and suave if you are able to produce fake bills in the office to avoid income tax.

And thirdly, if Ramalinga Raju has been inflating numbers, both in past performance of Satyam as well as future guidance he is only doing what we all are so adept at. Tune into any TV channel and you will find that every ad claims outrageous results of using various products and services. Axe deos are supposed to floor women, they are shown jumping into your bed. Children drinking Boost and Horlicks daily are shown to excel in their school studies as well as sports. Every month a new detergent soap comes on prime time television to tell us how it can remove stains without leaving even a mark. If Satyam guidance had been off the mark by a few crores of rupees what about headlamps and brake linings of vehicles promising to guarantee safe ride for the occupants of the car. Why is that when Satyam chief inflates numbers to bring in more business it is sacrilege, amounting to grave crime, media frenzy and name-calling on prime time news?

Lastly, let me ask you all a relevant question taking a leaf out of the recent history of companies going bust in the US. When Lehman Brothers, General Motors and Citibank were being bailed out by the US government with billions of dollars through a state intervention programme I was wondering why should government get involved in managing business. Let the market forces work their way. I was also surprised when markets across the world did not take kindly to these bail-out packages. The stock markets did not show any marked improvement on US government's announcement of saving the monoliths from sinking into the quagmire.

Incumbent US president Barrack Obama is planning for a trillion dollar bailout package soon after taking reins. Well, my opinion would remain the same. That is also why I am a little alarmed by the Indian government's stated intention of saving the 60,000+ jobs in Satyam. Good people will always get absorbed elsewhere and they don't need a job guarantee scheme. It is also not a good free-market policy to preserve jobs when there is no work. The idea of preserving jobs at Satyam is as bad as the reservation policy, which can only compromise quality, breed strife and inequality in society and cause grievous harm to consumer movement -- all that this blogsite and this writer stand for.

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Posted by Anil Nair at 10:17 PM
Updated: Sunday, 18 January 2009 1:17 PM

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