The Communist Party of India-Marxist (CPM) in Kerala has had many reasons to worry for a while now. The traditional Marxist party has seen many setbacks in the recent past and it has faced a deluge of criticism for the wrong moves it has been making. For one, the strikes and the protests it has organised have not met with desired success.
Furthermore, the party received a blow in the recently concluded Aruvikkara by election, where its position was further threatened, albeit marginally, by the emergence of the BJP. The CPM’s plans to uplift the party in such turbulent times seem to be backfiring. A recent example being the ‘secular procession’ that the party took out on 5 September. According to party leaders, the procession was taken out to mark the end of Onam celebrations for Balasangam, the largest children’s organisation in India linked to the CPM. The procession, which was taken out on the same day as Janmashtami, has stirred up a controversy.
Though the CPM leadership initially tried to wash its hands off the issue when it came under criticism, it later clarified that it was the children’s wing of the party which organised the procession. Later senior CPM leader and Balasangam patron M Prakashan Master termed the programme a great success.
Interestingly, apart from Kannur, the rest of Kerala has not seen any such procession. On 5 September, the BJP and the CPM took out close to 185 rallies with/ for children in various parts of Kannur district and according to police sources, the processions by the two parties were quite peaceful.
Everyone was shocked to find the CPM organising such processions on Janmashtami day given the fact that the party itself has been very critical of similar practices in the past.
Critics termed it as the party’s efforts to stop its supporters and workers from joining the BJP. According to a report published in Malayala Manorama daily in July, the CPM admitted that they have lost around 25,000 members of the party and many of them might have joined the BJP.
This was the first time that the CPM organised such a procession under the banner of Balasangam and the leadership’s claim that it has got nothing to do with it has found no takers. While Onam festivities in the state ended a week earlier, the CPM’s intention this time was to drive home the point that celebrations during any festival are not a sole prerogative of the RSS.
Of late, the CPM has become a bit ‘liberal’ on religious matters as it believes that rigidity on any issue would only worsen the situation further. Last year, the district committee allowed its activists and sympathizers to read the Ramayana at agitation venues during Karkidaka; an auspicious month in the Malayalam calendar. They have even revived humanitarian activities like palliative care and also launched a movement of organic farming across the state.
When asked about the party offering a ‘secular platform’ to celebrate religious events, a senior CPM leader on condition of anonymity said that the party has no aversion towards any religion, it is only against communalism, which is making an inroad into religious spheres.
He said, “When the Sangh Parivar and the BJP are hijacking festivals and dividing people on religious lines, efforts should be made by secular forces in the society to put an end to these practices. What we need is a secular platform where everyone can come and enjoy religious gatherings and festivals.”
RSS state general secretary P Gopalankutty said that the sudden surge in CPM’s enthusiasm towards religious matters is a desperate attempt to keep its flock together. He also added that the party organised the procession to stop its workers from joining the BJP and the RSS.
Meanwhile, political critic NM Pearson is of the opinion that there is nothing wrong in CPM conducting such processions or celebrating religious festivals especially when the BJP and the RSS are staking claim of every other religious festivals and symbols. However, the CPM leadership is not accepting it openly.
“The CPM has become a mere collection of people from party cadre, and this has led to uneasiness among certain workers forcing them to take the exit door. Many of them abandoned the party and joined the BJP or the Congress. Every party is seeking the help of certain religious group to ensure their progress and that is what the CPM is also doing. They have no other option,” says Pearson.
Meanwhile, soon after the procession controversy, another row kicked up with Sree Narayana Dharma Paripalana (SNDP) Yogam coming strongly against the CPM. The latest episode involved a tableau that the CPM put up during the procession at Kannur, depicting the iconic social reformer Sree Narayana Guru being nailed to a cross. This infuriated the SNDP leadership. The tableau had the Guru nailed to a cross with his famous slogan ‘One Caste, One Religion, One God’ tweaked with ‘One’ being cut and rewritten as ‘several’.
Intention of the CPM was clear as it was attacking the Hindutva forces for hijacking the Guru’s principles. But, SNDP failed to understand this and their leaders passed a resolution against CPM leaders on 7 September for defaming their spiritual leader. SNDP general secretary Vellappally Natesan in a press meet said, “CPM has turned Judas and nailed the Guru on the cross. They have dishonoured the Guru.”
Meanwhile, party secretary Kodiyeri Balakrishnan and opposition leader VS Achuthanandan came up with explanations that CPM should have taken extra care while depicting religious leaders in a procession and it was not done purposefully to hurt the Guru and the Ezhava community.
However, with SNDP general secretary demanding a public apology and the Yogam publicly disowning the CPM, the party will have lot to deal with in the coming days. With the local body polls scheduled to be held in the beginning of November, the CPM has enough on its platter.
adarsh@tehelka.com
In a storm of its own making
Terror Trail: Twin faces of 21st-century Jihad
It is 14 years since 9/11, when the twin towers crumbled in the US, and four since 5/2, when the global face of terror was buried deep in the Arabian Sea. After the shocking first event, which killed 3,000 people, the West launched a coordinated and aggressive war on terror. After the outrageous 5/2, when Al Qaeda’s (AQ) Osama bin Laden was killed in Abbottabad (Pakistan), the West claimed that the event marked the beginning of the end of terror.
The truth, as usual, comes in different shades and hues. AQ still exists, and is active in Pakistan, Afghanistan and Syria. In 2014, Pakistan’s General Mirza Aslam Beg wrote that contrary to America’s claim that it had destroyed the AQ network, “Al Qaeda is alive, splintered and spreading over several countries and more destructive than ever.” Another writer, Malik Siraj Akbar, said that the West’s blinkered focus on AQ between 9/11 and 5/2 “provided an extraordinary opportunity to other global Jihadist groups to consistently regroup and prepare for future battles”.
However, the biggest surprise for the Western world was the startling, incredible and quick rise of the Islamic State (IS), also known as ISI (Islamic State of Iraq), ISIS (Islamic State of Iraq and Al-Shams) and ISIL (Islamic State of Iraq and Levant). In less than a decade, it emerged as the naked face of terror, whose violence in Iraq and Syria traumatised virulent militant groups across the world. Even the nations that had supported AQ in the past were stunned by IS’ activities.
The rise and rise of IS has troubled and intrigued counter-terrorist planners, academicians, intelligence agencies and terrorist outfits. It raised valid questions: Is IS just another step in the evolution of modern terrorism, or is it different from AQ? Has global terror morphed into a more dangerous avatar or is it a mere extension of the events that escalated since the 1980s? An insightful analysis shows that while there are similarities between the IS and AQ, there are several differences too. IS cannot be seen through the same lens as AQ.
A recent US Congressional Report said that terrorist groups in Pakistan can be broadly divided into four categories — globally-oriented outfits, regional-oriented militants, sectarian factions and domestic-oriented agencies. The report subdivided the regional groups into those that were focussed on Afghanistan, and those that were obsessed with India and Kashmir. Obviously, this was a loose definition as several organisations cut across categories. A few can be both global and regional, regional and sectarian, and regional and domestic.
What is interesting is that the global terror groups largely exhibit the above traits, or their combinations. Most importantly, some of them actually mutate from one to another. It is as if there is an invisible Darwinian force that drives them to metamorphose into another identity over a period of time. For example, an outfit that operates locally, like within a state, can spread its wings into neighbouring countries, and acquire a global presence.
This is true of both the AQ and IS. As bin Laden admitted in 2001, his group was started in the late 1980s to create a military base “to train the young men to fight against the vicious, arrogant, brutal, terrorising Soviet empire…. So this place was called ‘The Base’, or Al-Qa’idah’, as in a training base….” Therefore, the original objective was to fight a regional war against the non-believers after the then Soviet Union attacked and occupied Afghanistan. It had a localised purpose.
Over the years, AQ acquired a global character and transformed into a multinational terror outfit. Aptly dubbed as Terror Inc. by the West after 9/11, the group became an international umbrella organisation that lent strategic, financial and operational support to dozens of Islamic militants in different geographies. It did run its own operations, but its overriding aim was to pursue the philosophy of “centralisation of decision and decentralisation of execution.”
After 9/11, and specifically after bin Laden’s death, AQ became ‘Lobal’ (locally-global) rather than ‘Glocal’ (Globally-local). As terrorism experts described it, the organisation became “geographically isolated”, which led to the emergence of several regional groups with “decentralised leadership” that freely used the AQ brand name. AQ became a state of mind, or in the words of the London Metropolitan Police Commissioner Sir Ian Blair, “a way of working”. Another writer said that AQ has “evolved partly an ideological and partly a politico-cultural force.”
Experts agree that the genesis of IS lay in the 2003 Iraq War, when the US-led forces invaded Iraq to topple the Saddam Hussein’s regime. Several Iraqi militant groups sprouted locally to fight the so-called occupation forces. One of them was Jamaat al Tawhid wa al-Jihad, which declared its allegiance to bin Laden and AQ in 2004. Later, wrote Asif Haroon Raja, it changed its name to Tanzim-e-Qiadat al-Jihad fi Bilal al-Rafidayn. In 2006, it became the ISI.
When the US turned its heat on the IS in 2010-11, the militants shifted to Jordan, where they received training and arms, and proceeded to Syria to participate in the nation’s civil war. It then turned its attention back to Iraq, and envisaged a Pan-Islamic nation that comprised Iraq, Syria, Jordan, Palestine, Lebanon, Kuwait, Cyprus and South Turkey.
What was crucial was that the ISI, which subsequently changed its name to ISIL and ISIS before settling down to IS, claimed that the Jewish Israel also formed a part of this composite Muslim caliphate. But the important point is that the IS began as a national force, spread its tentacles into neighbouring nations and, today, talks of a global expansion.
Religion of terror
Both IS and AQ are sectarian groups. Both are Sunni Muslim organisations, which target the Shia Muslims. Historically, the Sunnis and Shias have been at loggerheads with each other ever since Prophet Mohammad died in the seventh century. The Sunnis are in a distinct majority in Asia, Africa and the Arab world. The Shias constitute a sizeable, and even majority, population only in a few countries such as Iraq, Iran, Azerbaijan and Bahrain.
However, the reasons why the IS and AQ became sectarian were not the same. IS’ roots lay in the political-religious-military events in Iraq. The US-led war was primarily seen by the local Sunni population as a war against it. It felt that the occupation forces befriended the Shias and Kurds in Iraq and installed a Shia regime in the country. This was the reason why Sunni groups raised their heads in revolt. IS was one of them and became a powerful militant outfit in the region.
Muslim writer from Kerala stops writing column after Hindu forces threatened him
In another instance of religious intolerance, a writer in Kerala was forced to stop his daily column on Ramayana for being a Muslim. M M Basheer, a noted literary critic and former professor of Malayalam at the University of Calicut, stopped his column named ‘Ramayanam Jeevithasaramritham’ (Essence of Ramayana) in Malalayalam daily Mathrubhumi after he received as many threat and abuse calls from the right wing groups. Basheer, who is 75, was originally entitled to write six columns for the newspaper this August, however, stopped at five after the threats escalated to an intolerable level. He got continuous pestering calls mocking his identity as a Muslim writing a column based on a Hindu script.
Even posters threatening Basheer was put up near the newspaper’s head office in Kozhikode the day after the column started appearing on the daily on August 3. It is learnt from the sources that Hanumansena is behind the act. The right wing group has been in the forefront in unleashing attack on ‘Kiss of Love’ protest in the state few months
ago.
Though Basheer was unavailable for comment, a close source with Mathrubhumi told Tehelka that he was deeply upset with the threat calls and being termed a Muslim. Though he belonged to Muslim community, Basheer sir ever in his life showed any inclination to religious groups or organization, said the journalist.
He added that Basheer sir was one among the few literary figures in the state who is active even at this age. His column on Ramayana garnered public attention for the way he dealt the topic in a simple, easy language. A reader of the column said that she he felt proud for Basheer sir taking efforts in researching and studying Ramayana deeply.
Basheer did not attend the phone even after Tehelka made repeated efforts soon after the issue was out on Friday morning. The Indian Express carried a detailed report referring to him as saying that he stopped the column after he received continuous threat calls from the unnamed persons. He in that interview says, bit emotionally, that at
this age he cannot withstand this level of a criticism and stopped writing. He also added that no persons were willing to hear his version or explanation regarding the column.
“To the few who showed patience, I explained that the previous year I had written on Adhyatma Ramayana (the popular foundational text of Malayalam by Thunchathu Ezhuthachhan) and I spoke about Rama the God…
But few among the callers knew the difference between the two texts and very few cared. Most callers kept insisting that I tried to attribute human qualities to Rama because I was a Muslim,” said Basheer in the Indian Express.
Meanwhile, writer Suneeta Balakrishnan told Tehelka that the news could be seen as a concerted effort of certain vested interests to instill fear among the people. A man of his scholarly calibre, Basheer sir has only interpreted a classical literature through his column and did nothing offensive.
Catch a falling star
The sensational, almost-unbelievable movie-like plot was scripted much earlier in 1999. In that year, Peter Mukerjea, a blue-eyed boy of Rupert Murdoch, the czar of global media, was anointed as the CEO of Star India. The next year, he created the country’s most-viewed programme, Kaun Banega Crorepati (KBC), hosted by Bollywood icon Amitabh Bachchan. Peter rode a broadcast high as he rubbed shoulders with top notch media giants and political figures.
In January 2007, he quit Star and joined INX Media, which had been floated by his wife Indrani the previous year. As INX wooed renowned global private equity players and announced its intention to launch a slew of entertainment, music and news channels, the Peter-Indrani duo planned to invest Rs 1,000 crore over the next 24 months to emerge as key broadcasters. Within two years, they were hounded out of INX.
By 2015, they were embroiled in an astounding murder case.
Investigators are working on the currently dominant theory that the reasons why Indrani allegedly killed her daughter Sheena in 2012 are rooted in the events linked to INX. Therefore, the genesis lies in what happened between 2006 and 2009. That is why the behaviour of the couple during the period may have clues that will help unravel the macabre killing. At the end of the day, it is a typical neo-rich tale of money, power and sex. It is set in an overtly-ambitious world of today that is obsessed not just with mere materialistic possessions, but also the inherent ability to grab more as and when desired.
Professional peak
While KBC helped Bachchan return to fame with a bang, it put Peter at the top of the media heap. From there on, the Star CEO could do no wrong. He was the new media Midas; everything he touched turned to gold. But in Murdoch’s surreal and ever-changing world, nothing is constant. Those who are his favourites come tumbling down for minor misdemeanours. It was inevitable that the same would happen to the starry-eyed wonder boy, Peter.
In early 2006, Murdoch decided to split his Indian operations into two entities – Star Group and Star Entertainment. Peter was made the head of the former; it implied that he had nothing to do with the entertainment programmes despite his success with KBC. This peeved Peter, who decided that it was time to move on. Maybe it was time to make a new beginning.
When asked whether his abrupt exit from Star in early 1997 was related to the 1996 bifurcation of powers, Peter replied, “If you look back, there was always going to be a time, when I would have to do something else…So it’s not something that comes to me as a surprise. What I believe is (bifurcation) was a catalyst for me to actually start thinking what new opportunities exist outside Star, and perhaps the media business.”
He added that there was never a right time to quit. So why at this juncture? “It’s funny because no matter at what point I would have decided to leave, it would have been pretty much the same question. It could be a year ago or a year from now, and I think the question would not have changed — I can guarantee you that… Some would say that 14 years is too long and perhaps that is the sensation I began to get at the beginning of 2006. It took me a year to come to the conclusion that it’s time to move on and that there are lots of things to do elsewhere,” he said.
Entrepreneurial urge
INX Media, which was owned by Indrani, had a sister concern INX News. The former was focused on entertainment and music. In one of the interviews, Indrani said that INX’s major foray would be in the regional markets. She added that she wished to launch nine regional channels – three each in entertainment, music and news. “Local content is an attractive proposition for viewers. We wanted to have a bouquet with good regional penetration,” she said.
By 2007, INX Media was wooing global investors; Singapore’s Temasek and New Silk Route Advisors purchased 20 percent each in it, and New Vernon Private Equity bought 10 percent. A 2.84 percent stake in the firm was sold to an Indian investor, Kotak Mahindra. Sources contended that INX Media raised $170 million or Rs 750 crore as per the then prevailing exchange rate, from the four investors. INX was on its way to become a major broadcaster when it launched an English channel, NewsX, a Hindi general entertainment one, 9X, and a Hindi music one, 9XM.
Some of the names behind the global investors were known then, but were later sullied. New Silk Route was founded by Rajat Gupta, Raj Rajaratnam, Anil Kumar, Victor Menezes and Abdul Hafeez Sheikh. Of them, four were charged with insider trading in the US. Gupta was sentenced to two years’ prison, Rajaratnam got 11 years, and Verma got two years’ probation when he turned informer in the Gupta-Rajaratnam cases. Menezes settled his case out of the court.
Right from the beginning, foreign investors were more interested in entertainment and music rather than news. This was the reason why their holdings were in INX Media. In contrast, INX News was owned by Indrani (17 percent), IM Media (51 percent) which too was indirectly controlled by Indrani, and Vir Sanghvi (16 percent), who was the CEO in 2007 and claimed that the stake was in the form of sweat equity. The foreign investors held a minority stake in the news venture through INX Media, which held the remaining 16 percent in INX News.
Art of Diplomacy
In his book, Diplomacy, Henry Kissinger, the former National Security Advisor and Secretary of State of the United States, described the constant tussle that his country’s presidents grappled with to tide over global affairs. Over the past 100 years, some felt that the US should be the guiding light to woo nations to adopt its values. Others felt it should carry on aggressively to transform them. Some thought the era of balance of power was over; others felt it was intrinsic to international relations.
For seven decades, similar issues were debated in India vis-a-vis her relations with Pakistan. Should India follow ‘hot pursuit’, as advocated by Ajit Doval, the country’s National Security Advisor (NSA), to wrest back Pakistan-occupied Kashmir and destroy the terrorists’ bases there? Should she amicably resolve the problems? Post-1998, when both neighbours possess nuclear weapons, is it imperative to smoke the peace pipe with other regional powers to maintain a power equilibrium?
The recent impasse between New Delhi and Islamabad over the NSA-level bilateral talks indicated that the debate rages on. There is a diplomatic chaos and confusion on both sides. Neither nation knows whether to talk peace or war, whether to give an inch, to walk the extra mile or stay put. The public stand-off between the two is about who is perceived to have blinked first. In fact, one of breaking- news headlines in an Indian TV news channel was: “Will Pakistan blink first?”
An analysis of the events that led to the cancellation of the talks, and the language used by both sides hinted at the diplomats’ inability to decide what to do and say. Instead of using the hotline between the two capitals, they used the red-hot media to attack each other. Nothing was sacrosanct in this war of the words. Both sides accused each other of being scared to hold the NSA-level talks. It was evident that this was a unique case where both sides blinked at almost the same time.
War on terror
In the end it boiled down to a few words, or rather two sentences. Pakistan’s NSA, Sartaj Aziz, said that the bilateral agreement signed by the two prime ministers, specified that the overall talks will encompass “all outstanding issues” between the two nations. Sushma Swaraj, India’s foreign minister, countered that while this phrase found its place in the ‘preamble’ of the agreement, the details of the specific talks were specified in the details. As we know, the devil is always in the details.
According to Aziz, all issues meant exactly that; the talks couldn’t be limited to a few issues. Therefore, New Delhi couldn’t impose any ‘preconditions’ before the talks. In the Swaraj scheme of things, the specifics were clear. Apart from the preamble, the deal stated that three different discussions would be held between the two countries. The first in the three part series was between the two NSAs, followed by the ones between the respective border forces and military officers.
New Delhi insisted that the NSA-level talks were to discuss only terrorism, and no other contested issues like Kashmir. She explained that Prime Minister Narendra Modi’s thinking was that unless the two nations reduced the violence, either in the form of cross-border terrorism, incursions and firing, there couldn’t be any peace talks. This was implicit in the agreement, and wasn’t a precondition.
Islamabad disagreed. Aziz maintained that the spirit of the bilateral deal was to discuss all the contentious issues, including the K-word. This was the heart and soul of the problem as Pakistan’s polity, military and society completely supported the Kashmir people in their bid to decide their fate. At a press conference, the Pakistan NSA said that Kashmir was the most important issue.
War on Kashmir
The reason why India raised the diplomatic decibel level was due to the K agree word. First, Pakistan insisted that it would include Kashmir in the NSA talks. Second, the Pakistan High Commissioner in New Delhi wished to hold a reception for the Kashmir’s Hurriyat leaders on the evening before Aziz’s arrival. Both, said New Delhi, violated the letter of the bilateral agreement. With its autonomy demand and pro-Pakistan stance, the Hurriyat-Islamabad truck was unacceptable to New Delhi.
Aziz explained that India was merely flogging a dead horse. Each time the Pakistan officials visited India, they met the Hurriyat leaders. This had gone on for a decade. Why did New Delhi up the ante this time? Moreover, since Kashmir was critical to the bilateral relations, it was necessary for Islamabad to be in touch with all the involved stakeholders, which included Kashmir’s political leaders. New Delhi’s stance, therefore, violated the spirit of the agreement.
A few experts, both in India and Pakistan, questioned India’s focus on Hurriyat. The reason: since these leaders were Indian citizens based in India, the government could always clamp down on them and prevent their meeting with the Pakistan High Commissioner. This is exactly what happened when the Hurriyat leaders were arrested at the Delhi airport. So why did New Delhi feel the need to cry wolf over Hurriyat, and put diplomatic pressure on Islamabad to retaliate verbally?
Winners be damned
It was the classic win-win situation. The government raked in Rs 4,00,000 crore through the auction and allocation of coal mines early this year. The states would receive the bulk of this money over the next 30 years. India gained as the coal produced would lead to higher production of power, a key sector that could rev up the economy. The winning bidders felt confident that the allocations would not be unilaterally cancelled like the Supreme Court did with the previous allotments.
For the people, the auction hinted at the advent of transparent and non-corrupt governance, which then boosted the now-dented image of Prime Minister Narendra Modi. Everyone seemed pleased with the results of the auction. The coal minister, Piyush Goyal, claimed that the government got the “honest value of the coal”. He added that the auction was “an open marketplace, the most transparent thing, all of you saw it minute by minute, second by second”.
Within months, however, the mindset and attitude changed. Private players hinted that the aggressive bidding would lead to problems in a few years. It would make some projects unviable, put further stress on banks’ bad loans, hike the cost of power (which used coal as fuel), and force policy changes. More important, the lessons learnt from the auction would change the nature of future bidding, and impact the proposed auctions of iron ore and other minerals.
A few critics said that the auction was as opaque as the previous regimes’ allotment on a discretionary basis. The auction, like the earlier policy, was restricted to a few bidders, there was lack of transparency in valuations, and it led to confusion in the coal and power (user) sectors. As one of them said, “UPA-1 and 2 were about crony capitalism that helped individuals. NDA-2 is about policy-led crony capitalism that will show its horns over the next few years.”
Why is the once-hyped auction being flayed? What changed the manner in which select sections thought about the auction? Why did it become difficult for the government to defend the auction? And how will the experiences in coal impact the auction of other mines?
Stress over viability
There were several factors that could transform the captive coal blocks, and the allied power plants (as users), into unviable entities. The first was that in some cases, the bidders went overboard, especially in the case of reverse auction. Reverse bidding was one when there was a ceiling price that reflected the notional value of the coal, say, Rs 500 a tonne. The bidders offered discounts on this price, say, Rs 100 or Rs 200. In simple terms, they priced the coal at Rs 300 or Rs 400.
If the discounts were manageable, the situation wouldn’t be grim. Some bidders went crazy. An article in www.scroll.in argued that Essar Power, a winning bidder, not only discounted the notional value to zero but, in addition, offered to pay Rs 1,110 per tonne extra to the government. Its cost of coal came to Rs 1,500 a tonne if one assumed the actual expenses to be Rs 400 a tonne. Clearly, it would soon become unviable, or its power tariff would soar through the sky.
Second, the idea of a captive block is to have it near the user plant to cut down on transportation and other costs. However, in the coal auction, several bidders got coal blocks that were situated far away from their power units. Since the government does not allow sharing or swapping of coal among the miners, the fortunes of such coal-power entities would be the same as that of Essar Power. They would soon become unviable or forced to hike their tariff.
Finally, there were several business groups, which had several coal blocks, before the Supreme Court cancelled over 200 allocations in 2014. Some of these groups had invested in the allied user units, like power and steel. During the 2015 auction, they failed to win the earlier blocks; for example, Jindal Group’s hold over coal blocks came down from 7-8 to just 1. It was obvious that several investments that it had made in the past few years would turn sticky.
Stress over bad loans
The Jindal case brings us to the larger question of looming and increasing nonperforming assets (NPAs) in the banking sector, especially in public sector banks. According to the finance ministry, the magnitude of gross NPAs stood at Rs 2,67,000 crore as on 31 March 2015. Credit rating agencies predict the quantum to rise by March 2016; they estimate the situation to get worse before it gets better. The central bank has issued several warnings on NPAs.
If one includes stressed debt, or loans that could go bad in the near future, the scenario is worse. Standard and Poor’s, a global rating agency, has estimated that the level of stressed loans would zoom to over Rs 8,00,000 crore by March 2016. A sizeable percentage of this amount would turn into NPAs since corporate balance sheets in India are highly leveraged. Public sector banks are more vulnerable as their NPAs’ levels were over 30 percent higher than their private sector counterparts.
Banks are especially concerned about the money they have lent to crucial sectors such as coal, power and steel. An estimated Rs 1,50,000 debt in the power sector could become NPAs over the next 12 months. A similar thing may happen in the coal sector, where the loans at over Rs 2,50,000 crore. The coal auction might prove to be another nail in the NPAs’ coffin.
To begin, there was no clarity on how the banks would deal with loans given to coal miners who failed to win these blocks during the auction. Such owners would not be in a position to repay since they lost the mines. In such cases, the banks could not transfer the loans to the new owners, who would obviously not wish to be saddled with them. The banks could not insist that the old owners repay their loans from earnings from the coal-user plants, like power or steel.
Revenge of the Red Dragon?
For the first time, India was poised to grow faster than China and become the fastest-growing economy in the world. Then came the revenge of the Red Dragon, which tanked global stock markets and devalued several currencies. On Black Monday (24 August) — most market collapses happen on this day — stocks across continents fell like nine pins as they took their cue from Shanghai, whose index dropped by 8 percent. The story was the same in the US, Europe, Asia and Latin America.
Within six hours of trading, the Bombay Stock Exchange (BSE) Index went into a tail spin and fell by over 1,600 points, the largest single-day slump in seven years, as Indian investors lost their shirts worth over $100 billion. All the stocks that comprised the indices of the BSE and National Stock Exchange were in the red, and foreign investors vamoosed with almost a billion dollars in a single day. Global currencies, including the rupee, took a major beating.
Everyone blamed China for the boil. In the recent past, its growth has slowed down, debt has zoomed, and its bid to opt for multiple currency devaluations hasn’t worked. With one of the world’s largest economies in trouble, its big sneeze was bound to chill the world — and India. However, this is only a part of the story. India also suffered because of the economic travails in Europe, uncertainty about America’s future monetary policy, and its unique domestic problems.
This is really a tale about how a cold in China, fever in Europe, pain in the US, and a mix of dehydration and humidity in India decimated Indian stocks and currency. This is a narrative about how the globalised world wreaks havoc when things go wrong, and how India, unlike China, is the sufferer, despite her claim that she is on her way to become an economic superpower, like China. In short, this is a story about how a butterfly in Brazil can cause a Tsunami in Asian seas.
A tale of several nations
The China impact is simple to grasp. As it is one of the world’s largest manufacturer- consumer, an economic slowdown will lower demand for products that it imports and reduce supply of items that it exports. While the former will lead to price slumps, the latter to inflation. Thus, the continents that produce raw materials and intermediary goods, like Asia, Africa and Latin America, will earn less, and those that consume final products, like Europe, America and richer parts of Asia, are likely to spend more. In both cases, the result is the same: pressure on foreign exchange assets.
In the end, it will impact the Current Account Deficit (CAD), i.e. the difference between a nation’s foreign earnings and expenditure, of most nations. India is no exception; it is both an exporter to China and importer of Chinese goods. The advantage that India, like other nations, enjoys is due to the slump in global crude prices. Being an importer of crude, this will reduce her expenditure by a considerable proportion. Also, the decrease in other commodity prices will benefit her.
To save its economy, China resorted to several devaluations of the Yuan, its currency. The idea: a less strong currency will boost exports and lead to higher growth. The logic: to give an Indian example, a few months ago an exporter who sold his product for 60 would earn $1, when the rupee-dollar exchange rate was $1 equals 60. Now that the exchange rate has devalued to $1: 66.65, his product is still worth 60, but he gets 90 cents for it, a reduction of 10 percent in income.
Experts feel that the Yuan’s devaluation can kick-start a race among nations to adopt the same strategy to boost their exports and prevent a flood of Chinese imports. The idea for the latter: like devaluation boosts a nation’s exports, it makes imports into the country expensive. The logic: a few months ago, if an imported product cost $1 or 60, it would still be priced today at $1, but will cost 66.65. Such a scenario makes foreign investors flee a nation because of the currency uncertainty.
Add to this scenario the fact that despite the Greece bailout, Europe is not out of the woods. Although European Union leaders have maintained that there are no chances of a contagion effect, there are several question marks over the economic futures of Greece, Spain and Portugal. This adds to the nervousness of global investors, who flee at the first signs of trouble.
Then there is the American dream or rather its nightmare. Everyone expects interest rates in the US to go up in the near future. This will mean that the returns from domestic investment will go up. If the risks in other markets, especially in emerging markets like India, rise or remain the same, foreign investors are likely to move their money elsewhere and seek a safe haven in the US. It is finally about the risk-return equation. Anyway, investors have lost money in emerging markets this year; however, their losses in Indian stocks are less than in others markets.
On the Warpath
It was meant to be the final nail in the coffin of Raghuram Rajan, governor, Reserve Bank of India (RBI). But when his loyalists raved and ranted, Arun Jaitley, the finance minister who masterminded the move, gave in. Official sources contend that Rajan, as RBIgovernor, may indeed have a veto power in matters related to public debt. Earlier, Jaitley’s plan was to form a separate Public Debt Management Agency (PDMA), which would clip RBI’s wings and make it function as per consensus without giving any veto power to the rbi governor. In effect, Jaitley’s wish was vetoed.
This is not the first or the last time that a finance minister and a central banker were at loggerheads. India is not unique in the sense that it happened here. Globally, in times of economic crises, a showdown between an economic lord and a monetary master is almost inevitable. Not surprisingly, ever since the financial crisis of 2008, rbi governors and finance ministers have waged constant battles against each other. They have both criticised the other for India’s economic ills.
Most people remember the constant fights that the former finance minister, P Chidambaram, had with the then rbi governors YV Reddy and D Subbarao, as also with Rajan, who was appointed during the upa-2 regime. However, the decibel levels of the current Jaitley-Rajan tussle seem to have peaked. A pink paper recently wrote that “Raghuram Rajan seems to be under subtle but steady stack.” It added that “the government’s strategy seems to be to keep the central bank unsettled….” Sources say that after a long time the actions of a hitherto-independent rbi were politicised.
Given this scenario, it is apparent that although Jaitley may have lost the pdma battle against Rajan, the former will strive to win the war over the coming months. Before this government’s tenure is over, the rbi’s responsibilities will be less than what they were a year ago. The setting up of the pdma signals a move to take critical decision-making related to public debt and, of course, interest rates, away from the central bank. Rajan and his supporters will need to be continuously on their toes.
However, the crucial question is: why are Jaitley and Rajan on this warpath? It may also be asked whether the reasons why Chidambaram fought with Reddy were the same as now. Is this merely a matter of clashing egos and personalities or of practical politics and even-tempered economics? More importantly, in times of economic recession or slowdown, can good politics and good economics work in unison to seek common goals?
Shooting for growth
Prime Minister Narendra Modi came to power on the twin promises of growth and development for all the sections and twin dreams of transparency and governance. Jaitley was the man he handpicked to deliver the goods. Despite several policy changes in the past 14 months, growth continues to languish. Although past figures and future estimates have scaled up, critics feel this was because of the change in the growth-calculating formula.
The reality on the ground hasn’t changed. Today, even industrialists such as hdfc’s Deepak Parekh and Bajaj Group’s Rahul Bajaj, as well as foreign ceos, criticise the government for its inability to kickstart investments and put the country on a high growth trajectory. Time is running out for Jaitley and Modi and it is time to deliver on their promises. A study by Bradley Turner found that the focus of the finance ministers globally is generally on “growth rate of real gdp (Gross Domestic Product)”.
Ironically, the study’s title was ‘What causes finance ministers to get fired?’ Coincidentally, in the recent past, there were recurrent rumours that Jaitley may lose his job if he can’t achieve a higher growth rate by the end of this year. Fortunately for him, perhaps, the figures in the recent past were inconsistent — a month of good growth followed by a slide in core sectors followed by fears of monsoon failure followed by studies that the investment cycle may not pick up until 2016.
In contrast, the main task of a central banker is to rein in inflation, or price rise. As TR Santhanakrishnan, chairman and ceo, Financial Technology Business said , it is to lower prices of commodities and, at the same time, initiate a policy that “supports growth without triggering recession”. This is an almost impossible task; it is something that few central bankers have achieved, especially in times of economic crises. Therefore, like Jaitley’s, Rajan’s hands are tied.
Rajan maintains that low inflation is better than high growth, at least temporarily, to improve the lives of the people. The logic is that if people spend less to buy things, they will have more disposable income, which they can use to buy other goods. The interim result: it will trigger demand for goods which, in turn, will force businesspersons to produce more. As demand grows, companies will invest to increase production capacities. End result: high growth rates.
The problem is that Jaitley wants quick results; he wants growth to happen in months. He feels that this is the best panacea for the people, who suffered under the upa-2 regime. Therefore, the finance minister wants the rbi to lower interest rates continuously, which will cajole companies and consumers to borrow more from the banks. The firms will use cheap money to invest in production capacities and the consumers to go on a shopping binge that will hike demand.
Rajan refuses to tinker too much with the interest rates. Instead, he believes in a process that may be slow, but is robust. He fears that unless prices come down, India may fall into a vortex of high growth and high inflation, which may be more dangerous than one of slow growth and low inflation. It is obvious why there is a faceoff between Jaitley and Rajan. It is also clear why Jaitley wishes to take away the interest rate-setting powers of the rbi and shift it to the proposed PDMA.
How to save a life in death
On 24 July, Kerala scripted another success story in the history of organ transplantation. It was for the first time that an air ambulance was used in the state to fly the organ from a donor in a Thiruvananthapuram hospital to a recipient in Kochi. The state machinery and the Kerala Network of Organ Sharing (KNOS) — the nodal agency coordinating the state government’s deceased donor organ donation programme: Mrithasanjeevani, worked in perfect coordination to ensure that a brain-dead patient’s heart was harvested and airlifted to an organ recipient 209 km away in Ernakulam within 45 minutes. The team of doctors in the Lisie Hospital, Ernakulam, completed the heart transplant in less than two hours. The recipient; Matthew Achadan, an auto driver, was given a new lease of life. “He will soon leave the hospital to get back to his normal life,” says a hospital source in Kochi.
After the success of the transplant, the state government is seriously thinking about implementing an air ambulance service in the state. According to Health Minister VS Sivakumar, discussions for launching the service are in progress. The service will be launched in coordination with the Home and Revenue Department and the Disaster Management Authority. Sivakumar says that the service will operate mainly from government medical colleges and hospitals, which have organ-transplanting facilities. The Health Secretary has been designated to expedite the process.
The story of the transplant is an inspiring one. It was a big hearted ‘yes’ from Latha, wife of Neelkanta Sarma; the donor, which made the transplant possible. The donated organs of Neelkanta, which include the heart, kidneys and the corneas, have given new meaning to the lives of five other people.
Latha, an agricultural officer with the state government, did not hesitate when the doctors of the Sree Chitra Tirunal Institute of Medical Sciences came asking for her willingness to donate the organs of her husband after he was declared brain dead. Sitting at her home in Parassala, a border town in Thiruvanathapuram district, Latha says that there is no other way she could have given a fitting farewell to her husband other than donating his organs to those in need. Her decision proved to be exemplary and has received appreciation from all quarters. It is being hailed as an act of great compassion on the social media and Latha has even received a visit from Chief Minister Oommen Chandy who thanked her for helping out others during a difficult time in their lives. But to her, the decision was only a compassionate gesture towards her husband. Latha tells Tehelka, “I was only following his wish. My husband would have done the same. I am sure that anyone who knew my husband would not oppose my decision. Moreover, I had the support of the whole family.”
Neelkanta had often expressed his desire for organ donation to his two sons Subramanian and Gautam. However, Latha was unaware of it. She says that she only came to know of his wish after she took the decision. It was perhaps the deep understanding between the two which made Latha take the call on the donation. Latha and Neelkanta were neighbours and friends since childhood. They fell in love when they were in the college and married 16 years ago. “The understanding between us helped me take such a big decision. I hope more and more people come forward to donate organs and help those who are in need of them,” says Latha.
In Quest of the Fix
Delhi Police rode the moral high horse. It sensationalised the allegations. It invoked the sections of a more draconian law, Maharashtra Control of Organised Crime Act (MCOCA, along with the Indian Penal Code (IPC) because it felt that charges under the Gambling Act will allow the accused to go almostscot free, or with a mere slap on their wrist. In the end, the judge said the evidence was sketchy and full of holes.
One could say the real culprits were the gaps in the evidence collected by the Delhi Police, its deliberate intent to send the defendants to jail for several years, and the inability of Indian laws to deal adequately with illegal betting and matchfixing in sports. For Delhi Police, it’s back to Ground Zero.
Way back in 2000, after sensational disclosures by the late Hansie Cronje, once South African skipper, several Indian cricketers — former captain Mohammad Azharuddin, Ajay Jadeja, Manoj Prabhakar and Ajay Sharma — were banned for life by the bcci. Different high courts revoked the bans on two of them, Azharuddin and Jadeja. It is another matter that neither of them played for the country again; Jadeja did play for Rajasthan in the domestic Ranji Trophy and captained the side as well.
To be fair to Delhi Police, it is in august company. Most global investigators, including the anti-corruption unit of the International Cricket Council (ICC), have invariably found it tough, if not impossible, to get favourable orders in such cases. For it is important to first prove the ‘fix’, which isn’t easy, establish the link between performance, money and hawala transactions, connect the players and bookies to a global organised crime syndicate and finally, have the necessary laws to book the culprits.
WHERE IS THE FIX?
As the July 2015 sessions court order shows, it is tough to pinpoint the fix. Take the case of Sreesanth, who allegedly spot-fixed an over in the 2013 ipl match between Rajasthan Royals and Kings XI Punjab on 9 May 2013. Delhi Police said he agreed to take 60 lakh to bowl an over in which he would concede 14+ runs. An advance of 10 lakh was given to his friend and former cricketer, P Jiju Janardhanan. Sreesanth said he would give a signal to let the bookies know that the fix was on.
~Also Read~
[egpost postid=”248981″ byline=”false”]
There was an intercepted conversation where Sreesanth and Janardhanan discussed how to divide the 10 lakh booty – 3 lakh for the latter and 7 lakh for the cricketer. From the advance, the former India’s fast bowler purchased two mobile phones in Jaipur for his two girlfriends, Sakshi Jhala and Deepika. Almost 2 lakh was spent to buy clothes from a Diesel store on the 14th and 15th of May, 2013. A cash amount of 5.5 lakh was recovered from Abhishek Shukla, who had removed the unspent cash after the arrest of his two friends.
However, the sessions court concluded that there was no fix involved. One, Sreesanth did not concede over 14 runs in that over, only 13. Although the bookies commended him for trying his best, the judge said that “the detailed analysis of the over in question would show that S Sreesanth had bowled a legal and competent over.” Reason: In the first four balls, he conceded only five runs. In fact, the first and third balls were dot balls, or no run was scored off them. He also did not deliberately bowl a no-ball or a wide to concede extra runs to reach the 14+ mark.
What turned the police evidence in favour of the cricketer was a phone conversation that Janardhanan had with an alleged bookie, Chandresh Patel. In it, the former clearly said that Sreesanth was cagey about the over as he had been out of the team for a long time and didn’t wish to take the risk. “This clearly reveals the intention of S Sreesanth,” said the order, because the conversation happened at 12:13 pm on the day of the Royals vs Kings XI match.
In Chandila’s case, the police charged that he took Rs 12 lakh in 2012 from bookies but returned it as “he was unable to provide the requisite underperformance to which he had agreed.” He returned the money in three cheques of 4 lakh each to Sunil Bhatia, a member of the syndicate, one of which was debited to Bhatia’s account, two being dishonoured for insufficient funds. In 2013, before IPL 6, Chandila demanded Rs 25 lakh from the bookies. This time he failed to alert the bookies about the fixes with the pre-arranged signal and, therefore, had to return 20 lakh in cash.
As the judge observed, “The evidence, even if admitted in toto, only shows that Ajit Chandela (Chandila) had agreed to underperform but he did not do so. He is not shown to have cheated anybody since he did not underperform after taking money.”
SHOW ME THE MONEY?
To show that a match or an over is fixed, the investigating agencies need to link underperformance of the players, money they received, and the transfer of cash through hawala that involved money laundering. For example, in the case of Sreesanth, the court said that Sreesanth’s ipl contract was worth Rs 1.84 crore and on 3 April 2013, the balance in his HSBC bank account was over 36 lakh. His atm cash withdrawals in April 2013 were over Rs 10 lakh.
“In the given scenario, no presumption could be made that the purchases made by the Sreesanth were from the advance received from the bookies or that such expenses were not made from his legally earned income,” said the court. Similarly, the recovery of Rs 5.5 lakh from Shukla “is sham and it is the disclosure statement masquerading as seizure/recovery memo (by the police). At best, it can be said that 5.5 lakh were recovered from him (Shukla), but that recovery cannot be connected to S Sreesanth on the basis of disclosure statement of Abhishek Shukla.”
