The recent case of Indian traders being kidnapped in China has opened up a can of worms. Apart from the case revealing weaknesses in the Chinese judiciary (as I had highlighted in an editorial a few weeks back), it has also brought out in the open something that traders from India (and other countries) were facing for a long time but not speaking about openly. The big trade that happens between India and China is through the scores of wholesalers operating out of wholesale markets in India like the Sadar Bazaar in Delhi. These are not the big guys who prefer getting into litigation that easily; they also aren’t amongst those who operate with lawyers and bigger paraphernalia. These are smaller traders, though huge in numbers, who go to Chinese towns like Yiwu in particular and pick one or two containers of goods worth Rs. 30 lakh to a crore once every quarter. And they now fear entering China. The question is why? Can one incident of kidnapping shake up an entire community of traders, especially when China is such a good bargain for them? Or was this not that stray an incident after all?

Consider the case of Manish Rewari. He has been doing business in exactly the same town of China for years now. And swears by the advantages that China gives him in his business as he shows off a fascinating watch that he is wearing while narrating his story! He had first seen the same watch in a wholesale outlet in Karol Bagh (a shoppers’ paradise near Central Delhi). The shopkeeper quoted Rs.22k as the best price for the watch to Manish. Not be outdone like normal customers, this China believer – in his next trip to Yiwu – went around various shops and found out exactly the same watch. And the price for a single piece was Rs.2.5k; and for bulk order of more than a hundred pieces, Rs.1.2k per piece. A watch enthusiast, he picked up only one watch for his consumption.

If that sounded nice, just a trip before this particular trip, Manish’s experience was not as good. He used to work with a Chinese agent then. During his previous trip, he had struck a small deal and purchased goods for Rs.75k through the said agent. The agent took the money, delivered him the goods, but never paid the original seller. The next time, when Manish came and tried to directly deal with the seller, the moment he provided his old receipt with the previous agent’s name to show the price at which he had bought the goods in the previous trip, the seller pounced upon him. His grudge was that he had not received the money for that particular transaction. Manish very courageously tried to defend himself by saying, truthfully, that he had obviously paid up for the same. This he did despite knowing “that they [the Chinese seller] could pick him up and make him disappear”. His reasoning clearly was of no help because soon, there were scores of the seller’s people and henchmen who came from all around and surrounded Manish. Sensing trouble, Manish approached the nearby police, who in their very usual unfriendly manner told him in Chinese that they were there to protect only the interest of the Chinese. That’s when good sense prevailed. Manish knew that he had come for just three days and had a lot of deals to strike. And this would only get messy. And spending a few days in jail like a few others he had heard of was not a great idea. Manish grudgingly agreed to strike a deal with the disgruntled seller, and paid fifty percent of the pending money again as settlement (since it was too small an amount) and fortunately got away.

This year, however, Manish is not ready to go to China anymore; well, almost. He now works through an Indian agent. The recession hasn’t been great for businesses and he fears that even the Indian agent might not have paid up properly to the Chinese sellers (though Manish has paid his entire pending Rs. 37 lakh for his last imported container). The fear is that the Chinese sellers might again pounce on him. “It’s undoubtedly a fearful situation. The question of safety for the foreign trading community is totally missing despite us being such regulars and buying so much from them. There is no helpline. And they are just not ready to listen to our version. Someone messes up and someone else pays for it. The recent kidnapping has only brought to highlight the fears and trauma people have been going through for a long time despite doing big business there,” he says, elaborating further. He says something more that has been haunting a lot of Indian professionals in Gurgaon of late, due to a new phenomenon I had outlined, again in a previous article of mine, on how Chinese companies are now doing business in India only when they are allowed to get Chinese workers here (in effect, easing out their employment problem through projects in India).

The grudge the people working in Gurgaon have – as they see scores of Chinese people all around them working on various projects – is that not only are we allowing Chinese people to take our jobs, we’re also accepting their behaviour to simply look down upon Indians despite working in India itself (rightly or wrongly, is another question of course). Manish says exactly the same, “We do so much trade in China but they just don’t treat us with enough respect and that is a key reason behind this high handed semi mafia behavior.”     Read More....

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Ever since the American economy went bust and the European economy has been going down, it’s sad to see my favorite magazine, The Economist, frantically trying to defend the wrong and go wrong by criticising the right. Time and again. Just a handful of weeks ago, in their frantic effort to criticize everything Chinese and everything non-market oriented, The Economist did a cover story called The Rise of State Capitalism (January 21-27, 2012). Basically, the story talked about how economies like China and even India are becoming more dependent on large public sector units and how this is bad blah blah. The obvious supposed scare is that public sector corporations are inefficient, have time overruns, invariably have cost overruns, have ingrained corruption and so on! The real scare is the growing might of China, of course!

Our group is into almost all kinds of consulting activities and we rarely come across a private sector company where an executive doesn’t ask for a bribe before awarding a big contract. Sometimes we’ve even found out that a competing firm has used sleaze to satisfy the client being prospected and thus has obtained the deal. From Enron to Olympus to Accenture, there is no dearth of large corporations which have made the most corrupt of choices. Large companies – whether public or private – always have within them certain ingrained issues. And what differentiates them from one another are systems and leadership. Under a different leader, the same GE could be the world’s best benchmark example while under another, in just a matter of a few years, it could be a struggling joke! The same it is with the public sector. If systems are put in place like the private sector, there is no innate reason why public sector corporations should be inefficient. And if systems go wrong, then you could even have a Reliance being rated worse than a public sector company to deal with.

As a management teacher, at least that’s what I have believed. That the former USSR failed or that China is nondemocratic doesn’t mean that the public sector idea is wrong. The only truth is that governments must know what to plan and what not to. A government, for example, has no business being in the luxury hotels sector; at the same time, in countries like India, the government not being in health or education is a crime. There are wonderful examples of public sector successes and one of them is the Delhi Metro Rail Corporation (DMRC)! It’s a case study of our times.

In the midst of times where corruption was the high point and scams were unearthed left, right and centre, in the midst of the massive CWG scam, here was a corporation in the same government sector, under the control of similar ministers and bureaucracy and in the same country, with a key role during the same Commonwealth Games. And yet, the legacy of DMRC has been diametrically opposite and mind blowing! For records, the Delhi Metro has almost always completed projects before time. In fact, the first phase of the DMRC project was completed in seven years instead of the planned ten years. DMRC has had absolutely no cost overruns. Its efficiency is beyond any kind of international comparison with the trains being on time 99.97% of time! That too with a very strict guideline of one minute deviation as the standard of excellence – while internationally, in most countries, they term a 3 min deviation from scheduled time as on time! By all international standards, the Delhi Metro is world class and it was competed in the second shortest time in the history of the world as far as metro constructions go! And finally, to top it all, it has had no instance of corruption and it is as massive a corporation as it gets!
 
So what made the difference? Meet the man who was at the helm of it all Mr. E. Sreedharan and you will know! I have a theory – the corruption index of a man is always on his facial muscles. It’s not about being traditionally good looking or bad. It’s about the reflection of your thoughts on your face. The man who spends his life asking for bribes has a dirty bribe-seeker look on his face along with the look of someone who has an inner fear of doing wrong and getting caught. A reason why all the professors in our institute look distinctly different from the majority of the politicians in our country! Yes, E. Sreedharan looks like the former ones, my professors who taught me! Clean, honest and sincere! And when he speaks, he exudes integrity – growingly the rarest virtue!
 
“Four simple principles,” is how he explains his success story! The key to DMRCs success has been integrity! Yes, that’s what Sreedharan looked for first in his people! He wanted a free hand in selecting people and consequently got his old work acquaintances and others who were known to be totally clean to work with him; yet, he fired them at the first instance of an attempt to be corrupt! Integrity was his absolute top priority. It was followed by something that is interestingly massively linked to integrity! Professional excellence! The rule is simple. If you are talented, you are in a better position to not just deliver high quality results on time but also be more ethical. Those are the non-talented guys who retain their place mostly through corrupt practices! So within DMRC, Sreedharan had no place for the less talented! The focus on efficiency was so much that he did away with clerical staff! Today’s offices required no clerks; in fact, that’s from where the delays and corruption start! With these two key principles in place, the job was more or less done!     Read More....

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A handful of weeks back, in the ACER PISA test – the OECD's annual global assessment of students' skills (for South and South East Asia) – India came second from the bottom defeating Kyrgyzstan while China topped the list. This acts as the final nail in the coffin of India’s dented education system. In spite of arrays of pan-Indian educational programs, India still has not been able to make education inclusive for all. On the contrary, China since the last four decades has been rolling out ambitious plans to revamp their education system, which is evident from the way they are storming into global rankings.

Chinese education is a very consistent blend of Confucian theories and modern concepts mixed with Chinese national developmental policies. Chinese education, unlike ours, focuses on both socio-cultural and political aspects of the nation. The current Chinese education system extends from the guidelines that Premier Zhou Enlai gave in 1974; guidelines that are popularly known as sì gè xiàn dài huà or the 'Four Modernizations'. And what are these? The education system in China revolves around agriculture, industry, technology and defense – that, as per the Chinese, are pivotal for the country’s development. China today has installed key schools meant for highly academically inclined students. China has adopted a policy of providing nine-year compulsory education to all with a special emphasis on vocational training and higher education. This nine year of compulsory education makes a child conversant with mathematics, science and Chinese literature.

Interestingly, even rural students undergo similar training; and by the end of the ninth year of education, the rural student is at par with his urban counterpart. Contrast this with India, where a high-school student is unable to solve a basic mathematical problem or frame a sentence on his own. Moreover, Indian rural schools are mired with problems of infrastructure and above all suffer largely from the curse of teachers' absenteeism. On an average, more than 30 per cent of teachers are found absent in rural schools. In order to curb this menace, China pays their teachers based on student scores. Thus, a large component of teachers’ salaries depends on their students’ performance. Yet, there’s a balance. The better the school (based on the students' score) more is the fees they charge, thus increasing competition and quality both at the same time. Back in 2007, an article published in BBC stated, “China is now the largest higher education system in the world: it awards more university degrees than the US and India combined... The rate of university expansion has been beyond anything [that] anyone in the West can easily imagine.”

Millions of Chinese students are now abandoning colleges and are opting for vocational schools. These vocational schools are backed up by Chinese industrialists and known for producing ready-for-job candidates. In 2007, China allocated 14 billion yuan to be spent on vocational schools over the span of four years. Vocational education in China, unlike India, is not just confined to manufacturing but encompasses sectors like information technology, tourism and medicine. Vocational training was introduced in China so that educated people wouldn’t have to face the brunt of unemployment and relevant skill development is achieved so that qualified individuals have guaranteed jobs. The government has also introduced projects like the State Project 211, State Project 895 and State Project 111, where special importance is given to top top 100 higher education institutes to enhance the quality of their graduates. The Chinese ministry of education is also striving to meet global standards by inviting the world’s best researchers to work in these institutions, thus attempting to benchmark internationally. India too stressed on higher education – particularly in the tertiary sector – but faced with strong impediments in terms of funding, India is falling in terms of percentage of overall spending. The private sector too plays an important role in India in assuaging the demand-supply gap.

Back in 2003, China invited foreign universities to set up campuses; India passed a similar bill seven years later. Foreign universities have not only brought in global teaching pedagogies into China but have also elevated the level of education in the country. Consequently, China is doing exceedingly well in global rankings of late! In 2009, the Paris based Organization for Economic Cooperation & Development, representing 34 countries, released its Program for International Student Assessment, where the Shanghai region outperformed everyone else to be the top performer in all academic categories! According to OECD, China’s success is more because of its special emphasis on elite schools (key schools) where one is expected to shine par excellence. In 2003, the Academic Ranking of World Universities (ARWU) ranking showed that there were 23 Chinese universities amongst 35 featured in total. The top 3 Chinese universities that entered the top 200 worldwide university ranking included National Taiwan University, Chinese University of Hong Kong and Tsinghua University. There are more on the list of the top 500, including institutes likes Beihang University (formerly known as Beijing University of Aeronautics & Astronautics) and Beijing Normal University, which entered the ranking for the first time.

In comparison, India produced a big blank sheet! Not only does India not figure anywhere in ARWU, but it is also invisible in the Times Higher Education World University Rankings and QS World University Rankings. India is way behind China in terms of even the number of universities. There are 545 universities in India compared to 2,236 in China. Even in medical colleges, there are about 630 colleges in China compared to 251 in India. The total enrollment in Indian universities is only 4.7 million compared to 11 million in China. The situation was similar some years back too when, in 2004-05, India churned out 464,743 engineering graduates while China produced 600,000 for the same year.     Read More....

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I have very fond memories of a great patriotic politician of India (very few such men can be found amongst today’s politicians), Vasant Sathe. Apart from his very intelligent, practical and radical views on the tax structure, I remember how he always compared Korea to India to show how a small nation could surge ahead so fast while we kept cheating our countrymen. When I went to Korea recently, I couldn’t but help feel the same; I even wrote about this a few weeks ago in one of my editorials. In the week gone by, I had the opportunity to sit with a gentleman who is a consultant to a company called Electrosteel Steels Limited. He told me the most amazing story of a venture – for setting up a steel plant – by one Mr. Kejriwal near Bokaro on about 1500 acres of land. It is a steel plant being set up with a capacity of 2.2 million tonnes. Hearing the fascinating story (I’ll explain later on why I found it fascinating) of this plant made me remember Mr. Sathe again. Amongst various things, steel was of special interest to him – as should be to any politician with vision, for after the Stone and Bronze Age, it was the Iron Age that was decisive for building the comparative advantage for nations. And it was during the Industrial Revolution when the entire world saw and realised the power and economies that this metal could create. With the invention of steel, everythingchanged further. Today, almost all industries ranging from automobiles to defence use steel and related products extensively. Steel has been one commodity that to a large extent has been pivotal for economic development and social prosperity, and thus has been a key ingredient in the nation’s future plans. Mr. Sathe would always compare the Indian productivity to Korean productivity to explain the rot in the Indian system – and then, of course, he would invariably talk about China too. So today I thought I’ll dig a little deeper into some facts and figures about this key aspect symbolizing a nation’s development.

A recent Wall Street Journal report foretells decisive growth in China and India’s steel industry for 2012. The details are very interesting. India’s position in steel production is meek and lagging, mainly on account of government control, bureaucratic hurdles and red-tapism, coinciding with poor planning, unprofessional functioning, and poor productivity. Not just Asian countries like South Korea, but even countries like Malaysia have productivity standards much better than India’s. A research report titled “Indian Steel Industry: Outlook to 2012” predicts that Indian crude steel production will grow at a CAGR of 10% during 2010-2013. Still, India’s average consumption of finished steel is significantly less than that of its neighbours. Not only is India’s annual steel production capacity, in absolute numbers, far less than what nations like China and South Korea have; but the per capita consumption is also at a rock-bottom figure. A time-series analysis indicates that both India and China started their tryst with steel production approximately during the same time. Just after Independence, India’s and China’s annual steel production were at the same level. However, by the end of 1990, where the per capita steel consumption in China increased by 65 kg and touched a figure of 160 kg, India’s per capita consumption languished at 29 kg (an increase of just 7 kg per capita) by the end of 2003. As per the latest ASSOCHAM report, the per capita consumption of steel in India is only 35.5 kg per capita per year compared to 220 kg in China and 950 kg in South Korea.

The same goes for production too. China’s steel production increased by 105 million tonnes while that of India increased by just 7 million tonnes! As per the World Steel Association, India’s annual production of steel in 2010 was merely 66.8 million tonnes compared to China’s 626.7 million tonnes and Korea’s 58.5 million tonnes. Unlike India, which saw an increase in steel production by a shameful figure of 13.3 million tonnes, the Chinese steel production grew at a whopping 131.8 million tonnes in a span of just four years ending 2010. Putting this number in a different perspective, India’s population in 2010 was 17 per cent of the global population while the corresponding steel production was merely 4.5 per cent of global steel production. The same was not true for China and Korea. China’s contribution to global steel production in 2010 was more than 44 per cent and Korea’s was 4.13 per cent in spite of their population being 20 per cent and less than 1 per cent of the world population respectively.

Steel production capacity and consumption capacity of a nation (especially per capita), as I said earlier, speak volumes about any nation’s fundamentals. Both production and consumption has a direct correlation with infrastructure development. The steel industry, by any measure, forms the very foundation of almost all manufacturing units and acts as a backbone for industrial development. With India growing demographically, and the nation relying heavily on steel imports, it is imperative for our policy makers to increase steel production by leaps. However, our archaic and non-liberal industrial policies did not allow many steel plants to come up. Barring Tata Steel (that produced 23.5 Million tonnes in 2010) and SAIL (13.6 Mt in 2010), there are literally no big names in steel production. On the contrary, China and Korea both allowed an array of steel plants to mushroom in order to meet the growing demand and facilitate their hunger of infrastructural development. South Korea has two large companies namely Hyundai INI Steel and POSCO, which respectively produced 12.9 and 35.4 million tonnes of steel in the previous year; still, China’s more than 10 large steel plants seem to be far ahead in the race. Chinese steel plants like Hebei Iron and Steel (produced 52.9 million tonnes in 2010), Baosteel Group (37.0), Wuhan Iron and Steel (36.6), Jiangsu Shagang (30.1), Shougang (25.8), Shandong Iron and Steel Group (23.2), Ansteel (22.1), Benxi Steel (22.1), Maanshan Iron and Steel Company (15.4) and Valin Steel Group (15.1) are standing as stalwarts in the global steel sector. Going by these numbers, China’s biggest steel plant is twice as big as India’s biggest steel plant.

Most of India’s steel plants – that too, mind you, could be set up thanks to the then USSR which benevolently came and virtually donated most of the plants to us around fifty odd years back – are labour intensive and over a million people are employed in the Indian steel industry either directly or indirectly. However, this number has no correlation when measured against labour productivity. This huge number does not reap the desired results as the average labour productivity in the Indian steel industry is very low at 144 tonnes per worker per year. The productivity at India’s two biggest steel plants is more horrifying, with SAIL having a labour productivity of 75 tonnes per man per year while Tata Steel with has a labour productivity of 100 tonnes per man per year. This is against POSCO’s (Korea) labour productivity, which stands at a mind boggling 1345 tonnes per man per year. This simply means that a single Korean worker produces 10 times more steel than an Indian worker! No wonder then that Mr. Sathe used to be so much in awe of Korea. In the same light, India’s labour productivity in the steel industry has increased from 11 per cent to 16 per cent (during 2002-2008) while that of China has increased from 12 per cent to 23 per cent. China’s steel industry enjoys low employment cost (labour cost being $1.5 per hour) and equally low operational cost (low cost of energy, equipment and transport). According to studies, cost of incepting a steel plant in China is just 60 per cent the cost of starting a plant in Europe. Steel companies in India have to pay a huge interest on capital apart from managing high costs of electricity and transport. Overall, as per estimates, the cost of capital in India is 14 per cent per year compared to 5-6 per cent in China and 6 per cent in South Korea. The average energy consumption in India is 2 million kilocalories per tonne more than the global standard of 4 million kilocalories per tonne, which is a crying example of how outdated and inefficient our steel plants are!     Read More....

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Amongst the many critical predicaments that the Indian economy suffers from, corruption has been one of the biggest monsters, and thankfully the most talked about in recent days. Needless to say, corruption has corroded every delivery system and has made it completely dysfunctional. The entire Indian public life is riddled with overriding rates of corruption – from the Adarsh land scam to Commonwealth Games misappropriations to the 2G spectrum scam – the list here has been endless, and the magnitude, obscene. In fact, India’s public life was never clean – the infamous Bofors scandal, Harshad Mehta’s nexus with senior politicians and Ketan Parekh’s stock market manipulation – all had their own perilous impact on the economy! It requires no empirical study or statistical survey to exhibit that we comfortably are the top performers in all corruption related global indices.

Take for instance, Transparency International’s Corruption Perception Index (CPI) where India’s rank has been slipping consistently – languishing at the 95th position now with a score of 3.1 (on a scale of 10), a sizable 23 ranks down from 2007! We are far behind China that stands at 75th position with a score of 3.6. CPI score is not only about corruption but is more about the way corruption has got institutionalised in our system. Also, it is a fact that India’s score could have been better had it not been battered with the monstrous 2G spectrum scam. Interestingly, all the least corrupt countries like New Zealand, Denmark and Finland with 9.5, 9.4, and 9.4 scores respectively are not just socially developed but also economically progressive. And that’s why these are those nations that experience very few cases of crime, corruption and other forms of social malaise – unlike India.

The thumb-rule that set the pattern is that the developed countries mostly have high CPI scores, whereas at the bottom of the table are the countries mired by civil strife and oppressive regimes; and in-between are the emerging economies as well as former communist blocks. There is also a direct correlation between CPI rankings and Human Development Index (barring some aberration like Greece, which, in spite of being a developed country is ranked below China at number 80; and South Korea, which is ranked 12th in HDI and is 43 in CPI). Most of the African as well as Asian nations have a combination of low CPI and low HDI scores and most of the European and North American countries have the opposite; thus reflecting a direct bearing between the two indices! On hindsight, it may appear that there is no impact of corruption on GDP growth and investments. China and India, both scored quite low on CPI, yet have been riding on decent economic growth and FDI inflow. Vietnam and Indonesia are even lower in ranks in CPI (2.9 and 3.0 respectively) are recipient of quantum investments with their economy kicking!

Another case in point of disconnect between GDP growth and corruption is Brazil with a score of 3.8 and Russia appallingly with 2.4, who are at the bottom half of the draw! However, there is an interesting catch here, particularly, with respect to India. We have an increasing income inequality with a dubious distinction of possessing the highest number of poor in the world. An OECD report reveals that the people belonging to the top 10 per cent of our income group are 12 times richer than the bottom 10 per cent. And this is increasing as the difference 20 years ago was only 6 times, that is, before the beginning of our magic potion of liberalization! Gini Coefficient another notable measure to evaluate inequality, is on a rise too – it has increased from 0.32 in 2000 to more than 0.37 now! There is no secret in the fact that the income inequality assuages the chances of employment to many, lowers purchasing power for consumption expenditure, halts the access to borrowing, and hinders the ability to save and invest! For the uninitiated, CPI also takes into account various parameters that have a higher social impact. India fares badly on almost all parameters considered under CPI – viz. bribery, extortion, nepotism, patronage, graft, embezzlement. The 2G spectrum scam, CWG scandal, cash-for-vote bribery case have set infamous benchmarks on all these parameters and surely are the reasons for such poor showing in the index.

More alarmingly, as India develops, there is an ascent of illicit money being stashed in foreign shores as well. There is no doubt that due to this corruption plaguing India, the fruits of development are certainly not reaching the desperately poorer sections of the society – a fact quite evident from the increasing gap between the rich and the poor. World Bank too has drawn a poor picture of India’s achievements in curbing corruption! The report is one on Governance Indicators, where India has fared quite poorly and is below the half level on most parameters. In the parameter ‘Rule of Law and Control of Corruption’, which directly addresses corruption related issues like crime, tax evasion, black markets, and judicial independence – India has scored a lowly 56th percentile! That said, India’s low score is quite expected and obvious on this particular scale. India is probably the worst performer globally with respect to tax evasion as a humungous amount of black money gets stashed abroad (we top the global list with more than $1 trillion of Indian black money floating around the world). Added to that, the efficacy of the Indian judiciary has been in question too as even such a corrupt nation like ours can still hardly boast of any political or business leader who has ever been sentenced to long years of imprisonment.

Shamelessly, leaders like Kanimozhi and many others who were arrested on corruption charges are now roaming scot free. And a few who are still behind bars are leading a luxurious life inside the prison with all luxuries at their disposal. This speaks volumes on the credibility of the so-called ‘Rule of Law’. Such lousy rules of law are the vital motivating factors for our political and business class to adhere to such corrupt practices.

Another research and advocacy organization, the Global Financial Integrity (GFI), released a report called ‘The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008’. The report alluded to some jaw dropping facts! As a direct result of black money stashed abroad, India has lost a humungous sum. Tax evasion, bribery and kickbacks, cases of crime and other forms of corruption – all are listed between 1948 and 2008! The 2G spectrum is a classic case of a royal kickback scam by A Raja and it is intriguing how our system managed it to keep it off-the-hook, more so as this was done during the Bofors era. Notwithstanding, in our gigantic corruption saga, the present valuation of this illegal capital flight is more than double the US external debt! Even at the corporate level, the private sector always preferred overseas financial centers – the share of which (in terms of deposits), went up from 36.4 per cent in 1995 to 54.2 per cent in 2009.

Because India was positioned as a nation-state post Independence, corruption developed a strong foothold in Indian politics. Moreover, given the series of scams that have come to limelight in the last one year, it is tempting to assert that Indians are by nature immoral and are liable to be corrupted easily. However, researches have shown that Indians are as prone to become corrupt as their peers in other developing nations of Asia. But one thing that sets Indians apart is their willingness to tolerate such corrupt measures. This is evident from the amount of bribes the common man in India pays for availing of even the basic services in his day to day life. From getting a service in the hospital to lodging an FIR or getting a driving license, every service requires a common man to pay bribe for getting the work done without much bureaucracy. Almost all the public services like the Public Distribution System (PDS), hospitals, schools, water supply, are corrupt from head to toe. As per the India Corruption Study 2010 by CMS, rural households of 12 surveyed states have paid an amount close to Rs 4700 million as bribes during the last one year. Critically, the most affected people by these corrupt practices in public services are those from socio-economically weaker sections of the society, particularly in rural areas.     Read More....

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Woodrow Wilson once said that, “A nation that is boycotted is a nation that is in sight of surrender. Apply this economic, peaceful, silent, deadly remedy and there will be no need for force. It is a terrible remedy. It does not cost a life outside the nation boycotted, but it brings a pressure upon the nation which, in my judgment, no modern nation could resist.” Rebutting the same, decades later, Omar Bongo, former President of Gabon, argued against the use sanctions, commenting, “...It is important to observe that when Europe or the United Nations impose sanctions that are supposed to be aimed against a certain regime, usually millions of people end up being directly punished.” With time, the very objective of sanctions has undergone a full transformation – today, sanctions are used mostly for strategic gains than anything else.

The United States and its allies (particularly Israel) are closing in on Iran! With a thumping majority (100-0), the US Senate last month approved sanctions prohibiting foreign financial institutions from undertaking any business with the Central Bank of Iran. After a series of sanctions that have been regularly imposed on and off, the US government’s latest sanctions against Iran (signed into law by US President Obama on December 31, 2011, as a part of the act titled H.R. 1540, the “National Defense Authorization Act for Fiscal Year 2012”) are clearly the strictest ever. In his official statement on H.R. 1540, available at the White House website, Obama uses the word ‘military’ 14 times, with ‘defense’ being used only 9 times – this makes the aim of the law very evident! For records, more than 15 sanctions have been imposed on Iran till date!

Post the latest set of sanctions, the Iranian national currency – Rial – immediately lost its value by almost 15-20 per cent and is currently being exchanged at its lowest-ever rate of around 17,000-17,500 Rials to a dollar. The sanctions curtail other countries too from buying Iranian crude oil. The US through the latest sanctions can also debar parties that are trading with the Central Bank of Iran from having correspondent banking operations in the United States.

The National Defence Authorization Act (NDAA) has been passed by President Obama with an ensured funding of $662 billion that apart from imposing sanctions on Iran will also review Iran’s military capabilities. This is of utmost importance in case US plans to wage a war against Iran in the near future! Not surprisingly, all this is amalgamated with one of NDAA’s main objectives – which is to ensure energy security of NATO.

The most audacious part of the Act is that NDAA has unilaterally slapped these sanctions in such a manner that it can impose penalties on any third party that dares to trade with the Iranian Central Bank! The official aim of this sanction, as cited by the US administration, is very basic, yet highly tactical – Iran’s revenue streams are expected to be stifled, and consequently Iran is expected to have no money to advance its nuclear program! However, such a reasoning seems silly and juvenile! How on the earth would US be able to strangle Iran from achieving its nuclear ambition when they have gloriously failed in the past to deter even poor and impoverished countries like North Korea from developing nuclear weapons, in spite of imposing several sanctions on these nations? The situation may soon boil up to a scenario that resembles the implication of Iraq in the 1990s. Failing to ruin Iraq through sanctions, US ultimately resorted to war.

As I mentioned earlier, this is not the first time that America has targeted Iran. On June 9, 2010, the Obama administration had slapped extremely hard sanctions on Iran; banning the delivery of major military equipment to Iran and prohibiting international financial and asset transactions of Iranian corporations. In fact, Iran is not the lone target of America in the region as Syria has been party to the NATO’s ire and has been facing sanctions since 1986. A month and a half ago, the European Union and United States imposed new and renewed sanctions on Syria on the ground of suppression of its rebels, but interestingly remained silent on the same kind of repression in Yemen and Bahrain!

US has always imposed sanctions and embargoes on the pretext of national security and eventually invaded the target nations after making them economically and politically weak. Iraq has been a crying example of the same. And in Iran’s case, neither has US been able to prove any negative use of the atomic and nuclear facilities that Iran possesses (the International Atomic Energy Agency has no concrete evidence against Iran), nor were they ever able to prove the presence of WMDs (Weapons of Mass Destruction) some years back in Iraq. The entire fable created around WMDs in Iraq ended with a mere apology from America’s end.

As a matter of fact, the perpetrators of 9/11 were Saudi and Pakistani nationals. Pakistan is internationally infamous for harbouring numerous terror groups and was shamefully responsible for providing sanctuary to even Osama Bin Laden. But neither Saudi Arabia nor Pakistan had to face sanctions post 9/11 like those being faced by Iran. Reason? They have been following US diktats word by word! And the lesser said about Taliban, the better for the US, as it’s quite well accepted that the Taliban has been America’s own creation.

The US trade embargo against Cuba is five decades old and was described as “ineffective and detrimental” by Obama himself in September 2010. Pakistan also did face military sanctions much before by the US (a 15 year embargo that ran from 1990 to 2005 on the sale of F-16 fighter/bomber aircraft); but that didn’t deter the country from purchasing weapons from elsewhere. In similar lines, sanctions have had results quite opposite the objectives for which they were enacted. Human rights abuse and societal demotion were strongly visible in nations like South Africa (faced sanctions between 1960s-1970s), Haiti (1990-1994), Iraq (1990-2003) and the former Yugoslavia (1992) and went against the very objective of the sanctions that aimed at protecting of human rights. The arms embargo imposed on South Africa (during the 1960s) was also found to be counter-productive. The then Pretoria regime responded to the sanctions by developing a large-scale domestic weapons industry called Armaments Corporation of South Africa (Armscor). Similarly, the sanctions on Yugoslavia didn’t prevent the Bosnian war and eventually pushed the nation into poverty and destitution.     Read More....

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