10 things the Cobrapost sting tells us

king cobra

Vivek Kaul

Stings in India till now have been carried out to expose politicians. The Cobrapost sting is the first sting that has brought into the public domain the murky way in which the big Indian private banks operate. But more than just exposing the murky way in which big banks operate, the sting brings out in the open other uncomfortable truths as well.

1. The finance minister P Chidambaram in his recent budget speech had said “There are 42,800 persons – let me repeat, only 42,800 persons – who admitted to a taxable income exceeding Rs 1 crore per year.” Of course no one took that number seriously. We now know why.
The Cobrapost sting clearly shows us that there are many more people with a taxable income of more than Rs 1 crore. The straightforward and more than helpful way in which the banks were ready to help invest the black money of the ‘supposed’ politician that the Cobrapost reporter was fronting for, can only tell us one thing: Banks seem to be doing this regularly.
And given this we can only conclude that there are many people out there with taxable incomes of more than Rs 1 crore, who don’t pay tax, than just 42,800. While it’s an obvious conclusion that did not need this visual evidence, but it is still an important conclusion nonetheless.
2. The second thing that the sting tells us is that those who have black money do not keep all of it under their mattresses. A lot of it as we know goes into buying real estate (largely benami). But the holders of black money seem to like to diversify their hoarded “wealth”. As the Cobrapost press release points out “(Banks) accept huge amounts of cash and invest it in insurance products and gold.” The money invested in insurance products is in turn invested in stocks, government securities and financial securities issued by corporations. So hoarders of black money do seem to be following the age old investing principle of “don’t put all your eggs in one basket”. They seem to be buying everything. From gold. To real estate. To stocks. And even have money in fixed deposits with banks.
3. By investing at least in gold and fixed deposits, hoarders of black money also show us that they like to have some liquidity in the assets that they own. Real estate is not terribly liquid and neither are insurance policies.
4. The sting also shows our love for gold which goes with the large amount of black money in this country. Very small amounts of gold can be used to store a large amount of black money as wealth. India has lot of gold because Indians love it is the normal claim that is made, but India also has a lot of gold because there is a lot of black money floating around.
5. The good bit is that instead of just lying around under the mattresses of people, some of the black money is coming into the financial system. When people buy insurance policies which in turn buy either debt securities issued by the government or the private sector or invest in shares issued by a company getting listed on the stock exchange, they are in some way financing someone who needs the money. That is the ultimate job of any financial system. To move money from those who have it, to those who need it. Now what proportion of the total black money comes into the financial system, that no one has any clue off. But its better than people just channelising all their black money into land and other forms of real estate. Also as more of this money comes into the financial system the greater are its chances of being detected.
6. The other interesting thing is that banks are helping channelise black money into insurance and not mutual funds. The main reason for this is the fact that insurance companies pay a much higher commission than mutual funds do, even though mutual funds remain a much superior mode of investing. It also goes with the cross selling that banks tend to do these days given that almost all of them own insurance companies. So if you have ever wondered why the moment you enter a bank they try to sell you all kind of insurance policies and not attend to the need you really went there for, you now know the answer.
7. Another major reason for banks selling insurance and not mutual funds to this set of clientèle who wants to put its black money to work is the fact that the know your customer (KYC) norms for mutual funds are much stronger than those required to invest in insurance. This is clearly an anomaly that needs to be done away with. Either mutual fund KYC norms need to be weakened or insurance KYC norms need to be strengthened. If it was not for these KYC norms, mutual funds remain a better way of hoarding black money given that they are very liquid. You can buy a mutual fund today and sell out tomorrow (unless you are buying a tax saving mutual fund that comes with a lock-in of three years). The same is not possible in case of insurance which comes in with a minimum lock-in of five years. Hence, mutual funds also need to be provided equal access to black money as insurance has. Also someone who has a lot of black money and is wealthy, doesn’t really need to pay for the “pure” insurance that compulsorily comes with the investment oriented insurance plans.
8. The sting also tells us that banks have double standards. If you are ready to deposit/invest a lot of money with/through them, then they are more than ready to lay out the red carpet for you. If you are not, then try changing your address once and wait for all the proofs they want. Or try asking for a locker, and wait for the bank clerk/relationship manager to tell you that you will also have to open a fixed deposit of a few lakhs to get a locker. Meanwhile as the Cobrapost press release points banks “ allot lockers for the safekeeping of the illegitimate cash, including special large size lockers to accommodate crores of hard cash.” Or try depositing money and the bank clerk will give you a nasty look for having to count the total amount of money you are depositing. Whereas if you have black money, the bank will come to your residence to collect it. As the Cobrapost press release points out the bank will “personally come to the residence of the client to take the black money deal forward and collect the cash, even bring along counting machine.” Wow.
9. What the sting also tells us is that how simple it is to create a fake identity in this country. The rapist Bitti Mohanty could do it. So can you if you have black money. And the banks will help you with it. As the Cobrapost press release points out “ICICI Bank officials were ready to make a suitable profile for the client, such as showing him as an agriculturist or engaged in some business, so as to make the investment unquestionable. On the other hand, Axis Bank officials proved to be a notch above in inventing fraudulent means. Use “sundry” accounts of the bank, they suggested, to deposit all the illegal cash from where it is to be routed into investment. Either use accounts of other customers, for a fee, to transfer money abroad, or use some shell company and take away a chunk of foreign currency as expenses toward business-cum-leisure trips.”
10. And to conclude, what the sting clearly tells us is that everybody who pays Income Tax in this country is basically an idiot who is being taken for a royal ride. If you have a lot of black money and you are not paying tax on it, chances are somebody out there is waiting for you with a red carpet.
Please go find him.

The < a href="http://www.firstpost.com/business/10-things-that-the-cobrapost-sting-tells-us-about-banks-661376.html">article originally appeared on www.firstpost.com on March 14, 2013 

(Vivek Kaul is a writer. He tweets @kaul_vivek) 

 

Why car sales are falling but not realty prices

homeCar sales for the month of February 2013 are down dramatically. For the month of February 2013 they fell by 25.71% to 1,58,513 units in comparison to the same month last year.
In
this column yesterday, this writer argued that falling car sales is a reflection of the overall economy slowing down. People expect the bad times to either continue or to get even worse in the months to come. And this makes them hold onto the money they would have otherwise used to buy high cost items like a car. It also means that they do not want to commit to an EMI right now. Given these reasons car sales have slowed down.
The question that immediately cropped up was that if car sales are falling, using the same logic real estate sales should also be falling and that should lead to a fall in real estate prices. If cars are a big ticket purchase, then buying a house is the biggest expenditure that most people incur during their lifetime. Also the price of cars over the last few years hasn’t risen much whereas the price of homes has gone through the roof, making them terribly expensive.
So why are people ready to buy homes but not cars? The answer of course is not straightforward. But before I come to that allow me to deviate a little.
The economist George Akerlof wrote a research paper titled
The Market for Lemons in 1970. For this paper, Akerlof ultimately received the Nobel Prize. In this paper he discusses the market for second hand cars (or used cars) and the problem people have in selling them.
Akerlof divided the second hand car market into two types of cars, peaches and lemons. Peaches were cars which were in a good shape where as lemons were cars which were in a bad shape. The individual selling the car obviously knows whether his car is a peach or a lemon but the individual buying the car doesn’t. So seller has what economists refer to as ‘insider information’ which the buyer doesn’t have.
The point is that in this transaction one side has much more information than the other side. So there is an asymmetry of information. As Nate Silver writes in The Signal and the Noise – The Art and the Science of Prediction “In a market plagued by asymmetries of information, the quality of goods will decrease and the market will be dominated by crooked sellers and gullible and desperate buyers.”
The real estate market in India is a tad like that. The sellers have all the information in the world and buyers have very little of it, almost next to nothing. And this manifests itself into situations which do not benefit the buyers at all.
Allow me to explain. Everyone talks about how real estate prices have been going up. This writer was recently told by someone that the flat he had bought in 2002 for around Rs 20-25 lakh was now going for Rs 2 crore. Fair point. But are there transactions happening at such an expensive price point? And if they are happening how are they in comparison to the past?
The point is that just looking at the price doesn’t give us the answer. One also has to look at the number of buyers looking to buy at that price point because only that can tell us how strong the trend is.
Unfortunately such kind of information is not available to most buyers in India. Hence, people who sell real estate, all the brokers and property dealers of the world, deal with buyers from a position of strength and always try to project a scenario where prospective homes are scarce. The buyers have no clue of whether deals are actually happening or not and hence tend to believe the brokers.
A real estate index which tell us the broad direction of the market would be a great thing to have. While attempts have been made in the past to launch a real estate index, nothing robust has come out till date.
There are reasons to believe that people are not buying as much real estate as they were in the past. This is not conclusive evidence but some evidence nevertheless. Try reading
any newspaper article which makes a pitch for the Reserve Bank of India cutting interest rates, the CEOs of real estate companies come across as the most desperate of the lot. This tells you at some level that they are not selling as much as they are building. But how will an interest rate cut of 25-50 basis points (one basis point is one hundredth of a percentage) lead to people buying homes is beyond me.
Newspapers provide another indicator. Every week the front page of one newspaper or another has an advertisement for a new real estate launch happening somewhere, where the buyer has to put a minuscule portion of the cost of the home upfront. This money that is raised is typically used by the builder to payoff money that is due instead of building the homes that he has advertised. A story in
The Carvan Magazine makes this point by quoting a property dealer : “If these builders were suddenly asked not to sell any more projects, I’m telling you, most of them couldn’t balance their books tomorrow.” So in effect most real estate companies are running Ponzi schemes where they are using money being brought in by the newer investors to pay off the older investors. As long as this Ponzi scheme keeps going real estate prices will continue to be high. If newer investors stop bringing in money, the builders will have to start selling the homes that they have built in order to pay off people who they owe money to.
Another interesting number is the proportion home loans form out of total loans given by banks. Home loans peaked at 12.9% of total banking credit in March 2006. As on December 28, 2012, they formed around 9.3% of total banking credit. And this in a scenario where housing prices have gone up many times between March 2006 and December 2012. Hence, it would only fair to assume that people are buying a fewer number of homes, at least by taking on home loans.
So if people are buying fewer homes why are the prices not falling? Those who work in the real estate industry would like us to believe that the cost of constructing a house has gone up. While that may be true to some extent the argument doesn’t justify the astonishing levels of price rise.
The material used in construction of a house and other forms of real estate was and continues to be easily available. Lumber which is used in large amounts is a renewable resource. Glass is made out of quartz, the second most common mineral on earth. Gypsum, which is the main constituent of plaster as well as wall board is very commonly available mineral. Cement is made out of limestone which forms 10% of all sedimentary rock formations on earth. (Source: The Subprime Solution by Robert Shiller). That leaves out the price of land on which the homes are constructed. We will just come to that.
A major reason for home prices not coming down despite the stagnant demand for homes is the fact that the market is dominated by investors/speculators and not real buyers who buy homes because they want to live in them. Anybody who has doubts about this can take a walk through the newer areas of the National Capital Territory. Most of the flats remain empty, giving an eerie feeling of a ghost town. All these flats are owned by investors/speculators. And it is these people who keep playing a game of passing the parcel among themselves and in a way ensure that prices of homes do not fall. Also they have made so much money in the past (and given that most of it is black money) they are in no hurry to sell these homes.
The story in
The Caravan quotes a property dealer to make a similar point. “There isn’t a bubble of real homes…If all these apartments were actually built, and built fairly to schedule, I guarantee you that they would find real buyers. The demand is out there. But there is a huge bubble in imaginary homes—in homes that will be delayed indefinitely or just never get built.”
Also most of the black money in India finds its way into property one way or another. Most of the ill-gotten wealth of politicians is also deployed in property. And any fall in price of real estate would mean the value of their wealth coming down.
But at the end of the day there is only so much black money going around as well. What creates the illusion of the real estate prices continuing to remain high is the supply of land. While India does not have a scarcity of land like Japan does, the problem is that politicians control the supply of land. Every state and central and politician has land held in benami. And this is the real bubble that has kept home prices high.
As Ruchir Sharma writes in
Breakout Nations “Lately Indian businessmen have been regaling one another with accounts of a leading politician from Mumbai who is known to have amassed a huge wealth through property deals. At a private screening of a new Bollywood movie, this politician asked the producer to replay a particular song-and-dance number, over and over. When the producer asked if he was taken with the leading lady, the politician said no, he was eyeing the location and wondering where the producer had found such an attractive stretch of open space in Mumbai.”
If home prices have to come down, it is this link that needs to be broken.
The article originally appeared on www.firstpost.com on March 14, 2013


(Vivek Kaul is a writer. He tweets @kaul_vivek) 

Why falling car sales is bad news for almost everybody

car
Vivek Kaul
The great film director Alfred Hitchcock started making films in the early 1920s in Great Britain. This was the era of silent movies. But Hitchcock really came into his own once he moved to Hollywood, where he first made the very dark Rebecca in 1940. For the next twenty years Hitchcock was at his peak churning out one hit film after another. This lasted till he made his scariest movie Psycho in 1960.
Among the many classics that he made during the period was a movie called 
Rear Window (which Ashutosh Gowariker before he became a director of epic movies tried to copy as Pehla Nasha). The movie tells a story of a photographer Jeff who has broken his leg and is bed ridden. A nurse called Thelma is taking care of him.
Jeff and Thelma are shown to be having conversations throughout the movie. One such conversation is reproduced below.
Stella: You heard of that market crash in ’29? I predicted that.
Jeff: Oh, just how did you do that, Stella?
Stella: Oh, simple. I was nursing a director of General Motors. Kidney ailment, they said. Nerves, I said. And I asked myself, “What’s General Motors got to be nervous about?” Overproduction, I says; collapse. When General Motors has to go to the bathroom ten times a day, the whole country’s ready to let go.
In the conversation above Stella tells Jeff that she had predicted the stock market crash of 1929 which led to the Great Depression, once she figured out that General Motors was in trouble because they were not selling enough and as a result overproducing. 
While Stella’s claim of having predicted the stock market crash was a little far fetched, the conversation in a very simple way shows the clear link that exists between the automobile industry of a country and its overall economy. General Motors got into trouble only when the American economy was in trouble and this in turn added to the troubles of the American economy further. So when car sales are down dramatically it is a reflection of the overall economy being in a bad shape and the stiuation probably worsening in the days to come. 
The domestic passenger car sales in India hit a twelve year low for the month of February 2013 when they fell by 25.71% to 1,58,513 units in comparison to the same month last year. In February 2012, domestic passenger car sales were at 2,13,362 units. This is the biggest decline in domestic passenger car sales since December 2000, when sales had declined by 39.9%.
In fact for the period between April 2012 and February 2013, car sales were down by 4.6%. This is a reflection of the overall state of the Indian economy, which is slowing down considerably. 
Lets look at the points one by one. Household savings have gone down from 25.2% of the GDP in 2009-2010(the period between April 1, 2009 and March 31, 2010) to 22.3% of the GDP in 2011-2012(the period between April 1, 2011 and March 31, 2012). While the household savings number for the current year is not available, the broader trend in savings has been downward. 
So people have been saving lesser over the last few years. A straightforward explanation for this is the high inflation that has prevailed over the last few years. The consumer price inflation for the month of February 2013 stood at 10.91% in comparison to 10.79% for the month of January 2013. Food prices in February 2013 rose at a much faster 13.73%.
People are possibly spending greater proportions of their income to meet the rising expenses due to high inflation and this has in turn led to a lower savings rate. High inflation would not have been a problem if incomes also had been growing at a fast rate. But that doesn’t seem to be the case.
Estimates released by the Ministry of Statistics and Programme Implementation clearly point that out. As a release dated February 7,2013, states “The per capita income in real terms (at 2004-05 prices) during 2012-13 is likely to attain a level of Rs.39,143 as compared to the First Revised Estimate for the year 2011-12 of Rs. 38,037. The growth rate in per capita income is estimated at 2.9 per cent during 2012-13, as against the previous year’s estimate of 4.7 per cent.”
So prices have been growing at a very fast rate and incomes haven’t. In this scenario people have been cutting down on the consumption of high costs items like cars as they struggle to save the same amount of money as they had been doing in the past.
High inflation and lower household savings has also led to higher interest rates, which in turn has meant higher EMIs on automobile loans. This also has had its impact on car sales. And high inflation is here to stay. As Ruchir Sharma, a Managing Director & Head of Emerging Markets and Global Macro, Morgan Stanley Investment Managemen, recently said “The whole issue is that inflation is symptomatic of a wider problem in India.”
What has not helped is the fact that the government borrowing to finance its increased fiscal deficit(the difference between what it earns and what it spends) has also gone up over the last few years. Banks have had a lower pool of money to borrow from because of this and have had to offer higher interest rates to attract depositors. Higher interest rates on deposits have meant higher interest rates on loans and thus higher EMIs. 
But the greater impact has been because of the government deciding to allow the price of petrol and diesel to go up. With the government holding back the price of petrol and diesel for a very long time, prospective car buyers kept buying cars because they were not feeling the pinch of the high cost of fuel. Now any prospective car buyer also needs to take the high cost of fuel into account while making a decision. Since people were not paying the right price for diesel and petrol, this had artificially held up the demand for cars. Now that demand is coming down crashing. The point is that any artificial demand cannot hold up beyond a point. 
What this also tells us is that if the government had allowed the market to operate when it came to fuel prices, auto demand would have not come crashing down as it has, but would have adjusted gradually to a change in higher fuel prices. And you don’t need to be an expert to understand that a gradual adjustment is better than a dramatic fall. 
Now this is just one part of the story which explains why car sales have slowed down dramatically. But there is another part to the story. Slowing car sales also slow down other sectors of the economy as well, and this slows down the overall economy further. As T N Ninan wrote in a brilliant column in Business Standard in January 2013 “The car industry is a key economic marker, because of its unmatched backward linkages – to component manufacturers, tyre companies, steel producers, battery makers, glass manufacturers, paint companies, and so on – and forward linkages to energy demand, sales and servicing outlets, et al.”
In that context the fall of car sales by more than 25% in the month of February 2013 should be a clear sign of worry. Slowing car sales are also a reflection of the fact that people expect the bad times to either continue or to get even worse in the months to come. And this makes them hold onto the money they would have used to buy a car otherwise. It also means that they do not want to commit to an EMI right now. 
Floyd Norris writing in The New York Times explains it best: “New-car sales can be a particularly sensitive economic indicator because few people really need to buy a new car, and thus tend not to do so when they feel uncertain about their economic prospects. Even if a car purchase can no longer be delayed, a used car is an alternative.”
The article originally appeared on www.firstpost.com on March 12, 2013 

(Vivek Kaul is a writer. He tweets @kaul_vivek)
 

What happened when Narendra Modi met Rahul Gandhi

Vivek Kaul
 (This is a work of fiction)
Both Modi and Rahul were waiting at the VIP lounge of the Indira Gandhi International Airport in Delhi. There jets had developed technical snags and were being repaired.
“So?” said Modi, trying to start a conversation. “I hear you are trying to follow my footsteps.”
“Follow you?”
“Yes. I heard you don’t want to have any kids.”
“Yes. But I also don’t want to get married,” said Rahul, trying to clarify his point.
“Isn’t that the same thing?” asked Modi.
“I hear Narendra bhai you were married once,” said Rahul, trying to give chabhi to Modi.
“Mind your own business,” replied a very irritated Modi.
“Come on Narendra bhai we all know you immediately corrected your mistake,” said Rahul, trying to mollify Modi.
“Yes I did,” replied Modi. “But these women can drive you really crazy.”
“You must be talking from your ‘brief’ experience. My Spanish girl friend used to talk non-stop. Kept calling me Raul instead of Rahul. ”
“Did she?”
“Yeah. She used to really role her tongue while calling me Rauuuuuuuuul. And she thought I knew Spanish.”
“But don’t you?” asked Modi.
“Nah. I know Italian.”
“Isn’t that the same thing?”
“Not really.”
“Oh.”
“It’s as different as Marathi is from Gujarati,” explained Rahul. “And dhokla is from puran poli.”
“That’s news to me,” said Modi.
“Yes. And I got into some major trouble with my pretending.”
“Acha. What happened?”
“Me and Veronique, my girlfriend, were on holiday in Spain. She was talking non-stop and while talking she handed me a red trouser.”
“Red trouser?” asked Modi. “Not Saffron? Isn’t that a better colour.”
“Oh. But I am more left than right na,” said Rahul. “Plus given my one fourth Kashmiri Pandit genes, red suits me.”
“Acha. So what happened?”
“So she gave me the trouser. And I thought her non stop banter was about wearing it.”
“And you wore it?” asked Modi.
“ I wore it thinking this must be some Spanish tradition. We were supposed to visit her parents later in the day,” said Rahul.
“So what happened then?” asked Modi.
“Well turned out that before visiting her parents we were supposed to go to a bull-fight, where I was the matador for the day.”
“Oops.”
“I ran all the way to the airport with the bulls after me. And I haven’t seen her since then.”
“Now that was some story.”
“Yes. One of my friends tried to set me up with an Afghani girl. I gave up on the idea as soon as I found out that the national game of Afghanistan is Buzkashi.”
“Next time you should date a Gujju girl. Worse come worse she will make you fly kites on Makar Sankranti and make you eat dhoklo, theplo, khakro and undiyo,” said Modi, trying to feign some sympathy for his rival.
“And I can shout Kai Po Che,” said Rahul, rather excitedly. “Once I cut your kite.”
“If you want I could even look for a good Gujarati girl for you,” offered Modi, ignoring Rahul’s remark.
“Could you?” asked Rahul.
“Yes, why not!”
“But there is a slight problem with that?”
“What? Madam won’t like it?” asked Modi. “Don’t worry I will talk to her.”
“No. No. Ma to is okay as long as I marry a girl.”
“Then?”
“Well, I can’t call my girlfriend ben no.”
“Don’t make fun of Gujaratis. Ye achi baat nahi hai,” said Modi, trying to get into a Vajpayee mould.
“Narendra bhai. Poor joke che!”
“But its nice you are following my footsteps,” said Modi, trying to reclaim some ground.
“Why only you? There are so many others like you,” said Rahul.
“Like?” asked Modi.
“Like Jayalalithaa in Tamil Nadu. Mamata in West Bengal. Mayawati in Uttar Pradesh. Pappu in Orissa.”
“Pappu?”
“Oh, sorry. I mean Naveen Patnaik. Pappu is his nickname. Everybody in the Delhi party circuit used to call him that.”
“No. But I am different from all of them. I am NaMo. The Narendra Modi,” screamed Narendra Modi. “If I had the 3D presentation on like I had during the Gujarat elections, there would even be a Halo over my head right now and a Sudarshan Chakra in my index finger.”
“Calm down Modi saab. We are all the same. We want power so much that we are not ready to even share it with our children,” said Rahul, blurting out the truth.

(This is a work of fiction)
(Vivek Kaul is a writer. He tweets @kaul_vivek) 
 

Why Rahul Gandhi doesn't really mean what he says

rahul gandhi Vivek Kaul
In an interview to the Tehekla magazine in September 2005, Rahul Gandhi, now the Vice President of the Congress party, is said to have remarked that I could have been prime minister at the age of twenty-five if I wanted to.”
The statement created an uproar. The Congress party immediately jumped to the defence of its princling. Abhishek Manu Singhvi, the then Congress spokesperson, specifically mentioned that Rahul had not said ‘I could have been prime minister at the age of twenty-five if I wanted to’.
Tehakla initially stood by its story but backed down later. “This seems to be a clear case of misunderstanding. Mr Gandhi thought he was having a casual chat whereas our reporter took it to be a proper interview,” the weekly said
in a statement.(The ‘edited’ casual chat can still be read on Tehelka’s website).
On another occasion Gandhi remarked
“Please do not take it as any kind of arrogance, but having seen enough prime ministers in the family…it is not such a big deal. In fact, I often wonder why should you need a post to serve the nation.” (Source: Decoding Rahul Gandhi, Aarthi Ramachandran).
Gandhi’s obsession on clarifying that he is not in the race, seems to have continued. “Asking me whether you want to be prime minister is a wrong question,” he recently told journalists. In fact he even went onto add that he did not want to get married because marriage leads to children and a lust for power. “I feel we should all be detached from power. Only then we can contribute to the society better. You people ask me about my marriage plans. Sometimes, I think, if I marry and have children, I would want my children to take my position,” he said.
The spin doctors of the Congress party have been working overtime to portray this statement of their princling as a great sacrifice. But being married has got no link with running political fiefdoms and lusting for power. As Swaminathan Anklesaria Aiyar writes in
a recent column in The Times of India “Mayawati and Jayalalithaa are both unmarried and without kids, and they run fiefdoms no less feudal than the Congress. Absence of children has never meant decentralisation.” This argument also works for Mamata Banerjee in West Bengal, Naveen Patnaik in Orissa and Narendra Modi in Gujarat, who also run political fiefdoms despite having no children. So the lust for power or politicians running political fiefdoms, has got nothing to do with being married or not.
Also the question is that what can Rahul Gandhi get done as a Prime Minister that he cannot get done being outside the government (assuming that the Congress led UPA continues to be in power)? As Tavleen Singh writes in
a recent column in The Indian Express Rahul already has more power than almost any politician in India other than his mother. So why should he want something he already has?”
Other than wanting to be detached from power, Rahul Gandhi also wants to empower middle-level leaders. “Today, I see how MPs feel without power and it is the same story in all the parties, be it the Congress or the BJP. I want to empower the 720-odd MPs in Parliament. I want to give voice to the middle tier, empower the middle-level leaders,” he said.
While he can’t do anything about the BJP, what is he doing about the Congress? Not much seems to be the answer. The upper ranks of the Congress party seem to be filled with sons/daughters of Congress leaders. In fact, Rahul’s boys, a term I use for the relatively younger leaders in the Congress party supposed to be close to the princling, are all sons of Congress leaders. As Aiyar writes “After talking for years about promoting youth in politics, you have indeed promoted many newcomers to important ministerial positions. They are young by Indian standards, but many have greying hair. The list in New Delhi includes Jyotiraditya Scindia, Sachin Pilot, Milind Deora and Jitin Prasad.”
Nothing seems to have been done about the Congress tradition of the so called “high command” appointing the Chief Minister, in case the party happens to win a state election or even otherwise. This trend was most recently visible in Uttarakhand where the majority of the MLAs wanted Harish Rawat as the Chief Minister, but had to make do with the high command’s choice of Vijay Bahaguna ( who interestingly is the son of the late H N Bahuguna, who was with the Congress party for most of his life). The high command also appointed Prithiviraj Chavan (whose father and mother were both Congress MPs), a political lightweight who was not a member of the state assembly, as the Chief Minister of Maharashtra when they wanted to replace the scam tainted Ashok Chavan (son of SB Chavan, another Congress leader).
The points made above are not exactly rocket science. And I am sure Rahul Gandhi understands them as well as the others. As Tavleen Singh writes in The Indian Express Rahul Gandhi knows this as well as anyone else in politics, and if he wants to change things, then this is terrific. But why does he not get on with it? Why does he not begin by ensuring that next time the Congress party wins elections in some state, the high command is not given the task of choosing the chief minister? Why does he not ensure that next time a parliamentary constituency reports a vacancy, it does not get handed down to an heir?”
Singh in her column writes that as a responsible political pundit she has been mulling over what Rahul Gandhi said, and she remains “puzzled” and “mystified” by it.
This writer believes that there is an answer to what Singh refers to as a mystery and a puzzle. Allow me to explain. The writer Ramachandra Guha told me in an interview late last year that “I think this dynasty (Gandhi) is now on its last legs. Its charisma is fading with every generation.”
This is something that Shekhar Gupta also pointed out in The Indian Express “Ask any Congress leader who contests elections (unlike its star cast of chronic Rajya Sabhaists) and they will admit to you, albeit in whispers and fearfully glancing left and right, that the days when the Gandhi family could win them their seats are over. In the elections, now, it is every man for himself.”
This has been proven in Uttar Pradesh elections and the Bihar elections before that where the Congress party was routed. Rahul Gandhi was closely involved with both the elections. Given this the ability of Rahul Gandhi or for that matter his mother Sonia, to get in the votes for the party, is very limited. They are not in the same league as Jawahar Lal Nehru, Indira Gandhi or even Rajiv Gandhi, before them. Gupta explains it best when he writes “their ability to win seats beyond the Amethi-Rae Bareli enclave has diminished to insignificance.”
It would be foolish to believe that Rahul or Sonia do not understand this. Hence, they need the Scindias and the Deoras and the Pilots and the Prasads, of the world to continue winning elections. The smaller princlings within the party who can continue bringing in the votes from all across the country. The Congress party may be a shadow of what it was in the past, but it continues to remain India’s largest party. And for it to hold onto what it has, it needs to continue with the feudal structure that totally encapsulates it, with the Gandhis at the top.
In fact when the party has tried to get rid of its feudal structure it has had disastrous results. Take the case of Andhra Pradesh. After the death of Y S Rajasekhara Reddy, his son Jagan Mohan, wanted to become the Chief Minister. And that was not allowed. Jagan Mohan left to form his own party and is expected to widely damage the electoral prospects of the Congress party in a state which sends 42 members to the Lok Sabha.
On the flip side, even though the Gandhis are no longer the vote winners they once were, they are still very important to the idea of Congress. As Gupta put it in his column “I asked a senior (and always elected) Congress leader, then why was the Gandhi family still so important and had total sway over the party. He said, surely they cannot help anybody win elections, but they keep the party together. Their word is law and the party needs that discipline. Illustration: the moment Sonia or Rahul says something, everybody nods and falls in line. If Narasimha Rao or Sitaram Kesri said something, everybody broke out in rebellion and rashes.” So even though the Gandhis may not bring in the votes, they do help keep the Congress flock together.
Given this is in nobody’s interest, neither the Congress party, nor Rahul Gandhi (or for that matter his mother Sonia) to disturb the status quo. The Congress needs the Gandhis to survive as a party, and the Gandhis need the seats in the Parliament and the state assemblies to continue to be relevant.
In October 2008, while addressing girl students at a resort near Jim Corbett National Park, Rahul Gandhi referred to “politics” as a closed system in India. “If I had not come from my family, I wouldn’t be here. You can enter the system either through family or friends or money. Without family, friends or money, you cannot enter the system. My father was in politics. My grandmother and great grandfather were in politics. So, it was easy for me to enter politics. This is a problem. I am a symptom of this problem. I want to change it.”
More such statements will be made in the days to come. Meanwhile, the symptom and the problem will continue to co-exist.
The article originally appeared on www.firstpost.com on March 12, 2013 

(Vivek Kaul is a writer. He tweets @kaul_vivek)