Sitaram Yechury, the CPI(M) member of parliament, was asked in a recent interview in the Outlook magazine, whether the next Lok Sabha elections were going to be a direct contest between RaGa (Rahul Gandhi) and NaMo (Narendra Modi).
To this rhetorical question Yechury gave a brilliant answer: “There is a lovely saying in Telugu: Aalu ledu choolu ledu, koduku peru Somalingam, which means ‘I don’t have a home, I don’t have a wife but my son’s name is Somalingam’!”
The debate whether the next Lok Sabha elections in 2014 (or even earlier for that matter) are going to be a fight between Narendra Modi and Rahul Gandhi is basically a pointless one right now and at least till the election results are out. And there is more than one reason for the same.
In states that elect a large number of MPs to the Lok Sabha, neither the Congress Party nor the Bhartiya Janata Party (BJP) is expected to be the largest party and win substantial number of seats. In Uttar Pradesh, which elects 80 Lok Sabha MPs, the fight is between Samajwadi Party and Bahujan Samaj Party. The BJP is expected to come third. In West Bengal, which elects 42 Lok Sabha MPs, the fight is between the CPI(M) and Trinamool Congress. Similary Andhra Pradesh, which elects 42 Lok Sabha MPs, the fight is between YSR Congress and the Telgu Desam Party. In Tamil Nadu, which elects 40 Lok Sabha MPs, the fight is between the DMK and the AIADMK. In Orissa, which elects 21 Lok Sabha MPs, Naveen ‘Pappu’ Patnaik’s Biju Janata Dal is expected to do well.
In Karnatka, which sends in 28 Lok Sabha MPs, BS Yeddyurappa’s Karnatka Janata Paksha (KJP) is expected to play spoilsport for the BJP. In Bihar, which sends in 40 Lok Sabha MPs, if the Janata Dal(United) and BJP, do not enter into an alliance and fight elections on their own, it is likely to benefit Lalu Yadav’s Rashtriya Janata Dal. And on top of all this factor in the impact Arvind Kejriwal’s Aam Aadmi Party may have on the elections.
In fact, last year there were reports of even a fourth front with strong chief ministers like Nitish Kumar, J Jayalalitha, Mamata Banerjee and Naveen Patnaik, being its constituents. Arun Nehru, a former bossman at Jenson and Nicholson, a former MP and minister seemed to be leading the charge on this front. As a report in The Indian Express had pointed out “One man who says he is working to get them together is former MP and perennial seat-predictor Arun Nehru. He’s set the “fourth front” ball rolling among CMs Nitish Kumar, Mamata Banerjee and Naveen Patnaik and TDP leader N Chandrababu Naidu. Sources confirmed that the Bihar CM had been in constant touch with Banerjee and Naidu, directly and through Nehru, to “keep exploring possibilities.””
Given this it is likely that parties other than the Congress and the BJP might get sufficient number of seats allowing them to form some sort of a Third/Fourth Front. This front can then form the government with the outside support of either the Congress or the BJP. As Naveen Patnaik, the chief of the Biju Janata Dal and the Chief Minister of Orissa recently said “I think the Third Front is a very healthy option. But it is still early days.” In this scenario neither Rahul Gandhi nor Narendra Modi, will come into the direct picture.
How the situation develops will depend on how the post poll alliances evolve. As Nilanjan Mukhopadhyay, author of Narendra Modi – The Man. The Times, told me in an interview “ The next election will in all likelihood see post-poll alliances determining who will head the next government.”
Given that, the entire hungama about the race to the top between RaGa and NaMo doesn’t really hold. It is the regional satraps who hold the key to real power. And in a situation of a Third Front being formed, UPA allies like Sharad Pawar and his Nationalist Congress Party will be the first ones to jump the ship.
Hence, the next Lok Sabha elections will not be a presidential sort of race that it is being made out to be. In fact neither the Congress nor the BJP will take the risk of naming a PM candidate before the elections. It will depend on how post poll alliances evolve and who is acceptable to the ‘potential’ allies i.e. if they have enough number of seats to negotiate.
Narendra Modi in his own way recognises this. As Mukhopadhyay said “I had asked Modi about the number of dwindling allies. He argued that if the BJP’s winnability increased, allies would automatically come. He said they had more allies when they were on the winning curve but they started deserting when the ship began sinking. If it becomes afloat again, other would jump in. It is with grave risk that one should indulge in crystal ball gazing. But if the situation does not alter dramatically within BJP, and in other parties – including Congress – I see little chance of any party naming their prime ministerial candidates…Modi’s chances will depend on the number of seats the BJP wins.”
Hence, even Modi understands at some level that it will be a liability for the BJP to declare him as their PM candidate in advance. So the BJP is likely to be as vague as is possible for them to be on Modi. But at the same time enough signals will be given to the core cadre of the BJP to project Narendra Modi as the Prime Ministerial candidate.
When it comes to Rahul Gandhi he has clearly said that he is not in the race to become Prime Minister. The cynical interpretation of this is that all politicians say these kind of things. And that to a large extent this is true as well. The only people to whom this so called unwillingness of Rahul to be in the race, causes problems for, are the chamchas that the Congress party thrives on.
As Ian Jack writes in Mofussil Junction – Indian Encounters 1977-2012 “The Congress party became a machine largely bereft of ideology, with one purpose: to elect a prime minister called Gandhi…For without a Gandhi, even a Gandhi from Turin, the Congress fears it will be found out.”
While the chamchas in the Congress party may want Rahul to lead the charge, he clearly doesn’t see himself in the race. And here he may have picked up a thing or two from his mother, who after having refusing the PM’s post, was the defacto PM anyway. So if a Congress led coalition does come to power, and even if Rahul Gandhi chooses not to lead it, he would be leading it anyway. So it doesn’t matter if he is in the race or not. The Congress might choose even someone like a Pratibha Patil to be PM (like it chose Manmohan Singh), but the real power will remain with Rahul and his mother.
To conclude while, the social media might feel that this there is a direct fight on between NaMo and RaGa (or feku versus pappu) for the 2014 Lok Sabha elections, it hardly seems to be like that after some reflection. The sufi saint Nizamuddin Aulia once said Hunooz, Dehli Door Ast (Delhi is still far away) and that is as true for RaGa as it is for NaMo, at this point of time.
The article originally appeared on www.firstpost.com on April 17,2013.
(Vivek Kaul is a writer. He tweets @kaul_vivek)
Month: April 2013
Grow Rs 5000 to Rs 3.4 crore in a year – Is MMM the biggest Ponzi scheme ever?
Charles Ponzi, the man on whom Ponzi schemes have been named, has been dead for more than sixty years. And after all these years, it looks like that the world may have finally found a successor to Ponzi. His name is Sergei Mavrodi (featured above) and he is a Russian.
But before he get to Mavrodi, lets first try and understand what a Ponzi scheme is.
Charles Ponzi, an Italian immigrant into the United States, promised investors in the city of Boston that he would double their money (i.e. give them a 100% return on their investment) in 90 days.
Ponzi had hoped that to make this money through a huge arbitrage opportunity that he had spotted among the international postal reply coupons being sold across different countries. But due to various reasons both bureaucratic as well as practical, he could never get around to execution.
But by the time Ponzi realised this, big money was coming into his scheme and he had got used to a good lifestyle. At its peak, the scheme had 40,000 investors who had invested around $ 15 million in the scheme.
Ponzi kept his investors happy by using money brought in by the new investors to pay off the old investors who wanted to redeem their investment. And that is how the scheme operated upto a point. On 26th July 1920, the Boston Post ran a story questioning the legitimacy of the scheme. Within a few hours, angry depositors lined up at Ponzi’s door, demanding their money back. Ponzi asked his staff to settle their obligations. The anger subsided, but not for long. On Aug 10th, 1920, the scheme collapsed. The auditors, the newspapers and the banks declared that Ponzi was definitely bankrupt.
Ponzi was not the first person use this trick of using money being brought in new investors to pay off old investors. Neither was he the last.
Ponzi promised a 100% return to his investors in 90 days. But Sergei Mavrodi has managed to do evern better than Ponzi. His scheme MMM India (where MMM stands for Mavrodi Mondial Moneybox) is telling investors that their deposits will grow at 100% per month. Yes, dear reader, you read it right, 100% per month.
In fact as the following table on the webiste www.MMMindia.in shows, an investment of Rs 5000 made on April 15, 2013, is likely to grow to nearly Rs 3.4 crore in a year’s time. (You can check out the link here and even put in different amounts to see how much would it grow to at the rate of return of 100% per month).
Sum of deposit: Rs 5000
15 April 2013
15 May 2013
15 June 2013
|After 3 months|
15 July 2013
15 August 2013
15 September 2013
|After 6 months|
15 October 2013
15 November 2013
15 December 2013
|1 750 607.86|
15 January 2014
|3 853 784.10|
15 February 2014
|7 896 443.57|
15 March 2014
|15 424 270.12|
|After 12 months|
15 April 2014
|33 954 877.55|
Mavrodi brought MMM to India in 2011. The way it operates is very simple. The system is constructed around two concepts, give help and get help. So an individual logs on to the website www.mmmindia.in. Here he can help someone. To do this he needs to transfer money. This can be done through online banking, NEFT or even a direct cash deposit.
This amount is treated as a deposit in terms of a currency called Mavros, which is a virtual currency, whose exchange rate is decided personally by Mavrodi, twice a week on Tuesdays and Thursdays. This deposit in Mavros is supposed to grow at the rate of 100% per month.
Now if someone wants to sell these Mavros he needs to press the get help button. As the MMMIndia website points out “First the system calculates the amount of requests for payments (GET HELP button). And then, as per these calculations it will send request for transfers randomly to the participants (GIVE HELP button). Not necessarily, a request for transfer may or may not occur within a month.”
This basically means a couple of things. First you can get into the scheme anytime you want, but you can’t get out anytime you want. The second point is even more interesting. In order to get out of the scheme it is necessary that other people are willing to get into the Give Help mode. This means that they should be willing to transfer money from their account to your bank account.
This is like a classic Ponzi scheme where money being brought in by the newer investors (or more money being brought in by the older investors) is used to pay off those who want to exit the scheme.
In fact MMM India clearly shows on its website the structure of the way it operates.
This clearly tells you that pyramid structure that the scheme has. Also the scheme has no ‘supposed’ business model per se like a lot of other Ponzi schemes tend to have. In fact the website clearly points out “Do not forget this! There are no investments! No business activity! There is no company! There are no shares transactions, any relationship with the professional participants of the shares market, no shares or any product you do not get! Any source of income is ALSO NOT HERE!”
Despite this, the scheme has found many takers in India. As a recent article in the Business Standard points out “In India, adherents in the countryside of Maharashtra, Gujarat and Punjab are growing by the day. There are plans to take the network to other states.”
This is not the first time that Mavrodi has successfully launched a Ponzi scheme. He has done so in Russia in the past. The sudden switch from communism to capitalism in Russia created an unstable environment that made it ripe for running Ponzi Schemes.
MMM Corporation was the largest and the most famous of the lot. It was started by Sergei Mavrodi, a former mathematician, MMM issued share certificates which looked like bank notes. (These share certificates were not traded on any stock exchange).
Attracted by promised returns of 10% per week, the investors lapped up the share certificates. MMM became a market maker for these share certificates. The money collected by selling share certificates to the investors was not invested but essentially used to pay off the investors, selling the share certificates back to MMM. Effectively, money from the newer investors was used to pay off the older investors.
When questions were raised about the huge returns, it had promised, MMM stated that it had solid investments, but did not want to disclose them as its competitors might imitate its investment strategy. The returns offered were higher than those offered by Russian commercial banks, which were not very stable at that point of time. So many people withdrew their deposits from banks and bought share certificates issued by MMM. In the 1994 football World cup, which was held in the months of June-July in the United States of America, the Russian soccer team was sponsored by MMM. MMM advertisements ran extensively on state television and became very famous in Russia.
In July 1994, the Ministry of Finance warned investors about the unsustainibility of the scheme. This started a run on the scheme with investors dumping the share certificates enmasse. Soon the amount of money leaving the scheme was greater than the amount of money entering the scheme. On 26th July 1994, the share certificate scheme collapsed with all but one offices of the firm being closed down.
By getting elected to the Russian Duma, Mavrodi obtained immunity from prosecution, as per the Russian Constitution. After refusing to honour his previous commitments, Mavrodi decided to start a similar scheme which promised very high returns. Despite his past failure, many investors queued up to invest. In Oct 1995, Mavrodi was expelled from the Duma. He tried his best to get re-elected, but failed. A case was filed against him.
And it is the same Mavrodi who has now come to India to a run a Ponzi scheme. The beauty of this scheme is that he is even telling his potential customers that he is running a Ponzi scheme. But people being people, are still falling for it.
The article originally appeared on www.firstpost.com on April 15, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)
If Godhra had not happened…Modi would have been part of history by now
When it comes to writing biographies the life of Narendra Modi has been one of the most interesting subjects going around over the last decade. But no book which makes an objective assetsment of the life and times of Modi has been written till date. Nilanjan Mukhopadhyay‘s Narendra Modi – The Man. The Times (Tranquebar, Rs 495), seeks to fill this gap. Mukhopadhyay has worked for several newspapers and magazines like The Economic Times, Hindustan Times, Outlook and The Statesman, in the past. He is also the author of The Demolition: India at the Crossroads. In this free-wheeling interview he speaks to Vivek Kaul, on how Modi’s life has impacted his politics and how his politics is impacting all of us.
Can you tell us a little bit about Narendra Modi’s childhood?
Decoding Modi’s childhood was very important to me from the outset because the die was cast then in his case also. I used this tool of the simultaneity of time. I portrayed events in Gujarat and India in 1950 when he was born, the political developments taking place in the 1950s when the Modi was becoming aware of the world outside his cocoon. Vadnagar(where Modi was brought up) in the mid 1950s was such a small place, that every one would have also known even the stones on the walls, forget each other. There was single train that went on the metre gauge track and it returned – on way to Mehsana in the evening. Not many people crossed the village for his father’s tea-shop to be doing roaring business. Life must have been tough though better than the working class who slugged it out in the fields of the rich farmers.
What is Modi’s own take on his childhood?
When I interacted with Modi early on, he did not romanticise about his difficult childhood. Many people in public life have used their deprived childhood as a reason for a slip here and there. In most early interactions, he was reticent to talk about his childhood. It became a media story after he became chief minister and image building became a necessity after the 2002 riots. The sob stories were fed to an eager media in those years. There were some problematic associations that I have probed and come up with some fresh information. They are indicative of his weaknesses, like his aggression and defiance of teachers.
You write that Modi’s mother was the only one who during those days felt that her son was destined for bigger things….
My claim that his mother being sure that he would break free from the lower middle class trappings is concerned, this is based on what his old friends said. Modi biography was first and foremost a simple narrative to me, with all its high and lows, the melodrama and the mania. I wrote the early chapters trying to find traces of his present. But instead of going from the present to the past, I let the past evolve into the present.
You talk about how very early in life Modi liked to present himself well. He also had a love for acting and theatre…
While talking of his early life, Modi mentioned that he joined the Maha Gujarat agitation at the age of six. He did not know much about it and was in it because it provided a platform to display enthusiasm. He got the spotlight and thereafter there was no looking back. From leading the ‘baccha brigade’ in the agitation, he was at the forefront in the volunteer camps during the 1962 war. Barely twelve, how could the family imagine Modi will return to the cocoon. He found expression to his desire for the outside world through theatre, Bal Shakhas and his swimming adventures. By the time he was in pre-teens, Modi had broken free of the herd of classmates.
How good was he at his studies?
He was a mediocre student but he nosed ahead through extra-curricular activities. Theatre, political activism and currying favours from elders by cosying up to them were on this path. It became important for Modi to look different. He folded his clothes neatly and after folding them put them below the mattress – this was the way most Indians families have traditionally ironed clothes. He participated in elocution contests in school and acted in plays – grabbing the lead roles.
And how did these traits evolve in his later life?
At some point the entire external space became a stage. This increased manifold after the victory in 2002. The term Modi Kurta was coined around that time though the idea of a half sleeves kurta was there from the 1960s thanks to a Jana Sangh leader but without such popularity. The success of the Modi Kurta shows that styles becomes fashionable only after celebrity endorsement. And, lets accept – Modi has acquired celebrity status. But political leaders always had distinctive dressing styles. From Mahatma Gandhi’s loincloth to Dr A P J Abdul Kalam’s hairstyle. Why, even Advani has been immaculately dressed always – and so are others. But yes, Modi’s emphasis on detail does demonstrate an obsession with his looks.
You write that Modi started attending the local Rashtriya Swayemsevak Sangh(RSS) shakha at the age of six. How did that influence his development as an individual?
The Bal Shakhas he attended were merely catchment areas for the RSS when it was recovering from the setback from the ban after Mahatma Gandhi’s assassination. The groups were collected every evening when they gathered for the Maha Gujarat programmes and the Shakhas were mainly play exercises. There was little politics but a sense of discipline was instilled in these shakhas. Modi’s elder brother told me that he was influenced with this and the concept of a hierarchical organisation. It stayed on and is the main reason for his emphatic and autocratic ways.
Does the way he operates now have a lot to do with all the years that he has spent in the RSS, first as a child and then as an adult?
When I asked him how he made a transition to becoming chief minister without ever having been a minister or an elected representative at any level, Modi told me that he learnt the basic skills of running an organisation in the RSS. While this is true, there are also several traits of Modi that have not come from the Sangh – his primness for instance. Within the RSS the biggest question that should have been raised was after his marriage and the episode stemming from it, became public knowledge. RSS Pracharaks were not allowed to marry but he became one despite being married. This means he hid the information. But no action was taken – the only one could have been his expulsion. The RSS leadership never addressed this question. Probably Modi became very powerful with patrons in right places and so he was protected. Modi easily picked up those qualities from the RSS which would assist him later in life. But whenever certain norms necessitated personal sacrifice and dumbing down of the self, Modi was a reluctant activist.
What made him leave home at the young age of 18?
He told me he did not wish to speak about those years of absence – that he will write someday about what he did. But we can draw inferences. He was married early to a girl he did not know but it was part of a 3-stage process with the ‘gauna’ being the last one. After the second stage was over and he realised what marriage was all about and how it would pin him down to his village, he chose to avoid ‘gauna’ and went away. I spent considerable time, energy and resources to see if his disappearance had any links to the communal riots of 1969 but found none. The closest he came to telling me was that at times, he would go to Rama Krishna Mission and to the Vivekananda Ashram in Almora. Throughout Swami Vivekananda’s 150th birth anniversary year, I followed his utterances and tweets on the seer. I found them steeped with romanticism – not scholarly or articulating a polemical viewpoint. The standard argument that Vivekananda was the torch-bearer of Hindu in the west and thus should be respected. On his recent visit to Kolkata, he visited Belur Match and also the room where the Swami spent time meditating.
He returned home at the age of 21 in 1971 and then never came back to Vadnagar except for just a few hours when his father was on his deathbed in 1989. He returned again only in 1999 for the golden jubilee celebrations of his school. What does it tell us about Modi as an individual?
Modi’s world comprises I, Me and Myself. He is the centre of the universe, always. When he came back at 21, he had already fixed up something in Ahmedabad. It was an escape from a small village and the possibility of having to cohabit with a girl he clearly did not like. It is very difficult to meet his siblings unless one lives for considerable lengths in Gujarat. Even regarding his mother, Modi allows photo shoots on his birthdays when he goes for blessings and during religious occasions like Dushhera. His brother, Pankaj who is employed with the state information department was to accompany me to Vadnagar, but called in sick at the last minute and that was the last I heard about him. In any case, I knew that the awe of Modi was so great, that no one especially his siblings – would say anything negative. Even political adversaries were guarded in their statement.
He was the second RSS pracharak to be deputed from the RSS to the BJP after KN Govindacharya. How did it shape him as an individual?
Modi said two very important things about his final deputation to the BJP. Firstly, in regard to when exactly it happened, he said there are no fixed dates as the RSS does not issue office orders – things happen, informally and then formally. The second revelation is that even before his formal move to the BJP, he had played a key role in the revival of the electoral fortunes of the BJP in Ahmedabad when he shepherded the campaign for the Ahmedabad Municipal Corporation in 1986. Coming just a year after the rout following Indira Gandhi’s assassination it restored a semblance of confidence in the party and resulted in the party’s national leaders seeing the obvious talents of Modi. Advani played a key role in his elevation and he consulted with the top RSS brass before taking on Modi and before him K N Govindacharya as his political secretary.
How has the relationship between LK Advani and Narendra Modi evolve? What do you think is the status now? Does Advani still consider Modi to be his protege? Or is Advani still in the race for PM?
I went to gift Advani a copy of my book and it was evident he liked it as an idea. But he refused to be drawn into a comment on either Modi, current politics or even what he felt about the fact that I had written this book. He told me that all his utterances become controversial. He reiterated that the Parivar does not get offended if a junior member does very well. But then over the past few years, Advani had problems with even the RSS top brass over their suggestion that he call it a day and take on the role of a political mentor. Advani mentored Modi and the two remained close for a long period of time before Modi switched allegiance to the Murli Manohar Joshi camp. Modi made a return to the Advani camp when Vajpayee was PM. Advani lobbied for Modi getting the job (that of the Gujarat CM) and then saved him after the 2002 riots. But after the Jinnah comments, he became a liability for Modi and now with Modi’s rise, till the time Advani does not call it a day, his supporters will think of Modi as the usurper.
You write “If the Godhra incident had not ocuccured…in all probability there would have been no need to write this biography.” Why do you say that?
Modi is a ultimate manifestation of extreme communalisation of India. Modi won his assembly seat in a by-election after becoming CM but the BJP lost other seats in the same by-poll. This was just days before the Godhra carnage. Clearly the BJP was floundering and the government machinery was still moribund. Godhra and the riots changed it all. Modi realised that his time had come. Godhra did not happen because tourists were killed. This was a train load of VHP activists. The chain simple – No Godhra, no Modi. No Ayodhya – No Godhra. If Godhra had not happened, BJP would have lost the assembly polls due in February 2003. And Modi would have been part of history by now.
What do you make of the statement that Modi made after the incident: kriya pratikriya ki chain chal rahi hai? Why has he kept endorsing the post Godhra violence?
A political leader like Modi sees himself as a product to be merchandised by use of multiple tactics. In this process of selling, the USP has to be put upfront. Modi realised after the Godhra carnage that given the latent communalisation within Gujarat, there was bound to be a reaction. Instead of using force to quell violence and thereby allow detractors within the Sangh Parivar to weaken him, he chose to justify in the manner he did to the Zee reporter. It was not the reporter’s scoop. It was Modi’s scoop – he chose the vehicle that he felt would best deliver his message to his constituency. Modi knows how to toy with the media. Even now he does not express remorse in the Congress style ‘I am sorry’ or use Advani-type ‘saddest day’ words because if he does, he will upset his core constituency and this is something he cannot risk. How he balances this with the rest is the key question and I am eager to track this over the next few months.
There has been a lot of criticism of Modi over the years. But he still manages to win elections and people love him. How do you manage to explain that disconnect?
He wins because of his strategy of further communalising Gujarat and being able to coerce large sections of the Muslims to accept his hegemony has succeeded. Most Hindus who were surveyed by CSDS in 2003 said that the riots were necessary to teach a lesson to read Muslims. The more one criticises Modi, the more shrill noises are made by his adversaries, the more he benefits. In 2007, when he was shaky initially, Sonia Gandhi made the “Maut Ka Saudagar” comments and with that kissed the chances of the Congress goodbye. In 2012, the Congress never had a plan, they just hoped that Keshubhai would damage. He did and this was why Modi did not the 125-plus verdict he wanted.
When it comes to actual governance how good is Modi? The businessmen just seem to love him. Why is that?
There is no doubt that Modi is an efficient manager. He is quick on the uptake and has innate ability to make someone else’s knowledge his own. This includes his officers and people he interacts with – even those who come to seek something. He selects a good team of officers. He is a voracious reader and spends considerable time surfing the Internet looking for new ideas and then interact with subject experts. This has enabled him to initiate action in areas about which he knew little before – for instance rural electrification. Industrialists love him because Modi’s a single window operation. All ministers are either pygmies or rubber stamps. All decisions are taken by Modi. Even the basic decision on whether an appointment is to be given to someone who called, is taken by the man himself. Since industry leaders know that the decision is in the hands of just one man, they are happy dealing with Gujarat and it makes their task easier and the red tape easy to overcome.
One thing that comes out in the book is that Modi has fallen out (or even moved on from) with a lot of people who he was once close to. Sanjay Joshi, Haren Pandya, Gordhan Zadaphia, Keshubhai Patel, KN Govindracharya, S Gurumurthy and even LK Advani and Murali Manohar Joshi for that matter. What do you think would be reasons for the same?
Modi has not been a team man. If you look at this trajectory after the early years, he could never accept the presence of equals – he can only be captain. His unapologetic ambition has been the primary reason why he fell out with a large number of associates. He also changed sides effortlessly without any qualms whenever he felt the move would benefit him.
Is he sitting lonely at the top?
I asked him about him being lonely. He laughed saying that he liked loneliness. When I had probed further – if he had friends, he said his work left him with no time for friends. In a way it is true – he is a workaholic. But, the flip side is that he makes even close associates very insecure and so no one dares trying to befriend him. It is actually lonely at the top.
Do you think Modi will ever be able to get rid of the Godhra blot? How important is it for him to do that inorder to be a serious PM candidate in 2014? Or is Delhi still far away for him?
What is a blot to one section is also a certificate of commendation for the other group. I do not think Modi will ever say that what happened in the aftermath of the Godhra carnage was wrong and that his government should have been more vigilant. If he says anything like that I will be surprised. If he does, it will make him go the way Advani has gone – apologetic of his Ayodhya past, praising Jinnah and now saying that the BJP must provide a minimum guarantee to minorities. I used Nizamuddin Aulia’s words – Hunooz, Dehli Door Ast (Delhi is still far away) to argue that it was still a long way to go for the polls.
Will be get the necessary allies?
I had asked Modi about the number of dwindling allies. He argued that if the BJP’s winnability increased, allies would automatically come. He said they had more allies when they were on the winning curve but they started deserting when the ship began sinking. If it becomes afloat again, other would jump in. It is with grave risk that one should indulge in crystal ball gazing. But if the situation does not alter dramatically within BJP, and in other parties – including Congress – I see little chance of any party naming their prime ministerial candidates. The next election will in all likelihood see post-poll alliances determining who will head the next government. Modi’s chances will depend on the number of seats the BJP wins.
And finally do you think 2014 will be Rahul v/s Modi?
No I do not think it will be sort of presidential race. And as far as their support is concerned, if polls are held today, Modi will prove to be a better draw than Rahul.
The interview originally appeared on www.firstpost.com on April 15, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)
High inflation is inevitable, we just don’t know when
There are good times. There are bad times. And there are bad times which don’t seem like bad times, at least to some people. Central bank governors all over the world live in bad times which don’t seem like bad times to them.
In the last few years, central banks of United States, Great Britain, Euro Zone, China, Switzerland and now Japan, have printed tremendous amount of money. “So far, five central banks, – the Federal Reserve, the European Central Bank, Bank of England, the Bank of Japan and the Swiss National Bank have effectively created more than $6-trillion of new currency over the past four years, and have flooded the world money markets with excess liquidity. The size of their balance sheets has now reached a combined $9.5-trillion, compared with $3.5-trillion six years ago,” writes investment newsletter writer Gary Dorsch.
This has been done with the hope that pushing all this new money into the financial system will ensure that interest rates continue to remain low. Low interest rates would make the citizens of their respective countries borrow and spend more more. And at the same time banks and financial institutions would also be happy to lend more, given that there is so much more money going around. This will help businesses and the overall economy.
There was also the hope that all this new money would create some inflation as it chases the same amount of goods and services, leading to a rise in prices. When people see prices rising, or expect prices to rise, they are more likely to buy goods and services, than keep their money in the bank. That was the logic. And when that happened businesses would do well and so would the overall economy. But that hasn’t happened.
So central banks have gone ahead and printed even more in the ‘hope’ that people borrow and spend and some inflation is created. The fact that all this new money floating around hasn’t led to a high inflation has been used as a justification for printing even more money in the hope of creating some inflation. That’s the most harebrained logic that one can ever come across.
The fact that doing something (i.e. money printing) that should have resulted in something else (i.e. some inflation), but is not resulting in that something else (i.e. inflation), is being used to justify doing more of that something (i.e. money printing).
Also central banks, their governors and their respective governments have suggested time and again that all the money printing will lead to only some inflation, which they will be able to manage and not very high inflation that will go beyond their control.
It has also been suggested in recent times that very high inflation scenarios don’t just occur because of excessive money printing but there are other reasons to it as well. One theory which has gained popularity in recent times is that high inflation happens when there are supply shocks.
Lets take the case of German hyperinflation of 1923 where inflation reached a peak of 1000 million % a year and which remains the most discussed case of the twentieth century.
James Montier writing in a research paper titled Hyperinflations, Hysteria, and False Memories points out “Germany’s productive capacity had been significantly damaged by World War I, both in terms of the losses inflicted and the resources redirected to military use. Allied troops occupied the Ruhr Valley – the seat of much of Germany’s manufacturing base. These events clearly constituted a large supply shock.”
So basically what Montier suggests is that Germany was not producing enough goods to meet the needs of its citizens. It was also not in a position to import given that it did not have the money (or gold as it was in those days) to pay for the imports. And as there were not enough goods going around that led to high inflation.
Fair point. But this doesn’t necessarily mean that the excessive money printing wasn’t responsible for high prices that prevailed. The price of basic necessities went through the roof. A kilo of butter cost 250 billion marks and a kilo of bacon 180 billion marks.
The German government had been printing an excessive amount of money to finance its expenditure. It did not earn enough revenue to meet its expenditure. In 1922 a trillion marks were printed as the deficit shot through the roof. In the first six months of 1923, nearly 17 trillion marks were printed. With such an astonishing amount of money being printed, money started to lose its value dramatically. By August 1923, one dollar was worth 620,000 marks(the German currency) and by early November was worth 620 billion marks.
As the currency lost value, the government had to keep printing more of it, to meet its expenditure. So the more money the government printed, the more it lost value, and in turn, the government had to print even more money.
The industry which thrived during this period was the money printing industry. Thirty paper mills and 133 printing plants were working, but still could not turn out enough money required to keep up given the huge denominations they had reached.
So yes, a supply shock was responsible for an increase in prices, but so was money printing. And Germany was not the only country that went through this. There were other countries that went through a similar scenario which had supply shocks and printed an excessive amount of money also.
As Forrest Capie writes in a research paper titled Conditions in which very rapid inflation has appeared “Austria, Germany, Hungary, and Poland all had substantial and growing deficits built up prior to or coincidental with the inflation.” Austria, Hungary and Poland had peak inflation rates of 4 million %, 14,000% and 23,000%. So a supply shock would have definitely added to inflation but that does not mean that all the new money being printed and put into the financial system had no role in creating inflation.
Lets take the case of China in the late 1930s and 1940s. Japan invaded China in 1937 and occupied around one third of the country which included much of its eastern part. This meant that China no longer had access to taxes from the part under occupation of Japan. Also once this conflict ended, a civil war started in China. Hence, there was a prolonged supply shock. And this Montier argues led to very high inflation. Again this argument just covers one side of the picture.
Inflation in China at its peak crossed 50% per month. As Capie writes “There were clearly a long and accelerating inflation through these years with prices rising first by 27 per cent then 68 per cent, then more than doubling and so on until in 1947 monthly rates in excess of 50 per cent were reached.”
But was it only because of a supply shock? In 1936-37, the Chinese government revenue was equal to its expenditure. The situation changed in the years to come as war expenditure went through the roof. “When the Japanese attacked, the leader of the Nationalist Government pledged total war without regard to cost, and in the next few years no attempt was made to match increased expenditure with increased revenues,” writes Capie. By 1948, the government was spending more than twice of what it was earning. The difference being made up through printing money.
As soon as the war with Japan ended, a civil war broke out in China. And each of the factions engaged in civil war produced its own money. “Between 1937 and 1949, three governments – the Nationalists, the Japanese, and the Communists – occupied China. Each one issued its own currency (indeed, multiple currencies were issued by each authority). These bodies effectively engaged in monetary warfare, with each producing “propaganda stating that the currency of their enemies was falling rapidly in value,” writes Moniter.
In fact, money supply expanded by 700% between 1946 and 1947. And this also added to an increase in prices other than the supply shock. As Capie writes “Over the whole period of war, the money supply grew by 15,000 per cent, wholesale prices rose by over 100,000 per cent…The vastly increased note issue of the Central Bank of China lay behind the huge expansion in the money supply.”
So an increase in money supply remains an important reason behind high inflationary scenarios, there is no denying that.
Another reason often offered to argue that there will be no high inflation in countries that are currently printing money is that high inflation is an economic curse that only developing countries face. The example that is often given is that of Zimbabwe.
Between August 2007 and June 2008, the money supply in Zimbabwe went up 20 million times. With the money supply increasing by such a huge amount, inflation went through the roof. In early 2008, consumer price inflation was said to be at 2 million percent. By the end of the year it had sped to around 230 million percent.
It is argued that United States, United Kingdom, the Euzo Zone and Japan are no Zimbabwe. Of course that is true. But people who argue along these lines are victims of what we can call the black swan syndrome. Till the first Europeans landed in Australia it was thought that all swans are white. Only when they landed in Australia did they realise that swans could be black too.
Just because high inflation has happened in Zimbabwe, a developing country, in the recent past, it cannot be argued that high inflation cannot plague developed countries as well. In fact, the high inflation that prevailed in Israel in the 1970s and the 1980s is an excellent example of how high inflation can occur even in a reasonably developed country.
As Albert Edwards of Societe Generale writes in a research report titled Nikkei 63,000,000? A cheap way to buy Japanese inflation risk “Think about that for a moment. Japan is an advanced economy, a developed democracy and certainly no Zimbabwe. But Israel was all of those things too. It simply found itself politically committed to a level of expenditure – military and social – which it couldn’t fund. Instead of taking the politically unpalatable course of cutting that expenditure, it resorted to the tried and-tested tactic of buying time with printed money. Between 1972 and 1987 Israel’s CPI rose by a factor of nearly 10,000. Inflation averaged around 84% and peaked at an annualised 500% in early 1985.”
Like Israel, countries in the developed world where countries have found themselves politically committed to a level of expenditure that they cannot meet through their earnings and have been printing money in order to meet it. Just because this hasn’t led to high inflation till now is no basis for arguing that it won’t lead to inflation in the future as well.
Given the inevitability of high inflation, gold as a form of investment still remains very relevant despite the recent fall in prices. Having said that one shouldn’t be betting one’s life on it, given that it is difficult to predict when this will happen. As James Rickards the author of Currency Wars and a Partner in Tangent Capital Partners, a merchant bank based in New York, recently told The Real Asset Report “I recommend an allocation to gold from investable assets of 10% for the conservative investor and 20% for the more aggressive investor.”
The article originally appeared on www.firstpost.com on April12, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)
1984 riots: The original ‘maut ke saudagars’ set the tone for future
Having grown up on a staple of bad Hindi cinema of the seventies and the eighties, I have always associated people with ‘French’ beards as being villanious. Indeed, this is a stereotype of the worst kind, which I have been unable to get rid off.
But now comes the news that a Delhi court has set aside the closure report of the Central Bureau of Investigation (CBI) on Jagdish Tytler, in connection with the anti-Sikh riots of 1984 and ordered that the case against him be reopened. For those who don’t know, Tytler has had a rather impressive French beard, over the years.
Tytler along with many fellow Congressmen took an active part in inciting the anti-Sikh riots that happened in the aftermath of Indira Gandhi, the then Prime Minister of the country, being assassinated by her Sikh bodyguards on the morning of October 31, 1984.
As Tavleen Singh writes in Durbar “Mrs Gandhi (Indira) had set out of her house at about 9 a.m. And was walking through her garden towards her office, in a bungalow that adjoined her house, when her Sikh bodyguard, Beant Singh, greeted her with his hands joined together. Then he shot her with his pistol. Another bodyguard, Satwant Singh, opened fire with his automatic weapon.”
Gandhi was taken to the All India Institute of Medical Sciences (AIIMS) by her daughter in law Sonia, where she was declared dead.
Indira’s son Rajiv was sworn in as the Prime Minister in the evening of the same day. As Singh writes “We watched him on television. In a calm, emotionless voice, he said India had lost a great leader. Someone who was not just his mother but the mother of the country, or words to that effect. Then he stopped and stared sadly at the camera while Doordarshan showed shots of H.K.L. Bhagat (another Congress leader) and his supporters beating their breasts and shouting, ‘Khoon ka badlka khoon se lenge.’ Blood will be avenged with blood.”
In the environment that evovled the entire community of Sikhs were held responsible for the murder of Indira Gandhi. By the evening of October 31, the violence started. As Ramachandra Guha writes India After Gandhi – The History of World’s Largest Democracy “Everywhere it was Sikhs and Sikhs alone who were the target…In Delhi alone more than a thousand Sikhs perished in the violence…They were murdered by a variety of methods, and often in front of their own mothers and wives. Bonfires were made of the bodies; in one case, a little child was burnt with his father, the perpetrator saying, ‘Ye saap ka bachcha hai, isse bhi khatam karo’ (This offspring of a snake must be finished too).”
And this was not a spontaneous outflow of grief as it would be made out to be. It was mob-violence that was directed at the Sikh community in a cold and calculated way. “The mobs were composed of Hindus who lived in and around Delhi…Often they were led and directed by Congress politicians: metropolitan councillors, members of Parliament, even Union ministers. The Congress leaders promised money and liquor to those willing to do the job; this in addition to whatever goods they could loot. The police looked on, or actively aided the looting and murder.”
Jagdish Tytler was seen inciting one such mob around Gurdwara Pul Bangash near the Azad market in Delhi. Surinder Singh, the Head Granthi of the Gurdwara testified against Tytler on sworn affidavits. “On 1st November 1984 in the morning at 9am a big mob which was carrying sticks, iron rods and kerosene oil attacked the Gurdwara. The crowd was being led by our area Member Parliament of Congress (I) Jagdish Tytler. He incited the crowd to set the Gurdwara on fire and to kill the Sikhs…Five to six policemen were also with the crowd. On incitement by Jagdish Tytler, they attacked the gurdwara and set it on fire.” (Source: Tehelka).
And while Delhi burnt on those first few days of November 1984, Rajiv Gandhi and his ministers, sat on their bums watching the whole show unfold. Senior leaders approached the government to call out the army on the streets. But nothing happened. As Singh writes “But the new Prime Minister did nothing. Not even when senior political leaders like Chandrashekar and (Mahatma) Gandhiji’s grandson, Rajmohan Gandhi, went to the home minister(P V Narsimha Rao) personally to urge him to call out the army for help was anything done in those first three days of November to stop the violence.”
This is something that Guha also writes in India After Gandhi. “There is a large cantonment in Delhi itself, and several infantry divisions within a radius of fifty miles of the capital. The army was put on standby, despite repeated appeals to the prime minister and his home minster P.V.Narsimha Rao, they were not asked to move into action. A show of military strength in the city on the 1st and 2nd would have quelled the riots – yet the order never came.” Doordarshan, the only television channel in the country at that point of time, added fuel to fire by constantly showing crowds baying for the blood of the Sikhs.
A few week’s later in a public speech Rajiv Gandhi justified the pogrom(basically an organised massacre of a particular ethnic group) against Sikhs when he said “When a big tree falls, the earth trembles!”. Years later Sher Singh Sher, a Chandigarh based Sikh made the quip “Were there only Sikhs sitting under that tree?” (Source: The Tribune) Gandhi in several speeches in the months to come even alleged that the same extremist elements who had killed his mother had also engineered the riots.
Rajiv Gandhi like his mother was assassinated seven years later in 1991. Since then the Congress party has moved on and is now in the hands of his widow Sonia and their son Rahul. In December 2007, Sonia Gandhi, called Narendra Modi, the Chief Minister of Gujarat “maut ka saudagar”.
The irony behind Sonia’s statement was that the Congress party had many maut ke saudagars who had gone unpunished for instigating the riots of 1984. It was a situation of the pot calling the kettle black. But that doesn’t mean that nothing happened in Gujarat.
Sonia’s statement was made in the context of the riots that happened in Gujarat in 2002, where more than 2000 Muslims were killed. The riots happened after bogey number S6 of the Sabarmati Express caught fire on February 27,2002, on the outskirts of the Godhra railway station. Fifty eight people died in the fire. The bogey had kar sevaks returning from a yagna in Ayodhya.
As Guha points out “On their way back home by train , these kar sevaks got into a fight with Muslim vendors at the Godhra railway station…Words of the altercation spread; young men from the Muslim neighbourhood outside the station joined in. The kar sevaks clambered back into the train, which started moving as stones were being thrown. However, the train stopped on the outskirts of the station, when a fire broke out in one of its coaches. Fifty eight people perished in the conflagration…Word that a group of kar sevaks had been burnt to death at Godhra quickly spread through Gujarat. A wave of retributory violence followed.”
In fact the behaviour of Modi in the aftermath of the Gujarat riots was very similar to that of Rajiv Gandhi. He justified the violence, like Rajiv Gandhi had, as a spontaneous reaction. He said that the burning of the railway coach at Godhra had led to a ‘chain of action and reaction’.
(The original statement of Modi was in Hindi and was made to Zee News:
Kriya pratikriya ki chain chal rahi hai. Hum chahte hain ki na kriya ho aur na pratikriya…Godhra main jo parson hua, jahan par chalees mahilaon aur bacchon ko zinda jala diya, issey desh main aur videsh main sadma pahunchna swabhavik tha. Godhra ke is ilake ke logon ki criminal tendencies rahi hain. In logon ne pehle mahila tachers ka khoon kiya. Aur ab yeh jaghanya apraadh kiya hai jiski pratikriya ho rahi hai. (A chain of action and reaction is being witnessed now.We feel that there should be no action nor reaction. Day before yesterday in Godhra, the incident in which forty women and children were burnt alive had to naturally evoke a shocking response in the country and abroad. The people in this locality of Godhra have had criminal tendencies. They first killed the women teachers and now this horrifying crime the reaction to which is being witnessed). Source: Narendra Modi – The Man. The Times by Nilanjan Mukhopadhyay).
Guha finds man similarities between the two pogroms, the one against the Sikhs of Delhi in 1984, and the one against the Muslims of Gujarat in 2002. Both the cases started with stray acts of violence for which a generalised revenge was taken. “The Sikhs who were butchered were in no way connected to the Sikhs who killed Mrs Gandhi. The Muslims who were killed by the Hindu mobs were completely innocent of the Godhra crime,” writes Guha.
In both the cases there was a clear breakdown of law and order. More than that graceless statements justifying the riots, were made, one by a serving Prime Minister and another by a serving Chief Minister. And in both the cases, serving ministers, aided the rioters.
But its the final similarity between the two different sets of events that is the most telling, feels Guha. “Both parties, and leaders, reaped electoral rewards from the violence that they had legitimised and overseen. Rajiv Gandhi’s party won the 1984 general election by a large margin, and in December 2002, Narendra Modi was re-elected as the chief minister of Gujarat after his party won a two-thirds majority in the assembly polls,” Guha points out. Modi, the first RSS pracharak to become a chief minister, has won two more polls since then.
To conclude, if justice had been quickly delivered in the 1984 anti-Sikh riots and the Congress leaders who instigated the violence had been jailed, chances are the 1993 Mumbai riots and 2002 Gujarat riots would never have happened. And if they had, they would have happened on a much smaller scale. The original maut ke saudagars of 1984 set the tone for much of what followed.
The article originally appeared on www.firstpost.com on April 11, 2003.
(Vivek Kaul is a writer. He tweets @kaul_vivek)