What Micromax is to Nokia, Kejriwal’s AAP is to Dikshit

Arvind-Kejriwal3Vivek Kaul 

It is never really a great idea to compare a political party to a management concept, given that politics is more messier than business ever can be. But that is what I had done, over a year back, when a section of what had come to be known as Team Anna, decided to form a political party.
I had compared the Aam Aadmi Party (as it subsequently came to be known) to a disruptive innovation (
You can read the article here).
Disruptive innovation is a term coined by Harvard Business School professor Clayton Christensen. “These are innovations that transform an existing market or create a new one by introducing simplicity, convenience, accessibility and affordability. It is initially formed in a narrow foothold market that appears unattractive or inconsequential to industry incumbents,” is how Christensen defines disruptive innovations as.
The business landscape is littered with examples of hundreds of disruptive innovations. It typically involves a small entrepreneur coming up with a product which big business of the day is not interested in. A good recent example is that of Indian mobile phone brands like Micromax and Karbonn, which took on Nokia, which was the biggest mobile phone brand in India until a few years.
The Indian brands concentrated on selling low priced smart phones, mostly sourced from China, something that Nokia was not interested in. This allowed the Indian brands to gradually capture a major section of the market. By the time, Nokia woke up, these small Indian businesses had already become big boys. Micromax recently signed Hollywood star Hugh Jackman as its brand ambassador. (To its credit Samsung did not fall into the Nokia trap and is now the leading mobile phone brand in India)
Another great example of a disruptive innovation, which I have often used and which fits the situation beautifully in this case, is that of home grown detergent Nirma. 
Karsanbhai Patel introduced Nirma detergent in 1969 and priced it at Rs 3.50 per kg. Those were the days when soaps were more popular than detergents when it came to washing clothes. A major reason for this was the fact that detergents were expensive. Hindustan Lever’s Surf (now Hindustan Unilever) sold at Rs 15 per kg. And the lowest price detergent was sold at Rs 13.50 per kg. 
Given this huge disparity in price, Nirma sold well and continued to grow. Hindustan Lever kept looking the other way for a very long time simply because it was not interested in servicing the end of the market where the margins were low. By the time Hindustan Lever reacted, Nirma had established itself as a pan India brand. 
Hence, there are two ends to a disruptive innovation really. One is the new business which launches something which caters to a specific section of the market. The other is the established big business which is not really interested in that section of the market. This allows the new business to grow itself. By the time big business starts to see the smaller business as a threat, it has already grown big enough. The disruptive innovation thus challenges the status quo product. 
Along similar lines, Arvind Kejriwal and the Aam Aadmi Party are the disruptive innovation, and the existing political parties the status quo product. To their credit Arvind Kejriwal and his supporters understood that urban voters wanted a change and tailored their campaign in line with that. They understood that there was an opportunity for a political party which fields honest candidates and does not work along narrow caste or regional lines.
This basic idea seems to have worked. A pre-poll survey carried out by CNN-IBN, The Week and CSDS Pre-Poll has projected that the Aam Aadmi Party will get anywhere between 19-25 seats in the upcoming Delhi assembly elections. It gives the Bhartiya Janata Party anywhere between 22 to 28 seats and the Congress party 19 to 25 seats in a 70 member Delhi assembly. 
If AAP were to get even one third or half of the projected seats, it would be unprecedented. No political party established from scratch has ever done so well. 
So what has worked for the Aam Aadmi Party? There promise of providing a clean corruption free administration has gone down well with the Delhi voters. Cynics might turn around and tell you, what is the big deal about that? Every political party worth its salt promises a corruption free administration. 
While that is true, a promise of a corruption free administration coming from politicians who are already corrupt, does not mean anything for the voter. When the same promise comes from someone like Arvind Kejriwal, an IITian who worked for the Indian Revenue Service, and then quit to run an NGO, it holds some value. It tells the voter that there is still some hope left in the world. Hence, more than the message, who is saying it, turns out to be more important.
The other factor that worked well for Aam Aadmi Party is the fact that the big boys Congress and Bhartiya Janata Party were looking the other way, like often happens in the case of a disruptive innovation. 
The big boys never really took the Aam Aadmi Party seriously. The feeling was that where would this new kid on the block raise the money required to fight an election? How would the new party put the organisation required to fight an election in place? 
The Aam Aadmi Party turned the conventional wisdom right on its head when it came to raising money. It has been raising money directly from the people. As far as setting up the party organisation is concerned it has done a remarkably good job in a very short period of time. 
The party has also innovated when it comes to reaching out to people. It has been organising small 
mohalla sabhas attended by a few hundred people at a time, all across Delhi. The existing political parties, used to big rallies, have not seen this as a threat. This has helped the party consolidate its position all across Delhi. 
The Aam Aadmi Party has also been innovative when it comes to advertising, using auto-rickshaws as well as humans standing with banners at key junctions in Delhi.
Also, the existing political parties were confident that it would be next to impossible to reach the voter in such a short period of time. In this case the Aam Aadmi Party has been helped by the media, for which Kejriwal and his party have been a new and an exciting story, full of hope. And hope always sells well among readers. What has also worked is the fact that Kejriwal has been extremely media savvy, always willing to give an interview.
All this has clearly rattled the Bhartiya Janata Party and the Congress. In a recent interview to the Tehelka magazine,
 chief minister Sheila Dikshit
of the Congress Party said 
“My reaction to the Aam Aadmi Party (AAP) is nothing..absolutely nothing.” Only a person who is rattled could have said that. The Bhartiya Janata Party has been forced to project Dr Harshvardhan, as its chief ministerial candidate, instead of going in with its Delhi unit chief Vijay Goel . It’s obvious that the party wanted to project someone with a clean image to take on Kejriwal. But it left that decision to very late in the day.
What has worked well for the Aam Aadmi Party is the fact that Delhi votes majorly along class lines and not caste lines. Its real test will come when it starts contesting elections in other states, where caste and other political factors will have a major role to play.

The article originally appeared on www.firstpost.com on October 31, 2013

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

RBI rate hike: When Mauni baba takes onus for economic woes

India's PM Singh speaks during India Economic Summit in New DelhiVivek Kaul
It was one of those rare days when Mauni baba had decided to talk.
“What man Chidu you send these guys to the Reserve Bank and suddenly they decide to have a mind of their own,” he told Chidu, who was busy thinking about new ways to send out income tax notices to tax payers.
“Yes sir. I had great faith in the professor. But the first thing he did was raise the repo rate,” replied Chidu.
“It is the R effect,” explained Mauni baba. “First Reddy, then Rao and now Rajan. All from the South of the Vindhyas. And I thought Sikhs were a rebellious race. You know sadda haq aithe rakh and all that.”
“Yes, the three Rs were so humble and docile while they were in Delhi,” said Chidu. “Wonder what happened to them as soon as they landed in Mumbai.”
“Next time we will appoint my man Monty to the post,” said Mauni baba. “At least he will listen to me and stay silent.”
“Yes sir. That sounds like a great idea,” remarked Chidu. “Madam will also like it.”
“Also, we should move the Reserve Bank to Delhi, then it will be easier to keep the governors under control.”
“Brilliant idea sir ji,” responded Chidu. “There is too much independence in the Mumbai air. ” “But Nana ji hasn’t Rajan done the right thing by raising the repo rate,” said Mauni baba’s granddaughter, who had suddenly entered the room.
Arre beta,” said Mauni baba, looking lovingly at his granddaughter. “What do you know about all this?”
Nana ji, you know na I am studying economics at the University of Chicago.”
“Oh, yeah, your mother told me, but given that I have a country to run, I keep forgetting,” replied Mauni baba.
“Really?” said the granddaughter. “But I just heard Chidu uncle telling someone on the phone that you only do what Madam asks you to do.”
Arre beta. What are you saying? You must be mistaken. I did not say anything like that,” said Chidu, looking very embarrassed, as he got up from his chair.
“ Kya yaar Chidu. Sit down. Don’t worry. I have seen everything. I don’t get upset too easily,” said Mauni baba trying to reassure Chidu.
“So beta why do you think Rajan uncle has done the right thing?” asked Chidu, trying to divert attention from his gaffe.
“Uncle, one of my professors told us about Milton Friedman and his views on inflation. In fact, he quoted a paragraph out of Friedman’s book Money Mischief – Episodes in Monetary History.”
And do you remember that paragraph?” asked Chidu.
“Oh yes I do. Like all good Indian students, I am good at ratta maar.”
So what did Friedman write?” asked Mauni baba. “Tell us about it beta.”
““The recognition that substantial inflation is always and everywhere a monetary phenomenon is only the beginning of an understanding of the cause and cure of inflation…Inflation occurs when the quantity of money rises appreciably more rapidly than output, and the more rapid the rise in the quantity of money per unit of output, the greater the rate of inflation. There is probably no other proposition in economics that is as well established as this one,” is what he wrote,” came a long wielding response from the granddaughter.
“Wooh!” that was fantastic. What memory,” exclaimed Chidu. “Reminded me of Amitabh Bachchan.”
“Bachchan?” asked Mauni baba. “Wo kahan se aa gaya?”
“Sir. The little speech reminded me of what Bachchan once said.”
“What did he say?” asked Mauni baba.
You see the whole country of the system is juxtapositioned by the hemoglobin in the atmosphere
because you are a sophisticated rhetorician intoxicated by the exuberance of your own verbosity
“My name is Antony Gonzalves,” said Chidu, breaking into a jig.
“Shut up. The girl is trying to make a point,” said a rather irritated Mauni baba.
“Sorry sir.”
Haan beta. So what were you saying?”
Nanu, I just said that inflation is a monetary phenomenon, which means as the money going around in the financial system increases, so does inflation.”
“That’s right. And how can we control it?” asked Mauni baba, as the economist in him suddenly woke up.

We can control inflation by raising interest rates.”
“And the Reserve Bank has done the correct thing by raising the repo rate or the rate at which it lends to banks.”
“At higher interest rates people will borrow lesser given the higher EMIs they will have to pay.”
“And how will that make a difference?”
“Since people will borrow lesser, they will spend lesser as well. This will mean that a lower amount of money will chase goods and services, and that will bring inflation under control.”
“Wow!” blurted out Chidu. “Another economist in the family.”
Mauni baba was impressed. But he had to tell her the truth.
“Well beta. This needs a little more explaining,” he told her.
“Please tell me, I am all ears,” said the granddaughter.
“In 2007-08 the government spent Rs 7,12,671 crore. This year the number is expected to be Rs 16,65,297 crore or 133.7% higher. This has led to more money entering the economy and chasing the same amount of goods and services and thus driving up inflation.”
“As Friedman said?”
“Yes. Exactly like that. During the same period, the fiscal deficit of the government has risen by 327% from Rs 1,26,912 crore to Rs 5,42,499 crore. Fiscal deficit, as you would know, is the difference between what a government earns and what it spends.”
“Yes. So?” asked the granddaughter.
“The government makes up for this difference by borrowing money. With the mammoth increase in fiscal deficit, it has had to borrow more and more. This has crowded out the private borrowers.”
“I know where you are getting at,” said the granddaughter with a huge smile on her face.
“Hence, every time Chidu uncle asks banks to cut interest rates on their loans, I have a good laugh, and so should you, from now on. With the government borrowing more, there is a lower pool of money for the private borrowers like banks to borrow from. Hence, they need to offer a higher rate of interest on their deposits. And this means a higher rate of interest on loans.”
“A large part of inflation has been because of food. In fact, half of the inflation over the last five years has been because of a rise in food prices. As per the latest wholesale price inflation numbers, the price of onion has risen by 323% in the last one year. Vegetable prices during the same period went up by 89.37%. Fruits were up at 13.54%. And all in all food prices were up by 18.4% in comparison to the same period last year.”
“So the RBI cannot do anything about inflation. It does not matter if they hike repo rate or not,” explained Mauni baba. “Interest rates will not fall unless the government controls the fiscal deficit. And onion prices won’t fall unless Power Man wants them to.”
“So why don’t you just control the fiscal deficit Nanu?” asked the granddaughter.
“Well, that is for Madam to decide.”
Beta, we are running many programmes for the poor. And that is why our fiscal deficit is high,” said Chidu.
“Yes, I know all about those subsidies. You offer subsidies to those who drive diesel cars and people who use cooking gas cylinders. Since when did they become poor?” asked the granddaughter.
“Not like that beta. We offer food subsidies to the poor.”
“Oh yes, I read about that Chidu uncle. You sell food through the public distribution system where more than 40% of the food gets siphoned off.”
Beta, Madam has a vision for this country. You are too young to understand that, now you should go and let your Nanu and me discuss serious economic matters.” The granddaughter soon left the room.
“She will turn out to be an excellent economist one day,” Mauni baba said proudly with a big smile on his face.
“Well. And what was all that you were telling her?” asked Chidu, a tad irritated.
“All this bit about the government being responsible for inflation and the Reserve Bank not being able to do anything about it.”
“Yes. Isn’t that how it is?”
“Madam, won’t like this.”
“I am going to go and tell her and the shehzada everything.”
Yuvraaj bolo Chidu.
“What you are not afraid if I go and complain to Madam?” asked Chidu, not being able to figure out how Mauni baba continued to be so jovial.
“You might lose your job.”
“Chidu, I thought you were a smart man.”
“As in?”
“Well, what is my name?”
Mauni baba,” said Chidu. “But what’s that got to do with this?”
“Are you really that dumb?” asked Mauni baba. “Well who is going to believe you when you go and tell them that I spoke for as long as I did.”
“I think you have been spending too much time in Delhi. It’s time to go to Mumbai, Chidu,” said Mauni baba, having the last laugh.
The article originally appeared on www.firstpost.com on October 30, 2013 

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

Falling rural wages punches holes in UPA’s NREGA claims

india-wheat-2011-5-5-8-51-9Vivek Kaul  
One of the so called successes of the Congress led United Progressive Alliance (UPA) government has been the increase in rural incomes. As Ashok Gulati, Surbhi Jain and Nidhi Satija of the Commission for Agricultural Costs and Prices (CACP) of the Ministry of Agriculture point out in a research paper titled Rising Farm Wages in India “During the Eleventh Five year Plan (2007‐12), nominal farm wages in India increased by 17.5 per cent per annum (p.a), and real farm wages by 6.8 per cent p.a., registering the fastest growth since economic reforms began in 1991.”
Hence, rural incomes have been growing at a very fast rate through much of the second term of the UPA government. And the UPA politicians have pointed this out time and again. Yes, urban India is feeling the heat, but that is the price we need to pay to ensure that rural India is in a better situation than it was in the past, is an argument we have been made to hear time and again.
But looks like time has run out for this argument as well. Rural wages after adjusting for inflation fell in August 2013. As Sonal Varma of Nomura points out in a note dated October 24, 2013 “Growth in the average daily wage rate for agricultural labourers moderated to 13.1% y-o-y in August 2013, significantly slower than 18.5% y-o-y in 2012 and 23.4% in 2011. After adjusting for inflation, the decline was even more stark: real rural wage growth moderated to -0.1% y-o-y in August from 9.3% y-o-y in 2012 and 13.4% in 2011.” (y-o-y = year on year)
A real rural wage growth of -0.1% basically means that the income is growing just about at the same speed so as to match inflation. And this can’t be a good sign for sure.
One of the major reasons for an increase in rural wages has been Mahatma Gandhi National Rural Employment Guarantee Act(MGNREGA). As the CACP authors point out “The argument forwarded is that MGNREGA has ‘pushed’ up the average wage of casual workers, distorted the rural labour markets by diverting them to non‐farm rural jobs, thus creating an artificial labour shortage.” And this shortage has in turn pushed up rural wages to a large extent.
As Varma points out “Several factors, including the government’s employment guarantee scheme(which is MGNREGA) and indexing rural wages to CPI inflation, have boosted rural wage growth and shifted the terms of trade in favour of the rural sector.”
MGNREGA was launched in 200 of the most backward districts of the country on February 2, 2006. It was extended to all rural districts from April 1, 2008. The scheme aims at providing at least 100 days of guaranteed employment in a financial year to every household whose adults are willing to do unskilled manual work.
The payments made under MGNREGA vary from Rs 120 to Rs 179 per day, depending on the state. As mentioned earlier these wages are indexed to inflation. “At the national level, with the average nominal wage paid under the scheme increasing from Rs 65 in FY 2006‐07 to Rs 115 in FY 2011‐12… It has set a base price for labour in rural areas, improved the bargaining power of labourers and has led to a widespread increase in the cost of unskilled and temporary labour including agricultural labour,” write the authors of the CACP report.
So far so good. If MGNREGA was creating useful assets then all this money would have been well spent. The trouble is it isn’t. T H Chowdhary provided an excellent example of why MGNREGA does not work 
in a column he wrote for The Hindu Business Line in December 2011 “Villages cannot sustain so many unskilled labourers and not-so-literate labour. By creating useless “work” we are promoting dependency among the unfortunate rural, illiterate and unskilled population…An example of the village Angaluru in Krishna district will illustrate how good money is being thrown away for bad results. Out of 1,000 families, 800 had registered themselves as BPL, seeking work under NREGA. So far, it was 100 days at Rs. 100 per day. Even at this, 80,000 mandays of useful work in a year is impossible in a village and that too, year after year.”
What this tells us is that the very structure of MGNREGA does not make sense (and we are not even talking about all the corruption that comes with such schemes). What is true about one Angaluru village in Andhra Pradesh is true about most of the other villages all across the country as well.
Hence, the government is effectively giving away money free to people who have registered under MGNREGA. As Chowdhary puts it “Those who are registered for NREGA are mustered just for attendance and since there is no work to be done they go home, thus paid for no or little work.”
When people get paid for doing no work it is but natural that they will demand much more money for working. This has led to a substantial increase in rural wages over the last few years.
And high wages have led to high inflation in turn, specially food inflation, as a higher amount of money chased the same amount of goods and services. Over the last few years, the wages had been rising at a much faster rate than inflation, but now inflation has finally caught up.
This will now have an impact on rural demand which has remained robust over the last few years, even though the overall economic growth has slowed down considerably. As Varma of Nomura puts it “Over the last few years, rising real rural wages have…supported rural demand… A moderation in real rural wages should cause rural demand to moderate.” This, in turn, will slowdown economic growth further in the time to come. On a positive note, a slowdown in rural demand will also lead to medium term inflationary pressures moderating.
The basic point is simple. Sustainable economic growth cannot be created by simply distributing money or as some economists like to put it by “dropping money from a helicopter”. Gurcharan Das summarises the situation best in 
India Grows At Night. As he writes “We need to be humbler in our ambition and our ability to re-engineer society…If the state could only enable access to good schools and health care, equity would follow.”
The article originally appeared on www.firstpost.com on October 25, 2013

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

The history lesson Rahul Gandhi needs to take from Shashi Tharoor

Rahul Gandhi is turning out to be a fan of trashy Hindi films of the 70s and 80s. A few days back he spoke about ma ke aansoo(tears of his mother) and yesterday it was the turn of khandan ka balidan (the sacrifices of his family). “My grandmother was killed. My father was assassinated and perhaps I may also be killed one day. I am not bothered. I had to tell you what I felt from the heart,” he said yesterday.
While, Rahul Gandhi might have been talking from his heart, it is important to understand here that his grandmother and his father were killed because of monsters they managed to create.
Indira Gandhi did not like non Congress governments being elected to power in states. Either she dismissed them or created problems for them. She ultimately had to pay a price for this. In 1977, the Akali Dal party had been elected to power in Punjab. The Akali Dal was an ally of the Janata Party which had won the 1977 Lok Sabha elections and managed to throw Indira Gandhi out of power. She came back to power in 1980 and started to create problems for the Akalis.
Shashi Tharoor, the current minister of state for human resources development, documents this rather well in 
India – From Midnight to the Millennium. As he writes “In 1977, the Congress Party had been ousted in Punjab by the Sikh Akali Dal Party, an ally of Janata; Mrs Gandhi typically decided to undermine them from the quarter they least expected, by opponents even more Sikh than the Akalis. So she encouraged (and reportedly even initially financed) the extremist fanaticism of a Sikh fundamentalist leader Jarnail Singh Bhindarwale. Bhindarwale soon tired of assassinating clean shaven Sikhs for their apostasy and instead took up the cause of an independent Sikh state, Khalistan,” writes Tharoor.
Ramachandra Guha alludes to the link between Indira Gandhi and Bhindarwale in 
India After Gandhi. As he writes “By some accounts, Bhindarwale was built by Sanjay Gandhi and the union home minister Zail Singh (himself a former chief minister of Punjab) as a counter to the Akalis. Writing in September 1982 the journalist Ayesha Kagal remarked that the preacher(i.e. Bhindarwale) ‘was originally a product nurtured and marketed by the Centre to cut into the Akali Dal’s ‘sphere of influence’. The key word here is ‘originally’. For whoever it was who first promoted him, Bhindarwale quickly demonstrated his own independent charisma and influence. To him were attracted many Jats of a peasant background who had seen the gains of the Green Revolution being cornered by the landowners. Other followers came from the lower Sikh castes of artisans and labourers.”
Bhindarwale soon started operating out of the Golden Temple. As Guha writes “He(i.e. Bhindarwale) had acquired a group of devoted gun-totting followers who acted as his acolytes and bodyguards and, on occasion, as willing and unpaid killers.”
The situation soon got out of hand and Indira Gandhi had to send the army into the Golden temple where terrorists led by Bhindarwale were holed in. In fact, Bhindarwale had moved into the Akal Takht(the throne of the timeless one), from where the Sikh gurus had issued their 
hukumnamas, which the Sikhs were supposed to follow.
“Mrs Gandhi had little choice but to destroy the monster she had herself spawned, and she finally violated a basic tenet of the Indian state by sending armed troops into a place of worship, the historic Golden Temple in Amritsar, to flush out terrorists holed up there,” writes Tharoor.
Bhindarwale was killed in the fighting that followed the Indian army entering the Golden Temple. Tavleen Singh recounts a conversation she had with General K.S. ‘Bulbul’ Brar who was directly incharge of what came to be known as Operation Bluestar, in her book 
Here is how the conversation went:

‘Is the Sant (i.e. Bhindarwale) dead?’
‘How did he die?’ ‘Crossfire. Early in the morning on the second day he walked out of the Akal Takht with General Shabeg and Amrik Singh, and they fell.’
‘Did the fighting stop immediately after that?’
‘It did. But we lost a lot of men…and the Akal Takht is badly damaged. We had to use tanks and heavy artillery. It was a mess.’
‘In the villages they say Sant is still alive. Where is the rumour coming from?’
General Brar frowned and looked wearily at his officers. ‘This is a problem,’ he said, ‘we’re not sure how to deal with it. He’s dead.’

The attack on the Golden Temple proved to be a disastrous move. As Tharoor points out “The assault on the Golden Temple deeply alienated many Sikhs whose patriotism was unquestionable; the Gandhi family’s staunchest ally in the independent press, the Sikh editor Khushwant Singh, returned his national honours to the government, and a battalion of Sikhs, the backbone of the army, mutinied.”
The attack on the Golden Temple ultimately led to the assassination of Indira Gandhi on October 31, 1984. “Mrs Gandhi never understood the extent to which so many Sikhs saw Bluestar as a betrayal. She refused to draw the conclusions her security advisers did, and to her credit turned down their recommendations to remove Sikhs from her personal guard detail. Two of them, men sworn to protect her with their lives turned their guns upon her instead…but her real fault lay in having created the problem in the first place and in letting it mount to the point where the destructive force of “Operation Bluestar” seemed the only solution,” writes Tharoor.
Operation Bluestar also ended up exacerbating the Punjab problem. As Singh points out “It soon became clear that the operation to save the Golden Temple had been a disaster. It was clear to the army, to journalists and to most political analysts….Far from ending the Punjab problem Operation Blue Star served served to dangerously exacerbate it and to deepen the divisions between Hindus and Sikhs.”
Like Bhindarwale in Punjab, the Liberation Tigers of Tamil Eelam(LTTE) was also a monster helped to flourish by the Indian state. Guha deals with this in detail in India After Gandhi. “Of the several Tamil resistance organizations, the most influential and powerful were the Liberation Tigers of Tamil Eelam(LTTE). Led by a brutal fighter named Velupillai Prabhakaran, the LTTE had as its aim a separate nation, to be constituted from the north and east of the island, where the Tamils were in a majority…LTTE fighters had long used the Indian state of Tamil Nadu as a safe haven. Their activities were actively helped by the state government with New Delhi turning an indulgent eye.”
As we all know New Delhi was first run by Indira Gandhi and then her son Rajiv, grandmother and father of current vice president of the Congress party, Rahul Gandhi.
In 1987, Rajiv Gandhi made the disastrous decision of sending the Indian Peace Keeping Force to end the conflict in Sri Lanka. And this finally led to his assassination on May 21, 1991.
The point here is that the father and the grandmother of Rahul Gandhi were not martyrs, as he tried to project them as. They ended up paying for the huge mistakes that they made.
Rahul Gandhi also said in reference to the BJP “
ye rajneetik laabh ke liye chot pahunchate hain.(they hurt people for political gains.)” It is worth reminding Rahul about what his father Rajiv said in reference to the riots that happened after the assassination of Indira Gandhi. “When a big tree falls, the earth shakes.”
Trying to create fear and sympathy in the minds of people is a time tested political strategy, which politicians resort to, when they run out of ideas. Rahul Gandhi is just trying to do that.

The article originally appeared on www.firstpost.com on October 24, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek) 

With onion touching Rs 100 per kg, food security is a joke

Onion_on_WhiteVivek Kaul 
Rahul Gandhi, aspiring politician and vice-president of the Congress Party, recently said that his mother cried when she couldn’t cast her vote on the Food Security Bill. Of course, the tears of a mother are precious to any son. But what about the tears in the eyes of the aam aadmi as onion prices touch Rs 100 per kg, in some parts of the country?
As per the recently released wholesale price inflation numbers, the price of onion has risen by 323% in the last one year. Vegetable prices during the same period went up by 89.37%. Fruits were up at 13.54%. And all in all food prices were up by 18.4% in comparison to the same period last year.
So why have onion prices been rising at such a rapid rate? Research Analysts Neelkanth Mishra and Ravi Shankar have some sort of an answer in a report titled 
Agri 101: Fruits & vegetables—Cost inflation dated October 7, 2013A few states dominate the production of vegetables. “In particular, Maharashtra dominates the onion trade (45% of national production by value), while West Bengal produces 38% of India’s potatoes, 49% of India’s cauliflower and 27% of India’s aubergines (brinjals),” write Mishra and Shankar.
And it is this concentration that creates problems. As the Credit Suisse analysts point out “This concentration creates problems in generating a nationwide supply response in case a particular geography sees bad weather or any other disruption (e.g., onions in Maharashtra). This also drives significant variation in prices across the country.” Rains had damaged the 
rabi crop of onions, which is produced between March and May. The kharif crop of onions has also been damaged by unseasonal rains. This crop starts coming into the market by the end of September.
But has this led to a shortage of onions in the country? R P Gupta, director of National Horticulture Research & Development Foundation 
told the Week magazine recently that “I have been saying since July that there is no shortage of onion in the country..Official figures show that 27.5 lakh metric tonnes of onion were stored during February and May. Monthly consumption of the country is only 7-8 lakh tonnes per month…. So, where was was the problem of shortage?”
The only possible explanation is hoarding by traders in the key onion producing state of Maharashtra. As is well known the Agricultural Produce Marketing Committee (APMC), which runs the onion trade in Maharashtra, is largely said to be controlled by Sharad Pawar’s Nationalist Congress Party.
As the Week article points out in the context of the Lasalgaon mandi in Nashik, Asia’s largest wholesale market for onions “Powerful traders…manipulate the market. They book stocks from farmers at low prices, much in advance. Thousands of tonnes of onions are hoarded to create a short-supply. And as the prices spiral up, the hoarded stocks are released. It was such an artificial scarcity that allegedly spiked onion prices to record highs. “Traders in Lasalgaon Agricultural Produce Market Committee alone earned more than Rs.150 crore in just four days (August 12-15) this year,” says Dr Giridhar Patil, a farmer-activist.” This explains to a large extent why onion prices have been high all through the year.
The supply chain for the onion to move from the farmer to the end consumer remains very weak. 
As a recent Wall Street Journal article pointed out “A cultivated crop by a farmer in a far-flung village goes through as many as four intermediaries before reaching the local vegetable market in a semi-urban or urban area. These middlemen, wholesalers, traders and commission agents, usually charge fees and analysts estimate that by the time the vegetables make it to the stands in a retail market, their price has increased by almost six times.” This explains to a large extent why at times there is no link between the wholesale price of onions and the final price at which you and me buy it at. s
The Times of India reports that on October 22, 2013, the average wholesale price of the new onion crop at Lasalgaon was Rs 3,900 a quintal. This was 37% cheaper than in the summer. Despite this, prices at the retail level have not dropped.
NCP boss Sharad Pawar, who also happens to be Union Minister of Agriculture, 
had said on September 17, 2013 that “There is a lot of talk about the rise in onion prices; however, when prices fall no one shows any concern for the farmers. When farmers are getting more money for their produce we should not complain.”
Now if onion is coming in at Lasalgoan mandi in Nashik at Rs 3900 per quintal or Rs 39 per kg, and selling in Delhi at Rs 100 per kg, how is the farmer gaining? As explained above, it is the middlemen who are making the bulk of the money.
In fact, a study commissioned by the Competition Commission of India(CCI) in 2012, came to a similar result. The study titled 
Competitive Assessment of Onion Markets in India found that “onion trade is unilaterally dictated by the traders and not farmers for the reasons: (i) Average farm size of onion growers is quite low. Unfavorable weather conditions and price risk for these small farmers resulted for a minimal role in price formation; (ii) Traders buy small lots from the market yards and pool the produce for sorting or grading at their packing houses and market different grades to different markets all over India. Lack of trading expertise, market knowledge and risk bearing capacity has prevented most of the farmers to make any dent in onion trading. Therefore, most of the trading is in private hands; (iii) Farmers generally take reference of the local markets‟ rates, while traders compare rates of all markets, including major distant and export market and then decide where to send their produce of a particular grades. This brings greater profits to them…(vi) Lack of capacity to conduct multiple roles (wholesaler and commission agent) prevents farmers and their organizations to compete with traders.”
Also, most farmers, unlike traders do not have storage facilities. So they end up selling onions as soon as they produce it. The Week report cited earlier points out “This year, however, almost 80 per cent of the rabi crop was bought by traders (in the Lasalgaon mandi) at Rs.800 to Rs.1,200 a quintal by February-March. So, only a maximum of 20 per cent of the total crop was left with farmers who had storage facility.”
In fact, these traders even collude to drive up prices. As the CCI study found out “Collusion was observed among traders in selected markets in Maharashtra and Karnataka, For instance, a visit to Ahmednagar APMC revealed that there was collusion amongst traders. While bidding on certain lots was taking place, traders started with about Rs 300 per quintal and kept bidding higher prices till one trader quoted Rs 400 per quintal and another bid at Rs 405 per quintal. The commission agent stopped the auction and produce was shared between two wholesalers. It should also be pointed out that in Vashi market about 60 per cent of farmers reported that sales were undertaken through secret bidding.” The APMC markets referred to above are controlled by the NCP.
So farmers are not the ones benefiting from an increase in onion price, even if Pawar wants us to believe that is the case. Also, even if one believes that the farmers in Maharashtra are benefiting what about farmers in other states of India? Aren’t they paying a significantly higher price for onions? The last that I checked Sharad Pawar was the agriculture minister of India and not Western Maharashtra.
The reaction of the government to this rise in onion prices has been very high handed. 
The telecom minister Kapil Sibal, when he was asked on September 17, if onion prices will rise further, had said “Why don’t you ask the traders this? The government is not the one selling onions,”.
This was the last thing one expected a senior minister in the UPA government, which has been very committed to the idea of food security, to say. Onion is an essential ingredient in almost all curry that Indians make, whether it is to cook vegetables or meat. And given that, it is an important part of food security.
Onion prices have rise at the rate of 323% per year. The vegetable prices have risen at the rate of 89% per year. The food security of the 
aam aadmi is in danger as the government sits around doing nothing as usual. Half of the expenditure of an average household in India is on food. In case of the poor it is 60% (NSSO 2011).
Rahul Gandhi 
in a recent speech in Madhya Pradesh had said “They don’t understand that one can’t talk of development when the stomach is empty.” He had also said that “we understand your hunger.” Does he?
Or does the government want to supply rice at Rs 3 per kg and wheat at Rs 2 per kg, to two thirds of the country, so that people can buy onions at Rs 100 per kg? The joke as usual is on us.
The article originally appeared on www.firstpost.com on October 23, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)