If Rahul is serious about corruption, then let law of the land investigate Vadra

rahul gandhi

Vivek Kaul
Some of the political pundits who operate between Gurgaon in Haryana on one side and Noida in Uttar Pradesh, on the other, have been very impressed with Rahul Gandhi’s big speech, which he made late last week.
But there are several reasons which clearly point out that Rahul’s big speech should be treated like just another speech and nothing more.
In his speech Rahul Gandhi talked about giving “the country anti-graft bills which will transform the country,” and which will lead to “punish[ing] the corrupt and protect[ing] the honest.” A very noble thought indeed.
But look at the way the Congress party government in Haryana is treating the IAS officer Ashok Khemka. 
The government has recommended a CBI probe against Khemka for awarding a contract worth Rs 8 crore to a Gujarat based company. Over and above this, news reports suggest that a second chargesheet will be filed against Khemka, by the Haryana government. Khema has been accused of incurring a loss of Rs 22 lakh to the Haryana Seed Development Corporation of which he was the managing director between October 15, 2012 and April 4, 2013. Yes, you read the right. A loss of Rs 22 lakh.
As is well known by now Khemka exposed how the Haryana government went out of its way to help Rahul’s brother-in-law, Robert Vadra, to acquire land at cheap rates. Vadra later sold the land to DLF to make massive profits. (You can read a 
detailed analysis on this here).
So does this mean that Rahul’s statement of “punish[ing] the corrupt and protect[ing] the honest,” applies to everyone else other than the Gandhi family? And those who dare to expose the shenanigans of the family, will be hounded like Khemka has been?
As Pratab Bhanu Mehta writes in The Indian Express “Gandhi’s fiery AICC speech also vested too much in speeches and less in action. An anti-corruption stance is not very convincing when your own government is hounding Ashok Khemka and blaming the CAG and CVC.”
Also, why has Rahul suddenly woken up to corruption, a few months before the next Lok Sabha elections are due? Where was he when the Commonwealth Games scam, the 2G scam and the Coalgate scam happened? Holidaying in Europe?
Further, what does Rahul have to say 
about the CBI plea to drop criminal prosecution against Ashok Chavan, the former chief minister of Maharashtra, in the Adarsh Housing Society scam? That CBI is an independent organisation, which operates on its own? A special court in Mumbai rejected this plea.
Or what does he have to say about the Maharasthra government first rejecting the report by the judicial commission on Adarsh Housing Scam and then only partially accepting it. The Judicial Commission’s report pointed out that the Adarsh Society enjoyed political patronage of former chief ministers, the late Vilasrao Deshmukh, Sushil Kumar Shinde (the current home minister of India) and Ashok Chavan.
As pointed out earlier, the Maharashtra government accepted the report in parts. While it accepted allegations against Ashok Chavan, it decided to give a clean chit to the late Vilasrao Deshmukh and the current home minister Sushil Kumar Shinde.
Rahul also talked about “people demand[ing] honest and efficient governance,” and the Congress party “respond[ed] by getting the Lokpal Act passed.” The Lokpal Act in its current form has been doing the rounds for the last few years. Can Rahul tell us why did it take the Congress party so long to get it passed? Are the recent election results, where the party suffered an electoral humiliation, the main reason for it?
Rahul also took potshots at his main rival Narendra Modi of the Bhartiya Janta Party and said “Democracy is not rule by dictate. It is not rule by one man. It is rule through empowered elected representatives.” Very good point indeed.
But if Rahul is so concerned about democracy then when was the last time the Congress party had elections for the post of the President and Vice President?
As Ashutosh Varshney writes in 
Battles Half Won – India’s Improbable Democracy “An interconnected problem is the lack of intra-party democracy. Inter-party competition is vigorous, but intra-party competition is not. Party officials are appointed by the leaders, not elected by party members. During 1920-1973, the Congress party used to have regular elections, a practice dropped since then.” A Gandhi family scion who has inherited the throne should be the last person talking about democracy.
All these reasons make it very clear that Rahul Gandhi and the Congress party being very serious about corruption, doesn’t cut much ice. The Gandhi family scion needs to realise that ultimately actions speak louder than words.
As MJ Akbar put it in The Times of India “Corruption is a slippery slope for anyone in power. Congress should have stuck to its familiar narrative of populism and stability, for such advertising can be backed by evidence.” So, if Rahul is serious about corruption, then he should let the law of the land investigate the land dealings of Robert Vadra for a start and ensure that the Congress governments do not hound honest bureaucrats like Ashok Khemka. Then there will be real evidence to back his words. Of course, that is easier said than done.
(Vivek Kaul is an author. He tweets @kaul_vivek) 

Why the Modi bull market is likely to continue

narendra_modiVivek Kaul  
If foreign investors into the Indian stock market are to be believed, India is currently in the midst of a Modi rally. Goldman Sachs had explained this phenomenon best in a note titled Modi-fying our view, published on November 5, 2013. “The BJP led National Democratic Alliance (NDA) could prevail in the next parliamentary elections that are due by May 2014. Equity investors tend to view the BJP as business-friendly, and the BJP’s prime ministerial candidate Narendra Modi (the current chief minister of Gujarat) as an agent of change. Current polls show Mr.Modi and the BJP as faring well in the five upcoming state elections, which are considered lead indicators for the general election next year. Even though the actual general election outcome is uncertain, the market could trade this favorably over the next 2 quarters, which argues for modifying our stance,” the Goldman Sachs note pointed out.
Every bull market has a theory behind it. But ultimately any market goes up when the amount of money being brought in by the buyers is more than the amount of money being taken out by the sellers. For the Indian stock market to continue going up, and for the so called “Modi” rally to continue, the foreign investors need to continue bringing in money into the country.
The foreign institutional investors have made a net investment of Rs 72,791 crore since the beginning of the year. During the same period the domestic institutional investors have net sold Rs 65,694 crore.
In fact, numbers for the month of November make for a very interesting read. The foreign institutional investors during the month have made a net investment of Rs 6108 crore. During the same period the domestic institutional investors have net sold stocks worth Rs 9376 crore.
Through this data we can conclude that foreign investors have been more bullish on Indian stocks than Indian investors. Why has that been the case?
A possible interpretation of this is that the domestic institutional investors are worried about the overall state of the Indian economy. The Goldman Sachs summarises these challenges well as “the macro challenges that India faces in terms of external and fiscal imbalances, high inflation and tight monetary policy.” And given this, they have been net sellers during the course of this year.
The foreign investors are not bothered about the state of the Indian economy and that is why they have been buying Indian stocks. Why is that? A possible explanation is the fact that they have access to all the “easy money” in the world at very low interest rates.
They have been borrowing and investing this money in the Indian as well as other stock markets all over the world. This has been possible because of all the money being printed by the Western central banks. This has led to a situation where there is enough money floating around in the financial system and hence, kept interest rates low.
So for the foreign investors to continue investing money in India, it is important that interest rates in the Western world continue to remain low. For that to happen the Western central banks need to continue printing money. And that is the most important condition for the so called “Modi” rally to continue.
In case of the United States, which has been printing $85 billion every month, the decision to continue the easy money policy rests primarily in the hands of Janet Yellen, who is currently the Vice Chair of the Federal Reserve of United States, the American central bank, and will take over as its next chairperson early next year.
So will she continue printing money? Jeremy Grantham, the chief investment strategist of GMO, and one of the most acclaimed hedge fund managers in the world, believes that Yellen will continue to print money, and follow her predecessors Ben Bernane and Alan Greenspan, and ensure that the Federal Reserve continues to run an easy money policy in the process.
As Grantham puts it in 
Ignoble Prizes and Appointmentshis most recent quarterly newsletter “My personal view is that the Greenspan-Bernanke regime of excessive stimulus, now administered by Yellen, will proceed as usual, and that the path of least resistance, for the market will be up.”
And this will mean stock market rallies not only in the United States but all over the world, including in emerging markets like India. “My personal guess is that the U.S. market, especially the non-blue chips, will work its way higher, perhaps by 20% to 30% in the next year or, more likely, two years, with the rest of the world including emerging market equities covering even more ground in at least a partial catch-up,” writes Grantham.
What is interesting is that another veteran of the US markets and one of its foremost investment newsletter writers Richard Russel has had something similar to say in the recent past. Russel in a recent note titled 
Get Ready for the Mania Phase explained that there are three phases to any bull market. In the first phase the wise and seasoned investors enter the market and pick up stocks which are going dirt cheap, because of the previous bear market.
In the second phase, which happens to be the longest and the most deceptive phase, retail investors flirt with stocks and buy them very carefully and not on a regular basis. In the third and final phase of the bull market investors really take to stocks. As Russel writes “The third or speculative phase of a bull market is characterized by a wild and wooly and ever-increasing entrance by the retail public. This phase is characterized by hot tips, hype and pure greed.”
This third and final phase of the bull market has started in the United States, feels Russel. “This is where I think we are now in this bull market. I believe that during the next 12 months we will experience a surprising and ever-expanding rush by the “mom and pop” public to enter the market. At the same time, veteran investors and institutions will seize the opportunity to distribute stock that they may have held for years,” he writes.
And this phenomenon along with the easy money policy of the Federal Reserve will lead to a global rally in stocks. As Russel puts it “All primary movements are international in scope, and this bull market will be no exception.”
The trouble of course is that this rally will not be based on any fundamentals, but just a lot of easy money chasing stocks. And that is something that cannot last beyond a while. The bubble will burst and there will be a lot of pain. As Grantham puts it “And then we will have the third in the series of serious market busts since 1999 and presumably Greenspan, Bernanke, Yellen, et al. will rest happy, for surely they must expect something like this outcome given their experience. And we the people, of course, will get what we deserve.”
The article originally appeared on www.firstpost.com on November 30, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)

Why Nitish Kumar 'really' dumped Modi led BJP

220px-Nitish_Kumar
Vivek Kaul 
The Nitish Kumar led Janata Dal (United) (JD-U) ended its 17 year old alliance with the Bhartiya Janata Party (BJP) yesterday afternoon. This was on account of the fact that the BJP has or more less declared Narendra Modi as its prime ministerial candidate, something which did not gone down well with Kumar and JD(U) and thus led to the split.
While prima facie it might seem to be a clash of two strong personalities i.e. Modi and Kumar, there is much more to the split than that. In order to understand the real reason behind the split one has to understand the caste politics of Bihar in its most basic form.
Nitish Kumar belongs to the 
kurmi caste which is the numerically too small to help him win elections. At the same time the people belonging to the caste are geographically concentrated and not spread out throughout the state. The kurmis form around 3.5% of the state’s population. In comparison, the yadavs, who back Lalu Prasad Yadav, Nitish’s biggest political rival in the state, form 11.7% of the population.
Given this, over the years Nitish has had to chip away at votes from other castes. This has included wooing the 
mahadalits (primarily the non Paswan schedule castes, which included Dalits other than the Dusadh, Chamar, Pasi and Dhobi) and the extremely backward classes or the EBCs (primarily the non yadav backward classes). The EBCs formed 32% of the state’s population but had only a 5% representation in the state assembly.
It has also included wooing the backward caste Muslims i.e. the 
pasmandas. This was what helped Nitish Kumar break Lalu Prasad Yadav’s MY or Muslim-Yadav formula. The MY formula was the main reason behind Lalu winning successive elections despite the governance in Bihar almost coming to a standstill. Muslims form 16-17% of the population in Bihar which is much more than 9.9% nationally.
What is interesting here is that even though Lalu Yadav successfully wooed the Muslims, when it came to distributing goodies he concentrated on the upper caste Muslims i.e. the 
ashrafs.
Manjur Ali studies this phenomenon in a research paper titled 
Politics of ‘Pasmanda’ Muslims : A Case Study of BiharAs he writes “Lalu Prasad Yadav in the name of M-Y (Muslim-Yadav) alliance has promoted the FM-Y (Forward Muslim-Yadav) alliance, where major benefits were cornered by Ashraf Muslims in the name of the community… Unemployment, poverty and apathy of the state towards their problems were never raised by the Bihar Ashraf political elites ..The RJD made fourteen Muslims MLCs, out of which twelve were upper-caste Muslims. Again, there were seven appointments made for the post of Vice Chancellor, all from upper castes. Similarly, appointment to government posts like teachers, posts in the police department and in minority institutions were allotted to the sharif people. In turn, Lalu received blessings from religious leaders belonging to the upper castes for his electoral victory.”
Nitish Kumar was sympathetic to the cause of the backward caste Muslims while Lalu Yadav took the Muslim support for granted. On October 8, 2005, seven 
pasmanda political parties issued a clarion call to defeat Lalu Yadav’s Rashtriya Janata Dal (RJD) in the state assembly elections. Slogans like ‘Vote hamara fatwa tumhara, nahi chalega’ (your dictate on our vote will not work) and ‘jo pasmanda ki baat karega, wahi Bihar pe raaj karega’ (those who concede the demand of Pasmanda will rule Bihar) became the order of the day.
This split in the Muslim vote along with other caste alliances that had been built, helped Nitish Kumar become the Chief Minister of Bihar in November 2005. In fact he first realised the power of the Muslim vote in 2004. The BJP-JD(U) alliance won just 11 out of the 40 Lok Sabha seats in the state. This despite the fact that people of the state were fed up with the misrule of Lalu Yadav and Rabri Devi. But the Muslims had not been voting for the BJP-JD(U) alliance and punishing it for the Gujarat riots of 2002.
In the state assembly elections of 2005, Nitish Kumar wooed the 
pasmanda Muslims and did not allow Narendra Modi to campaign in Bihar. The JD(U)-BJP alliance did very well winning 143 out of the 243 seats in the state assembly. This anti Modi stand continued and the alliance did very well in the state in the 2009 Lok Sabha elections and 2010 state assembly elections as well. He also ensured that Modi did not campaign in these elections as well. So Nitish Kumar has found his anti-Modi stand reap electoral benefits in the past.
Hence, any direct association with the BJP which has Narendra Modi at the top would clearly have cost Kumar the 
pasmanda votes and helped his bete noire Lalu Yadav resurrect his MY formula. In fact, in the recently concluded Lok Sabha by election in Mahrajganj, the RJD candidate won by 1.37 lakh votes. The worrying thing here for Kumar was that Muslims seem to have voted for the RJD enmasse. This was the final nail in the coffin for the BJP-JD(U) alliance.
Critics of Nitish Kumar have repeatedly asked that why did he continue in the NDA government in Delhi after the 2002 Gujarat riots. If he had a problem, he should have quit then. Why wait for 11 years? While this seems like a valid point that is not how things work in politics.
In 2002, and till very recently, Modi was nowhere in the national scheme of things for the BJP. Hence, there was no direct association between Nitish Kumar and Modi. But now with Modi being BJP’s prime ministerial candidate the Muslim vote would have moved enmasse to RJD, which is something that Kumar could ill-afford. In the past Nitish managed to keep Modi away from Bihar, but now with Modi being the prime ministerial candidate for the BJP that would not have been possible.
That’s one part of the story. The caste alliances that Nitish Kumar built were one reason behind the success of the BJP-JD(U) alliance. Nevertheless the alliance was also helped by the upper caste vote that the BJP brought with it. The Brahmins, Rajputs, Bhumihars and Kayasthas, form the upper castes and account for around 16% of votes in Bihar.
The upper castes formed the icing on the cake. In fact, the JD(U) leader and former convener of NDA, Sharad Yadav, admitted to as much when he said after the 2005 win: “We had the masses with us but I am not sure we would have won such a landslide without the BJP. Although some JD(U) members wanted to break from BJP, we realised that it was the BJP which had the support system – the upper-caste dominated press, bureaucracy and judiciary. Though Nitish led from the front, the BJP played its part in this win.”
Manish K Jha and Pushpendra summarise the situation very well in their 2012 research paper 
Governing Caste and Managing Conflicts Bihar, 1990-2011 “Nitish Kumar had assiduously worked to bring together a coalition of Kurmis, Koeris, EBCs, lower Muslims (Pasmanda) and Mahadalits. and the upper-caste and business-community support-base of his party’s coalition partner, BJP. Finally, in November 2005 assembly elections, EBCs consolidated their votes in alliance with lower caste Muslims and upper castes and RJD regime was replaced by the JD(U)-BJP coalition.”
In a state as feudal as Bihar is, for any party the support of the upper castes is a huge help. What the BJP also brings with itself is the RSS cadre, which is a huge help during 
the election process, from campaigning to manning booths to having the right electoral agents at the right booths. This is something that Nitish would have realised during the recent Maharajganj Lok Sabha poll.
One possibility for Nitish is to align with the Congress to make up for the loss of the votes that BJP brought in. The Congress has already started sending feelers regarding an alliance. There are two problems with this approach. The first problem is that the Congress is more or less dead in the state. Hence, any alliance between the two parties is going to benefit the Congress more than the JD(U).
And the second problem is that the Congress already has an alliance with Lalu Yadav’s RJD. And aligning with Lalu won’t go well with the political plank of development that Nitish has built and also delivered on. Any political leader who stands for economic development can’t be seen aligning with Lalu Yadav, the very antithesis of development. But as they say funnier things have happened in politics.
Given these reasons, Nitish Kumar and JD(U) will be worse off after the split with the BJP, but only slightly. Nitish’s bigger interest here seems to hold back Lalu Yadav from resurrecting his MY alliance and from the way things stand here, he should be successful at that.
As far as the BJP is concerned it will continue to get the support of the upper castes in the state. But that in itself will not be enough to win a substantial number of the 40 Lok Sabha seats. In the current Lok Sabha, the BJP-JD(U) alliance had 32 seats from the state.
Also, it is worth remembering that Hindutva was never really a big issue in Bihar. Even after Lalu Yadav arrested Lal Krishna Advani during the course of his 1990 
Rath Yatra, the state continued to remain peaceful. So BJP’s attempts to resurrect this issue (as it is plans to in Uttar Pradesh by appointing Modi’s lieutenant Amit Shah as in-charge of the party in the state) won’t really work in Bihar. Given these reasons, it will be difficult for the party to win more than 10 Lok Sabha seats from the state, on its own. Hence, Modi will have to work more magic in other states so as to ensure that the party wins enough seats on its own so that potential allies are attracted to it at least after the elections.
The article originally appeared on www.firstpost.com on June 17,2013 

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

Why Advani’s resignation is the ‘black swan’ that can hurt the BJP

 
BotanicSwans11Vivek Kaul
 
All swans are white.
Or so went the wisdom till the world discovered Australia.
Australia had black swans.
This was the basis of Nassim Nicholas Taleb’s black swan theory. The theory uses the black swan metaphor to explain the negative consequences of hard to predict rare events.
Nassim Nicholas Taleb and Mark Blyth explain the concept in a research paper titled 
The Black Swan of CairoBlack swans are essentially large scale events that lie far from the statistical norm and are largely unpredictable to a given set of observers. So basically these events have a very low chance of happening and hence are rarely predictable in advance.
“Such environments eventually experience massive blowups, catching everyone of-guard and undoing years of stability or, in some cases, ending up far worse than they were in their initial volatile state,” write the authors.
Lal Krishna Advani’s resignation from all official posts that he held within the Bhartiya Janata Party(BJP) is a similar black swan event. It came out of the blue and has caught the party totally off guard. None of the political commentators who appear on television almost every day discussing the way this country is headed, predicted it. And like black swan events do, it has already started to have negative after effects.
As soon as the news of Advani’s resignation broke out one stream of thought that was put forward by supporters of Narendra Modi(particularly those on Facebook and Twitter) and other analysts was that Advani’s days were up and he should retire gracefully. Some even went to the extent of saying that he should have already retired gracefully and let the younger generation take over. It was time for the 
Bhishma Pitamah to lie down on the bed of arrows that he had made for himself, said one political commentator.
Whether Advani should retire, or should have already retired, is a matter of conjecture. But the fact is that he has not and still wants to be part of the political set-up. And that is the important point on which any discussion should concentrate on. Keeping that in mind, what are the negative repercussions that it could have for the BJP in general and Narendra Modi’s efforts in becoming the Prime Minister of India, in particular?
The Rashtriya Swayemsevak Sangh (RSS), the ideological mentor of the BJP, seems to be backing Modi in this fight. So that’s one positive going for Modi.
But there are other issues at play here. Even Modi, with all his charisma and political guile, cannot ensure a majority for the BJP in the next Lok Sabha elections on its own (neither can any other leader for his or her party). So alliances (pre-poll and post-poll) are the only way to form a government.
Advani’s resignation seems to be pulling apart what remains of the National Democratic Alliance (NDA). Janata Dal (United) an important member of the alliance is already talking about leaving it. As Sharad Yadav, the convener of the NDA, and a member of Janata Dal (United) said after Advani’s resignation “It is sad … It is not good for NDA’s health.” KC Tyagi, another Janata Dal(United) leader was a little more direct: “It is tough for us to remain a part of the NDA now that the BJP’s tallest leader is gone.”
If the alliance between BJP and Janata Dal (United) breaks down, at least 30 seats could be at stake in the next Lok Sabha for the NDA. Bihar elects 40 MPs to the Lok Sabha. While the development agenda of Nitish Kumar has held the alliance in good stead in Bihar, but it has also got its caste calculations right. Caste calculations are very important in a state as caste ridden as Bihar is. The upper castes typically tend to vote for the BJP and lower castes follow the Janata Dal (United).
If the parties were to fight elections on their own, the only person that is likely to gain is Lalu Prasad Yadav. This has happened in the past where Lalu Yadav (with his wife Rabri Devi as his front) has won elections despite being terribly unpopular because the opposition vote against him was not united.
BJP is largely insignificant in most of Eastern India. In Bihar and Jharkhand(where the party is largely on its own and has done well due to good penetration of the RSS in the tribal areas) together elect 54 Lok Sabha MPs, the party has a significant presence. If the arrangement between Janata Dal (United) and BJP were to breakdown it would mean another problem for the BJP. And this can’t augur well for Modi’s PM campaign. The party has an insignificant presence in large parts of the country (particularly the South and the East). Hence, it needs to do very well in the portions it has a significant presence.
What makes Bihar even more important is the fact that the BJP hasn’t done well in Uttar Pradesh in the recent past. In the current Lok Sabha the party has 10 MPs from the state which elects 80 MPs to the Lok Sabha.
Shiv Sena, BJP’s first alliance partner, is also thinking along the lines of Janata Dal (United). “(Sena president) Uddhav Thackeray has said that the contribution of Advani and former Prime Minister Atal Bihari Vajpayeein building the party was invaluable for both BJP and the NDA,” Sena spokesperson Sanjay Raut told PTI. “One cannot think of NDA or the BJP without Advani-ji,” he quoted Thackeray as saying.
Another important issue that crops up here is the way Advani has been treated by the current lot of BJP leaders backed by the RSS and driven almost into isolation. Treating a father figure in an unrespectful manner is not likely to go down well with sections of voters. In fact, sections of the pro-Congress media have already started harping on this fact. This can be another major headache for the BJP to deal with.
Also it is worth remembering that many BJP leaders over the years have been mentored by Advani (and this includes Modi as well). And this might lead to the party not being able to put forward a united front in the months to come and various leaders working at cross purposes. The BJP’s best performance came in the Lok Sabha elections of 1996, 1998 and 1999 (it won 161 seats in 1996 and 182 in both 1998 and 1998). This was the time when the party largely united under the leadership of Advani and Vajpayee.
MG Vaidya, a former spokesperson of the RSS, had a telling comment to make in this regard.
“It’s shocking that a leader of such a great stature has to quit. It is now evident that all is not well in BJP. Advani was probably perturbed over the inner crisis in BJP and therefore quit all positions,” said Vaidya. “Some other leaders and Advani’s followers too may tender resignations,” he added. This remains a huge risk for the party. The top leaders of the party bickering doesn’t send down a good signal to the cadres. As a senior BJP leader in Uttar Pradesh told the Times of India “The latest developments in the party are damaging. Bickering at the top would certainly demoralise the party cadre and on the other hand confuse the voter. It would further dent the party’s prospects in the state in the forthcoming Lok Sabha polls. Though the prime reason for the rift is elevation of Narendra Modi as party’s LS poll panel chief, there are other issues too that need to be addressed.” Also it is worth remembering that the old warhorse Advani still remains a better bet than Modi, if things get tight for the BJP, after the next Lok Sabha elections. He is likely to be acceptable to more parties as the leader of the NDA than Modi. Even Mulayam Singh Yadav, whose party Samajwadi Party depends a lot on the Muslim vote, has had nice things to say about Advani in the recent past
Given these reasons it is little too early to say that Advani’s resignation will have no impact on the BJP and Modi’s race to become PM.
The piece originally appeared on www.firstpost.com on June 11,2013 

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