Saturday, December 30, 2006

Saddam Executed for Criminal Complicity with US

Saddam Hussain was executed this morning for a crime that he had committed back in 1980s, in complicity with, what has now become, the United States of Amnesia.

In December 1983, during the 8-year Iraq-Iran war, US President Ronald Reagan dispatched his special Middle East envoy, Donald Rumsfeld to Baghdad with a hand-written letter to Hussein. Rumsfeld had served in various positions in the Nixon and Ford administrations, including as President Ford's defense secretary, and at this time headed the multinational pharmaceutical company G.D. Searle & Co.

On January 1, 1984, Washington Post reported that the US “in a shift in policy, has informed friendly Persian Gulf nations that the defeat of Iraq in the 3-year-old war with Iran would be ’contrary to US interests’ and has made several moves to prevent that result”.

Three months later, Rumsfeld was back in Baghdad for meetings with then-Iraqi foreign minister Tariq Aziz. United Press International reported on March 24, 1984, that “mustard gas laced with a nerve agent has been used on Iranian soldiers in the 43-month Persian Gulf War between Iran and Iraq, a team of UN experts has concluded... Meanwhile, in the Iraqi capital of Baghdad, US presidential envoy Donald Rumsfeld held talks with foreign minister Tariq Aziz on the Gulf war before leaving for an unspecified destination”.

In fact, even prior to Rumsfeld's visit, in May 1983, in a letter to the Iraqi Foreign Minister Tariq Aziz, US Secretary of State George Shultz had mentioned about the "very important common interests" between the two countries, and had noted that:
    "...Clearly, international terrorism is not only a parallel menace to our two contries, it also appears that at least the inspiration for certain terrorist acts against Iraq and again's the US emanates at times from the same sources.By working together to combat terrorism, our efforts should be more effective"

In November 1984, US resumed normal diplomatic ties with Iraq.

As I had posted long time back:

    During the eighties, the UN was concerned with Saddam Hussein's use of chemcal weapons. On March 21st, 1986, the Security Council President, "speaking on behalf of the Security Council," stated that the Council members were

    "profoundly concerned by the unanimous conclusion of the specialists that chemical weapons on many occasions have been used by Iraqi forces against Iranian troops...[and] the members of the Council strongly condemn this continued use of chemical weapons in clear violation of the Geneva Protocol of 1925 which prohibits the use in war of chemical weapons"

    The United States was the only country to vote AGAINST the issuance of this statement!!!.

In any case, Saddam is now dead and gone, killed by a form of "justice" which is paradoxical. A few months back, an article in New York Times (May 21, 2006), noted about the court proceedings in Iraq:
    "The American influence has been undeniably pervasive, with about 90 percent of the $145 million in annual costs for the court and associated investigations paid for by the United States Justice Department, and lawyers sent by Washington acting as advisers."

Commenting on the execution of Saddam, Robert Scheer observed:
    "It is a very frightening precedent that the United States can invade a country on false pretenses, depose its leader and summarily execute him without an international trial or appeals process. This is about vengeance, not justice, for if it were the latter the existing international norms would have been observed. The trial should have been overseen by the World Court, in a country that could have guaranteed the safety of defense lawyers, who, in this case, were killed or otherwise intimidated.... This rush to execute him had the feel of a gangster silencing the key witness to a crime."

So today, besides all his cruel deeds, Saddam finally paid for two of his costliest mistakes:

1. He did not choose his friends wisely, and
2. He did not learn from his past experiences with his "Best of Enemies"

Other Sources:
National Security Archives
(this contains links to some of the de-classified documents from State Dept)
The Saddam in Rumsfeld’s Closet
Who should pay for Saddam's Crimes?

Friday, December 29, 2006

An "Invisible" Revolution... 400 Poor Women/ Hour!!!

"Invisible" people create revolutions that too remain invisible from the sight of most - specially the MSM...

The following is a glimpse into one such revolution, which is happening in India.

Perhaps the best introduction to this phenomenon is this desciption from the preface of The Lights and Shades Study:

    "I recall a time in Jharkhand, India in the forest town of Chandwa, sitting with a self-help group under a mahua tree. We ate the mahua’s large raisin-like berries, soon to be turned intocountry alcohol, while a few of the women recounted their story. A well-meaning organization (WMO) had come to empower this self-help group, which had formed on its own about a year earlier. The WMO advised the group that its members would have moremoney if they were to pickle and pack their garden harvests to sell to customers in Calcutta. The organization helped the group with recipes, with bottling and labeling. For several weeks the WMO and the women applied themselves day and night to the task. Somewhere along the way, the WMO lost the group’s savings and never did find a market for the chutney. The women pointed to a houseful of jars as evidence.

    Invincible, the group forged ahead, without the benefit of the WMO. Group members met each week, deposited cash savings into a box, then lent the cash to one another for emergency needs. The group fund began to accumulate once again. Some members had helped other newgroups form in the village and they too began to increase their savings. A few groups had linked to a local bank for more credit. Women members were checking into benefits they might receive by connecting to a government programme.

    I asked the women what activity might have been more lucrative than chutney production. Several said they preferred to work on their own, not in a group business. Working alone, except for harvesting activities, was less risky than putting all their eggs – their hours - into one basket. Yet they did cite one exception, an enterprise which they found to be most promising if undertaken as a collective. On occasion, together in the night after the children had fallen asleep, they would gather at the railway tracks to remove coal from the parked cars of the local freight train. Several women would stand guard while the others skimmed the goods. The next day they would sell the coal to nearby shops. There was no cash-outlay, justtheir time as a cost. They laughed as they confided their secrets.

    Empowerment seemed less like a quaint watercolor of women pickling fruits and vegetables in the countryside, thanks to the benevolence of an empowering NGO, and more like guerrilla survival in a setting where self-help meant fending off assistance whenever possible. This group was pure inspiration – entrepreneurial, full of humor, immune to whatever good intentions might come its way...."

This Self-Help Group (SHG) is only one among the 2.6mn SHGs that spread across Indian villages.

What are SHGs?
Self Help Groups (SHGs) are informal associations of up to 20 women (their average size is 14) who meet regularly, usually once a month, to save small amounts (typically Rs 10 to 50) a month. While they are formed with the encouragement of NGOs and other self-help promoting agencies (SHPAs) such as government agencies and the banks, they are expected to select their own members, and are therefore sometimes called affinity groups. After saving regularly for a minimum of six months, and using the funds to lend small amounts to each other for interest, which is ploughed back into group funds, and satisfactorily maintaining prescribed records and accounts, they become eligible to be "linked" by the local bank branch under a NABARD-sponsored programme called the SHG-Bank Linkage Programme.... On-time loan repayment to the banks has been very high, above 90 percent, and there have been no defaults so far.

Some facts:

  • Started as a pilot project of 500 SHGs, by Nabard in 1992, they grew slowly. In last 5 years, they have grown 10-fold.

  • Now, they reach 31mn rural households (out of the 191mn total Indian households).

  • Of these, about 14mn households are linked to bank credit though SHGs

  • According to The Lights and Shade Study, overall, 51% of SHG members fall below the poverty line; another 32% are ‘borderline’ (above the poverty line but vulnerable to risk). Scheduled Castes (SC) and Scheduled Tribes (STs), recognised as structurally poor, are 55% of members. Widows, also a vulnerable and under-privileged group, were found to be 10% of SHG members.

  • , 38% of SHG members work as casual labourers - 29% work in own agriculture, and 17% are engaged in a non-farm enterprise.

  • 74% have no schooling, 11% have some adult education to become ‘neo-literate’, 15% have some schooling (mainly at primary level).

    SHGs also represent an antidote to the "Access Denied!!!" phenomenon...

    And perhaps also explain the fact that:

    In India, there are 400 women, who join an SHG every hour!!!

  • Monday, December 25, 2006

    ...on Building a "Global" B-School Brand

    In her book, No Logo, Naomi Klein describes how during the last few decades, "brands" have acquired a life and identity of their own, independent of the "product" they are supposed to represent.

    The phenomenon is part of the contemporary zeitgeist, where

    - the 'labels' one wears significantly contibute to one's self-worth
    - the 'address' one lives in replaces the experience of 'home'
    - the 'lifestyle' becomes a substitute for personal identity
    ... Broadly, the the 'form' and 'style' in life become more important than it's substance.

    This article, Grabbing at a Chimera by Santosh Desai (The Week, Dec 17, 2006) is quite illustative of this trend...
    (and oh, yes, while the author mentions IIMs, but the same can be said for any B-School in India!!!)

      Last week, I attended the first pan-IIM meeting in which the subject under discussion was 'How to build the IIMs as a global brand'. As a subject, it is broadly indicative of the mood of the country for the very next day I was at another seminar where 'Marketing India to the world' was the topic being debated. Usually these discussions follow a typical India-is-ready-to-take-on-the-world-in-everything-except-cricket pattern and can be safely slept through.

      The interesting thing about the IIM discussion was that the enthusiasm of the alumni for the subject was not shared by the directors and senior professors of the IIMs. Their consensus was that the IIMs had a very long way to go before being considered world-class. They pointed out the abysmal salaries that faculty draws in India, spoke frankly about the absence of any research emanating out of these elite institutions and the inability to attract meaningful number of foreign students, given the absence of infrastructure. Add to this the distortions caused by constant governmental interference and the picture looked anything but promising.

      There are two aspects of this debate that have larger ramifications. The first is that we discussed this subject at all. Given the pitiful number of seats that elite educational institutions in India account for and the pressure on these from reservations for the socially backward, one could argue that globalising the IIMs should be the last thing on our minds. And as the professors pointed out, if not in so many words, that if one looked at the ground realities, this question walked the thin line between fantasy and insanity. The need for a globally respected IIM brand came from its alumni to bolster their credentials retrospectively.

      This is symptomatic of the current trend towards a sense of hyperbolic euphoria that borders on drunken megalomania. As a nation, we seem to have interpreted an ability to walk as a sign of an impending Olympic sprint medal. Our ambition has catapulted from being a participant in the world order to leading it with fanfare blaring. We want Bollywood to cross over, we want Mumbai to metamorphose into Shanghai, we want everything that we do to be acknowledged by an adoring world, by which, of course, we mean the west. We hate our cricket team because they make our desires look silly. And we can mount our fantasies on flimsy foundations - that IIM students get salaries we cannot comprehend is evidence enough of their global credentials.

      The 'we' in question is of course a small minority that has appropriated for itself the mantle of India. Which brings me to the second larger dimension of the IIM debate. The divergence in the view of those running these institutions and the exuberance of its alumni is a graphic reminder of the divide between the residents of a New India and others.

      IIM graduates today have a good chance of starting at salaries higher than what their teachers can hope to make. Like luxury liners, these students cast off from their dilapidated docks into the New World. The irony is that the air of excellence that surrounds our elite institutions has less to do with their intrinsic quality and much more to do with their scarcity. In a country of India's size, the access to quality education is so limited that anyone who 'gets through' is assured of a passport to New India. This is not a sign of our coming of age globally but of the distance we have to travel in making opportunities accessible to all.

      If teachers of India's most elite institutions can be thought of as citizens of the lesser India, then the divide between the two Indias is a very real one. The desire to become instantly respected globally will only intensify this division. Our priority is to do well by our citizens and fulfil their aspirations. This does not rule out global ambitions, but calls for a hardheaded look at where these ambitions are legitimate. With our limited resources, we cannot fritter away our energy on endeavours that are designed to inflate the ego of a few. The focus of our efforts cannot be outer-directed; we cannot care so much about what the world thinks of us. What matters is the nature of the new reality we are able to create for ourselves. For all of us, not merely a few.

    Update 1: er... forgot to mention that the author of the above article is himself, a graduate of IIMA - used to be the Head of the ad agency McCann-Erickson, before he joined the Biyani's.

    Update 2: I think must add this. I got a mail from a friend this evening:
      I have to agree... even though I am an IIM-A alumnus myself. The reason for being far away from World Class is not because of low staff salaries alone either. In my view it is the lack of academia-industry partnership as well as the lack of rigor about research and learning. The case method which is followed in most IIMs as the main method of teaching is only as good as the research with which it is backed. And that is a big questionmark.

      The other factor that creates this fantasy about being global is the hype with regard to the placement and salaries that a few of the toppers are able to get. Don't ask me the logic behind paying more to a fresh MBA graduate than most companies will pay a manager with 20 years of hands-on experience. In my view it commoditizes education and reduces it to something that can be measured on the basis of a salary that one kid can get. What value can a fresh graduate add to the company that is worth the money that some of them are paid? I am a graduate from the same system and have since taught in the IIMs and other B-schools and can tell you that in my view there is no justification at all to pay a fresh graduate the ridiculous salaries that we periodically hear about. No wonder that the alumni tend to feel that the sun shines because of them. It also produces a know-it-all attitude that banks more on image than on substance to get ahead in life and so the life expectancy of the graduate in his first job is less than 2 years. What a waste of an education!!

      I was invited to deliver the key-note speech at a conference of all the MBA colleges in Andhra Pradesh and began by asking the faculty and students what their purpose was in teaching business. They said it was to teach students to become businessmen and women. I then asked the students if anyone had a business of their own. They all looked at me blankly. I then asked the faculty if any of them had a business of their own. They also looked at me blankly. I then asked them how possible for people who had never actually done business to teach others how to do business without any practical experience in the training? I made a lot of people very uncomfortable but I drove home the point by recommending that B-Schools must scrap Placement Cells. Business School graduates must be taught to create businesses so that they can go out and create employment for others. Not become another statistic in the begging line for jobs. Or another highly paid paper pusher who now does it on a laptop.

    Tuesday, December 19, 2006

    The "Hidden Hand" of Free-Market Corporate Subsidy

    This a continuation of two earlier posts on

  • Subsidized Global "Free Trade" - I (Farm and Agriculture)
  • Subsidized Global "Free Trade" - II (Industry)

    The current zeitgeist is that
  • the business of business is business (i.e., make profits for the shareholders, and serve the customers)

    Fair enough!... That is what all that "free-market" doctrine is all about - i.e., let the business have a free-hand, let it focus on what it is supposed to do, and prosperity (and political freedom) will follow, etc...

    ...till one looks at the "internals" of how this "free" market is achieved... And this one is from the land/country that champions "free market", "free trade", "hidden hand of the market", "globalisation", etc.

    [for the time being, we will not go into the dynamics how the the "hidden hand" worldwide needs a "hidden fist" to maintain the "free market" afloat, as described by the flat-earther, Thomas Friedman... To quote:
    "The hidden hand of the market will never work without the hidden fist — McDonald's cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies is called the United States Army, Air Force, Navy and Marine Corps."]

    Coming back to the "free hand" thingie, one way of "doing business"/making profit is by evading taxes by the companies (or, in other words, making citizens pay for their profits)

    A study covering 275 profitable Fortune 500 corporations by Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP) found that:
    ("right click/save" to download)

    • Eighty-two of the 275 companies, almost a third of the total, paid zero or less in federal income taxes in at least one year from 2001 to 2003. Many of them enjoyed multiple no-tax years. In the years they paid no income tax, these companies earned $102 billion in pretax U.S. profits. But instead of paying $35.6 billion in income taxes as the statutory 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they received outright tax rebate checks from the U.S. Treasury, totaling $12.6 billion. These companies’ “negative tax rates” meant that they made more money after taxes than before taxes in those no-tax years.

    • Twenty-eight corporations enjoyed negative federal income tax rates over the entire 2001-03 period. These companies, whose pretax U.S. profits totaled $44.9 billion over the three years, included, among others: Pepco Holdings (–59.6% tax rate), Prudential Financial (–46.2%), ITT Industries (–22.3%), Boeing (–18.8%), Unisys (–16.0%), Fluor (–9.2%) and CSX (–7.5%), the company previously headed by our current Secretary of the Treasury.

    • In 2003 alone, 46 companies paid zero or less in federal income taxes. These 46 companies, one out of six of the companies in the study, told their shareholders they earned U.S. pretax profits in 2003 of $42.6 billion, yet received tax rebates totaling $5.4 billion. In 2002, almost as many companies, 42, paid no tax, reporting $43.5 billion in pretax profits, but $4.9 billion in tax rebates. From 2001 to 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40 percent.

    • After 2001, the average effective rate for all 275 companies dropped by a fifth, from 21.4 percent in 2001 to 17.2 percent in 2002 and 2003, less than half the statutory 35 percent corporate tax rate that corporations ostensibly are supposed to pay.

    Here is the list of top-25 "tax negative" companies (figures mentioned are in "mn US$"):
    Image and video hosting by TinyPic

    If one thinks that these "incentive" (i.e., tax breaks) would lead to more capital investments by the companies, the data shows a different picture:

    • The 25 companies in the study who reported the largest tax savings from accelerated depreciation — garnering two-thirds of the total depreciation benefits for all 275 companies over the three years — cut their total property, plant and equipment investments by 27 percent from 2001 to 2003.

    • In contrast, the remaining 250 companies reduced their investments by only 8 percent.

    • Overall, the 275 companies in the study reported that their capital investments fell by 15 percent from 2001 to 2003.

    The study concludes that:
      Most of the loopholes and tax dodges that corporations use to slash their taxes may be technically ‘legal’ in the sense that the tax law allows them. But remember that these subsidies got into the tax code because corporations lobbied to put them there. Saying something is ‘legal’ doesn’t mean that it’s right....The sharp increase in the number of tax-avoiding companies reflects the results of aggressive corporate lobbying and a White House and a Congress eager to do the lobbyists’ bidding."

    The losers from widespread corporate tax avoidance include:

    • The general public, who must pay higher taxes, lose public services, or be responsible for big future debt burdens.

    • Relatively disadvantaged industries and companies that will find it harder to compete for investment capital with tax-favored corporations.

    • The U.S. economy, which is harmed by the distortions that corporate subsidies produce.

    • State governments and state taxpayers, which see their corporate tax systems erode along with the federal system.

    • The integrity and sustainability of the tax system as a whole.

    The report, unfortunately, misses out mentioning that one of the largest set of losers are the industries in developing nations, who have to compete against these subsidised corporate gaints!!!

  • Sunday, December 17, 2006

    Dispencible People: Singur is only a Metaphor...

    A few days back, I had made a posting on "Government as Real-Estate Broker". Given the recency of happenings in Singur over the land-acquisition, it was naturally a comment on the role of govt.

    However, the post was not about Singur only.... But, first one must look at this news item:

    'No Consent for Acquiring 411 Acres of Land'

      KOLKATA: The Buddhadeb Bhattacharjee government has published a status report on land acquisition in Singur saying that out of a total 997.11 acres of land, the government got prior consent from farmers for 586 acres only on the day it fenced up the land. Another 34 acres is vested land.

      Government figures reveal that the administration didn't have consent for acquiring 411.11 acres which constitutes 41.22% of the land acquired — a plausible ground for unrest among peasants and the government's clamping of Section 144 of the CrPC in Singur... (Going by the admission of local administration), the government got consent from the landowners for another 370 acres days within the area was brought under Section 144.

      The sudden spurt in giving consent by the farmers seems intriguing because the administration has been negotiating with political parties and panchayats at various levels since May, but without much success. The status report reveals that nine meetings were held at the DM's bungalow in the three-month period between the first meeting held on May 27 and the ninth meeting on September 21, with no progress. Later in mid-September, the meeting venue was shifted to Kolkata but nothing transpired in the meet.

    The admission by the government came under pressure from petitioners. Two petitioners are quoted in the same news item:

    • "It is clear that there are no details of the project, its cost and benefits, provided also to the gram panchayat and consent of the gram panchayat is also not sought..."

    • "In reply to my petition at the Calcutta High Court under the Right to Information Act, the government replied that the West Bengal Industrial Development Corporation has requisitioned for the land and there was no mention of the Tata small car project, forget the details. But this shouldn't have been the case. Because the WBIDC has taken loans from the West Bengal Finance Corporation, a government organisation and the people have the right to know where his money is being spent and the details thereof."

    Singur, however, is merely a metaphor of what is happening on a large scale in the country. Here is a very small slice of other similar well-known examples:

  • Delhi New Master Plan to allow housing on 27,000 hectares of land
    Delhi's New Master Plan "will have provisions to permit putting up of dwelling units on 27,000 hectare agricultural land that Delhi has in its possession and also provide for easier and relaxed floor area ratio norms for city’s vertical development with necessary no objection certificate from water and power authorities..." (according to State Minister for Urban Development Mr Ajay Maken) "the Delhi’s Master plan will have provisions to allow builders to make multi storied buildings in the agricultural land of Delhi to accommodate the growing needs of housing

  • Power grows from the dust of the land
    A few months back, the UP govt's acquisition of 2,500 acre of agricultural land a power project by a private business led to massive protests by farmers at Dadri, and eventually to police action on protesters.

  • Police Firing a Kalinganagar
    Earlier this year, the protests of Kalinganagar - and the death of people in police firing - over the acquisition of 13000 acres of tribal/rural land by the Industrial Devt Corp of Orissa took place.

  • 60000 Acres, 5 Townships Govt’s Plan for Crumbling Bangalore
    Karnataka govt is planning to acquire 60,691 acres land to hand over to 32 private consortia to build a cluster of five privately built satellite townships around Bangalore. The news reports: "Chief Minister H D Kumaraswamy, who is personally pitching for the estimated Rs 30,000-crore townships project, has sent out the message that the government will not allow any obstacle to stall the project or allow it to go the Bangalore Mysore Infrastructure Corridor way."

    The list can go on... SEZs, Slum-clearance, Express-Ways, Outer Ring Roads, Mega Dams, etc, etc.

    Singur, is just a metaphor... of...

    ...of "Dispencible People" !!!

  • Saturday, December 09, 2006

    Indian History Trivia (6): India's 1st 5-Star Hotel

    Long time since I came back to this series...

    One more trivia:

    This was back in 1956... India was a young country, and the passion to build India - to bring it to the world forum - was at its peak.

    In 1955, in a UNESCO forum in Paris, the Prime Minister, Jawaharlal Nehru extended the invitation to hold the summit in India in 1956. The invitation was promptly accepted by the organisers.

    But India had neither a hotel of any standard nor a convention centre at that time. When his advisors reminded Nehru about the lack of facilities in New Delhi, he decided to build a hotel and a convention centre.

    In a period of 15 months, India built its 1st 5-star hotel. This was a colossal edifice representing the country's post-independence-instilled Revivalist architecture with the rose-pink walls of Kota stone, with Moghul style arches, and the Natraj Suite, the Kashmir Suite, the Rajput Suite and the Presidential Suite, all representing the diversity of the country.

    Starting with a 3 story grand building, it grew into a hotel with 550 rooms and 111 suites, spread across 25 acres of land. Nehru used to come and personally supervise the construction.

    The cost of such a construction for India was huge at that time - Rs. 3 crores (Rs 30mn). Dr Karan Singh, then the Sadar-i-Riyasat of Kashmir State, and who later became the Minister of Tourism in '60s recalls:

    "Panditji said the princes should contribute money to make a good hotel in Delhi. We have nothing to count. He said I will give you land but will you all put in your money? And so we did," (The state of Kashmir along with two more states contributed funds to construct the hotel, but soon the funds shared out for it went dry) "We spent about 10 to 20 lakhs and then ran out of money. We went back to Panditji and the government had to chip in."

    And that is how India's first 5-star hotel - Hotel Ashok - came up. And so did Vigyan Bhawan - Asia's First Convention Center!

    ... Those were the days when govt and business were not inimical (the issue was not about capitalism vs. socialism, as it is now - but about how does one contribute to building a nation). The staff of the Hotel Ashok got trained by the existing Oberoi Maiden staff (just as the initial training of SAIL technical staff happened at TISCO)

    In years to come, this place also became the platform for many well-known pubic personalities including Yamini Krishnamurti, Raja Radha Reddy, Hema Malini, Meenakshi Sheshadri and Pt Uday Shankar. It hosted Queen Elizabeth II, Marshall Tito, Margaret Thatcher, Prince Aga Khan, Fidel Castro and innumerable heads of states who came to India (During . Sometime in the late '70s nearly 40 heads of states stayed in the hotel at the same time... And a Saudi Arabian ambassador who stayed in the hotel's presidential suite for three years and held his daughter's marriage reception in the hotel).

    Hotel Ashok got a bad reputation when in 1982-83, Zubin Mehta and his team walked out the hotel because of a cockoach!

    This year, Hotel Ashok celebated its Golden Jubilee anniversary. According to one obsevation:

    "The hotel, at 50 B in New Delhi's Chanakyapuri overlooking the posh Diplomatic Enclave, has plodded through as many as 50 years of life since then, but en route, has not only lost the sparkle of 1956 but also defeated its great history. Sad that no Indian heart today turns fonder at the mention of The Ashok, no heads of state check in there anymore. Like any other state-run establishment, it has long reeled under the weight of demands for free sarkari service from the politicians and their minions, red tape and a fading semblance of maintenance. At least that is the general idea on the street."

    A personal note - another trivia - about the "general idea on the street":
    I had a chance of attending two conferences - one in Hotel Ashok and the other in another up-market 5-star hotel on Sadar Patel Marg in New Delhi last month. Purely a personal obsevation, but I found that 'Ashok' vs. 'this hotel' was like a comparison between 'class' vs. 'commodity'. Interstingly, the two conferences - one on micro-finance and the other a sort of annual jamboree of functional practitioners of a certain corporate 'discipline' - also reflected this distinction.

    Earlier Posts in the Series:
    1. The Story of Junagadh
    2. The Foundations of "Nehruvian Socialism"
    3. A "Nation-in-Making"
    4. Legacy of "The Raj"

    1st govt-owned 5-star hotel turns 50
    In celebration of a legacy

    Wednesday, December 06, 2006

    Government as Real-Estate Broker

    Good and bad news for all the fans of Milton Friedman.

    The good news is that Govt (Govt of India, GOI, to be precise) is no longer in-charge of the state of affairs (or rather, the affairs of state).

    The bad news is that GOI is still relevant to business/ free-market economy.

    Just when everyone - in corporates, media, urban intelligentia - had given up about the relevance of GOI in the booming liberalised economic scenario, the GOI has found a new role for itself... has become the middleman for the land deals for corporates!!

    The need for such a role lies in The Paradox of the Present Model of Growth and Development, viz:

    In order to grow (SEZs, Express Highways, Mega-dams, Infrastructure, new ventures, etc.), the 'free-market' enterprises need to own land/ private property in convenient locations (the "convenient location" is also the reason why most projects are located on fertile land, while the wasteland remains untouched). However, if the companies have to pay the 'free-market' price for others' 'private property'/land, their projects will become financially unviable (more so, since market-forces shoot up the land prices, once a project gets announced).

    And therein lies the paradox:
    In order for the free-market enterprises to grow in the liberalised economy, they need to be shielded from the forces of free market!!!

    GOI/State Govts provide a way out of this paradox because they have access to a legacy (competitive advantage!!?) - the Land Acquisition Act of 1894, enacted by the British - that none others have, but need its protection.

    This is how this arrangement works:

  • 1. According to the Land Acquisition Act (1894), the GOI/State Govts have the right to acquire land from private owners for any "public purpose".

  • 2. To acquire the land - at the behest of any party - GOI needs to give/publish a 'Notification of Acquisition' to the owners of property, e.g., farmers. (This will be published in the gazette and at least two local daily newspapers)

  • 3. The owners of the property can file an objection within a month of the notification.

  • 4. The "concerned authority" - normally the Distt Collector or Dy. Commissioner - needs to deal with these 'objections' within a year, hold an enquiry, and then "award" the acquisition. The Award, i.e., transfer of property, can be done within 2 years of Notification.

  • 5. The Land Acquisition Act does not define the meaning of "public purpose" - that is the discretion of the "concerned authority"... Someone's "private property" can be acquired to build a school, a road, clear a slum, a hospital, etc.... Or to hand over to a corporation as its "private property" for "public purpose".

  • 6. The original owner is, of course, entitled to compensation for loss of his "private property". The compensation is calculated as per the market value of the land at the time of the Notification. The valuation is done by the "concerned authority", not by any independent agency.

  • 7. After acquiring the land, the Govt sells (or leases out) the land to the private corporate party. The sales/lease price is calculated according to the MOU or as per the market value of land at the time of selling.

  • 8. The Corporates get the land at below the market rates. This makes their projects viable.

  • 9. The GOI/state govts pocket to difference between the "acquistion" and the "sales" price... This adds to revenue earning in the state budget. Govt also gains by transfering the agricutural land to industy, since now it can be taxed as the 'corporatised' land - agriculture income is non-taxable in India.

  • 10. This is a mutually win-win arrangement between the GOI and corporates...."development" happens... Industrialisation, GDP, Sensex - or whatever - zooms up...

    Some, however, lose in bargain.... These are the "victims of development who sacifice for the larger good" of the economy.

    Land Acquisition by Government
    Land Grab and "Development" Fraud in India
    One-Sided Law on Land Acquisition