Manu Rishi Guptha: What Indian Kings and Leaders have in common

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As I saw Sengar walking
out of the court with a despicable smirk on his ugly face, his expression said
“I might have committed the most heinous crime but this is a minor blip and I
will soon be back – because in India “Sab Chalta Hai”. How I wish and pray someone
had done a
Hyderabad
on him.
And that smirk has pretty much defined the
character of this nation. Whether its corruption , conduct of politicians and
citizens alike, getting away with proverbial murder or whatever…..

So as my dear friend, prolific and thought
leader par excellence – Andy
Mukherjee
recommends article
after article
, ways to take this country out of an economic malaise through
large spends on development, in all three scenarios of BC DC AC (Before During
After Corona), I beg to disagree with his positivism and audacity of hope, as
large part of every Initiative, Govt spending, Tax collection, Infra spend,
gets diluted and withered away to land into the pockets of corrupt stakeholders
at all levels thereby depriving every single citizen of India – A truly morally
and ethically clean nation. And any strategy fulcrummed on a spend centric
evolution is most likely to be withered away or land where the tax dollars
mustn’t.

Abraham Lincoln s
Gettysburg speech in 1863
has been a bedrock of ideology of every
democratic nation on this planet, but few nations have been able to follow / imbibe
it in its true spirit. Most have just lost the opportunity of implementing true
democracy.

Societies that establish democracy on the
bedrock of truthfulness and discipline (Singapore) – flourish, but societies
that use democracy as a fundamental right to abuse the system and to get away
with everything, neither deserve the luxuries of a democracy not would they be
able to imbibe a degree of conduct that is expected for a democracy to flourish
and function.
Let me endeavour to address a few points
that frustrates a middle-class/educated Indian & that are reflective of the
state of a nation. And how in the AC (After Corona) world the moral compass of
humans and nations could change for the better. But that cannot happen if we
don’t recognise and acknowledge the real virus plaguing the deepest innards of
our character.
In my mind corruption is the most
debilitating virus that has embedded in the soul of the nation and if it drains
an average of 10% to the Mr. 10 %’s of the nation we are looking at an average
annual loss/leakage of approx. 200-250 Billion USD. I am still reminded of a
gentleman named Madhu Koda many many years ago (I am not even sure whether he
is alive or dead) who in a mere few months of being in power allegedly amassed
thousands of crores of wealth
through abuse of power. Compare that to an
ignorable flutter when a few MPs in the British
Parliament submitted a few parking tickets that were fake and had to resign

instantly from their positions. An indiscretion like that would be considered a
joke in India – maybe considered a fundamental
right
.
“If one can get away with something, one
will most certainly get away” – and that’s the basic problem with democracy.
State of Infrastructure..
Nations have been judged on the strength of
their infrastructure – which has catapulted cities/nations to become the global
hub of finance and fulcrum of progress – London Underground
and not any intellectual superiority,  is
one single catalyst that has catapulted London to become the financial hub of
the World.
It is believed that India has a total
length of 4.3 million Kms
of road network that’s managed by state / central
governments. Each KM of road costs approx. 1.4 mill USD for a national highway
and about 0.7 mill USD for a feeder road/state highway to construct. At an
average of 1 mill USD per km, we are looking at staggering numbers that are
being spent on infrastructure – primarily roads. A leakage of a few percentage
points (at a general norm of 10%) we are looking at billions of dollars of
leakage by junior officers, contractors delivering deficiency of service and
quality. (rough estimates peg this at 3-5 Bill USD). Most roads across the
country need to go through just one rainy season to get completely eroded. It
was shameful in the global media, when a prankster
made a video wearing a space suit
and what appeared to be craters on moon
were in reality a usual road in Bangalore.
And during my world travels, when I end up
visiting same areas year after year, I haven’t seen any eroded road even on the
usual routes that I travel because roads there – last for years without any maintenance.
Why – Because they do their job right as per specifications and as per
contract.
In one of my jobs, I entered into a registered
contract to provide some service to someone. And the other party used my
service for a year and reneged on the obligation to pay me for it. Shame on our
internal system of judiciary and enforcement of contracts that I, I the last 2
years haven’t been able to even deliver the summons to the other party inspite
of all the technological advances of emails WhatsApp text-messages because we
are still romanticising the systems of 1900’s of a court official delivering
subpoenas and leaving all loopholes to be exploited. A nation where a
registered promise cannot be enforced – has no real future and can never
enthuse any degree of confidence either in an investor, or an entrepreneur –
Because You one get away with everything.
Someone rightly / clichédly said –
Government should never be in the business of business.
When Coal India launched
its IPO, many many years ago, it was expected to become the most valuable
company on the planet at that time. Afterall we were dealing with monopoly,
infinite coal reserves (probably the largest in
the world) some say enough for another 150 years. Yet Coal india is being
operated at the lowest possible level of efficiency. Has destroyed entire
shareholder wealth and has seemingly no future.
Swaminathan Iyer wrote in the TOI
many weeks ago
about the inefficiency of Coal India Ltd and the key take
away point was – Indian worker produces 0.8 tonnes of coal per man shift
compared to Australia that produces 40 tonnes per man shift. In the name of
socialism the much earlier Prime Ministers created and concentrated national
reserves and treasures as engines of welfare for Politicians, officers and
workers at large. If the extraction of coal per person per day cannot be linked
to the compensation of the CMD of Coal India and every single of its 300,000
employees – the PSUs will continue to erode taxpayers money and shareholder
wealth. It was also the same eminent
Mr. Iyer who predicted in Jan 2010
that India will over take China by 2020
. Alas it remined a dream that might not
come true for another 2 decades….
Some
20 years ago as a 25 yr old manager of a small hotel (at the start of my
life) in a small hilly town I would always desire my hotel to be full. I would
do all that it took to ensure that every guest who ever checked in would always
come back and never go anywhere else. At that time I was keen to get a
confirmed business of an Oil PSU to be their designated-hotel for their
visiting executives from all over the country. Only to realise, as I overheard
during a social gathering, that that PSU has an emotionally watertight contract with a hotel
far lower in class and service than mine, because the dealing officer gets
approx. 2 lacs a year to renew that contract (Mind You I am talking of year
2000). That year he got a Maruti Zen (a popular car of that time). TVM (Time
Value of Money) pegs that amount at about 30 lacs in todays value. Such is the
quantum of leakage – All at taxpayers expense.
No
wonder how hard You try – even though oil is floating and being thrown away/sold
free across the planet, its still selling at over Rs 70 per litre in India. –
Inefficient monopolistic OMC’s do churn a profit – But they could churn many
times more.
Imagine
this is just one instance of one PSU involving one city and one officer.
Extrapolate it to the entire country. You would want to shoot Yourself in the
head – if You complete that math.
Take
the case of Oil PSUs, NALCO, NBCC, HUDCO, SBI, GAIL, BHEL, BEL, etc etc etc. If
the respective Minister’s and MD’s salaries were directly linked to the EBIDTA
of these companies and to global thumb-rules of performance of similar
industries , they would have all done well. But the massive destruction of
shareholder wealth slowly orchestrated by the inefficient stakeholders at large
has truly eroded the incentive to perform and sowed the seeds of deep-rooted
malaise that has seemingly no cure. And it’s ironical that the Govt wants to
IPO The Life Corporation of India. Some quarters of financial whiz-kids are
gung-ho on LIC IPO. Mark my words today. It’s the biggest disaster waiting to
happen and biggest fraud on existing policy holders who are expected to partake
in the growth story of Indian economy and its financial markets.
  • 30-40% Income tax
  • 18-28% VAT on everything
  • Pathetic supply chain management resulting in inflation
    upwards of 6-8% (that’s the real inflation really irrespective of the statisticians
    claims)
  • Most expensive Fuel in the world – despite of lowest
    crude prices
  • Accumulated losses of PSUs such as Air India @approx
    150 employees per aircraft compared to just about 70 employees per aircraft
    @indigo – the less said the better about the efficiency and hospitality of Air
    India
  • Infrastructure worst than what human mind can possibly
    fathom or fragile human body can bear
  • Public health and public education in shambles that
    has allowed the private participants (private hospitals and private schools) to
    emerge and charge obnoxious tariffs for rather mundane services.

If
India has to survive the AC era where the likelihood of deflation and
depression will hit it like an unexpected Tsunami soon and the futile
narratives built around the demographic dividend (youngest population on the
planet) have to remain relevant – the character of this nation must change.

Taxing
the very few who are responsible through their capitalistic superiority by
taking risks and putting their capital to work should be rewarded for adding
economic value to the nation by generating millions of jobs and generating
already high taxes that are withered away by inefficiencies at every level with
abject neglect of accountability.
On
the contrary, rather than taxing anything that moves, all that the Govt needs
to do is to allow the corporates to draw a reverse Covid-Cess (from a
national corpus created by the Govt to fight these unusual times) that is a
percentage of the sum of average taxes paid by the business in the last 5 years
or so.
Rather
than juggling with a future stimulus that’s impossible to figure out in a
complex country like India where the economic engine has come to a grinding
halt – Why cant a % of annual taxes paid be returned to the tax payer to
alleviate the economic pain.
GST
has been a revolutionary reform that reflects the quantum of sale of an
organisation. The Govt can easily make a reasonable assumption of the Operating
Profit of respective businesses according to their industry and deduct that
from the reverse calculation of the revenues and provide that liquidity to enterprises
that allows these to survive.
It
sounds mighty responsible while sitting on a high horse to say “Dont retrench
and don’t enforce a paycut” But can an organisation print/create money? – NO!!
But
Governments Can – That’s what Governments are supposed to do while being
responsible in good times while collecting tub-full of taxes year after year.
And this isn’t the time to worry about Fiscal Deficit as inflation is the last
cause of worry when the entire nation is afraid to spend even for basic needs
because of the underlying fear of the unknown.
With
all the alleged discipline that our policy makers seem to be proud of, we could
barely manage a BBB- on our sovereign, does anyone really care if it changes to
Junk.??
The
stimulus that will save this nation is elusive, and the little flutter that was
created so far is 0.8% of the GDP of India whereas USA has already given a
stimulus of 12% of GDP and an additional 2.6% of GDP in payroll protection. In
rupee terms Indias stimulus amounts Rs.1307 per capita in comparison to approx.
Rs 5 Lacs per capita in the US.
The
greatest service that our politicians and officers can do right now is:
  • Show
    up more frequently (great leaders are always there in form and spirit)
  • Demonstrate
    that You feel the pain of the common man / businessman / taxpayer / who are
    going through severe economic compression
  • Avoid
    frivolous, confidence draining statements (Ala IRS officer’s note to revive
    economy)
  • Find
    simple ways to give much needed stimulus rather than inventing complex formulas
    (that will never be perfected). Corporations / Individuals have P&L’s and
    Balance Sheets – Find ways to just use existing declared data to reverse the
    debits from these statements
  • Involve
    Industry leaders (who run real businesses and manage real situations) to tackle
    this vicious enemy
  • Reach
    out to political opponents (who are experienced & educated) and shed the
    walls of partisanship in the face of such adversity
  • And
    above all let the economic engine NOT STOP under any circumstance. Restarting
    it would take years
  • And
    lastly build confidence among us 1.3 billion people. Loss of Confidence kills
    the spirit to work, aspire, travel, purchase and that deflates an economy like
    nothing else.

But
Lets get real , lets get going before its too late.



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Manu Rishi Guptha
Manu is an Investor, Blogger, and a Professor of Fearlessness & Minimalism.
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