Sunday, February 26, 2012

MCGM Election Results: NOTAP beats AOPPT

I know this is a trifle late, but I was away and could not find time to write. Here I am putting down some thoughts on the results of the just concluded MCGM elections.

Firstly, that even before the counting had begun, the real results of the elections were clear. More people opted for the “NOTA Party” (None Of The Above Party) than “AOPPT” (All Other Parties Put Together). The city recorded average voter turnout of around 45 % with the highest voting percentage in any constituency at  49.50 %. Not a single constituency had more than 50 % people going out to vote.

This has been interpreted by many as “voter apathy”. “……Mumbaikars have lost the right to complain……”, “…….Mumbaikars just don’t care……” and so on. Some also commented on the turnout  being lower in the affluent areas of the city than the less affluent. I even heard one “expert" say on T.V. that Mumbaikars have so much money that they spend half their time abroad, and so it doesn’t matter to them who governs MCGM.  Nothing can be farther from truth! 

There should be no mistaking the fact that the real reason for low voter turnout was that there were no  worthwhile candidates to vote for! It is an outright rejection of all candidates who contested the elections. This should be an eye opener for all the parties contesting the polls, and especially for whoever is in the opposition. If you want to dislodge a ruling party, you need to provide a worthy alternative. If you cannot even create a glimmer of hope in the minds of the voter, he is not going to waste his holiday! This is the message from the Mumbai elections. I am not justifying this approach, in fact I believe everyone must vote (see the previous blogpost here), but there is no doubt that this is the message the people have given.

I also find the “affluent people don’t care” theory a little difficult to digest. True, voter turnout in areas such as Malabar Hill, Peddar Road and Juhu have been shown to be lower than some of the slums and lower income areas. But using the same statistics, one can say that voting percentage was lower in the educated sections of the society, than the less educated. Liquor bottles and chicken biryani cannot be used to bring the Juhu voter out of his home, though it may work in the slums of Cheetah Camp or Kanjurmarg.

Some have observed that the Marathi dominated areas have shown higher voter turnouts than non-Marathi speaking areas. This once again shows the importance of having an “alternative”. The disgruntled (with the present governance) Marathi manoos perhaps found hope in Raj Thackeray’s MNS but the non-Maharashtrians had no one to look up to. Interestingly, the Congress propped up MNS in its early years in the hope that it (MNS) will finish the Shiv Sena, but the MNS seemed to have gained at the cost of Congress itself. While the MNS gained substantially in the elections, the Sena did not lose much. It is the Congress whose strength has come down from 71 to 51.

This is the real story of Mumbai elections - a fit case for Rule 49 – O! (Right to Reject all candidates).

Tuesday, February 14, 2012

Voting rules for the elections

It is election time in Mumbai, so I am framing some guiding principles that I plan to follow in this, and all the subsequent elections. You too can do the same!

1. I will ensure that I cast my vote. It is not only my right & duty; it is also a privilege to vote. How much ever imperfect our democracy may be, democracy it is, and I am lucky to be born in one. Almost half the people in this world do not have the privilege to vote. Remember the adage: “Bad governments are elected by good citizens who do not vote”. If we do not exercise our franchise, we may lose it one day. 

2. I will research candidates in my constituency. With the advent of technology and increased transparency in recent years, citizens have better access to information about the parties and their candidates than before. I will use it. If I can spend three hours watching a movie, I might as well spend some time researching who will maintain the roads I walk on, supply the water I drink or decide what to do with the tax I pay from my hard earned salary.

3. The person is more important than the party. The simple rule here is that a good person in a bad party is better than a bad person in a good party. So I will vote for the candidate, not for the party.

4. I will not vote for the known devil. I will not vote for a candidate who was elected in the past  but did nothing for the people, or has a corrupt or criminal background, or reveals wealth that does not justify his known professional or educational status.

5. I will not presume that everyone is bad. If the major parties do not put up candidates who are good enough, there are always fringe political parties or even unknown independents whom I can vote for. I don’t see any harm in voting for the unknown ones when the known ones are failing my test. If nothing else, I can use education as a criterion to decide whom to vote for. Not that it is a fool-proof criterion, but atleast it is better than voting on the basis of religion, caste, language, fame or good looks.

6. I will not worry about how others vote. Whether the candidate I vote for can win or not, or whether his party can form the government or not, is irrelevant to my decision of whom to vote. Remember that we not only elect our government, but also our opposition! In a democracy, having a good and effective opposition is as important as having a good government. 

I hope these rules will help me in choosing the right candidates, or atleast prevent me from choosing the wrong ones. If everyone does the same, we will have Ram Rajya one day.

Tuesday, February 7, 2012

Banana economics and the value of the Rupee

You may think I have gone bananas, but this is a serious article. It is not often that a banana figures in an Economics text book. Nor is it often that I buy a banana.

Today, after lunch in office, I casually picked up a banana from a street vendor nearby to top up my lunch. As I ate the fruit, my thoughts went back several years ago when, I and a friend of mine used to eat bananas during lunch time everyday, chit-chatting on the footpath, and watching the traffic pass by. It was 1992 - 93. 

Bananas used to cost Rs.2 for three then. I paid Rs.3 for one today. Back in the evening, I calculated that  banana prices have increased by around 8 % per annum over a period of nearly twenty years. I also find that:

1. Bananas are easy to grow and cultivated in several parts of the world. Over long periods of time, supply of bananas is completely elastic.

2. Bananas are perishable, they must be consumed as soon as they are produced (at least, within a reasonable period of time). It is not possible to hoard bananas, create artificial shortage and jack up prices. Bananas are not bought as an “investment”.

3. Hedge funds do not buy bananas, nor are bananas traded on commodity exchanges. There are no Exchange Traded Funds (ETFs) who invest in bananas. You cannot buy bananas “on the margin”. There is no speculative demand for bananas.

4. There are no banks who offer “loans for buying bananas”, which can create artificial demand and cause price bubbles.

5. The demand for bananas does not fluctuate much with economic cycles of boom and bust. Demand can be said to be in a “steady state”, growing “normally” along with the growth in population. I don’t think per capita consumption of bananas has changed much in the last twenty years due to cultural shifts, eating habits or other such reasons.

6. Prices of bananas are not regulated. There is no MSP (Minimum Support Price) or government subsidy either to banana sellers or buyers which distorts price discovery.

7. A banana cannot be said to be the country’s “staple diet”, unlike say rice or wheat. If prices rise more than expected, people will stop eating them, bringing the prices down again. If prices fall too much, banana growers will grow something else, reducing supply which will bring prices up again.

In other words, this is a classic case of what economists call the “long run equilibrium” where prices are determined by free forces of demand and supply, over long periods of time. There are no disruptions.

And yet, banana prices have increased at a rate of 8 percent per annum over the last two decades.

We can therefore draw the following conclusions: 

Ceteris Paribus, (very important in economics!)

Firstly, this rate (around 8 % p.a.) can be taken as the long run rate of currency depreciation for the Indian Rupee. Price of banana has actually remained the same, but the currency has lost its value. Price of every  other natural resource can also be expected to rise at a rate of at least 8 % per annum in the long run. 

Secondly,  prices of natural resources where such an ideal state does not exist (a condition contrary to any point mentioned in 1-7 above exists) can be expected to increase at a rate more than 8 % per annum in the long run. Note that almost all the factors mentioned above influence price upwards, by either increasing demand or reducing supply.

And last but not the least, even monkeys can teach economics.

Thursday, February 2, 2012

Historic judgement in the 2G case

A historic day for India’s democracy. Hope is still alive for the Indian Republic. Full text of the 2G judgement is available here. But I can’t resist posting a few words from the Supreme Court order.

(To understand how big a loot of public money the 2G scam has been, read this article written more than a year ago)

So here we go: 

“The material produced before the Court shows that the Minister of C&IT wanted to favour some companies at the cost of the Public Exchequer….”

“…This arbitrary action of the Minister of C&IT though appears to be innocuous was actually intended to benefit some of the real estate companies who did not have any experience in dealing with telecom services……”

“The cut off date…….was not made public …… and the first-come-first served principle, which was being followed since 2003 was changed by him at the last moment …..This enabled some of the applicants, who had access either to the Minister or the officers of the DoT to get the bank drafts etc. prepared towards performance guarantee etc. of about 1600 crores……..”

“The manner in which the exercise for grant of LoIs to the applicants was conducted on ....... leaves no room for doubt that every thing was stage managed to favour those who were able to know in advance change in the implementation of the first-come-first served principle. As a result of this, some of the companies which had submitted applications in 2004 or 2006 were pushed down in the priority and those who had applied between August and September 2007 succeeded in getting higher seniority entitling them to allocation of spectrum on priority basis….”

And this:
“…….we consider it imperative to observe that but for the vigilance of some enlightened citizens who held important constitutional and other positions and discharge their duties in larger public interest and Non Governmental Organisations who have been constantly fighting for clean governance and accountability of the constitutional institutions, unsuspecting citizens and the Nation would never have known how scarce natural resource spared by the Army has been grabbed by those who enjoy money power and who have been able to manipulate the system

And this:
Respondent Nos………who were benefited by a wholly arbitrary and unconstitutional action taken by the DoT for grant of UAS Licences and allocation of spectrum in 2G band and who off-loaded their stakes for many thousand crores in the name of fresh infusion of equity or transfer of equity shall pay …….. Respondent Nos. …………too had been benefited by the wholly arbitrary and unconstitutional exercise undertaken by the DoT for grant of UAS Licences and allocation of spectrum in 2G band…..”

(Emphasis mine in all the above paragraphs).