The effects of Land acquisition laws in Rural India

1.       Overview

2.       Focus on Opportunity

3.       Pitfalls in Land Acquisition and Classification of Land

4.       Buying & Selling Land in Rural India

5.       Rehabilitation and Resettlement

6.       CRZ Rules and its consequences

7.       Mining and Dams, Rights and Wrongs

8.       Transitioning to a Market Based Economy

9.       The Tenant Advantage

10.     Conclusion

1.     Overview:

For India to progress she has to:

-          Enact policies that jettison the bad practices of the past,

-          Strengthen prevailing good practices and,

-          Introduce new policies that accelerate the rate of growth in an environmentally responsible manner.

For the purpose of this article, progress is defined as; providing opportunities for all and adherence to pragmatic environmental guidelines. The most important issue is a balanced approach that improves the Quality of Life for all, while addressing the needs of the stake holders involved, namely; the citizens, the affected people, the government, the investors and businesses.

2.     Focus on Opportunity:

At the individual level opportunities translate to education for the youth, training for the unskilled, jobs for the willing and entrepreneurship for the able. It is projected that a Million youth will be entering the workforce every month for the next Ten years. Providing abundant opportunities for the One Hundred Twenty plus Millions over the next ten years,  requires Urbanization and Industrialization. There is a debate on whether this is the appropriate approach for India. The prevailing conventional wisdom supports this assertion. The detractors are primarily idealists, who partake in the fruits of modernization while proposing alternatives that they themselves are unable to demonstrate. India is at an inflection point and India’s only hope is proceed in Urbanization and Industrialization as fast as possible, to realize the “demographic dividend”. Not doing so will result in a “demographic disaster”.

3.     Pitfalls in Land Acquisition and Classification of Land:

India’s current land acquisition laws are a major impediment for Urbanization and Industrialization. The Land Acquisition Bill is a long time coming, the jury is out whether it will provide some relief. However there needs to be an over arching strategy that enables progress to accelerate in an environmentally responsible and inclusive manner.

Not all land deemed agricultural is suitable for agriculture and not all areas deemed Forest has an abundance of trees or wild vegetation. The emphasis of the laws has been on restricting who can own agricultural and forest land as opposed to stipulating what can be done on the land. Shortcomings in governance have resulted in rampant violations of land utilization, while curtailing ownership. The pragmatic solution is to shift the emphasis to strict environmental guidelines which can be monitored and controlled. Furthermore, stiff penalties can be instituted for violating land use guidelines and since that can be enforced, it would serve as a deterrent and remedial actions can be taken.

For instance, every small town in India has a main thoroughfare with a hodgepodge of gullies and lanes leading to dwellings and surrounding farms. As the town expands, surrounding agricultural land is converted to non-agricultural (NA) land and growth occurs in a haphazard manner. Town expansion is not unique to India. What is lacking is a good town planning process, wherein the town expansion grid is laid out with easements, and set backs for roads, pavements and bicycle lanes. As part of the conversion process, the land owner is made to surrender the portion specified in the town’s master plan. This is a WIN/WIN/WIN solution, wherein the owner realizes the appreciation of the land (which is often significant) when converted to NA, the town acquires land for infrastructure at no cost and the town folks benefit.

4.     Buying and Selling Land in Rural India:

Buying and selling agricultural land in Rural India is riddled with additional stipulations that require the buyer to have an agricultural certificate or own agricultural land. Furthermore in some States there is an income cap that has to be met to qualify as a buyer. Indian citizens without these qualifications are unable to acquire agricultural land. Because of these restrictions, land values are artificially depressed and farmers are not able to realize the true Free Market Value (FMV) of their holdings.

The work around these restrictive laws and stipulations for U&I is accomplished by the government acquiring the land and then selling it to a developer or industrialist. Valuation of the land in these acquisitions is the major source of contention. The people themselves are to blame for this. The government appraisal of the land termed “Market Value” (MV) is in many instances set to lower than 20% of what the land is actually sold for i.e. The Open Market Value (OMV). The buyer is quite happy to register the land at or slightly above the MV ascribed by the government and in doing so saves a significant amount on Stamp Duty which is shy of 7%. This results in a WIN for the buyer and a LOSS for the government.

When government acquires the land, the compensation to the owner is based on the prevailing government evaluation i.e. the MV. The government sets the acquisition price at twice or thrice the MV. But in instances where the MV is lower than 20% of the OMV, even 5 times the MV does not fetch the current OMV to the owner. The Government then sells the land to the purchaser i.e. Developer/Industrialist “officially” at a price that is higher than the acquired price, which is still lower than the OMV. However, the purchaser is made to part with an amount that is the OMV or thereabouts with the difference between what the actual cost to the purchaser and “official” sales price pocketed by corrupt bureaucrats and politicians. When the owners find out that the land was sold to the purchaser at the price recorded “officially”, all hell breaks loose. This is a Lose/Lose situation wherein owners are unable to realize the true value of their holding, the government is shortchanged, the purchaser at times pays less than the OMV and a windfall is realized, by the corrupt bureaucrats and politicians. What is needed is policy that results in, and ensures a reversal of the current situation.

For example say:

• The Open Market Value (OMV) is 100.
• The Market Value (MV) set by the government is 20.
• Government pays the owner 40 and proudly claims we paid 2 times the MV.
• The government then turns around and sells to the purchaser - Developer or Industrialist for an “Official Price” of 50 and shows a 20% profit.
• However the Actual Cost paid out by the purchaser is the OMV i.e. 100 or at times less, maybe 90 or 80.
• The difference between the Official Price and what the purchaser’s  Actual Cost is pocketed by the intermediate corrupt maggots.

There are many ways to circumvent this situation. One is for the government to reduce the amount of Stamp Duty which is currently about 7%. To use the above example, The Stamp Duty paid on the MV purchase price of 20, falsely declared by a buyer, will be 1.4. If the government reduces the Stamp Duty to say 2%, and the land is registered at OMV of 10, the government will realize 2. Buyers will be motivated to declare the actual price paid and pay the 2%. In addition all land transactions should be posted in a public registry and available to the public.

One hurdle still remains and that is the classification of land allotted for development. It has to be classified as NA. This could be factored into the Master Plan of the Town, Taluk or District. Town guidelines will have to be constantly updated as Towns expand. A policy could be established that each Taluk should set aside a certain percentage of their land for Development (Housing and Industry) and this could be rolled up to the District Level. Non-arable and non-forested land could automatically be allowed for conversion to NA and be made available as areas for development. The price negotiations can then be left to the buyers and sellers. This policy has been instituted effectively in Gujarat, where owners of non-arable land have benefited significantly.

An additional step each district should take is to develop Industrial Parks that entrepreneurs could lease, to set up small scale businesses. The Maharashtra Industrial Development Corporation has many such successes set up around cities. This program could be expanded in a smaller scale to smaller towns.

5.     Rehabilitation and Resettlement (R and R):

RandR is the most controversial and often botched up aspect of Land Acquisition. The requirement of a Social Impact Study is only as good the follow through in its implementation and the ability to modify the approach as and when what is actually experienced warrants it.

Transactions concerning private land should be treated differently from acquisition of public land. In many cases privately owned land has been encroached upon by squatters and the rights of the owners are subordinated to that of the squatters. R&R in this situation should be the responsibility of the government with incentives provided to the acquiring parties involved to assist in the R&R of the squatters.

More importantly is land acquired for Dams and Mining. This is covered in a following section. The big question confronting India is whether it is fair to continue on the path of progress on the backs of the marginalized poor who are affected.

Compensation to displaced persons should be based on their prevailing income level along with appropriate incentives that encourage rehabilitation. Lump sum payments and land grants are often frittered away, with the displaced person being worse off than prior to being displaced. This is often the case of good intention going bad.

Rehabilitating a person who has lost their livelihood/current way of life is an uphill task. The adults are usually entrenched in their ways. Change in this context is a generational issue. The young have to be educated. There has to be strict laws prohibiting the sale of liquor that is accompanied by jail terms for people engaged in the selling of liquor. R&R provides a good opportunity to provide internships to urban youth to work closely with the affected people.

6.     CRZ Rules and its consequences:

CRZ (Coastal Regulation Zone) rules that oversee coastal development are yet another instance of imposing extreme controls that strangle development of the coast. Instead of promoting good practices, discouraging bad practices and providing a path to achieve the former for existing violations, the situation is such that violations are frequent and the very intentions of the laws are not realized.

Under the updated 2011 rules, coastal land has been classified into four zones:

• CRZ I will  comprise ecologically sensitive areas like mangroves and mudflats;
• CRZ II will  comprise developed areas;
• CRZ III will consist of underdeveloped areas, not  classified ecologically sensitive; and
• CRZ IV will comprise territorial waters from the low tide line to 12 nautical miles into the sea.

Restricting development in zones designated CRZ I makes eminent sense. CRZ IV pertains to jetties and ports and would require licensing and clearance. However, CRZ II and CRZ III could be governed through establishing and enforcing environmental guidelines. The government could even add a “develop at your own risk” clause to insulate it from storm damage and ocean erosion i.e. “Acts of God”.

Requiring an open space from the high tide line to the building of High Rises makes sense, but making the distance 500 meters is rather extreme.

CRZ II and III rules severely restrict the development of tourism on the coasts of India and with that opportunities tied to tourism is eliminated completely.

7.     Mining and Dams, Rights and Wrongs:

The rights to mine natural resources and constructing Dams add another layer of complexity to the land acquisition situation. Dams are government undertakings, while Mining involves private party participation. To the average citizen these are engines that drive progress. What is ignored or brushed aside are the hardships borne by the affected people and the environmental impact.

Past practices continue to be pervasive in present projects. The modus operandi in many cases is literally to bulldoze the way to get the job done with no regard for the welfare of the affected people coupled with abject disregard for the environment. Furthermore, promises made are broken and as a result there are protests due to skepticism.  Those protests are responded to by lathi charges, resulting in death at times. It is alarming that the people who promote and execute these projects are presumably members of civil society. However, how they proceed, amounts to legitimized thuggery driven by extreme “laalach” in the name of progress.

Mining and Dams by their very nature are controversial activities with conflicting agendas between stakeholders. The big question confronting India is whether it is fair to continue on the path of progress on the backs of the marginalized poor who are affected. In all fairness there are many in civil society who work continuously to bring such issues to the attention of the press and public. However, more often than not, this leads to a confrontational approach where each party digs its heels, refusing to budge. As a result instead of working towards a negotiated resolution, the issues get buried into accusations and counter productive debate.

There is a saying that the needs of the many far outweigh the needs of the few. Mining and Dams are examples of those activities that meet the needs of the many who rely on the output of these projects. Besides, they also provide a wide spectrum of opportunities from unskilled to highly skilled individuals. While it is impossible to address every issue of every stakeholder, each stake holder has to agree to sacrifice or give in a little so that an optimal agreement is arrived at. It is therefore imperative that a balanced workable solution be arrived at. What can be and should be achieved is a “Compromise Solution” since a “Consensus Solution” is well nigh impossible.

At risk is the environmental impact that has to be factored into the discussion. Environmentalists are the stake holders who serve as custodians of the environment, with the other stakeholders being the Miners/Developers, the Government, the Inhabitants of the area and the owners (if any) of the land itself.

To arrive at a Compromise Solution all parties have to accept that development is inevitable and everyone has to commit to a workable solution. Also on a case by case basis a comprehensive solution will require “give and take” from all parties concerned. With that in mind the following is a partial list of what has to be factored:

-         The environmental impact should be minimized as much as possible.

-         Concerns of the inhabitants should be addressed. Besides relocation assistance, they need to be rehabilitated, which is no simple task. Rather than giving them a big payout, which is frittered away, a monthly payout is the preferred option.

-         Owners (if any) must be compensated fairly

-         Additionally, in the case of Mining:

o       Restoring the environment has to be factored into the operational costs. It may take many years for the environment to be restored, but with proper actions such as grading, the planting of trees or ground cover, it is possible

o       Miners should achieve a viable rate of return on their investment

o       Government should receive a fair share by way of revenue

8.     Transitioning to a Market Based Economy:

Another factor to be taken into consideration for India to progress is to transition from a Socialist driven populist economy which strangulates the pricing of goods and services to a more pragmatic “market based” economy that serves all classes of people. With respect to land, one such solution is to structure the laws that govern an SEZ differently in that the pricing of essential resources such as electricity, water, LPG, diesel, petrol & property taxes etc. are priced based on economic and commercial rationality as opposed to Political or Societal pressures.  Only members of the lower economic classes in an SEZ should be eligible for specific subsidies that cover essentials.

9.     The Tenant Advantage:

An artifact of the laws and the legal process that owners are painfully aware of is that the balance of power is tilted in favour of those who occupy the land, be it through a lease or through encroachment. In India, possession is 9.99 tenths of the law and evicting the occupants is a lengthy arduous time consuming process. The problem with this situation is that it encourages miscreant behaviour, wherein the encroacher uses the law and the at times, the patronization of politicians to deny the rightful owner the privilege that they legally possess. Furthermore, lawyers take advantage of this and proceed to lengthen the process resulting in an extended and guaranteed source of income for themselves. 

10. Conclusion:

The major flaw regarding land in India is a focus on who can own land based on its classification, as opposed to land use. Emphasis is given to protect land encroached by the landless, rather than promoting an abundance of affordable of rental options and opportunities. The desired objective ought to be to remove burdensome restrictions on land ownership and acquisition and ensure good environmental practices. This will go a long way in realizing opportunities for the “demographic dividend” and prevent a “demographic disaster”.

Related Articles:
Ghosts who sign: http://week.manoramaonline.com/cgi-bin/MMOnline.dll/portal/ep/theWeekContent.do?programId=10350679&contentId=17439295

Land of green, now suicide spot: http://week.manoramaonline.com/cgi-bin/MMOnline.dll/portal/ep/theWeekContent.do?contentId=17389835&programId=1073755753

 
 

State of Pakistan - Hilarious

This is a hilarious cartoon that depicts the situation quite aptly. Looking up the Internet, Pakistan apparently has a lot of Gas reserves, but it seems to come out of where the US Drones are hitting it.

India's foreign policy towards Pakistan is absurd. Politically India should not give Pakistan the time of day. Just ignore Pakistan and ask their Politicians to fix their problems first and stop causing trouble for us. After all, their Politicians are puppets of their military, a bunch of numb nuts and India stoops to their level!

As far as defense is concerned, India should act responsibly and take measured responses to Pakistan's infractions. Simply put, "take no shit from the Pakis". They have been acting like a five year old bully and getting away with it. Their military misbehaves and their Politicians raise hue and cry, "Look, look they are talking about hurting us! They are war mongering!" Bunch of cry babies! India's response thus far has been that of a big sister.


That said, India should engage in cultural, social, commercial and sporting engagements. India should also allow cross border visitation. This is often referred to as "back channel" communications. After all, India and Pakistan share a "cultural" heritage. Religious differences aside, North Indians and Pakistanis are "cut from the same cloth".

India's response should be kind to the people of Pakistan and screw the Politicians and the Military.

One more thing. Their infractions are like pimples on India's face that burst once in awhile. India can wipe the puss off the face and wait for another pimple to burst or take preventive action.

Look at what Pakistan is supposedly doing - Printing counterfeit Indian Currency and training terrorists. Instead of whining and complaining, India should surreptitiously fund their internal conflicts (with or without counterfeit currency) and be generous with all the outfits that are fighting each other. After all it is only a matter of money and India does not even have to recruit volunteers! The smart way to do it is via a foreign aid program. A little bit in legitimate aid as a cover.

Shameful India

The world leader in Open Defecation

Tops in exposed Bottoms

Summary:

India has amassed and produces a powerhouse of Intellectual Capital, which has and is making a difference both in India and across the world. However, despite the impressive progress India has made as a country, it reeks of the following:

• Corruption
• Crumbling and inadequate Infrastructure
• Deplorable living conditions of the poor, particularly Urban Slums
• Garbage everywhere and people thrashing the environment without a care
• Men urinating in public
• Open defecation in public

As a result of this situation, the Quality of Life of ALL segments of society suffer by way of disgusting visuals for the middle and upper class and unhygienic and appalling living conditions for those at the Bottom of the Socio-economic Pyramid.

Visualize this – 626 Million citizens of Indian poop in the open every day¹. That is over half the population of India drop their drawers or raise their sarees to expose their buttocks to relieve themselves, to leave their excreta for others to see and for others to avoid stepping on. Some consider it their birth right. Yeh hai Mera Bharat Mahan! (This is my great Bharat aka India)

India is #1 in the World in the field of “Open Defecation”². A “Badge of Honor” - Not!, more appropriately a "Badge of Horror", for being “Tops in Exposed Bottoms”.

             

This article focuses on the issue of Open Defecation and dwells into the situation on the ground by way of some pertinent observations, which is by no way exhaustive. Policy recommendations and tactics are proposed to get rid of this shameful practice of Pooping in Public (PIP).

Besides economical reasons there is cultural inertia that needs to be overcome. A combination of initiatives that include nudging, shaming and disciplinary actions is needed to eliminate India from the list of “Tops in Exposed Bottoms”.

It’s more than Government:

Government alone cannot be held responsible for solving the problem in its entirety. Citizens have to take some responsibility for improving their lives. Not all open defecation is unacceptable, particularly if it is done in the privacy of one’s field or property if they so choose. The real issue is Open Defecation in Public places. Government can facilitate the solution with subsidies as it does today. However, with just a “carrot and no stick” policy, is not working.

It is Cultural:

“Everyone here does it, what’s your problem, who are you to tell us not to do this?” is the answer given in Rural India, by men particularly by the coast, even where there are government provided community toilets. Women do use the community toilets and clean them. The men will have nothing to do with it.

On the flip side, there are families that have houses, with Satellite TV, every member has a mobile phone and off late, the young men are acquiring motor cycles, but no toilets! Constructing a toilet is not one of their priorities. In some cases they will spend money in constructing a place of worship; a Devastan, in their plot, but no toilet. “We don’t have place for a toilet,” is another excuse. Citing poverty as the sole reason is a handy excuse. Society’s and Government’s responsibility is to provide opportunities for people so that they can bootstrap themselves from their predicament. Not doing so is tantamount to oppression and that too has to be addressed.

Despite economic progress, this shameful mentality and practice is ingrained in the Indian culture and addressing the problem requires changing this mindset. Pooping in Public (PIPing) is an integral part of Indian culture!

Transference of Culture:

The slums in urban areas consist of emigrants from Rural India. They live they way they do “back home” only the conditions are more squalid and disgusting. To these people a trip back to their village with urban earned money is like a breath of fresh air.

Rural and Urban India – Two different environments:

The difference between the rural and urban context is that while the initiative needs to be taken by the individual families in rural India, a community based initiative is required in urban India. The problem can be addressed with Slum Redevelopment and Low-Cost Housing. The former takes time and the latter is stymied by the fact that the policy is severely skewed towards “ownership” as opposed to providing “rentals”. The fact that this is an “anti-socialist” policy is lost on those who uphold “Socialism” and “Communism”. The inability of the government to provide low cost housing, accompanied by rampant corruption and lack of policies prevent private parties from serving the Bottom of the Pyramid.

Lack of Cost Effective Solutions:

The standard practice is to “custom” build. But for the basin, doors and piping, everything is custom made and cost becomes a major hurdle. There is a dire need for innovation here to reduce costs and accelerate the “Time to Build and Operate”.

Solutions need to be provided at multiple price points with a “no frills” offering along with modular additions for more creature comforts. A lot of research has gone into “What” can be done. Less attention has been given to the “How” it can be done at a price that is in the reach of the poor.

All Carrot and no Stick:

The government provides subsidies to citizens living Below the Poverty Line (BPL) to build their own toilet. But as stated above, this neither motivates nor changes the prevalent cultural mindset. Some BPL citizens are also given a plot of land and a cash grant to build a house. The policy states that some portion of the grant is retained until a toilet is made. However, low level corruption not only eats away at the subsidy for toilets, and at times, for a kick back the money held back for the toilet is released.

BPL card holders who own land and house should be put on notice to either build a toilet or lose their BPL card.

Policy & Programs:

Access to toilets should be made mandatory in rental housing. In urban areas, this should be strictly enforced. The chawls of Mumbai are a good example of shared toilets.

Space is often a problem in Urban Areas. Where space is available, a Government/Corporate/Community partnership or Public/Private/Partnership(PPP) could be a viable solution. There is no blanket policy or program that can solve this. Slum redevelopment and building high rises that frees up space for parks and other purposes is the most feasible urban solution.

Both urban and rural India would benefit from a “cookie cutter” approach where economical, practical and reliable solutions are replicated without having to resort to custom solutions. The market is huge, and rather than giving the subsidy to the individual family, it could be used to subsidize the cost of a privately developed solution along with a loan program for the citizen.

The impact of corruption:

Builders lament that administrative hurdles and the demands of corrupt maggots whose only interest is in lining their pockets, make it unfeasible to build Low Cost Housing. In the case of infrastructure projects, money that could be used to provide facilities to the workers who are involved in construction is siphoned off by these maggots resulting in these workers living in make shift tents with no facilities. Builders need to make a reasonable return on their investment and with the corruption involved the quality of the work suffers as well.

Tactics:

The major hurdle is to change the citizens’ mind set. There are many “soft” approaches that can be taken such as:

• Educating young children
• Empowering young girls to not marry into house holds that have no toilet.
• Putting young men on notice - No Toilet, No Bride.
• Communicating the Policies and Programs (Subsidies & Solutions)
• Policing open defecators who flaunt not using community toilets.

Unless people are pushed they will not change. Granted, if people are provided better opportunities and earn more, they will respond. In the absence of “discretionary” spending into which toilets are bucketed, a more aggressive campaign that “shames” this practice is required, through signage and advertisements. After all, India has successfully launched a Moon Probe and yet the majority of Indian citizens are defecating openly.

While legal equality is guaranteed, people are accustomed to social inequality, be it due to caste, profession, or economic status. Not having a toilet should be positioned as a distinct attribute of social stigma. A series of pictures that shows a Rocket, a Car, a Motor Cycle, a man defecating along side a dog, with a bride showing alarm will get the message across.

Urbanites need to take some action as well. People employing domestic workers can ask if they have toilets and if not why not and how they can leverage a program (provided one exists) to assist in helping them acquire the same.

Conclusion:

The resistance to building one’s own toilet is due to multiple reasons that range from ingrained cultural attitudes, socio-economic reasons, lack of cost effective solutions and toilets not being a priority as compared to Satellite TV and Motor Bikes. Society’s and Government’s responsibility is to provide opportunities for people so that they can bootstrap themselves from their predicament. And for those who do have houses, a combination of policy, programs, laws and tactics is required to eliminate this shameful practice. If a person has a house they have to be nudged to acquire a toilet. Only dogs, cattle and pigs etc. defecate in the open in this day and age. The issue is with which animal species these people wish to identify with. From a social perspective society does not consider them equals. Are they sub-humans?

Note 1: There is some good news as well as bad news.

http://www.who.int/water_sanitation_health/monitoring/jmp2012/fast_facts/en/index.html

Note 2:

http://ibnlive.in.com/news/india-is-worlds-capital-for-open-defecation-ramesh/275057-3.html

To FDI or not to FDI in Retail is the Question

Summary:

In any issue such as FDI (Foreign Direct Investment) in Retail or in matters that concern the country and citizens, a policy should be framed with two objectives in mind:

1. Does it serve the National interest?

2. Does it serve the citizens in this case consumers?

There are bound to be impacts in between that have to be managed. This article addresses the following issues regarding FDI in multi-brand retail, namely; approval for the likes of WALMART and other multinational retail stores:

-         Consumer Benefits

-         Impact on Kirana Shops and small retailers - the “chota” capitalists

-         Employee Benefits

-         Supply Chain Issues

-         The competitive advantage

-         The darker side of FDI

-         The perils of FDI

-         Sovereignty and FDI

Consumer Benefits:

The track record has shown that the emergence of Big Bazaar, Reliance Fresh etc. resulted in FMCG (Fast Moving Consumer Goods) being sold at below MRP (Maximum Retail Price) and has forced the small retailers to adopt by providing better customer service and home delivery. It is an inarguable fact that the customer has benefited. They are voting everyday with their pockets. In India the policies tend to be supportive of the provider at the expense of the customer. The overall policy should promote customer winning and fairness to businesses, provided the National Interest is protected.

Impact on Kirana Shops and small retailers - the “chota” capitalists:

The major argument against “Big Box Outlets” and FDI in retail is the impact on the small Kirana shops. These Kirana shops are “capitalistic” ventures and it is interesting that the objections being voiced are arising from the Communists and Socialists, whose very dogma and agenda is “anti-capitalist”. Capitalist businesses thrive, survive or die based on market forces and how they adapt to it. In this matter it appears that the Left wishes to “protect” the “chota” capitalist from the “bada” capitalist even if it means at the expense of benefits to the customer.

Employee Benefits:

Kirana Shops in Urban Areas, exploit their workers, many of whom can be seen sleeping outside the shops. Big Box Retailers pay better and can be made to provide better assistance to their employees over a period of time. Policies could be enacted to have these enterprises provide housing. Big Box Retailers employ people on the floor to assist customers, janitors to keep the place clean and security staff. They provide uniforms, promote cleanliness and can be monitored to ensure better working conditions.

Supply Chain Issues:

In the case of FMCG, the direct connection between producer and seller has been effectively established by the large retailer. However when it comes to farm produce, the supply chain is mired with lack of storage facilities and the iron grip the mafia like middle men have over the farmer. The fact is that there is no money to be made in building out the required infrastructure unless the middle man is eliminated. This can only be done by enterprises that own the entire supply/distribution chain from procurement to retail/wholesale, either directly or through partnerships. Reliance Fresh has succeeded in doing this to a certain extent, and in the process faced the wrath of the goondas. eChoupal from ITC has resulted in some benefits to the farmer, but the forces against the farmer are vast and deeply entrenched. There are many parties in the supply chain starting with the buyer, the transporter, the manual labor etc. Each party protects its turf and vigourously fights anyone encroaching upon it; often with brute force. When it comes to perishable crops the farmers are always at the mercy of this mafia. What is needed is a Big Bang to shake up the vested interest.

Wheat is another story. The Food Corporation of India, buys the wheat at a premium, is unable to transport/sell all of it and as a result the loss due to rot is significant every year. Why would private parties or the farmers invest in storage facilities? It is already a losing proposition for the government and this situation has been the case for many years. With large retailers entering the wheat distribution chain, it is possible that the uptake could alleviate the surplus being wasted. If India cannot use it, rather than lose it, the wheat could be exported.

The Competitive Advantage:

The knee jerk Indian reaction is to strangle a competitor with regulatory obstacles and as mentioned earlier by resorting to goondagiri. The concept of beating the competition through “fair and square means” is an emerging attitude that has taken root in quite a few situations. China, that is revered, worshiped and looked up to by the Communist Party of India, has permitted WALMART to open stores. In response to this, a Chinese entrepreneur has opened outlets with the sole intent of beating WALMART at their own game by out-smarting, out-maneuvering, out-performing WALMART. That is what we Indians should step up to, rather than being obstructionists to progress. For instance Parle now sells packaged Potato Chips. The Indian consumer should act patriotically and choose Piknik and Parle over Kukure and Lays. Now that has a ring to it.

Indian Entrepreneurs should learn the logistic and business practices of these foreign companies and beat them at their own game. Rather than pursuing an obstructionist policy against these foreign companies, Desi companies should provide better quality products and superior customer experience at a cheaper price so that these foreign companies are compelled to down scale or shut shop and leave us.

The darker side of FDI:

The inflow of FDI is another source of enrichment for the maggots in India who wish to benefit from the flow. This is another “ATM” that the maggots will grab - ten to twenty percent or more off of the inflow. Who is to blame for this? A lot of the political opposition is for “show matey”. It will be interesting to see whether the ones who oppose Big Boxes in their State will quietly withdraw their opposition when the dust settles.

The perils of FDI:

If FDI were to come into retail and it serves as a conduit to repatriate profits khullam khulla a la the Coca Cola and IBM scenarios of the 60s and 70s, then that has to be prevented. Coca Cola imported their syrup, bottled it, sold it and repatriated all their profits. IBM imported older computers returned by their US customers and palmed them off in India. Both refused to dilute their ownership and George Fernandez did the right thing booting them out in the mid 1970s. In the case of Coca Cola, they left behind a bottling and distribution network which was quickly leveraged by Indian drinks manufacturers. With IBM leaving, other computer manufacturers ventured into the Indian market. Many years later, Ramesh Vangal, an IIT Bombay graduate, negotiated a deal with PepsiCo with a stipulation that they will export products from India to ensure a balance in Forex. Coca Cola followed suit and so did a host of other Multinationals.

Pragmatic guidelines can be laid, wherein the foreign party is allowed to repatriate 100% of their investment plus say 20% to 30%.  Beyond that they could be permitted to repatriate 20% to 30% of their profits thereafter, provided their net exports is equal or preferably greater than what they repatriate. By negotiating acceptable guidelines, a net outflow of Forex can be curtailed. 

Sovereignty and FDI:

There are allegations that FDI in India will yield significant control to vested foreign interests. This reflects poorly on India, for India is the master of its own destiny and India is fully capable of protecting her own interests even in the face of some unpatriotic maggots who wish to profit from putting their personal interests over that of the country. If it is found that foreign parties are working against India’s interest they can be booted out and their “Brick and Mortar” investments will be left behind. If the infraction is severe, their finances could be “quarantined” in India and subject to legal procedures. It is inconceivable that FDI would be a threat to Sovereignty or National Security and that drastic measures would have to be resorted to in this day and age. The goal is to accrue benefits for the investor, the country, the producer and the consumer.

The issue of percentage ownership is a red herring. Control can always be achieved through proxy ownership. As indicated earlier the important issue is of repatriation of profits and balance of Forex. The goal is to manage the money flow, ownership is a secondary issue. If ownership is a major heart burn, then ownership should be pegged at 30%. But that brings up the issue of raising the necessary capital to get this cart moving. Are Indians ready and able to pony up the required capital?

As it is Big Bazaar is over extended and hurting and other over extended enterprises (KingFisher was one, but now it is history) are probably chomping at the bits to see FDI to rescue them from their financial predicament

In Summary:

If the entry of FDI in retail does not result in a significant imbalance of India’s Forex reserves and the net effect is that both the producer and the consumer benefit by eliminating the middle man, then that it is a good thing. Change often results in winners and losers. A bridge across a river puts the boatmen that ferry people and goods out of business. In this case, the Kirana shops and small retailers will have to adapt by providing better service and delivery, in order to survive and thrive or they will die.

Reflections on India by Sean Paul Kelley

I challenge any Indian to take offense to this article that portrays the Sad Truth. The only exceptions I can cite is that Railway Tickets can be obtained via the Internet, subject to availability and hotel registration is not as cumbersome as he indicates. I have posted his article without his permission and I hope that is OK - RSS.

Reflections on India

by 

Sean Paul Kelley 

If you are Indian, or of Indian descent, I must preface this post with a clear warning: you are not going to like what I have to say. My criticisms may be very hard to stomach. But consider them as the hard words and loving advice of a good friend. Someone who is being honest with you and wants nothing from you.

Lastly, before anyone accuses me of Western Cultural Imperialism, let me say this: if this is what India and Indians want, then, who am I to tell them differently. Take what you like and leave the rest. In the end it doesn't really matter, as I get the sense that Indians, at least many upper class Indians, don't seem to care and the lower classes just don't know any better, what with Indian culture being so intense and pervasive on the sub-continent. But, here goes, nonetheless.

India is a mess. It's that simple, but it's also quite complicated. I'll start with what I think are Indias' four major problems – the four most preventing India from becoming a developing nation – and then move to some of the ancillary ones.

First: Pollution. In my opinion the filth, squalor and all around pollution, indicates a marked lack of respect for India by Indians. I don't know how cultural the filth is, but it's really beyond anything I have ever encountered. At times the smells, trash, refuse and excrement are like a garbage dump. Right next door to the Taj Mahal was a pile of trash that smelled so bad, was so foul as to almost ruin the entire Taj experience. Delhi, Bangalore and Chennai to a lesser degree, were so very polluted as to make me physically ill. Sinus infections, ear infection, bowels churning was an all too common experience in India. Dung, be it goat, cow or human fecal matter, was common on the streets. In major tourist areas filth was everywhere, littering the sidewalks, the roadways, you name it. Toilets in the middle of the road, men urinating and defecating anywhere, in broad daylight.

Whole villages are plastic bag wastelands. Roadsides are choked by it. Air quality that can hardly be called quality. Far too much coal and far too few unleaded vehicles on the road. The measure should be how dangerous the air is for ones' health, not how good it is. People casually throw trash in the streets, on the roads.

The only two cities that could be considered sanitary, in my journey, were Trivandrum – the capital of Kerala – and Calicut. I don't know why this is, but I can assure you that, at some point, this pollution will cut into Indias' productivity, if it already hasn't. The pollution will hobble Indias' growth path, if that indeed is what the country wants. (Which I personally doubt, as India is far too conservative a country, in the small `c' sense.)

The second issue, infrastructure, can be divided into four subcategories: Roads, Rails, Ports and the Electric Grid. The Electric Grid is a joke. Load shedding is all too common, everywhere in India. Wide swathes of the country spend much of the day without the electricity they actually pay for. Without regular electricity, productivity, again, falls.

The Ports are a joke. Antiquated, out of date, hardly even appropriate for the mechanized world of container ports, more in line with the days of longshoremen and the like. 

 
Roads are an equal disaster. I only saw one elevated highway that would be considered decent in Thailand, much less Western Europe or America and I covered fully two-thirds of the country during my visit. There are so few dual carriage-way roads as to be laughable. There are no traffic laws to speak of and, if there are, they are rarely obeyed, much less enforced (another sideline is police corruption). A drive that should take an hour takes three. A drive that should take three takes nine. The buses are at least thirty years old, if not older and, generally, in poor mechanical repair, belching clouds of poisonous smoke and fumes.

Everyone in India, or who travels in India, raves about the railway system. Rubbish! It's awful! When I was there in 2003 and then late 2004 it was decent. But, in the last five years, the traffic on the rails has grown so quickly that once again, it is threatening productivity. Waiting in line just to ask a question now takes thirty minutes. Routes are routinely sold out three and four days in advance now, leaving travelers stranded with little option except to take the decrepit and dangerous buses.

At least fifty million people use the trains a day in India. 50 million people! Not surprising that wait lists of 500 or more people are common now. The rails are affordable and comprehensive, but, they are overcrowded and what with budget airlines popping up in India like sadhus in an ashram in the middle and lowers classes are left to deal with the overutilized rails and quality suffers. No one seems to give a damn.

Seriously, I just never have the impression that the Indian government really cares. Too interested in buying weapons from Russia, Israel and the US, I guess.

The last major problem in India is an old problem and can be divided into two parts: that've been two sides of the same coin since government was invented: bureaucracy and corruption.

It take triplicates to register into a hotel. To get a SIM card for ones' phone is like wading into a jungle of red-tape and photocopies one is not likely to emerge from in a good mood, much less satisfied with customer service.

Getting train tickets is a terrible ordeal, first you have to find the train number, which takes 30 minutes, then you have to fill in the form, which is far from easy, then you have to wait in line to try and make a reservation, which takes 30 minutes at least and if you made a single mistake on the form, back you go to the end of the queue, or what passes for a queue in India.

The government is notoriously uninterested in the problems of the commoners. Too busy fleecing the rich, or trying to get rich themselves in some way, shape or form. Take the trash, for example, civil rubbish collection authorities are too busy taking kickbacks from the wealthy to keep their areas clean that they don't have the time, manpower, money or interest in doing their job.

Rural hospitals are perennially understaffed as doctors pocket the fees the government pays them, never show up at the rural hospitals and practice in the cities instead.

I could go on for quite some time about my perception of India and its problems, but in all seriousness, I don't think anyone in India really cares. And that, to me, is the biggest problem. India is too conservative a society to want to change in any way.

Mumbai, Indias' financial capital, is about as filthy, polluted and poor as the worst city imaginable in Vietnam, or Indonesia – and being more polluted than Medan, in Sumatra, is no easy task. The biggest rats I have ever seen were in Medan !

One would expect a certain amount of, yes, I am going to use this word, "backwardness," in a country that hasn't produced so many Nobel Laureates, nuclear physicists, imminent economists and entrepreneurs. But, India has all these things and what have they brought back to India with them? Nothing.

The rich still have their servants, the lower castes are still there to do the dirty work and so the country remains in stasis. It's a shame. Indians and India have many wonderful things to offer the world, but I'm far from sanguine that India will amount to much in my lifetime.

Now, you have it, call me a cultural imperialist, a spoiled child of the West and all that. But remember, I've been there. I've done it and I've seen 50 other countries on this planet and none, not even Ethiopia, have as long and gargantuan a laundry list of problems as India does.

And, the bottom line is, I don't think India really cares. Too complacent and too conservative. 

About the Author:

Sean Paul Kelley is a travel writer, former radio host, and before that, an asset manager for a Wall Street investment bank that is still (barely) alive. He left a fantastic job in Singapore working for Solar Winds, a software company based out of Austin, to travel around the world for a year or two. He founded The Agonist, in 2002, which is an international affairs, culture and news destination for progressives. He is also the Global Correspondent for The Young Turks, on satellite radio and Air America. 

Government - Don't mess with the JEE

The move to tinker with the JEE* is an example of BAD intentions to spoil something that has worked well for the country. Needless to say there is always scope for improvement of a selection criteria that focuses on merit and is devoid of political meddling and corruption.


It seem to be a politically motivated "vote-bank" or "money-grabbing" idea to curry favour with some constituents or other. Don't these people have better things to do, to improve the plight of the millions of poor in India? Instead of improving people's lives, the prevailing tactic is to lower existing standards to enable "inclusive growth".


The proposal at hand is to change the format of the JEE exam with a preliminary aptitude test, with a 40% weight to the entrance test with Board exam results. The following Scenarios depict some of the possible outcomes:


Scenario 1: It is a non-issue.

The advocates of this moronic idea don't realize the varied levels of the different Boards. Normalizing them is a major challenge. Many students score a greater than 100% result. One possibility is that there will be grade inflation in the harder Boards so that their graduates can compete effectively. And if most of the applicants have greater than 100%, this effectively makes the 40% weight assigned to the Board results a non-issue. Everybody gets the 40%, khullum khula.


Scenario 2: The process crumbles on its own weight.

The JEE is a highly automated test environment capable of handling the massive number of entrants taking the test. Unless the factoring in of this 40% weight into the JEE results is automated, i.e matching the entrants with their Board marks, and the number entered accurately, the process will be fraught with errors. This idiotic idea of ascribing 40% weight to the Board exam adds so much weight to the process that it becomes impossible to implement efficiently and accurately.


Scenario 3: Institute a common Board exam:
That is what the two step JEE was and that was kabashed.


Scenario 4: Bye Bye UPA

The UPA fails to be the next governing body and this issue gets shunted to oblivion.


Scenario 5: Hurting Minority sentiments

The IIT graduates are a minority community and tinkering with this "Sacred Cow" hurts the sentiment of this community. Once this community starts expressing their "hurt", the UPA government which excels in appeasing minorities will be forced to withdraw this effort.


Scenario 5: Non-cooperation

The patriotic faculty could just put its foot down and say this is just not feasible citing Scenario 2. This would force the MHRD to institute a software project to automate factoring in the weighting of the Board results and hopefully it will be assigned to the duds Murthy referred to in his whine and the project will never be completed to fruition.


* JEE - The Joint Entrance Exam that students appear for admission to the IITs