The Fall of Trust

Somewhere in financial history, the word ‘trust’ got replaced by the word ‘credit’ which divided the economic chronology into After Credit and Before Credit. Even though credit was present from before agrarian economies, it was used in an organised manner by Europeans from the 15th century which in turn fueled their scientific as well as political conquests.

Credit which is trust in future boomed when the trust was kept or got fulfilled by advancement in economies, which in return again fueled credit growth. This cyclical growth excited man and he made the cycle circle faster at each turn by lending, spending and printing too much. Obviously this made the Europeans champions of the world and hence the first to go bankrupt.

In the 21st century their credit cycle broke all of a sudden, and they found themselves staring at negative returns on the credit facilities. This meant the number of trusted parties who can avail credit had declined, resulting in the need to shell out in order to find parties willing to accept credit. This happens because the trust factor in future has declined as the number of defaulting accounts rapidly balloon and even lead to sovereign countries defaulting on credit.

Italy was in crown position of having world’s highest ratio of bad debts. This crown position was challenged by a country in South East Asia where everything happens prematurely. That’s India. Even though India saw organised credit surge and became the economy’s backbone very late only in the 20th century, we are staring at huge bad debts which is around 9.5% of the total advances, where in Italy the bad debts are at 8.5% currently down from 17% in 2015. We are facing this high ratio of broken promises for last few years and we planned many things.

Now in 2019, the bad debts have changed their status from the ‘result’ to ‘cause’. We were talking about why it happened for last few years but now we are discussing what it will result from now on. The CEO of NITI Ayog, Amitabh Kant said that trust is missing in the economy which, as we’ve seen really means credit is missing from the economy. So where did the trust go? Since 2005, we saw boom years for trust where we saw credit was flowing seamlessly and investments were soaring. We added capacity in infrastructure like power plants, airports, ports and roadways. We invested heavily in industries and we created immense capacities. This was all made possible by the basic emotion of credit or trust in tomorrow, that tomorrow will be better than today. Indians were also sure that our more than enough population itself will provide the required demand and hence the cycle of trust will be safe. Alas it wasn’t.

The lack of reforms in the Banking and Finance Industry and the policy paralysis in the second term for the UPA government started the cracks in our cycle of trust.

In the first half of the 2010s, PSB asset books were ripe with more than 10% NPA’s, this led to a fall in their lending and their share in lending was taken over by NBFCs which got their boom years from the beginning of this decade. This boom bank rolled the initial years of NDA govt where no one knows actual growth rates. Introduction of fresh initiatives by NDA such as IBC brought fresh life to the trust in future. But just like as GST, the IBC was also introduced half baked, and as of now, number of cases pending more than 270 days which was the defined deadline to be decisioned is 400. It became another Judicial system of India.

Then came the ILFS balloon burst. This took away the single engine on which the economy was running – the NBFCs. Funds became costlier or rare for the NBFCs and hence for the end users. Now we are celebrating one year of NBFC crisis and economy shows the effects. As nobody is there to fund, the demand worsened and the auto sector’s fall was first omens of impending doom. All sectors started cost cutting and the already worse unemployment hit another spike which again affected aggregate demand. This eroded the trust in tomorrow. Only trust eroded, not the money with banks. As trust in the economy eroded people are less likely to invest in the market and hence this money will go to less risky fixed deposits.

Obviously for a less trusted tomorrow, credit is not favorable and hence needs the rate cuts to encourage people who can afford a credit at this time to come on board.

Making all this worse is the attitude of the government of the day. The government is either ignorant, lazy or just in plain denial about the crisis. The actions of the government are nothing less than blunders. Perhaps that will make the cut to the second episode of this series.

Magellan’s Calendar

In the September of 1519, a sailor called Ferdinand Magellan set sail to navigate around the globe. This was at a time when earth was believed to be flat and very few thought otherwise, even fewer were ready to prove this by planning an expedition to circumnavigate the earth. Magellan is widely credited to have successfully completed the expedition. Of course, the truth is Magellan died on the islands on the Philippine archipelago and only 18 of the 241-member crew made it back to Spain to prove that it is not possible to fall off the earth by sailing over the horizon.

The fleet of 5 ships and 241 sailors navigated the Atlantic via West Africa and the coast of Brazil. By the time the ships resupplied on the islands of the Strait of Magellan, one of the ships; Santiago was destroyed in a storm and the crew of another called San Antonio had mutinied and returned to Spain. The three remaining ships had entered the South Pacific Ocean in the November of 1520.

 The winds and waves vanished, and the sails dropped. The silent sea as the Pacific is called offered no help. Men succumbed to the tricks of the sea and fell overboard; the crew came into fire from pirates in the sea and native tribesmen on land.  Months passed, and there was no hospitable land to resupply. The commanders of the ships were getting edgy and the admiral foresaw more mutinies.

The admiral decided, the best way to keep the crew from losing their minds over the time passed was to hide the calendar. History records that the captains of the 3 remaining ships were given calendars made by the admiral and they along with the admiral decided what day it was. The Admiral maintained one calendar for himself and his first officers that showed the real date and another calendar for the crew that showed a false date – a date that changed slowly and kept the crew thinking days passed slower than weeks.

The crew eventually crossed the Pacific after 4 agonizing months of navigating through the Pacific and landed Guam in the Philippines sea. When Magellan and his officers revealed that they had spent 4 months navigating through the pacific, the crew was shocked beyond belief. Some felt betrayed, some said they had an inkling, but they didn’t care much now as they had finally made port.


The economic conditions in India are bad. It doesn’t take a genius to figure that out now. Economic indicators like the GDP numbers, agricultural income growth, manufacturing growth, employment rate and the aggregate demand in the economy are all declining and have been declining for quite some time now.

Although the decline and the collective decline is concerning, the real concern is that the central government of India is not acknowledging it. What we hear from government and government representatives is that FDI numbers have been the highest, the problem is because of the time bombs left behind by the previous governments or that these are effects of the trade war and other global factors.

Economists, one after the other have said that the slowdown is India’s own doing. Demonetization and the hasty implementation of a half-baked GST is being blamed for the current slowdown in the economy. When the BJP came into power in 2014 we were at a cyclical boom period along with a global fall in crude prices. Our government didn’t see it fit to pass on the advantage to the consumers and saved millions, where are those millions now?

2014 and 2015 were drought years for the agriculture of India and it had just seen a little recovery in 2016 when the government announced demonetization to kill the rural and other unorganized sectors. The government followed one blow after another by the hasty half-baked GST thereby taking care of what was left of the unorganized sectors.

The effects of these hasty and impulsive policies are having an effect now. One may say the financial crisis in Banks and NBFCs was a gift of the previous government, but sadly the numbers say otherwise. While the NPAs was at 2.5 Lakh crore in 2014 it has now come to 8.5 Lakh crores in 2019. Inaction from the current government is the reason for the snowballing of the banking crisis.

There are a lot of problems in our economy and all of them can be fixed. We are the nation that escaped from the meltdown in 1991, we are the nation that averted being part of the global crisis in 2008; so we can definitely find our way around these self-inflicted wounds. If only we have the stomach to accept that there is a crisis.

The finance minister gets defensive and starts shutting down reporters, the home minister is busy plotting booby traps for the opposition leaders and the prime minister is busy planning for his next item number.

I quoted the story of Magellan and his fake calendars because I am a hopeful person inside. I secretly want to believe that no government of India can be so arrogant about its ignorance. I sincerely hope that our central government is holding a Magellan’s calendar in front of us to keep our hearts and is maintaining a genuine calendar for itself that shows the truth.


Politics of Karnataka

The July of 2019 saw the politics of Karnataka reach one of its lowest points. The Congress-JDS alliance government was about to fall – only that it wouldn’t.

With the resignations of the nearly 18 MLAs, the government had gone into a minority in the house and was legally ineligible to run the government of the state. The build up to this situation was also an embarrassment. Horse trading has become a word used too often in the political scenario of Karnataka. Politicians have a price at which they would switch sides and help form or falter governments. Its shameful – but not new.

The coalition had been sworn into governance just 14 months ago and was deemed an unhappy marriage. The ministers in the cabinet had descended to a bunch of squabbling pirates trying to seize power from one another. Greed was so obvious that ministers were changed within months and a visible policy paralysis in the state with barely any representation at the national level. The general election of 2019 made the point clearer when both JDS and Congress were reduced to a solitary seat out of the 27 contesting seats from the state.

All that being said, the BJP which by far had the best numbers – 105 of the 224 seats in the Karnataka assembly was about to succeed finally to form the government. BJP had by hook and crook managed to get the MLAs to resign – ofcourse there is no actual proof that BJP did this, but that’s not the question. The point of concern is, even after the JDS-Congress alliance government went into minority they stalled the proceedings of the house and when the time came to seek the trust vote, the Chief Minister and the parties in government took up almost 3 days – 3 working days and almost 7 non work days to bring on the trust vote. It was just shameful. The whole country was covering the news. Karnataka politics had sunk to a new low, and there was nothing we could do, the public was just a dead rubber duck in a stale tub of dirty bath water.

Finally the government fell on the 23rd of July and made way for the new government to be sworn in. It is at this point that my brother in law sent me a link to a Times of India article which read “Only 3 CMs have successfully completed their term in the history of Karnataka”

I clicked it.

It said, Nijalingappa, Devaraj Urs and Siddaramaiah were the only chief ministers who completed a full term. Ofcourse, it’s just Times of India, so you can expect them to be a little hyperbole. Firstly there were 2 other CMs who completed full terms, Ramakrishna Hegde and SM Krishna. Inside the article it does specify that they are only talking of Congress CM’s but still SM krishna was a congress CM and they conveniently overlooked him.

Leaving the factual error aside, it’s still an eyebrow raising point that of the 15 state assemblies, the state has had 22 Chief ministers, and only 5 of them have stayed the CM for the full term. Why is this?

The people of Karnataka always pride themselves as being different from the rest of the country. Even though there is no lack of patriotism towards the nation, we’ve always been different. Rather we’ve been somewhere in the middle. Unlike Kerala or Tamil nadu or Bengal who have traditionally had their own way of thinking and their own rule, Karnataka politics has interwoven itself into the national politics at many places and also maintains long blank spaces of disconnect.

While there are places where we want conformity with the center, we’ve also struggled to find our own autonomy. The BJP of Karnataka doesn’t speak the language spoken by the BJP of the hindi belt of country, nor does the congress indulge in excessive sycophancy to the Gandhi family; and finally unlike Tamil Nadu, we don’t have a strong regional push for autonomy. Like all humans, the state of Karnataka has always been struggling to find a middle ground and the perfect blend of moderation. So what do the politicians of Karnataka hold dear? Values? where do they get their values from? Are they as confused as any regular citizen of the state?

Nijalingappa and Devaraj Urs are hailed as the greatest leaders that the state has seen. Some even term Ramakrishna Hegde, a prodigi of Nijalingappa, as a big name too, but he was a little too well connected with the underground and mired in scams, so lets not give him a pass for now.

Now speaking of Nijalingappa, he was obviously the most powerful and incorruptible leaders of the states, he came to the position because of his initiatives and movements towards the unification of Karnataka. It was his moves that made Tamil Nadu and Kerala move resolutions in their states for letting go of Kannada territories.

Urs had a lot of achievements to his name, he was the one who changed the name of the state from Mysore to Karnataka, and he was the one who approved the creation of the electronic city in Bangalore. It is also known that his next of kin were also involved in the underground of Bangalore, but that never smeared his image as an efficient administrator and visionary of Karnataka.

Even after the big three, Karnataka saw a spell of stable government when SM Krishna was sworn in as 16th CM of Karnataka in 1999. His vision for Bangalore is also hailed even today in urban legends of Bangalore. However, SM Krishna’s term ended in 2004 and hence started the turbulent times in the politics of Karnataka – a trend that has been going on since then.

Since 2004, in the 15 years there have been 4 assemblies constituted out of which one was dissolved; 10 swearings of the CM, and 2 stints of President’s rule in the state. How did it all go down so fast?

It all started in 2004 HD Kumaraswamy first engineered a defection in 2006 to leave the Congress-JDS coalition to join hands with the BJP with an added incentive of becoming the CM of the state. The Congress-JDS government in the first place had a rocky relationship because of multiple factors, prominent among them being the unassertiveness of CM Dharam Singh. Kumaraswamy’s actions didn’t stop with the first defection, after he held the CM’s post for nearly 20 months he was to transfer power to the BJP based on a power sharing agreement that they had while engineering the defections of 2006. But Kumarswamy didn’t come through, he refused to transfer power and hence the state was put under president’s rule. After 2 months, in the November of 2017, Kumaraswamy again extended support to the BJP and BS Yeddyurappa was sworn in as the CM of the state; but when it came to proving majority, Kumaraswamy again backed away due to disagreements in sharing ministerial positions.

The assembly was hence dissolved after 191 days of president’s rule and the fresh elections where announced. By now the people of the state had lost respect for the JDS and the BJP had gained public sympathy. The BJP came to power on its own by way of a historic victory for the BJP in the south of India. But does that mean this story has a happy ending? No.

The BJP was mired in corruption charges and Yeddyurappa was named in a mining scam chargesheet. The opposition and BJP central leadership demanded Yeddyurappa to step down from the CM’s post, but he wouldn’t. Amids massive public outrage doctored by the opposition, Yeddyurappa remained adamant and maintained that he was innocent and his conscious was clear. Eventually his prosecution in the mining scam reached a fever pitch and he was even pronounced to be held in police custody. BSY was now out of options and had to quit the CM’s post in the July for 2011, about 3 years after he had assumed office. He was so disappointed and disgusted by the lack of support from the central leadership that he even quit and party and joined a regional party called Karnataka Janata Party – he came in at the top as the party president. After this bitter turn of events, the BJP appointed 2 other CMs for the remaining 2 years of the assembly.

In the assembly elections of 2013, though the country was reeling under policy paralysis and sever corruption charges on the central government, the state voted in favour of the congress giving it a clear majority to form the government on its own. The main reasons for this being the split in the BJP and the general sentiment to stay away from corrupt politicians.

This government remained in power for the entire term of 5 years without many hiccups. Although not much was achieved in the term, there was nothing visibly wrong and the opposition just didn’t have enough opportunities to usurp. Point to note – Siddaramaiah, the CM who held the post for the full term is also a defector – in fact he has been in 5 different parties. The biggest episode being his exit from the JDS in 2005.

Then came the assembly elections of 2018. An eventless term of the congress was about to end. There was not much to show and tell for the congress. The BJP stuck to its idea of being one with the nation and trying to breathe a breath of fresh air in the politics of the state. All indications depicted that it was going to be a hung assembly and a story of 2004 to repeat all over again. That’s what we saw in the drama that unfolded in 2018-19.

Now that we know all the facts, the question to be asked is, why? why are these men after power and why do they openly and easily defect? and why is defection so acceptable? is there no place for loyalty and integrity? Most importantly, can we as public do nothing about it? because no matter whom we vote for, they all have their own agenda to push for and they wouldn’t mind switching sides without a second thought about their voters.

I guess this is a riddle for students of political theory?

A Day in Paradise

Haven’t we always wondered what happens in the world? How do birds fly? What makes it rain? What’s the need of a catch basin? OK pause. Judging by the desperate nature of the examples, you would’ve figured that this is an unwanted intro to something completely different. You’re not all that wrong.

Like the questions, we also have one burning question inside us. How are laws made? The easy answer is: we as people elect our representatives through elections, these representatives come up with ideas that could improve our lives. Once an elected representative (most often but not always is a part of the government in power) comes up with something, he/she then tables (floats/pitches etc) the idea in the parliament, where the rest of the representatives (both from the govt and opposition) take an objective look at it, study it and come up with questions and amendments to the proposed idea. Sometimes this results in lengthy debates, setting up on committees for further studies and finally when everyone is satisfied with the amount of debating, the proposal – also called a bill is subjected to a vote and if the bill passes the vote, then does the idea become a law? Well not exactly, but this is the first step – Ok what are the other steps then? We’ll take that up some other day – but just to remind you, this was in your secondary school civics text books.

So, what is this blog about?

This blog is about taking a look at whether it is really all that simple. Do laws just get ‘tabled’ in the parliament, debated upon and passed into being laws or does something else happen? Let’s look at one day – hence the cheesy title – A Day in Paradise. For our purpose, I’ve taken up 4th July 2019 as a case for our study. Now let’s dive in – there will be technical terms and ‘governmental’ or ‘parliamentary’ jargon what we’ll try to define in simple terms as we move along.

Business

Business in our terms means agenda. It is the list of activities that are planned for a day’s work in the parliament. The Business is generally published 2 days in advance and in case of revisions, a revised List of Business is published and shared with the members of the parliament. I’m not sure if all the ministers coming to the parliament go through this before coming but its published as a matter of practice and standards.

Here’s the gist of what was going to be the business of the day for 4th July 2019: But first lets just understand what the different things mean

  1. Questions
    • Any questions to be asked of any member of parliament – these needs to separately listed and made available to the said member of parliament so as to be able to prepare and answer the question.
  2. Papers to be laid on the table
    • These are basically reports or notifications that any member of parliament wants to bring to the notice of the parliament. Once a paper is placed on the table, it may be brought up in discussions in the parliament (also called the house) or in general cases it is just a point of information for the house. Eg: certain XYZ Report has been produced by the ministry of oil and gas based on a study done on all oil refineries on the east coast of India.
  3. Messages:
    • Messages from either of the houses to each other or from the different state heads or the president that needs to be relayed in the parliament.
  4. Statements
    • Ministers or committee members can raise a request to make a statement in the parliament, these requests are taken by the speaker and based on merits and discretion provided a slot to make the statement.
  5. Motions:
    • Basically a topic or a line of thought that any member of parliament wants to bring out in the house and start a debate and discussion or come to consensus about a past discussion or debate.
  6. Resolutions:
    • It is a kind of coming to a decision about a certain topic, or bill or business of the house. Best explained with an example. The Finance minister can move to bring a resolution on changing the Duty on say computers from 10% to 20%. Now this isn’t a law or something that will amend a law, but it is something of importance to the nation and hence needs to get an approval from the parliament. Hence the minister will move for a resolution and the house will vote aye or nay for or against the resolution.
  7. Legislative Business
    • The thing that we thought was the main business of the parliament – making laws. These are basically laws and bills that are not yet laws that a minister may bring up for creation or amendment. These bills once brought up can either be taken up for debate and discussion or be brought up for the vote.
  8. Matters under rule 377
    • Matters of business that don’t fall into any of the other mentioned categories

Now the table above talks numbers, but what are the questions raised? Are any of them really really important to the nation and how did the concerned member/minister respond to the question? What are  the messages replayed in house? What were the motions submitted? And was there a debate on the said motion? How was the bill passes? Was there a debate? The things we see on TV, the ruckus and commotion, can we capture that? Well truth be told, all the commotion and ruckus is also captured and is there for everyone to see.

For starters, the happenings in the parliament are all on record. Secondly most of it is video recorded and available on the TV channels LSTV and RSTV. The video recordings of these parliamentary sessions is also available on the websites of the loksabha and rajyasabha. The websites of Loksabha and Rajyasabha also have PDFs of all the documents that you need to look up. The list of business, the questions, the bulletins, the debates and the speeches held on the floor of the house.

The objective of this blog post was not to bring out what happened in the parliament. Its to give the reader a general idea of what happens and that our parliament has enabled us as citizens to look for and find all the information about the happenings of the legislative arm of our democracy.

Since there is hardly a fortnight left in the current session of the parliament, Dr. Timepass will compile data of the business of the house in these 2 weeks and do some qualitative review. Come back again by the weekend to see what happened in the lower house of the Indian parliament this week and what we at Dr. Timepass make of it.

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Documents used for this Blog:
1. LS List of Businesses – 4th July
2. LS Bulletin Part 1 – 4th July
3. LS Questions – 4th July
4. Papers to be laid on the Table – 4th July