One-stop shop for the total transformation of India

What exactly is Modi saying regarding state funding of elections? He has not provided a detailed proposal.

Now that I understand what Modi has been saying re: state funding of elections, he is not saying much, really.

All he wants is a debate.

But what is HIS proposal?

Let me say this in brief:

a) State funding as proposed by Indrajit Gupta was a terrible idea.

b) State funding must be simple and clean: each valid vote must return Rs.20 (or so) to the candidate (not political party). Period. That’s we need. And how hard is that for people to understand?

I have detailed this at length in BFN and also in SBP’s manifesto.

JUST READ THESE, AND DO IT THE RIGHT WAY. NOTE THAT IT WON’T BE ENOUGH TO IMPLEMENT STATE FUNDING, EVEN IF DONE THE RIGHT WAY. THE FULLY SUITE OF REFORMS IS NEEDED.

Let me reproduce the section regarding electoral reforms:

===extract===

While Equality (socialism) and corruption are lifelong buddies and room-mates, Freedom (capitalism) and corruption are arch enemies. A free India can’t condone even the tiniest bit of corruption. We must become the least corrupt country in the world if we want to be called free. The following four actions will help to eliminate political corruption and also dramatically improve India’s governance:

  • Raise the wages of MPs and MLAs at least by a factor of ten while simultaneously getting rid of all of their ‘perks’. Let us pay the Prime Minister of this great nation at least what a middle level business executive of a very large multi-national firm gets, say Rs. 1 crore per year, and MPs Rs.20-30 lakhs each. As it is unpopular for politicians to raise their own salaries, we can help them by setting up an independent commission that would determine their wages. There is also atendency among politicians to add to their perks if their wages are kept low by public pressure – this is a significant problem for India. In India some MPs also allegedly sell some of their perks, such as their free air tickets. That is surely criminal. Perks are also expensive to administer. Let us therefore get rid of all perks once salaries are raised, and only reimburse actual expenses incurred on the job, for instance, eligible travel expenses. Let openness and transparency on such basic matters prevail in India; a free society can’t expect anything less than that.
  • We must fund our elections differently – through state funding. The purpose of the wages of MPs or MLAs is not to cover the expenses incurred during elections, but to pay them competitively for their responsibilities. Even if wages are hiked, we will still need to find a way to make the electoral expenses manageable. We can do so by state funding of elections. A simple and effective method that will pay Rs 25 or thereabouts, at current values, for each valid vote cast in favour of a candidate is outlined in Box 3. A system similar to this operates successfully in Australia, where about $2.10 (about Rs 66) is paid at present by the government for each valid vote polled by a candidate.[i]
Box 3 
State Funding of Elections
Let us revert to Mr Harishchandra’s original calculations. A small payment made for each vote polled by a candidate radically alters the expected financial burdens on candidates. It makes it viable for a much larger number of people to participate. The field of candidates changes from less than 1 per cent of the eligible population at present to potentially the entire adult population. Here’s how:
Let a payment of Rs X be made per vote polled, with n = 6 and θ = 0.02, as before.[ii] Mr Harishchandra expects 10 lakh voters to cast their vote at the election. His expected PVreturn now becomes:
      
With a government payment (X) of only Rs.8.39 per vote cast in his favour, Mr Harishchandra can expect to break even after spending Rs 20 lakhs of his own money on the election. This still leaves him with no income after repaying his loan. A payment of around Rs 25 per vote will make it practicable for Mr Harishchandra to contest the election, even with six serious candidates flanked against him. He is empowered by this method to take a calculated risk. The electoral fray now becomes a genuinecontest, not suicide.
Mr Harishchandra may, of course, still hesitate, since corrupt candidates will continue to spend huge amounts of black money without any accountability and threaten honest people should they attempt to contest. With strong auditing systems, anyone found using black money will be thrown behind bars. Further, over time, the new incentives created by state funding will allow many more honest and competent candidates to contest. There will finally come a turning point when morally challenged candidates will be shut out completely by the public which will only choose to vote for good candidates.
  • Third, we need to abolish election expense limits while simultaneously building extremely strong audit systems for monitoring the contributions received and expenditures made during elections.
  • Finally, a wider set of reforms of the electoral system will be needed, such as making public the property returns of our candidatesin the interest of greater transparency. These and other such reforms are touched upon in Chapter 6.

 

Continue Reading

What exactly did Modi say regarding state funding of elections?

On 15 November 2016, Modi convened an all party meeting prior to the commencement of Parliament. In this meeting he asked the parties start discussions re: state funding of elections.

Speaking about simultaneous polls, he said, “A crucial problem is how to make political funding transparent. How to implement state funding of elections. Let all political parties debate it and come to a conclusion. Let’s remove the question mark which exists against those in public life.

“Polls happen separately. Let there be one election, simultaneous elections,” he said, seeking a consensus on the issue. [Source]

OTHER REPORTS

He also suggested that parties discuss in Parliament, state funding of elections” (Source)

“he said the on the eve of the ongoing winter session of Parliament that he was open to the idea of state funding of elections in the country.” (Source)

Prime Minister Narendra Modi has suggested state funding of polls to improve transparency in public life and combat corruption, he made this remarks while chairing an all party meeting at Parliament House yesterday evening ahead of the winter session of Parliament beginning today. (Source)

 

Continue Reading

No gold means no trade, no borrowing, no investment. EVEN TODAY.

From a debate on Whatsapp:

A friend wrote: “gold, unlike deposits in banks, cannot be borrowed by others for generation of additional value”

MY RESPONSE

Well, no one can borrow anything without collateral. Most businesses (98 per cent of them, in terms of number, particularly in a country like India) can only borrow based on collateral. Land is used today for this purpose, but for small contingencies, people can still use gold. Hindi movies show women (with jewellery) getting loans against gold when the situation gets dire. This was how you got loans from village money lenders – and this is how to you loans even today. Tiny and small businesses (the vast informal sector of India) operate ultimately on gold backing.

In the Roman era vast quantities of gold were brought into India which had a huge trade surplus with the West (this continued for 2000 years till a couple of hundred years ago). India’s ancient hundi system (very similar to modern Western banking) was based on trust and credit-worthiness, but only those who had proven gold (not just land) could be trusted enough to have their IOUs (hundis) accepted in far off corners of the world.

No gold, no trade was the rule till recently across the world. Even today, one can readily deposit gold with a pawnbroker and get a loan.

Of course, the global banking system started with gold as the only recognised deposit (recall that land was not tradeable in the past – hence worthless as collateral – across the world till pretty much recently). On the basis of gold, banks started issuing notes (money lending). Notes are a form of borrowing – usually for short term working capital.

Even after Nixon’s rejection of the gold standard in 1971, banking cannot operate even for one minute without gold. The system will crumble. Vast hordes of gold continue to be stored by banks (including RBI) to ensure international liquidity of their currency. Imagine Zimbabwe trying to pay with fiat currency! India almost became a Zimbabwe in 1991, so we had to fly a plane load of gold to the Bank of England. The IMF refused to lend to India till it had physical possession to India’s reserves of gold. If India doesn’t store gold and Modi continues his socialist tricks, our banking system can easily fail.

Pieces of paper printed by governments only retain value till the government is trusted. Gold retains value regardless of governments. It is the ultimate store of value.

SBP is committed to ensuring backing of the rupee with gold, as part of the journey to transition to a fully privatised system (which also will need to be backed by gold).

No gold, no trade, no borrowing, no investment.

FURTHER

gold is exactly as valuable as its market price. And gold is 100 per cent fungible – it is the only thing in this world that can be converted into anything else without almost any loss of value. And being a traded commodity, its price is uniform across the entire world.

Continue Reading

Notes from my meeting with Frank-Jürgen Richter on 9 December 2016

It met Frank – the CEO of Horasis – yesterday. He had come to Melbourne as speaker at a major conference.

Frank is a keen observer of India, having edited three books on India and organised numerous Horasis India meetings. He visits India four to five times a year, and from what I could gather, he knows a lot of people who matter in India.

He is next visiting in January then in February. First he is going to Gujarat and then to Mumbai (if I recall correctly).

The main thing I’d like to note is that he is willing to consider my suggestion to merge the sessions on youth and education, sol there is space for a potential session on the governance system and policy making in India.

I will speak at the opening plenary as part of a panel of 4-5 persons (around 300 people will be in the audience). Thereafter, four separate sessions are held before and after lunch, followed by a closing plenary. If a session is held on India’s governance system and policy capability, then I may have something useful to say in that session, as well.

To ensure we have suitable representation from the Indian government, I suggested he invite Jitendra Singh for the governance session , so the Modi government can directly comment on any reforms it is taking in this direction (e.g. state funding of elections). If Jitendra Singh is not available, maybe Jayant Sinha can be invited.

If a governance session is held in Horasis 2017, it would be a great opportunity to show the participants why India continues to have severe malfunctioning governance despite a change in government in 2014. The key is the solution – and thereafter people can pursue various options to push the solutions.

I presented him my copy of James Tooley’s Imprisoned India and a copy of BFN as reading material for his return journey. Imprisoned India is important since it is a story of the real India – an India so bleak one shudders to think of how the average India lives his/her life.

I mentioned to Frank that Tooley has done the most important work – ever – in the field of education. He has proven that education works, and works better, without government. That is a brilliant empirical proof of something I have written about at length in BFN.

It will be great if Frank can get in touch with Tooley. It will be even better if Tooley can be invited to the Horasis session and speak both about his experience and about private school education in India.

I told Frank that regardless of my many concerns about Modi, SBP would support any good policy that Modi seeks to implement, e.g. Modi is now talking about state funding of elections. This is an absolutely essential reform (if done properly, of course).

 

Continue Reading

The poor are actually expecting lakhs of rupees to be deposited into their accounts! By February Modi will be in serio

Here’s a report about why the poor are still supporting Modi:

“Madam,” he began, “I feel that in a few days, Rs 2 lakh will be credited to my account. It will be given by the government. When there is so much black money returning to them, where do you think all that money would go? Modi is bound to give it to people like us. He is going to be the next Jayalalithaa. What Amma did for her people, Modi will do for us.”

My prediction on this is clear: Three months from now, India’s fever will dissipate and angst will rise. The people have been badly fooled.

Modi just can’t meet the expectations he has created. The policy continues to harm the economy in a big way. By February (say, mid-February), Modi will be facing a severe backlash.

“If the elections have to be held before February 18, the Election Commission has to announce the dates of polling in the next few days.” (Source)

I believe that if Modi can manage to get the elections completed before 18 February 2017, he might still benefit from the tail end of a dissipating wave of enthusiasm about demonetisation.

But if elections are held after end-February, BJP will face increasing pressure, and if elections are held in late March, I believe BJP would well be wiped out in UP.

Continue Reading