रविवार, १३ मे, २०१८

Karnataka Election - Role of Central government....

Karnataka state has witnessed the 6 president's rule. The formation of Karnataka government is highly influenced by Central government. Another interesting thing about Karnataka State is that the state can't digest the coalition government. Coalition government in Karnataka were unable to complete the whole term. Let us see some interesting things. I will divide these article into 3 parts -

1) Same party is ruling at State and Center but Something goes wrong with Party at Center -
Karnataka State faced first president's rule in 1971 from 19th March 1971 to 20th March 1972. Veerendra Patil from Congress was Chief Minister of Karnataka, but Congress split in 1969 and Veerendra Patil preferred to be with Congress (O) and therefore government lost the majority in 1971.

2) One party is ruling at state and another party is ruling at Center -
In 1977, Karnataka state witness second state emergency. In 1977, Janata alliance managed to win the loksabha election. Janata alliance dismissed the State government where Congress was ruling. Congress was in power at Karnataka. But president's rule was imposed even though the government had majority in the house. 

3) Coalition government at state -
First coalition government was formed in 1983.

Janata party formed the government with the help of BJP, CPI, CPM and 16 Independent MLAs and  Ramakrishna Hegde became the C.M. of Karnataka. After two years Ramakrishna Hegde abolished the government and faced the fresh election. So first coalition government lasted for two years only. In 1985, Janata Party won 139 seats and again Ramakrishna Hegde became the C.M. In 1988. due to some allegations, Ramakrishna Hegde resigned from his post and S. R. Bommai became next chief minister. In 1988, after the formation of Janata Dal by merging the Janata Party and Lok Dal, few people from Janata Dal left the Janata Dal and informed the governor that this government had lost the majority. At that Pendekanti Venkatasubbaiah, Congressman and the Union Minister of State for Home and Parliamentary Affairs in both Indira Gandhi and Rajiv Gandhi cabinet was governor of Karnataka. He informed the same to president and recommended to impose the president's rule. Even after C.M. informed the governor that his government has majority in house, governor recommended the president to excise the president'r rule and dismiss the state assembly. Karnataka witnessed third president's rule in 1989. 
Another president's rule till fresh election was imposed by Rajiv Gandhi's government in October 1990. 
In 2004, another coalition government was formed. Congress and JD(S) formed the new government 

But this government lost the majority in 2007 and 5th and 6th president's rule was imposed from October 2007 to May 2008.

So few interesting and important points can be pointed out. First thing, BJP has an advantage. Vajubhai Vala, BJP leader, former cabinet minister of Gujarat is current governor of Karnataka. BJP is at Center. So it is clear that if Congress wants to rule the Karnataka for next 5 years then alliance is not a good option. Congress must win the seats more than 111 which is the magic figure otherwise it is very difficult for congress to survive even with the highest seats in the house. 

सोमवार, ७ मे, २०१८

Gujarat and Maharashtra - Two Lazy States

The N K Singh's 15th Finance Commission has started the debate over the population criteria. But we are ignoring one thing. Are states using this fund properly? Let's take two states - Gujarat and Maharashtra Before 2017, there was two types of expenditure - planned and non-planned. Planned expenditure of states is the expenditure that comes under center's advances to states for their plan. The expenditure other than planned expenditure i.e. spending to maintain the law and order i.e. spending on police, government offices and departments etc is known as non-planned expenditure. Now let's have a look of planned expenditure of Maharashtra state.

Data Source - An author uses data from Reserve Bank of India for given analysis

Budget estimates are predicted expenditure based on the analysis of pre-budget trends.
Revised estimates are a mid-year estimates based on six months actual trends and predicted expenditure for the balance six months.
Accounts are actually spending.
Maharashtra's actually spending is much lower than the revised and budget estimates for plan expenditure.

Now for Gujarat,
Data Source - An author uses data from Reserve Bank of India for given analysis
Again actually spending for plans is lower than the revised and budget estimates for plan expenditure. 

And non-planned expenditure of Maharashtra,
Data Source - An author uses data from Reserve Bank of India for given analysis

For non-planned expenditure, we can see the opposite trend. Actually spending is in fact more than the budget estimates of non-planned expenditure. 

Data Source - An author uses data from Reserve Bank of India for given analysis

Even for Gujarat, there is no much difference between budget estimates and actually spending. 

Data Source - An author uses data from Reserve Bank of India for given analysis

Maharashtra's total expenditure is more or less equal to the budget estimates. 

Data Source - An author uses data from Reserve Bank of India for given analysis

For Gujarat, total actual spending is less than the budget estimates. 

Now important thing is that as far as planned expenditure is concerned, both states are lazy to spend according to the budget estimates and revised budget estimates. What does it mean? It means the grants which are provided by the center to states are not fully utilized on the projects and plans. That means funds allocated for plans for rural development, infrastructure, construction of roads, electricity generation etc are not fully used. SO center government should be careful before allocating the funds to such lazy states. That remaining funds can be used by other states MORE EFFICIENTLY. 

रविवार, २९ एप्रिल, २०१८

Education Institutions: From Public good to private good - Autonomy or Divorce?

On 20th March, Indian government in their "HISTORICAL DECISION" granted the autonomy to 60 educational institution (5 Central Universities, 21 State Universities, 24 Deemed Universities, 2 Private Universities and 8 Colleges).

Source - Public information bureau of India

Human Resource Minister Shri Prakash Javadekar said that UGC will have control over the given institutions but these institutions will have freedom to start the new courses, off campus centers, skill-related courses, research parks and other new academic programs. They are free to hire the foreign faculty and enter into academic collaborations.

This looks like India will witness the high quality education, India will witness the research based education etc etc. But I don't think so. Anyway we already have 74 autonomous institutions (This doesn't include the institutions and colleges which are grated the partial autonomy or autonomy for specific department.). But still we haven't seen any major transformation. I can understand the autonomy giving to the private universities, deemed university and colleges as they are already generating the funds at their own. They want the autonomy as they are interested to EXPAND THEIR BUSINESS. But granting the autonomy to central and state universities is problematic. According to UGC, till 29th June 2017, there are 47 Central Universities in India. Central universities are National Importance institutions. Central University Act 2009 is passed with the aim of having universities with goal of teaching and research in the various States. Now grating the autonomy to Central universities is like I am giving the freedom to myself!! Is anything going change after giving autonomy to Central Universities? Except the fees, nothing will be changed. Central Universities are already free to make the research based program, collaboration. Government itself can attract MoU and foreign collaboration more than autonomous central universities.
Now I tried to get the fee structure of some autonomous institution and central universities.

Source - Walchand College of Engineering and JNU university.

Walchand college of enigeering is autonomous college and JNU is a central university. Above graph shows the comparison between the M-Tech fee of JNU and Walchand College. Fee of Walchand college is very high compare to the JNU. And this is going to happen with central universities also.
Education is public good. Okay, it is impure or imperfect public good.We have privatization of education with the presence of public institutions but  further liberalization of public education will throw the majority of population out of the higher secondary education system. Around 22% Indian population is below poverty line. Government should at least control the Central universities and state universities and their fee structure. Government should stop CONVERTING THIS PUBLIC GOOD INTO PURE PRIVATE GOOD. 

शुक्रवार, २२ डिसेंबर, २०१७

BJP is losing the GUJARAT...

There is tremendous reduction in the power of BJP in Gujarat. One can easily say that by just observing the seats won by BJP. But I am going to use some concentration index to show that. In market, Herfindahl-Hirschman Index (HHI) is used to measure the monopoly power. The range of HHI is between 0 and 1. If HHI is 1 then there is monopoly i.e. one firm has absolute power in given market and if HHI is zero then it means no one has control over the market. HHI is calculated by adding the square of market shares of firms. Now I am going to use this HHI index in political economy to measure the concentration of power. After that I will use Effective Number of Political Parties which is proposed by Laakso, M., & Taagepera, R. (1979) to measure the degree of coalition.

(Data source – Election Commission of India) 

Now let’s see the HHI and ENP. 

(Index has been calculated)
Let me explain the trends. Here HHI is reduced from 0.48 to 0.29 in last 15 years. That is 50 % reduction. It means the concentration of BJP is reduced by 50% in Gujarat assembly. No let’s see the Effective Number of Political Parties. ENP is just a multiple inverse of HHI. ENP gives the actual number of parties in government. In democracy, generally one can’t have absolute power over the house. So ENP won’t be one. Now ENP is increased from 2.05 to 3.3 in last 15 years. It means in 2002, the government of BJP was similar to the coalition government formed by of two parties. Now in 2017, ENP is 3.37. That means, the present government of BJP is equally powerful to the coalition government formed by the 3 parties. Now it is clear that the power of BJP in house of Gujarat is reduced. 

Now let’s find the similar index by using the Lok sabha seats won by BJP in Gujarat. 

(Data source – Election Commission of India) 

Now according to lok sabha election 2012, HHI is 1 i.e. there is absolute control over Gujarat state. So according to lok sabha election result, BJP should have concentration near to 1 in Gujarat assembly. But actually HHI is 0.29 and ENP is 3.3. Compare to Lok sabha election, power of BJP is continuously declined. Following figures are clearly denoting the above fact. 

The reasons behind this reduction might be different. It might be because of raise of Congress or raise of rural conflict or bad policies of BJP. But one thing is sure, 2019 is not easy for BJP.

बुधवार, २२ नोव्हेंबर, २०१७

knock knock.. Is crisis at door?

Rather go to bed without dinner than to rise in debt. -Benjamin Franklin 

We are going to bed without dinner but still debt is rising. Our outstanding liability is around 67% of total GDP. Fiscal deficit at the end of August was around 96% of the budget estimate for 2017-18. Then one important question arises – ‘Are we moving towards 1991?’ Let’s see.. 

(Source - Data from Reserve Bank of India is used for calculation)

Fiscal deficit is obviously very high. For this time, I am taking absolute figure (not in percentage). Both states and central fiscal deficit is very higher than 1990s Fiscal deficit. Total outstanding liability is rapidly increasing and very high compare to 1991. Revenue deficit is also higher than 1991 in absolute terms. 

(Source - Data from Reserve Bank of India is used for calculation) 

So does it mean we are very close to crisis? Let’s see another side of picture.. Foreign reserves are increasing and very high compare to 1990s. Now let’s observe the trends of the ratio of these variables to foreign exchange reserves. As far as ratio of fiscal deficit to foreign exchange reserve, total outstanding liability to foreign exchange reserve and revenue deficit to foreign exchange reserve are concerned we are at good position compare to 1990. It means we have enough foreign reserves. This is good but again our net exports are negative and not improving. Yes it is true that we are at better position compare to 1991 but now it’s hard time to think about our outstanding liabilities. We can’t ignore the total outstanding liabilities of states. Although various steps has been taken into account for domestic industries, net export is not improving. Just limiting the expenditure is not enough.



शनिवार, १४ ऑक्टोबर, २०१७

Indian states.. life in debt…

Our system - of debt-fueled economic growth, of ineffective democracy, of overloading planet Earth - is eating itself alive - Paul Gilding.

Forget about debt-fueled ECONOMIC GROWTH, few Indian states have only growth in their OUTSTANDING LIABILITIES. We talk too much about outstanding liabilities and Fiscal Deficit of Central government. But we can’t ignore the financial health of Indian states. Andhra Pradesh is continuously borrowing from markets. West Bengal is new competitor for Andhra Pradesh. One might say that revenue deficit or fiscal deficit is under control or government is taking serious steps to control their deficits. But these deficit can't be financed by borrowing. If it is a case then we should start thinking about outstanding liabilities of Indian states.

(Source - Reserve Bank of India - Handbook of Statistics on Indian States. To make it simple, data selection is restricted to 2013 as Telangana state is created in 2014 and Andhra Pradesh is very important state as far as OUTSTANDING LIABILITIES are concerned.)

Every state is showing OUTSTANDING PERFORMANCE in OUTSTANDING LIABILITIES. States are continuously borrowing. Okay, this borrowing can be justified if states have good economic growth. But are these states really growing? 

(Source - Reserve Bank of India - Handbook of Statistics on Indian States)


Total outstanding liabilities to GSDP is also increasing. In 2013, debt to GSDP ratio for Andhra Pradesh was around 71% while for West Bengal it was 64%. It's like both states are in competition and they both have forgotten that the in future, these loans have to be paid. If this trend remains same then it will be dangerous for W.B. and A.P. 
The borrowing not only restricts the spending of borrower but also increases the interest rate in market. Although it's not applicable here but if O.L. is high enough then to avoid riskiness, state government might have pay high interest on new loans in future. So it might create a debt trap. 
Again I am not in favor of restricting the government spending. But it should be productive. We must re-think our policies like subsidies. Agriculture is a state subject. And most of the subsidies are given for this sector. But still this sector is not improving. Government should find an alternative for such policies.
In Maharashtra state assembly, former finance minister informed that although the debt of Maharashtra State is huge, state can borrow more because GSDP of Maharashtra is high compare to the other states. So state government should borrow and spend that money on workers and farmers. Now here is a problem. According to 14th finance commission, for additional borrowing, interest payment to revenue receipts ratio should be less than 10% and debt-GSDP ratio must be less than 25%. According to this criteria Maharashtra is not eligible for additional borrowing as debt-GSDP ratio is more than 25%. Now same former finance minister might demand same thing i.e. state government should borrow or center should provide a financial aid. And center can announce announce any dam package for any state for no reason (except elections). Spending of borrowed money must be restricted to few areas. Gujarat state had debt to GSDP ratio of 25 % in 2016 but in same year, interest to revenue receipts ratio was more than 10%. And now packages are being announced by central government for Gujarat state. These announcements must have some criteria. Even though these announcements are the tools for elections, these announcements are not good as far as financial discipline of state is concern and that's why states are not worried about debt. But when borrower lends money to the next borrower then if one commits suicide, other has to commit suicide because first borrower will lose money and second will lose one lender.

शनिवार, १२ ऑगस्ट, २०१७

Maratha Kranti Morcha.. What does it show and what does it mean?

Maratha community is protesting since last few years. One thing we should appreciate that the protests were peaceful. But I disagree with the concept of this protest. My relatives and friends who are part of this silent protest march might not like this opinion but this is what I think. 
In democracy everyone has right to protest. I am not against any protest march. Everyone should express his/her disagreements. People from Maratha community are also suffering from problems like poverty, unemployment etc. These problems come regardless your caste. (But what about social discrimination? In Maharashtra, (so called progressive state) we have seen honor killings. Right now I don’t want to get into this and I won’t talk about caste discrimination). But certain things are difficult to understand.
One thing which I observe is that the name of Chhatrapati Shivaji Maharaj has been used intensively. Protestors were saying that Chhatrapati Shivaji Maharaj was their ancestral. It shows that they are Kshatriya (Upper caste). But still they want reservation! Demanding reservation by showing upper caste status is simply hypocrisy. They should have demanded reservation without their caste status. We have reservation because of existing caste system which is exploitative. Given demand is pushing this exploitative system up. 
Another thing which is the most important and dangerous that is LOVE FOR KING and KINGSHIP. I personally respect Chhatrapati Shivaji Maharaj. Creating new empire is very difficult. His policies, governance were really good. But in democracy, we can just respect KING AND KINGSHIPS but we can’t follow them. Democracy has its own problem but it is the upgraded system. In democracy no one can enjoy a special treatment because of his/her ancestral. If he/she is enjoying then it is the biggest threat to our democracy. Now why this is happening? (I am just focusing on their demand related to reservation) I tried to find the data related to state-wise agricultural population. But I couldn’t find any data on OPEN SOURCES. So I am using some proxies. I am computing agricultural population by using rural population growth rate (majority of agricultural population is still living in Rural area) and households who hold agricultural land.
I found category-wise household (who hold agricultural land) data (2010). Then I used same population growth rate to estimate future trends.

In others categories, we have OBC, Marathas, Kunbis and others. Right now I am using others as a proxy for Marathas and Kunbis. OBC population is high but ignore OBC population wont make big difference as the numbers for SC and ST are comparably low. I know it is harsh assumption. But I don't detailed data. But roughly we can say that Maratha community is still engaged in agriculture sector. 
Then I calculated per capita agricultural GSDP by using same population. 

Here per capita GSDT is very low. Per capita GSDP in 2011 was app. 1300 while in 2013 it was app. 1450. I know these numbers are really weird. We are using proxies for various variables. Okay lets assume that the per capita GSDP is fours time higher than these numbers. Then also per capita GSDP will be low. The growth of agriculture sector in Maharashtra is also not good.

So with given numbers and graphs we can say that the agriculture distress may be the reason. So I think agriculture reform can be one solution. High per capita agricultural income may solve this problem up to certain extend.
So next time I hope this protest will be a protest of farmers, landless farmers and agricultural laborers.

Data sources -
Planning commission, RBI (handbook of statistics on Indian states), Economic Survey of Maharashtra 2011-2012