| Compare this with our government, most of which is old, uncommitted (except to their own seats or parties) and, generally, terrified. Policymaking remains hostage to these sub-prime qualities, as a result of which very, very little gets done, when it does get done it often has little to do with the good of the country, and, in any case, happens so slowly that sometimes it's hard to believe that it's already 2007 "" and nearly the end of it at that. |
| The nervous fumbling on capital controls that upended markets last week was a case in point. It is clear that India needs capital, and equally clear that the world is eager "" indeed, seemingly desperate "" to provide it. But since the government has been unable (unwilling) to open channels to absorb this capital "" whether in infrastructure, in retail, in myriad other areas that remain protected so that politicians can collect their rent in due course "" the money flows into the only channels that are open "" viz. equities, and, to some extent, real estate. Naturally enough, these asset markets overheat and zoom out of control, in parallel delivering mayhem to the foreign exchange market, in the form of billions of dollars that the RBI has to mop up. |
| In the four weeks to October 12, the RBI bought over $24 billion "" that's more than the forex reserves of the Netherlands, Saudi Arabia or Kuwait! This enabled them to cage the rupee at about 39.30, with liquidity splashing around everywhere. With inflows unabated "" indeed, accelerating "" and the half-hearted (old, uncommitted and terrified) efforts to stimulate outflows completely ineffective, the RBI's nightmarish screams were finally heard in Delhi and the ministry of finance pushed Sebi to try and raise the barricades. |
| Of course, the market tanked and the government backed down "" welcome to Thailand. While markets have recovered much of their composure, it seems that the government continues to turn a deaf ear to the real issues "" at least to judge from the politics-as-usual sentiment that prevails. This means that while markets will get back to business as usual soon enough "" after all, this is India and it is going to grow at 10% a year for some time come "" there will certainly be another, and then another, wobble, each one larger than the last. |
| The good news, however, is that, if you leave the political establishment out, change is in the air. Indeed, almost everyone would agree that there is a complete disconnect between the essence of the country today and that of the government, and, in this day and age of market determination, this means that sooner rather than later we will see substantial change in the nature of our government. |
| Indeed, there are several straws in the wind. Note, for instance, the continuing impact of the Right to Information Act "" in a few short years, it has become a part of life; indeed, my wife points out that "RTI" has become a verb as in "just RTI it." Then, there's The Times of India's Lead India campaign, which is looking for "tomorrow's leaders" who are, at most, 45 today. Another sign, albeit discolored by parochialism, is the news that Rahul Gandhi, at 37, has just become a general secretary of the Congress. Loudest of all, of course, will be "" and this is a prediction "" the sharp increase in young (i.e. under 30) people who vote in the next election. |
| It is clear. It is time. We need our political leaders (and our bureaucrats, please) to field like Robin Uthappa, bat like Yuvraj, bowl like Irfan and Harbhajan, and, critically, take decisions like Dhoni. |
| We need a constitutional amendment that limits the age of members of parliament (both Houses, Centre, state and city) to 65. |
| We need all government contracts to be 100% rear-ended. This means that if, say, a road construction contract is for Rs 200 crore and the time line is 18 months, the contractor will get paid Rs 200 crore plus premium interest (at, say, 2% above the market) accumulated, say, three years after completion, provided that there is no time overrun or quality problems over the holding period. The additional cost (in terms of the premium interest) would be peanuts compared to what would be saved in poor and delayed implementation. This would be a step towards eliminating corruption, since only reputable companies with strong balance sheets would be able to bid for such work. |
| There would be opposition to such ideas, of course, but we need to push aggressively to destroy the weak underbelly of political corruption. Make no mistake, corruption, however lion-hearted its roar, is ultimately weak "" all it needs is a rampaging band of young, committed and excited Indians "" a la Team 20/20 "" to blow it away. Which means each of us needs to become more active in politics at every level. Use the RTI; call meetings of citizen groups where you question your councilors/legislators on why, for instance, the Crawford Market redevelopment plan was so furtively passed despite obvious evidence that its terms "stole" from the citizens; push all political parties to field younger candidates; and vote aggressively in the next election; which, if we are lucky and Dr Manmohan Singh reads this, will be early next year. |
| Between now and then "" well, there may be one (or more) market hiccup(s), but this is India, which means you can buy any asset at any price at any time and hold it for two years "" you'll be smiling happily ever after. Going long India is still the best play on the planet. |
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