Let's chop the onion cartel

Every time onion prices hit the roof, or for that matter, whenever food inflation inches upwards, it is amusing to see economists invariably pointing to supply-demand constraints and the urgent need, therefore, to modernise the supply chain. And that has always left me wondering why economists can never see beyond the fundamental prescription enshrined in the economic textbooks. It doesn’t always hold true.

The onion crisis is no different. At a time when the electronic media was screaming at the top of its voice, I heard many an economist, who had probably never been to a crop field, repeating ad nauseam what they had been taught in their classrooms.

Onion prices had hit a two-and-a-half year high in August at the back of fears of a drop in production in key areas because of drought last year, and in some areas, the heavy rains turning to be a spoilsport. The emphasis, therefore, was on the need to streamline the supply chain, with some newspapers even suggesting irradiating the vegetables to extend its shelf-life.

From a maximum of Rs 10 per kg in June, onion prices had shot up to Rs 70-80 per kg in a few weeks, finally stabilising at Rs 50-60 when the government announced a slew of measures, including imports and quantitative restrictions on exports. Although Union Agriculture Minister Sharad Pawar had said that prices would remain high until October when the new crop comes in, strangely the wholesale prices began to soften to coincide with the announcement of import-export measures.

This is not the first time the onion trade has played truant. In December 2010, onion prices were on fire. Even prior to that, onion prices had flared up for three years in a row between the months of September to December. And I had always maintained that barring some seasonal variation, there was no reason for onion prices to soar by 400-500 percent. Even this year, the production shortfall has been anticipated at a mere 4 percent and the prices have gone up by as much as 600 percent on an average. How can this stupendous price hike be attributed to supply-demand constraints?

For several years now, I have been saying that the extreme volatility in onion prices (and also that of other vegetables/ fruits) is the handiwork of a cartel that operates in the wholesale trade. A handful of trading families have cornered the entire trading activities, thereby very conveniently manipulating the market. Large-scale hoarding of onions goes on unchecked.

The reason is obvious. No political party wants to ruffle the traders with any stringent action. Traders hold the strings to the political purse, and a crackdown against hoarding and speculation would mean chopping off the financial cord.

It is not that cartelisation operates only in agriculture. Take the case of airlines. You click three times on a flight route on the Internet, and the ticket price goes up. Private airlines have charged as high as Rs 25,000 for a one-way ticket between Mumbai and New Delhi, taking advantage of cancelled flights that day. Now look at the prices of eggs. If supply-demand is the mantra, then how come prices of eggs are almost uniform throughout the country? How come the demand for eggs remains the same in New Delhi and Bathinda, for instance? It is because a handful of people/companies decide the egg price for the day.

I can go on with such illustrations. Often the blame is rested on the Agriculture Produce Market Committee (APMC) Act, which regulates the agricultural markets. But there is no APMC Act for the airline industry. And look how conveniently they have unbundled the prices to even charge for a seat preference.

In agriculture, organised retail players such as Reliance Fresh, Easy Day, Big Bazaar, Spencer’s and others who buy the produce directly from farmers, too, have failed to pass on the price benefit to consumers. Replacing one set of middlemen with another, therefore, is not the answer.

Source: Tehelka Issue 35, Vol 10. Aug 31, 2013

http://www.tehelka.com/lets-chop-the-onion-cartel/

Onion prices: What brings tears to your eyes.

Onions being sold in a typical Indian market

Quoting a study by the National Bank for Agriculture and Rural Development (NABARD), the Hindustan Times has reported that the stupendous price hike in onions was because the trade had manipulated the prices. In a report titled: Farmer sells onions at Rs 8, you buy at Rs 70 (HT, Aug 22, 2013. bit.ly/18LnbB7 ) it states: "You are right to feel ripped off, but spare a thought for the farmer, too. A NABARD report on onion reduction and marketing seen by HT shows that the farmer makes a profit of just Rs 3.60 for every kg he sells. In other words, a farmer would need to sell nearly 20 kg of onion if he, hypothetically, wanted to buy a kg of his own produce in plusher arts of Delhi."

In other words, the middlemen, and that includes the wholesale agents as well as the retailers, have together romped home with a huge profit. According to the NABARD study, "in an ideal situation -- with no hoarding or unfair practices, and wastage at the 'normal' 25% of the 150 million tonne crop -- onions should be available at Rs 14 per kg."

This is not the first time that the trade has been exploitative. Even at the height of the onion crisis in December 2010, when prices had touched Rs 80/kg, I had said there was no shortfall in production, and the unprecedented price hike was on account of hoarding and manipulation of the prices. Of course at that time, the Govt had sided with the hoarders simply because it wanted to justify the need to push in FDI in retail. (See my blog post: Now it can be told. Onion prices were stage managed. Dec 2010, http://devinder-sharma.blogspot.in/2010/12/now-it-can-be-told-onion-crisis-was.html).

Time and again, rising food inflation has been the topic of media discussions. Some magazine/newspapers have trailed the entire supply chain to explain to readers how the prices are jacked up, and at what stage. The general agreement is that it is the middlemen who exploits both the producers and consumers. So if the middleman's role is minimised or done away with, both the farmer as well as the consumers stands to benefit. The solution that is being suggested therefore is to bring in organised retail which will buy directly from the farmers, and therefore make it available relatively cheaper to consumers.

During the present onion crisis, the organised retail chains -- Reliance Fresh, Spencer's, Easy Day, Big Bazaar and the likes -- were charging Rs 60/kg when the open market price was also Rs 60/kg. A day or two later, it brought down the price to Rs 59/kg and eventually settled at Rs 50-55/Kg when wholesale prices were softening after the Govt announced imports. I had made it a point to visit Reliance Fresh store in Mohali (where I stay) just to monitor the prices of onions. Two things I observed. First, there was hardly any price difference. Secondly, the price that is fixed for onions is for A-grade quality, but what sells for most part of the day is very inferior quality produce. In other words, what Reliance Fresh is doing is that it does provide A-grade quality, immediately when the stocks come in for the day at a little less price that is in the open market, but then pushes bulk of its inferior quality produce at the same price throughout the day.

India's economic crisis: Bottom of the pyramid has the answers

At a time when the Indian economy is in doldrums, Prime Minister Manmohan Singh has time and again reassured investors that there will be no going back on economic reforms. As usual, he has blamed the external factors for the slump. The internationally respected weekly The Economist has gone a step ahead. To ensure that the Prime Minister does not retract from the promise of delivering more reforms, it has tried to create a fear psychosis among the policy makers so that they don't budge an inch from the faulty economic track the country has been made to follow for the 9-year period of the UPA Government.

Like the cover story in the Time magazine sometimes back that called Manmohan Singh an 'underachiever' (the underlying idea was to provoke him to open up to FDI in retail and other sectors), The Economist has in a frightening analysis titled "Made outside India" (Aug 10, 2013. econ.st/164nUNE ) tried bravely to build up the argument that if India does not accelerate the growth pace, what ever remains in India (in terms of industrial base) will also move out. It was not only amusing to read the biased argument (biased is a soft expression, it is actually a flawed analysis) but makes me wonder how can a reputed magazine support the frauds in trade and business in the name of economic growth. I am shocked that it sings praises for tax havens like Mauritius, and is also praising the decision by Finance Minister P Chidambaram to defer the General Anti-Avoidance Rules (GAAR) which could have brought curbs on the flow of black money and corruption. (Read my earlier blog: Celebrating the induction of black money: http://devinder-sharma.blogspot.in/2013/01/gaar-deferred-investors-stock-markets.html).

It is true that gambling is illegal in India, except a few places. If Sri Lanka is planning to develop a casino industry to attract weekend travelers (like Nepal has done), does it mean that India should also allow gambling to be developed as an industry? This is like saying that India should allow sex tourism to develop on the lines of Bangkok under the proposed India-Thailand Free Trade Agreement that is being renegotiated. I think there can be nothing more stupid as well as dangerous than this argument.

What is amusing of course is the example of Bollywood films that are being shot abroad. The Economist says: "In 1985 Yash Chopra, an Indian film-maker, led a trend of shooting Bollywood "dream sequences" -- in which the hero and heroine sing amidst meadows and snowy crags -- in Switzerland. The Alps were easier, safer than the more familiar location of Kashmir." This is true. But what is wrong in this? Doesn't the Hollywood industry do the same? It has for late done many a films in India or with Indian participation. Does it mean that the Hollywood industry is moving offshore? In any case what the magazine does not perhaps know is that even that trend of filming abroad has come down lately. Film goers love the films that are shot in countryside locales in India. The latest release Chennai Express shot within the country's lesser known locales has been a record earner.

In essence, The Economist is indirectly trying to tell India to strengthen its service industry, cut down on red tape, and allow dirty and corrupt practices to prevail. This is exactly what India has been trying to focus on since 2004-05, and look at where the economy has plummeted to? I will not try to go into the finer details, but I would surely like to draw the attention of The Economist to an excellent analysis by S Gurumurthy that has been published in the New Indian Express. Titled: Reckless imports put Rupee on a ventilator, Aug 19, 2013. http://www.http://www.readwhere.com/read/c/1505436 ). The article brings out how a flood of imports because of the deliberate destruction of the domestic manufacturing sector has put the Indian Rupee in a crisis. "The 9-year UPA period saw manufactured goods import of $ 50 billion against just $2.3 billion during the NDA regime." 

It was primarily because of destruction of the domestic manufacturing sector that some of the Indian industry has moved out. It is not because of red tape and bureaucratic hurdles but because the Reserve Bank of India changed the rules that allowed companies to take out money to invest abroad. I see no merit in this. If foreign companies bringing Foreign Direct Investment (FDI) in India can do business and still make profits (despite the hurdles), how come the Indians companies are not? Again, it is The Economist all these years that has been drumming up the need to open up the economy to foreign investors. More the FDI more has been the imports of manufactured goods. More the signing of unreasonable FTAs, more has been the deluge of unwanted imports that further destroyed the domestic manufacturing sector.

It didn't only end up with massive imports but also destroyed jobs. A Planning Commission sponsored study says that between 2004-05, when Indian economy grew anything between 8.5 to 9.3 per cent, manufacturing sector witnessed a massive job loss. More than 5.3 million people lost jobs in manufacturing. Wrong advise by economists (and also The Economist) had forced the government to bypass manufacturing and follow services in its quest for growth. Remove all the hurdles, and let the markets operate freely is what we have been repeatedly told. But when markets crash, the same set of corporate media advises the government to step in and provide bailout packages.

Markets are always manipulated. There is no such thing as free markets. Whether it is the World Trade organisation (WTO) or the Wall Street, manipulation is the core ability of free trade as well as open markets. So don't get unnecessarily alarmed when the stocks tumble. Just wait and watch. Heavens are not going to fall if the Wall Street crashes completely. This is gambling. Let the gambling rules prevail for those who have willingly put their surplus money in.

I am not sure whether The Economist will ever take my advice. But it will good if they step down from their high pedestal and look at the ground realities more carefully. All that it has been suggesting so far is aimed at creating more wealth. Whether it is through the unhindered capital flows, hedge funds, stock markets, farm land grab,  foreign direct investments etc etc the basic premise is to create more high-net worth individuals. The poor will get the advantage of trickle down. Knowing the economic, environmental and social crisis the world has been pushed into, it is high time to move away from this terribly flawed economic approach. Take the simple case of Hiware bazar village in Maharashtra. Without indulging in all the spoils that neoliberal economists have been tirelessly suggesting and manipulating, this village alone has created 60 millionaires. Imagine if each of the 6.5 lakh villages in India can produce 10 (and not 60 millionaires to begin with), wouldn't the face of India change for ever? And what if the same principle of self-reliance is applied everywhere else in the world?

The solution to the economic ills can be provided by the bottom of the pyramid. Read this: One village, 60 Millionaires. The miracle of Hiware Bazar. bit.ly/15NdWMU 

All that glitters is not gold.

On Aug 15, gold rose by 0.5 per cent, to trade at $ 1,372.97 an ounce in the Singapore. This was considered to be the steepest hike in the futures market since June 19, 2013. In India, the same day, gold prices crossed Rs 30,000 per 10 grams, rising 3.56 per cent. In the next two days, gold prices surged by Rs 1,310 per 10 grams in India, the highest in the past two years. The sudden spurt in prices followed the Govt's ill-advised decision to raise import duties to 10 per cent.

In the days to come, with the festive season nearing, gold prices will further firm up.

The argument that I hear repeatedly from the Finance Minister is that gold imports have surged in the past few years thereby leading to the widening of the Current Account Deficit. His hypothesis is that investment in gold (or silver) is an 'idle investment' and does not flow back into the economy. By saying this, he is actually wanting the middle class not to invest in gold to park its savings, but to spend it on other consumer durables that will keep the wheels of economy moving.

What he is not telling us of course is that by raising the import duties and curbing the imports, he is helping the futures market in precious metals to literally make a killing. Just in two days after the decision to raise import duties, we have seen a massive jump in prices. For the aam aadmi this is bad news. After all, gold is an important part of Indian marriages (on an average 15 million marriages happen every year in India) and you can imagine the indirect taxation parents of bride and groom have to undergo by shelling out a hefty price. That's what Mr P Chidambaram wants. After all, you should be made to empty your pockets, the underlying principle on which market economy operates.

I fail to understand the economic logic. It is the unbridled consumerism has led the world to the grave environmental and ecological crisis. If the world is nearing a tripping point, if the world is witnessing global warming leading to ecological catastrophe at places across the globe, consumerism in an important reason for it. Nevertheless, what is more important to know here is the selective application of the 'idle money' concept. If investment in gold by the middle class is an 'idle' investment, what about the Rs 10-lakh crore that is being hoarded by the India Inc?

The Reserve Bank of India (RBI) has in a report spelled out that India Inc was sitting over a cash reserve of over Rs 9-lakh crore by the end of March 2012. This year, I am sure the money that is being hoarded by India Inc must have increased many fold (Reliance Industries alone is sitting over Rs 83,000 crores. http://bit.ly/14LzxFp). With India Inc refusing to invest the hoarded cash within the country, isn't this also 'idle money"? Why is that the Govt not making any effort to force the private companies to fork out the hoarded cash? Why is it quiet when it comes to the Corporate sector?

If only the Govt had forced India Inc to take out the massive cash reserves that it is sitting on, and make it invest within the country, which in the process would have created jobs, be assured the rupee down slide would have been in check. The CAD would have come down, and so would have been the fiscal deficit.

The booster shot to futures trading in gold and the inability to make the private sector cough out the hoarded cash reserves has a political link. We all know elections are around the corner. And on top of it, the Govt is unwilling to let Right to Information (RTI) provisions apply for the political parties. Do I need to say more?

Will India's Corporate Social Responsibility (CSR) norms lead to a Company Raj?

I haven't read the finer print of the Companies Bill. But what I have so far gathered from news analysis in various newspapers, the Companies Bill calls for companies having a net worth of Rs 500-crore or more, or a turnover of Rs 1,000-crore or more, or a net profit of Rs 5-crore or more to have a Corporate Social Responsibility (CSR) spending of at least 2 per cent of their average net profits of the past three years. In an interview with The Times of India (Aug 12, 2013) the Corporate Affairs Minister Sachin Pilot calls it a "positive, forward-looking, reform-oriented, and investor-friendly legislation." 

A day later, news agency PTI said that given the criteria that has been spelled out in the Companies Bill, only 1 per cent of the active companies need to follow CSR spending norms. Further, what is peculiar to India's new law is that the 2 per cent spending on CSR is not mandatory but reporting about it is mandatory. "Now the essence of the bill is self-reporting and self-disclosure. At no point it is my objective to create an inspector Raj where the government is the sole authority and we decide what is right and what is wrong. That's the company's money. They have full freedom to choose how they want to spend that money," Sachin Pilot said in an interview (Companies have full freedom in spending CSR money: Sachin Pilot TOI Aug 12, 2013. bit.ly/15sm70Z ).

Well, Sachin Pilot has reasons to have unlimited faith in the Corporates. After all, he is the Corporate Affairs Minister. But left to the Corporates, India would have been gobbled up by now. The widening economic inequality across the globe is a clear-cut pointer to the extent of greed that prevails among the rich and beautiful. Sachin Pilot therefore seems to be living in a make-believe world. He is no exception. It happens to all those youngsters whose foray into politics is just because they happen to be the sons/daughters of known politicians.

While the issue of tax-benefits for CSR spending is still to be resolved, already many suggestions have started pouring in. Says another news report (CSR spends to get Cos varying tax benefits, TOI, Aug 13, 2013): "For instance, writing a cheque towards the PMs National Relief Fund would entitle the donor company to a deduction, from taxable profits, of the entire donation amount. On the other hand, if a company has constructed a school building in a village, no tax benefit may be available -- at least not without a drawn out litigation."  

Some studies point to Rs 12,000-crore (or $2 billion) of corporate money flowing into the social sector. For a sector reeling under terrible resource-crunch with less money available across the globe for social, voluntary and charitable activities, and with the Indian Government tightening the FCRA rules to stifle NGO activity, the clamour for CSR funding will increase in the days to come. In my understanding, CSR funding will change the direction of social activities, driving more towards activities that actually end up benefiting the Corporate sector. In the absence of clearly defined guidelines, CSR money will come in handy to lay out a strong foundation for the Corporates to encash on eventually.

Let me illustrate. Schedule VII of the Companies Bill (as per a news report) prescribes wide-ranging activities that could be part of a company's CSR policy, such as eradicating hunger and poverty, promotion of education, women empowerment, reducing child mortality and improving maternal health, environmental sustainability, employment enhancing vocational skills or contributions to central or state government set-up funds, including the PMs Relief Fund. These activities look perfectly suitable for CSR activities. But when it comes to actual operations, it is the way the programme is structured/designed that is going to matter. Company's underlying commercial interests will always remain the primary focus.

Take the case of of hunger and poverty. Let us assume Mahyco/Monsanto, the agribusiness technology giants in India, launch a CSR project on improving agricultural practices to fight hunger and malnutrition. Without doubt, it is going to focus on bringing in genetically-modified seeds, chemical fertilisers/pesticides and thereby encourage an industry-driven farming model of agriculture. It will be in the name of eradicating hunger. Since more money will be available for this kind of initiatives, I can see NGOs making a beeline before the company. At no stage will Mahyco/Monsanto promote ecological farming or ask farmers to go in Low External Input Sustainable Agriculture (LEISA) practices. Take another example. The much hyped e-Chaupal initiative of ITC was aimed at laying the foundations for terminal markets for corporate agriculture. Of course, there are some honourable exceptions. But the number of such companies is very limited.

My suggestion therefore would be to have a clause in the CSR rules that ensures no company can make CSR spending in a domain of its own commercial interests. There has to be a strict regulatory regime established (no IAS please, and no ex-Corporate honcho) that oversees the working of the CSR projects to ensure that companies follow the norms that the regulatory body spells out for sustainable development. If you leave it free for all, as Sachin Pilot is suggesting, a majority of the companies will go on rampage, and we will actually end up creating conditions, knowingly and unknowingly, for the emergence of another Company Raj. Corporate funding has to be therefore very strictly regulated and monitored.

CSR spending however should not be seen as an open license to exploit the natural resources. It is not a license to loot, and then demonstrate social responsibility by opening a school or a hospital somewhere. It is for this aspect that the setting up of a National Investment Board is a bad precedence. It must be scrapped as soon as possible. Corporates too have to be made socially and environmentally responsible in their basic business operations. CSR is not a route for social repentance for the sins the companies normally indulge in.

Believe it or not, Mukesh Ambani and an average guard (including those posted outside his Mumbai home) fall in the top 5 per cent of the country !

My maid servant asked me the other day: “Sahib ji, TV news tells me those earning more than Rs 1000 a month are not poor. How can this be true? Although I am earning Rs 5000 every month working at your home, I mop up your floor and wash your dishes. If I was rich why should I be doing jhhadu-pochha? Kuchch karona Sahib ji. Aap bolo na…”   

  

Mohan used to be a helper in my office. He now works as a guard in the Delhi University. “Sir ji, I earn Rs 6000 every month. I have a wife and two children. I live in a one-room shanty accommodation in Kamla Nagar. I know how I am struggling to run my family. My wife suffers from asthama, and my younger son has a heart problem. If I didn’t have the BPL card, I couldn’t have got them a hospital treatment. They would have died by now. And look, this government tells me that I am not poor…”

While I was grappling with words to assuage their anger at a faulty poverty line being enacted every now and then, here comes another shocker. The National Sample Survey Organisation’s (NSSO) latest set of consumption expenditure data for 2011-12 tells us that if you live in a village and spend more than Rs 2,886 per month you are among the top 5 per cent of the country. For the urban areas, the cut-off limit is Rs 6,383 per month. That makes me as well as you, the reader, in the same category as Mukesh Ambani, Ratan Tata and Narayana Murthy. Time to celebrate, isn’t it?

However, both my housemaid and my helper have narrowly missed being in the top 5 per cent bracket of the country. But they surely can derive some console and of course a lot of happiness to know that they rub shoulders with the top 10 per cent of the country. According to NSSO, those spending Rs 2,296 in rural and Rs 4,610 in the urban areas fall in the top 10 per cent. And that makes me wonder, if a guard outside an office or a swanky home is amongst the top 10 per cent of India, then imagine the fate of the remaining 90 per cent of the population? In simple words, does it not mean that over 110-crore people out of a population of 125-crore in India are simply destitute? Does it not mean that the poverty line that has been worked out time and again is completely fallacious and meaningless? 

If a spending of Rs 96.2 in the rural areas and Rs 212.77 in the cities is what it takes to form the top 5 per cent of the country, then there is something glaringly missing in India’s growth story. The promise and excitement of being the second fastest growing major economy is simply an illusion of prosperity wherein a handful of people/families have amassed huge wealth. The average growth in income that India has witnessed means nothing considering the gigantic income inequality that prevails.

The NSSO’s consumption expenditure data only shows how wide the income gap is. With every passing year, we know the prevailing inequality is further widening. At this rate, probably India would put the US to shame where 400 individuals have amassed economic wealth equal to that of half the American population. In India, economic growth seems to be all about the ultra high net-worth individuals (HNIs) whose number has risen to 100,900 in 2012-13, and is expected to swell to 300,000 in another five years. Ultra high net-worth individuals are those who have amassed Rs 25-crore or more in past 10 years.

The more the accumulation of economic wealth with a handful of families, the more is the projection of rising average incomes and growing prosperity. 

Regardless of how strong the poor feel about the cruel joke being thrust upon them, there is excitement in the air. I mean in the air waves. For the past few days I have been hearing the TV anchors and the Congress spokespersons repeatedly emphasizing on the latest miracle that they claim has been achieved. Poverty has come down by 15 per cent in eight years, between 2004-05 and 2011-12.  Some have even demonstrated their height of insensitivity by claiming that a decent meal is possible in Re 1/5/12.

Past NSSO data shows that the percentage of population below the poverty line has come down from 37 per cent in 2004-05 to 21.9 per cent in 2011-12. Planning Commission has last year (in Mar 2012) announced that poverty percentage has come down by 7.3 per cent, which means from 37.2 per cent in 2004-05 to 29.8 per cent in 2009-2010. And now finally, the data for the eight years the UPA has remained in power shows a magical decline in poverty by 15 per cent.

Interestingly, the reduction in poverty is being flaunted at a time when the Planning Commission is still not sure about the new poverty line. And if my housemaid and helper have crossed the Rubicon of poverty to rub shoulders with the rich and mighty, it is time for a grand celebration. But before that, let's have a reality check. 

Remember the TV serial: "Mungeri Lal ke haseen sapne"

Is "inclusive growth" a meaningless phrase? World Bank thinks so. Is "food buffer" a useless policy? Well, who else but the World Bank can think so

A man is known by the company he keeps. Similarly, an institution is known by the people it employs. I have never understood why does the World Bank continue to employ stupid economists. If you appoint economists who are simply going by the textbooks, and have rarely spent some time in the villages or interacting with the poor and marginalised, you will continue to produce faulty recommendations. Since the World Bank does not only make recommendations but turns them into conditionality's that the country receiving the finances must adhere to, it ends up doing more damage than can be envisaged.

I thought the ex-chief economist Nicholas Stern was the last of the breed. Travelling through India sometimes back, he had said: "I agree it is a sin to provide the kind of subsidies the US provides to its farmers .. but developing countries must remove their trade barriers regardless of what is happening in the developed countries." Look at the brazenness with which he approved the wrong being perpetuated by the rich countries. Just because he was on the payroll of the World Bank (in which US holds the majority share), he defended the great injustice in the name of economics. When one country (or a group of countries) bullies its way through, how can it be termed as market economics?

Interestingly, Nicholas Stern has now co-edited a book with NK Singh: "The New Bihar"

Kaushik Basu is the new chief economist for the World Bank. He was earlier the chief economic adviser to India's Prime Minister Manmohan Singh. He is on leave from the Cornell University where he is the C.Marks Professor of International Studies and a Professor of Economics. Influenced probably more by the column he used to write for India Today magazine, Manmohan Singh invited him to be his chief adviser. Well, the crisis that the Indian economy is faced with certainly has surely something to do with the advise the chief economic adviser must be rendering to the government.

One of the radical suggestions he made in his individual capacity was to legalise bribe giving (Kaushik Basu says make bribe giving legal. WSJ http://blogs.wsj.com/indiarealtime/2011/03/30/kaushik-basu-says-make-bribe-giving-legal/). I think this speaks volumes of the kind of thinking the economist has. Some called it a radical thought, but I always thought nothing could have been more stupid. And coming from an economist from the Cornell University, I wonder why do we continue to rate these university so high?

While he was advising the Indian Prime Minister he always talked of 'inclusive growth'. In fact, Prime Minister Manmohan Singh has time and again stressed on the need to make economic reforms more inclusive. The Indian media continues to chant the mantra of 'inclusive growth'. Now that he has moved on to the World Bank, he probably realised the futility of using 'inclusive growth' as the hallmark of development. On July 31st, he tweeted: Sustainable growth, inclusive growth, and growth have all had their time in the sun. I propose we make way now for "intelligent growth."

Look at this statement. Does it not mean that the World Bank (or the mainline economists who work for it, or who espouse the cause) do not know what actually works for development? He says that the time is up for inclusive growth or sustainable growth. So he is now looking for another catchy phrase. The best that he can think of it is: "intelligent growth". If the only objective is to delude the educated class with yet another phrase, I suggest the World bank employ a better copy writer. And that brings me to another question. Why does the World Bank need the services of economists when the job can be better done by a copy writer?

If there is no such thing as sustainable growth and inclusive growth, isn't it time to have an urgent re-look at the entire economic growth model? The International Panel on Climate Change has been telling us for several years now that the world has reached a tripping point, and since the growth paradigm is not sustainable, does it not require a complete overhaul? Bringing a new phrase of "intelligent growth" will not address the monumental crisis of survival that the Earth finds itself in.

He has come out with another gem. His tweet today says: "For a nation to have a minimum food buffer stock requirement for all times is useless policy. An inviolable buffer is as good as no buffer." He is obviously referring to India's huge buffer stocks. In the light of the proposed Food Security Act, Kaushik Basu has now made public his displeasure. Reading what his fellow colleagues from the Columbia University -- Jagdish Bhagwati and Arvind Panagariya -- have been relentlessly harping, I am not the least surprised. Such stupid and dangerous statements can only come from mainline economists who are pushing for commercial interests of the multinationals. 

India's food buffer is one of the best policy initiatives that have come up in the recent past. If India has survived the spate of famines it used to face before the British left the shores, food buffer has played an important role. If India has never experienced the kind of food inflation that many countries across the globe have witnessed (Brazil was faced with 440 per cent food inflation in early 1980s) it is because of the food buffer that was created. If India escaped the 2007 Global Food Crisis that resulted in food riots in 37 countries across the globe, it is because of the food buffer. If India has escaped the likes of Arab Spring and also the disintegration and collapse that Soviet Union suffered, it is primarily because of the comforts of food security ensured through a sizable and operative food buffer. 

To suggest the dismantling or dissolution of the food buffer can be the outcome of an unintelligent and insane mind. World Bank is full of them.