Blog Posts by Mohit Satyanand

  • I am not Your Crony

    Last week, RIL Chairman, Mukesh Ambani, met Prime Minister Manmohan Singh. I don't know what they discussed, which is hardly surprising. But I can guess, since the media has been full of speculation about the CAG's draft report of investigations into RIL's exploration, development and production of petroleum resources in the Krishna Godavari (KG) basin.

    Now I haven't read the report. Again, this is hardly surprising, since it is still being studied by the oil ministry. Nor, says Mukesh Ambani, has he read the report. Now this would be truly surprising, given the wide-spread belief that the Reliance empire's access to relevant government documents is unparalleled.

    Unless, of course, something has changed in the RIL-government dynamic. When Murli Deora was transferred out of the Ministry of Petroleum and Natural Gas this January, the move was seen by many as a signal that the government was trying to create a distance between itself and the country's richest man: Murli Deora, who now

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  • ‘Make Believe’ Policy

    In accounting and government

    One of the corner-stones of accounting is "mark-to-market". Meaning, a company must tell its shareholders the value its financial assets would fetch in the open-market. When these prices fall, the real worth of the company takes a hit, which must be reflected in its quarterly accounting.

    When the crisis hit Western banks last decade, sharp losses in the value of financial instruments set off a chain reaction — huge book profits turned to losses; to cover these losses, banks sold assets; the selling pressure forced market prices down; this required banks to sell more assets, etc. To prevent a total melt-down, governments stepped in with emergency loans, which created some breathing room.

    However, this borrowed cash did not make the assets —especially derivatives - any more saleable or valuable. To allow banks to repair their balance sheets, a magic wand was required. Governments, acting through financial regulatory boards, wished away Mark to Market (MTM)

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  • Dirty Money Is Not Just Black

    We complain about black money. For most of us, black money is money in suitcases, printed notes of currency. We imagine that there are huge stashes of currency in politicians' houses, that industrialists are, quite literally, rolling in the stuff. Our new-age yoga enhanced civil society members even demand that we should stop the use of Rs. 500 and Rs. 1000 notes because they help corruption.

    And I say that at a macro level, we should be more worried about white money.

    Because RBI's statistics — they release this every week — say that the total amount of rupees in notes printed is about Rs. 10 lakh crores. Our GDP is about 80 lakh crores. Even if 30% of the total money printed was being hoarded as black money, it's about 4% of GDP. This is not small; but I argue that this is not big enough. I mean there is much more illegal money out there than 4% of GDP. And that also means the black money is being laundered into white money quite easily.

    From doctors to lawyers to small hotels to

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  • Beware the False Prophets

    "We are not righteous people, only they will go to heaven, the others will stay here on Earth to go through terrible sufferings."

    Written in her diary by a 14-year old Russian girl, convinced that Judgement Day would arrive on May 21, 2011. According to Harold Camping, a Christian broadcaster whose 'prediction' gained wide currency, Jesus would return on this date, and the righteous would fly up to heaven. Those, like the young Russian diarist, who didn't qualify for the flight, would be subject to five months of fire, brimstone and plagues. Millions would die every day.

    Camping seemed like he was channeling an earlier prophet of doom, who had said, "sea level rise, expanding deserts and catastrophic weather-induced flooding have already contributed to large permanent migrations and could eventually displace hundreds of millions."

    This false prophet was the UN University, declaring in 2005 that 50 million people could become environmental refugees by 2010, fleeing the effects of

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  • Red Riddance

    Kolkata's decline began when the Naxals raised the red flag in rural West Bengal. 34 years of Communist party rule hollowed out the commercial status of the city. For any one born in the last 3 decades, it is difficult to conceive that Kolkata was once a major hub of Indian business activity, second only to Mumbai. Since then, it has been eclipsed, not just by Delhi, Chennai and Hyderabad, but by erstwhile retirement towns like Bangalore and Pune, and cities that didn't exist then - Gurgaon and the bureaucratic acronym, NOIDA.

    I find it fitting that the death-knell for the communist party was rung over the issue of property; the deeply human need to own ran counter to party ideology; the right to expropriate came naturally to those in power, and the clashes in Singur and Nandigram exposed the untenability of a party that spoke of land reform but practiced land grab. George Orwell had it right.

    On our south-western coast, the Kerala reds surprised poll pundits by their resilience,

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  • Andhra Pradesh’s Microfinance Muddle

    Last week, the Andhra Pradesh government took a fresh step towards encouraging its citizens to violate their contracts en masse. Claiming to be speaking on behalf of self-help groups in his state, the principal secretary, AP Department of Rural Development, told microfinance institutions (MFIs) that borrowers would resume paying loans if interest amounts paid were now treated as principal, if interest rates were halved -- from 24% to 12% -- and if repayment was now on a monthly rather than a weekly basis.

    With over Rs 10,000 crores of loans outstanding, and no fresh funds available, at least some MFIs operating in AP will accede to the new conditions, just as some parents will pay ransom charges to kidnappers. The question, though, is whether the role of the state is to hold a gun to business, or to reinforce the sanctity of contracts.

    Andhra Pradesh has been at the forefront of the Indian microfinance initiative to take credit to rural areas, while the formal banking sector has made

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  • The Many Routes to Corruption

    Fellow columnist, friend, and editor of this space, Amit Varma, hit the button when he wrote last week that corruption is a manifestation of too much power vested in our politicians. Now Anna Hazare and his mob want power over the corrupt mob, by virtue of their self-proclaimed virtue.

    I have no reason to doubt their squeaky cleanliness, or even their good intentions. But then, I didn't doubt those very attributes of the good doctor, Manmohan Singh. And we all know how that played out. Now the custodians of our nation and the custodians of our virtue are sitting down to draft a bill that will make us a less corrupt nation. Hah!

    Meanwhile — and I love my food too much to fast for the right to shove this into parliament - here are the first three points on my bill to free our nation from the arbitrary powers of governance:

    1. The premise that natural resources are the property of the state is like motherhood, or virtue — it seems impossible to attack. But this convenient iteration by

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  • Free our markets – it’s simple

    As I write this piece, the highest gains amongst the 50 shares that make up India's Nifty, have been logged by Sesa Goa, an iron ore producer. The good cheer comes from the Supreme Court ruling yesterday that the Karnataka government's ban on iron ore exports should be lifted.

    At the same time, the biggest loser on the Nifty is Cairn India, whose investors are worried whether the proposed sale of a stake to Vedanta will be cleared by the government.

    So much for free markets.

    Strip a few layers off the onion, and it gets messier: the Karnataka government imposed a ban on the export of iron ore because it had discovered that a great deal of mining in the state was illegal. Rather than do the hard work of figuring out which mines were legit and which not, it used the hammer of the state and shut down all exports. Never mind that an estimated 100,000 jobs were put into question. The underlying conflict was much more critical than jobs or investments; critical to the politics of the

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  • Time for Project Human

    What is it about the tiger that so captivates our political leaders? A few years ago, when it was discovered that the population of tigers in Ranthambore had dropped significantly, Prime Minister Manmohan Singh spent a day at the park, reviewing the progress of Project Tiger. Last week, Environment Minister Jairam Ramesh went to Sariska, after a tiger was poisoned, presumably by a villager. Acknowledging the belief of some tiger conservationists, that the species need "inviolate spaces", the Minister announced a budget allocation of Rs. 30 crores to relocate villagers outside the Sariska park.

    The Sariska relocation may happen, or it may not. It may even be fair to the villagers, though 60 odd-years of ousting villagers for projects dreamed up by the Central Government would not give one much cause for hope. However, it is clear that Project Tiger is in deep trouble. After 30 years of intense focus on this charismatic species, the Indian tiger population is down, while public expense

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  • The Green Face of the Congress Party

    After Jairam Ramesh showed a red light to the Vedanta mines in Orissa, the Congress party and its Crown Prince unfurled a huge green flag of environmentalism. The POSCO port and steel project, which was to be the largest foreign investment in India, was the next to be put on hold, as the minister called for a review of the project's environmental compliance. Plans for three big dams on the Ganga were blocked, and the Navi Mumbai airport plans were called up for review.

    Most disturbingly, for a country which is chronically short of electricity, the Ministry of Environment and Forests' new classification of "-Go' areas for coal mining will render almost half of India's coal-bearing areas off-limits to mining.

    Alarmed by the runaway greening of his own party, Steel Minister Virbhadra Singh asked his colleague, Jairam Ramesh, to be "pragmatic and not dogmatic".

    What gives?

    First of all, rule out the thought that this is a one-man crusade. His time in the MOEF may well have made Jairam

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