Big Business Strikes Again, this Time Through Modi Government's Assault on RBI

The unprecedented invocation of Section 7 is not in enlightened public interest – it is a brazen move to force the RBI to open bank funding to desperate corporates.

M K Venu in The Wire.In

Reserve Bank of India Governor Urjit Patel with former governor Raghuram Rajan in the background. Credit: Reuters/Danish Siddiqui 

The business cronies of this government have done it again. And they manage such coups each time with unfailing precision. This time, the Centre has taken the unprecedented action of sending a direction to Reserve Bank of India (RBI) under Section 7 of the RBI Act, the first step in a process of virtually issuing a diktat that the central bank must do whatever is necessary to resolve the potential credit freeze in the non-banking finance sector and relax norms for lending to small business.

The RBI over the past year placed lending restrictions on weaker banks, where non-performing assets (NPAs) and other warning indicators were much higher than normal, consequently eroding much of their capital. You can be sure once these norms are relaxed by an RBI under duress, bank funds will start flowing again to the cronies directly or indirectly because moneys are essentially fungible.

I’m told that one celebrated big business promoter from Gujarat, who is known to travel with Prime Minister Narendra Modi on official trips abroad, is currently borrowing short-term money at over 18% to meet his past loan servicing needs.

But once RBI relaxes the current stringent lending norms for banks and adequate liquidity is provided to trapped NBFCs, select big business cronies – owing nearly Rs 4 lakh crore to banks – will continue to get access to funds. In any case, these powerful promoters have managed to avoid going into bankruptcy proceedings as mandated by the RBI’s circular of February 12, 2018. Some of the power projects of the Adani Group, Essar, the Tatas and so on, who have repayment overdues of over Rs 1 lakh crore, are currently being given a fresh lease of life.
So make no mistake, the unprecedented invocation of Section 7 of the RBI Act, never done since independence, not even during the financial crises of 1991 or 2008, is not guided by enlightened public interest as the finance ministry may claim.

It is a brazen move to force the RBI to open bank funding to desperate corporates who need to save themselves so that they are also in a position to give the necessary funds to political parties via anonymous electoral bonds.

Also read: Modi Government Invokes Never-Used Powers to Direct RBI Governor: Reports

These corporate groups and their promoters remain immortal and untouched through all regimes. They manage to get a share of juicy defence contracts even while they owe over Rs 1 lakh crore of overdue loans to banks. Modi will also have to answer why a select group of promoters are getting special treatment by avoiding the RBI circular of February 12, 2018. Is there pressure on the central bank to dilute its rule which mandates that all borrowers above a certain level have to enter bankruptcy proceedings? Is a special dispensation being created for cronies?

These questions will surely haunt the Modi regime in the run-up to the 2019 elections. The sheer power exercised by these business houses is now becoming more and more apparent and naked.

Earlier these powerful forces ran a campaign against Raghuram Rajan and ensured he didn’t get an extension because Rajan had sent a list to the prime minister’s office (PMO) of politically-connected promoters who may have fraudulently diverted bank loans for purposes others than the financing of their projects.
Rajan had asked for a multi-agency probe against these errant promoters because RBI felt it alone did not have the wherewithal to do it. An RTI application by The Wire confirms that the list was sent in 2015 and the PMO is refusing to part with it even to a parliamentary committee headed by BJP leader Murli Manohar Joshi after several reminders.

Also read: Exclusive: RTI Confirms Raghuram Rajan Sent Modi List of NPA Defaulters, Action Taken a Secret

So, it is clear the government is hiding something and is now feeling impelled to get rid of the RBI chief by initiating action under the never-before-used Section 7 provision.

RBI governor Urjit Patel cannot heed the Centre’s directive as it would lower the dignity of the institution and erode the integrity of some of the tough decisions that the central bank has taken to clean up the banks and bring errant promoters to their heels. If Patel quits, India will become a laughing stock among global investors and the money markets could see unprecedented volatility. Remember, in his speech last Friday, deputy governor Viral Acharya had invoked the 2010 Argentine example where the central bank governor there resigned in protest after the regime tried to force him to part with the institution’s reserves to fill the government’s fiscal gap. The markets went for a toss after that in Argentina.

There is a strong parallel here as the finance ministry is also coercing the RBI into parting with a part of its contingency reserves (over Rs. 2.5 lakh crore) to meet the Centre’s growing fiscal deficit in an election year. All this is happening under the shadows of high oil prices, a growing current account deficit and a weakening rupee.

If the RBI governor resigns in these circumstances there could be huge repercussions. The invocation of Section 7 of the RBI Act is, therefore, an act of desperation that is bound to boomerang on the Modi government.

The barefoot government

Bunker Roy in The Indian Express

Since 1947, Indians have not spoken out so strongly and clearly for a completely new brand of people running government. Mercifully, there are no ministers educated abroad. Thankfully, none of them has been brainwashed at Harvard, Stanford, Cambridge, the World Bank or the IMF, subtly forcing expensive Western solutions on typically Indian problems at the cost of the poor. Look what the high-powered, foreign-returned degree-wallahs have reduced this country to. They wasted opportunities to show the inner strength of what is essentially Indian because they never really knew their own people living in Bharat. In the eyes of the world, we have lost our self-respect, dignity and identity.

All the ministers now have gone through average government schools. Some have never been to college. Many have experienced poverty, exploitation, injustice and discrimination at some point of time in their lives. It is truly the first barefoot government ever to be voted into power in independent India. Where else in the world would you have a one-time tea-seller on a railway station becoming prime minister, shaping the destiny of more than one billion people?

The first example the Modi government must set is by drastically reducing the perks and privileges of MPs. Free power, food, housing, travel to those whose personal assets run into crores and a Rs 2 crore annual fund for development (read patronage) for over 500 MPs is costing the exchequer nearly Rs 2,000 crore. Only the prime minister will be able to make it happen and, at the same time, stifle any dissent from BJP MPs. The time is now.

No other government in the world has a Class 12-pass woman minister speaking as an equal to almost 120 heavily qualified, on paper, vice chancellors (90 per cent male). Today, as we judge them, the VCs are all too intellectually and morally fatigued. There is something dreadfully wrong with an education system that produces graduates from even private, expensive, snobbish schools and colleges who are still prejudiced about caste, class, religion, sex and colour. These “graduates”, who roam the streets of small towns and cities by the thousands, call themselves “educated”, practice the worst forms of cruelty, slavery and crimes against humanity, against society and in their own families. Indeed, some of them rose to the level of their incompetence by becoming ministers in previous governments, reinforcing the status quo, wasting vast public resources by implementing silly Western ideas, listening to foreign-returned “experts” and making a hopeless mess of this country. The tragedy is that they cannot see the colossal damage they have done to the very fabric of this country.

Now they will call me a “namak haram” because I went to Doon School and St Stephen’s College and I am trashing my own kind. They deserve it. Their snobbish elitist education has made them arrogant, inaccessible, insensitive and devoid of any humanity or humility. Just because they received a Western education, they think they know their country. Superficially, they may know urban India but they are clueless about rural Bharat.

Alvin Toffler, in his book Future Shock, said, “The illiterate of the 21st century will not be someone who cannot read or write. It will be someone who is not prepared to learn, unlearn and relearn.” In the 40 years that I have lived and worked with the rural poor in Rajasthan, what have I learnt that I did not manage to make my own kind “unlearn and relearn”?

It was not for want of trying. What did the prime minister, the deputy chairman of the Planning Commission and finance minister of the decimated UPA government have in common? They were all “educated” abroad. They were all for subsidising the rich and cutting subsidies for the poor. They had no idea about real poverty and hunger and how the rural poor survived, expecting the whole country to be gullible enough to believe that the rural poor today could survive on Rs 27 per day.

Out of sheer ignorance of rural realities and showing extremely poor political judgement, the three of them almost managed to strangle the MGNREGA. The MGNREGA prevented migration by the millions into cities. The bungling and corruption by village officials notwithstanding, the rural poor now have more money to spend on food, clothing, housing and essentials. So, of course, prices will go up.

The prime minister is evidently serious about improving the quality of life of the rural poor, as he eloquently stated in his speech on Independence Day. So what are the out of the box solutions that need to be considered urgently?

The MGNREGA should stay with “Modi-fications”. Pay minimum wages, which the Congress’s three armchair foreign-returned economists so stubbornly and unethically refused to do, in spite of a high court order. Make it more transparent and accountable, take action against corrupt officials exposed in social audits to set an example. Pass the public grievance bill in Parliament as soon as possible. Call a meeting of respected grassroot practitioners across political ideologies who know the MGNREGA from the village level and follow up on their recommendations.

The focus has to be on innovative job creation in the rural areas. Provide 100 days of employment at minimum wages to construct low-cost toilets for girls and rooftop rainwater harvesting tanks for drinking water, tree plantations and flush toilets in rural schools by the thousands. Construct rural godowns to store food grains instead of letting nearly 5 million tonnes of grain just rot in the open. Start community colleges on Gandhian lines instead of sending delegations of “experts” on education to study the American model. There are enough indigenous examples to replicate and scale up.

Civil society is riddled with defeated politicians and retired bureaucrats who, having lost their power, influence and privileges, have started NGOs. While they were in power, they did not lift a finger to help them. When these has-beens have nothing better to do, they start NGOs. They give genuine small civil society organisations a bad name. Maybe it is time to revive the debate of the 1980s on the need for a code of conduct for NGOs. The code would expect them to have a simple lifestyle, take a living wage instead of a market wage and observe the laws of the country.

If we are fighting against crony capitalism, we should also fight against cronyism in NGOs. When the Council for Advancement of People’s Action and Rural Technology (CAPART) was closed down and replaced by a Bharat Rural Livelihood Foundation (BRLF) in September 2013, it was done in complete secrecy. The BRLF was never widely publicised and civil society was never invited to contribute to its formation. It is designed to benefit a handful of select organisations — cronyism of the worst kind. It was so much in contrast to the open debate that galvanised the voluntary sector over the code of conduct and which preceded the merger of the People’s Action for Development India (PADI) and the Council for Advancement of Rural Technology (CART) to form CAPART in 1986.

What needs to be done? Replace the national advisory council (NAC) with a voluntary action commission (VAC). The mandate of the VAC should be to identify the thousands of genuine grassroots groups who have an FCRA registration and submit their report to the home ministry. It is not the job of the home ministry to judge the incredible work of community-based organisations. A lot of effort has gone into the formulation of the BRLF. Let it remain. But demand of the existing management if they have the self-respect to resign en masse and let the new government bring in new members.

Cronyism British Style - A depressingly British tale of friends in high places

From Ofsted and the BBC to the Lords, there’s a strong whiff of cronyism. When will we have the courage to challenge it?

• 
• • Zoe Williams
  • The Guardian, Monday 4 August 2014

Illustration by Andrzej Krauze

One crony is just a crony; it doesn’t – by my reckoning – become an “ism” until there are three. If the chairmanship of the BBC Trust hadn’t come up at the same time as the chiefdom of Ofsted, and if those two things weren’t playing out in the foreground of the peerage announcements to come this week, it might be OK, and the whole of public life wouldn’t look like it could all be such an embarrassing stitch-up. Unfortunately, the three events have come together. David Hoare is the new chief of Ofsted. Seb Coe is not the new head of the BBC Trust, but not for want of begging by the government, which changed the job requirement to make it more appealing to him. Karren Brady and Stuart Rose are reported to be lined up for ennoblement.

In fairness, appointments to the House of Lords are at least meant to be political, even if they shouldn’t, strictly speaking, be distributed on the basis of wealth. The other two posts, however, are supposed to be appointed impartially, with the emphasis on fitness for the post.

So what is David Hoare’s fitness? He is a trustee of AET academies, which is the largest chain, and also one of the worst – in the bottom quarter for results, both its disadvantaged and non-disadvantaged pupils achieving below-average GCSEs. Five schools in the chain had “unacceptable standards”, according to ministers earlier this year, though Ofsted’s verdict, due to be published last week, has been delayed. Not to worry. The other 72 schools may well have acceptable features. The Department for Education can’t see what all the fuss is about, since Hoare appears to be far less unpopular and less irrelevantly qualified than its other candidate, Carphone Warehouse founder (and Tory donor) David Ross.

For me, the main problem isn’t Ross’s relationship with the Conservative party, or even the alleged tax-avoiding practices of Ross and Hoare’s current or past business interests, though I must admit I’m not thrilled to see the highest ranks of public life wedged with people who don’t appear to understand the point of tax. No, worse than any of that is the assumption of the DfE that almost anybody will be better at running education than someone with experience of teaching.

The entry point for a significant post in the academies system is that you should never have set foot in a state classroom. God forbid that you should ever have stood at the front of one, and taught anything to anyone. In years to come, we will look back in wonder at this period, when government worshipped at the feet of industry so fervently that it thought its titans could do anything. But right now, we’re all trapped in the bowels of government delusion, and won’t see the light until Alan Sugar has been appointed chancellor of Cambridge University and Richard Branson is chief medical officer.

These are two sides of the same coin, whether you’re talking about politicians fawning over business leaders, or business leaders casting cash – or the pearls of their acumen – towards politicians. You’d think we’d be used to it, since New Labour was beset by rows such as these. Whether it looks like corruption or cronyism – is it actively bent, or does it merely stink? – depends a lot on whose side is doing the crony recruitment. But this is surely a rare point of convergence between the Morning Star and the Daily Mail: it doesn’t look very transparent or objective when politicians recruit their allies.

They give us breadheads, to run our institutions of oversight, but they also give us circuses: this is the only plausible explanation for the desperate bid to appoint Seb Coe as chair of the BBC Trust. He is a Tory and a national treasure, a man it is impossible to dislike, a recognisable face and acute businessman whose achievements are uncomplicated and demonstrable. He can run really fast, OK? In these turbulent times for the BBC, as its enemies mass on the borders of its charter (up for renewal in 2016) calling for its disintegration, that’s what we need at the helm, clearly. A man who can run incredibly fast.

In the hubbub around the job description having been rewritten to suit Coe, you may have missed the details of that rewrite: it was to reduce the time commitment that the head of the trust would have to make. This said it all about the process – first, that nobody making the appointment was really taking seriously how significant it was, and second, that Coe didn’t really want to do it. He has now come out and rejected it, as apparently have Patience Wheatcroft, Dame Marjorie Scardino, Sir Howard Stringer and Sarah Hogg.

Why candidates should be snatching their hats so energetically out of the ring is open to question. Former Labour culture secretary Tessa Jowell maintains they are put off by the high level of political meddling, but this seems to be an unlikely deterrent for those who agree with the meddlers. I can well imagine, however, that a candidate of any leaning might be put off by the sheer bungling frivolity, the sight of a government desperately grappling for a household name, a bit of borrowed popularity. Anyway, the shortlist is, for today at least, back to one: Nick Prettejohn, City grandee and former adviser to George Osborne. The circus said no, and we’re back to the breadhead.

The phrase “City grandee” cheered me up, however: remember Royal Mail, and remember that it could be worse. They didn’t have to just give these posts to their associates; they could have sold them.

Party Donors nominated to House of Lords

from The Independent

The naming of business chiefs who have donated millions of pounds to the major political parties as new members of the House of Lords has provoked accusations that money is “polluting” Parliament.

The donors are included on a list of 30 new peers who will take the total membership of the Second Chamber to nearly 850 – the biggest number since it was reformed 14 years ago.

The 14 Conservative nominations include Sir Anthony Bamford, the chairman of JCB, whose family and firm has handed £5m to the party in recent years. His elevation comes three years after a previous attempt by David Cameron to award him a peerage was dropped.

JCB has close links with the Conservative Party. It employed the Foreign Secretary William Hague as an adviser after he stepped down as party leader in 2001 and Mr Cameron last year opened a company factory in Brazil.

A Tory source praised Sir Anthony as an “incredibly significantly industrialist” whose business employs thousands of people and pointed out he was invited on a foreign delegation organised by the last Labour government.

The Conservative list also includes Howard Leigh, a Tory treasurer and fundraiser, who has donated more than £200,000 personally and through his company.

Two prominent Liberal Democrat donors are among the 10 party supporters nominated to the Upper House by Nick Clegg. They are the entrepreneur Rumi Verjee, who brought Domino’s Pizza to Britain and has given the Liberal Democrats more than £800,000 and the nightclub developer James Palumbo, whose Ministry of Sound company has donated almost £700,000.

One of Labour’s five new peers is the businessman Sir William Haughey, a former director of Celtic football club, who has given the party more than £1.3m since 2003.

The campaign group Unlock Democracy said the nominees were the “usual list of party donors and cronies” and accused Downing Street of producing the names in Parliament’s summer recess to minimise adverse publicity.

Lord Oakeshott of Seagrove Bay, a Liberal Democrat member of the committee of MPs and peers which drew up a blueprint for Lords reform blocked by Mr Cameron, said: “Cash for peerages pollutes Parliament and political parties. We are all in it. It is now more urgent than ever to elect the Lords and get the big money out of British politics for good.”

The swathe of appointments brings the number of people entitled to sit in the Lords to 838 (although 53 are currently absent), the largest figure since most hereditary peers were removed in 1999.

The new peers could cost the taxpayer about £1.2m, plus travel and other expenses, leaving Mr Cameron with awkward questions over his promise to cut the cost of politics.

New peers

1. Sir Anthony Bamford (Con) Veteran industrialist whose family is a long-standing, generous Tory supporter.

2. Danny Finkelstein (Con) Times columnist, below left, and old friend of George Osborne. A youthful supporter of the SDP.

3. John Horam (Con) Britain’s most travelled politician sat in the Commons for Labour, the SDP and finally the Tories.

4. Howard Leigh (Con) Chairman of the Leaders Group, a network for supporters requiring members to donate at least £50,000 a year.

5. Olly Grender (Lib Dem) First worked for the party in the 1980s and was Paddy Ashdown’s chief spin doctor. Has just stood down from a Downing Street stint.

6. Brian Paddick (Lib Dem) Former senior officer in the Metropolitan Police, above right, has twice been a candidate for London Mayor.

7. James Palumbo (Lib Dem) Friend of Nick Clegg and has lent his nightclub, free of charge, to the Lib Dems.

8. Sir William Haughey (Lab) Glaswegian businessman above right, who built a fortune in the refrigeration business. Has given more than £5m to charity.

9. Jon Mendelsohn (Lab) Chief fund-raiser for Labour who set up his own lobbying company with two party colleagues.

10. Jenny Jones (Green) One of their most prominent figures on the London Assembly for 13 years.

Why are the BRICs all crumbling? Welcome to the permanent revolution

PAUL MASON in The Independent

Friday 21 June 2013

In most of the Bric countries economic rise has involved increased inequality, exacerbated corruption and failing public services - and that's just half the story

Tear gas cannot stop it. Not even when fired point blank into the faces of protesters. State censorship is powerless against it. The bloodless prose of the official media cannot encompass it. But what is it? What is the force that put a million people on the streets of Brazil on Thursday, turned Turkey’s major cities into battlefields and – even now – bubbles under from Sofia to Sarajevo?

The answer is in the detail: the self-shot videos, the jokes scrawled on handwritten signs, the ever-morphing hashtags on Twitter and the Guy Fawkes masks. Brazil’s protests may have started over the equivalent of a 5p rise in bus fares, but the chants and placards in Rio speak to something different: “We’ve come from Facebook”, “We are the social network”, and in English: “Sorry for the inconvenience, we are changing Brazil”.

The bus-fare protest in Sao Paulo involved, at first, maybe a few thousand young activists. There was CS gas, burning barricades, some Molotovs and riot shields, but never enough to stop the traffic, which flowed, surreally, past it all. When police arrested 60 people, including a prominent journalist, for possessing vinegar (to dull the sting of tear gas), it became the “Salad Revolution”. Then, last weekend, tens of thousands turned into hundreds of thousands, and the protests spread to every major town.

It’s clear, now, what it’s about. Brazil’s economic rise has been spectacular – but as in most of the so-called Bric countries it has involved increased inequality, exacerbated corruption and the prioritisation of infrastructure over public services. “Less stadiums, more hospitals,” reads one plaintive placard. The fact that the whole process was fronted by the relatively liberal and pro-poor Workers’ Party led, for a time, to acquiescence. The government sold the idea that hosting the World Cup, clearing some of the slums and pacifying the rest with heavy policing, together with a new transport system in the major cities, would complete Brazil’s emergence as a developed country.

But the World Cup is draining money from public services; the cost of the urban transport system is squeezing the lower middle class. And blatant corruption enrages a generation of people who can see it all reported on social media, even if the mainstream TV ignores it.

If this were just one explosion it would be signal enough that the economic model for the so-called emerging markets – rapid development at the cost of rising inequality – is running out of democratic headroom. But the same social forces were on the streets of Istanbul. The same grievances forced the Bulgarian government to sack its recently appointed and seemingly professionally unqualified state security chief on Wednesday.

In Turkey’s Taksim Square, as the tear gas drifted, roaming around with a microphone was a bit like being at a graduate careers fair. What do you do, I would ask. They would be always young, often female, and in perfect English reel off their professions from beneath their balaclavas: doctor, lawyer, marketing exec, shipping, architect, designer.

This too is one of the fastest developing countries on earth. And here too there was a mixture of economic grievance and concern about freedom. Some complained that, despite the growth, all the wealth was being creamed off by a corrupt elite. At the same time, the ruling AK Party, with its religious base, was seen as encouraging what the Turkish fashion writer Idil Tabanca has called “a growing unspoken air of animosity toward the modern”.

And everywhere there is protest – from Taksim and the Maracana Stadium to the Greek riots and Spanish indignados of two years ago – there is “non-lethal” policing that seems designed to turn passive bank clerks into bandanna-wearing radicals. It is striking that in both Brazil and Turkey, excessive force against peaceful demonstrators was the moment that turned a local protest into a globally significant revolt.

But the grievances, in the end, tell only half the story. It is the demographics, the technology and the zeitgeist that make the wave of current protests seem historic. Look first at the symbolism: the V for Vendetta mask is everywhere now – but it originated as the signifier of the Anonymous hacker movement. The hand-scrawled placard signifies a revolt not just against the state but against the old forms of hierarchical protest, where everybody chanted the same thing and followed leaders. In every tent camp protest I have ever been in, it is clear that the unspoken intention is to create a miniature utopia.

Velocity of information matters as much as action itself. It is striking how badly the incumbent elites in each case totally lose the information war. Whether it’s Greece, Turkey, Egypt or Brazil the unspoken truth is it is hard to gain a voice in the official media unless you are part of the in-group. This creates the mindset that drove Egyptian TV to ignore Tahrir, and Turkish TV to replace 24-hour news with cookery programmes as the fighting raged outside their studios. But it doesn’t work. People have instant access not just to the words, stills and videos coming from the streets, but to publish it themselves. As a result, when crisis hits, the volume of “peer to peer” communication – your iPhone to my Android, my tweet to your uploaded video – overwhelms any volume of information a state TV channel can put out. And when it comes to the content of the “memes” through which this generation communicates, the protesters and their allies find suddenly that everything they are saying to each other makes sense, and that everything the elite tries to say becomes risible nonsense.

In each case – from Egypt, through Greece, Spain and the Russian election protests – the revolt was already there, simmering in cyberspace. And in each case, the ultimate grievance was the difference between how life could be for the educated young, and how it actually is. They want a liberal, more equal capitalism, with more livable cities, and more personal freedom. But who will provide it?

Each time the movement subsides, the old generation’s commentators declare it dead, overhyped, romanticised in the heat of the moment. But the protests keep coming back. In 1989, we learned that people prefer individual freedom to communism. Today, in many countries, it is capitalism that is associated with cronyism, repressive force and elite politics, and until that changes, this Human Spring looks likely to continue.

The serpent in the garden

The IPL is representative of the worst sides of Indian capitalism and Indian society

Ramachandra Guha

June 1, 2013

I detest wearing a tie, and do so only when forced. One such occasion was a formal dinner at All Souls College, Oxford, where opposite me was an Israeli scholar who had just got a job at the University, and was extremely anxious to show how well he knew its ways and mores. He dropped some names, and spoke of his familiarity with the manuscripts collection at "Bodley" (the Bodleian Library). In between his boasts he kept scrutinising my tie. Then, when he could contain his curiosity no more, he walked across the table, took my tie in his hand, looked at it ever more closely, and asked: "Is this Magdalene?"

I did not answer. How could I? For the tie signalled not membership of a great old Oxford College, but of a rather more obscure institution, the Friends Union Cricket Club in Bangalore. I joined the club in 1963, aged five, because my uncle, a legendary one-handed cricketer named N Duraiswamy, played for it. I would go along with him for practice, stand by the side of the net, and at the end of the day be allowed to bowl a few balls from 12 yards or thereabouts. By the time I was ten I was helping lay the mat and nail it to the ground. When I reached my teens I was bowling from where everyone else did.

As a boy and young man, I was an episodic member of the Friends Union Cricket Club. In those years I was based in North India, and came south for my summer and winter holidays. In 1994 I moved to Bangalore for good. In the past two decades, I have watched FUCC win the First Division Championship three times, and seen a series of young players graduate from club cricket to representing the state in the Ranji Trophy. My club has produced two India internationals and at least fifteen Karnataka players, all of whom I have known personally and/or watched play.

Largely because of Duraiswami - who has been captain or manager for forty years now - FUCC enjoys a reputation that is high both in cricketing and ethical terms. No cricketer of the club has ever tried to use influence to gain state selection. Where other clubs sometimes adjust games to make sure they do not get relegated, FUCC does not resort to this. FUCC cricketers do not come late for practice, and never abuse the umpire. And they play some terrific cricket too.

FUCC was one of a dozen clubs that provided the spine of Karnataka cricket. The others included Jawahars, Crescents, BUCC, Swastic, Bangalore Cricketers, and City Cricketers. The men who ran those clubs were likewise personally honest as well as fantastically knowledgeable about the game. The cricketers they produced won Karnataka six Ranji Trophy titles, and won India many Tests and one-day internationals too.

This year I mark the 50th anniversary of my membership of the Friends Union Cricket Club. In this time, FUCC has commanded my primary cricketing loyalty; followed by my state, Karnataka, and only then by India. Six years ago, however, a new club and a new format entered my city and my life. I was faced with a complicated decision - should I now add a fresh allegiance, to the Royal Challengers Bangalore?

I decided I would not, mostly because I disliked the promoter. In cricketing terms, Vijay Mallya was the Other of Duraiswami. He had never played cricket, nor watched much cricket either. He had no knowledge of its techniques or its history. He had come into the sport on a massive ego trip, to partake of the glamour and celebrity he saw associated with it. He would buy his way into Indian cricket. And so he did.

It was principally because Mallya was so lacking in the dedicated selflessness of the cricketing coaches and managers I knew, that I decided the RCB would not be my team. So, although I am a member of the Karnataka State Cricket Association and have free entry into its grounds, I continued to reserve that privilege for Ranji Trophy and Test matches alone.

The KSCA Stadium is named for its former president, M Chinnaswamy, who was one of Duraiswami's heroes. When I was growing up, Durai would tell me of how Chinnaswamy supervised the building of the stadium, brick by brick. This great lover of cricket abandoned his lucrative law practice for months on end, monitoring the design, the procurement of materials, and the construction, with no cost over-runs and absolutely no commissions either.

	The behaviour of Messrs Lalit Modi and N Srinivasan cannot shock or surprise me, but I have been distressed at the way in which some respected cricket commmentators have become apologists for the IPL and its management

In other ways too Chinnaswamy was exemplary. Never, in all the years he served the KSCA, did he try to manipulate a single selection. Later, when he became president of the BCCI, he met the challenge of Kerry Packer by increasing the fees per Test match tenfold. It was while he ran Indian cricket that our players were for the first time treated with dignity and paid a decent wage.

I wonder what Chinnaswamy would have made of his grasping, greedy, successors as presidents of BCCI. I wonder, too, what he would have made of a man who can't pay his own employees having a free run of the stadium that Chinnaswamy so lovingly built. This past April, the Bengaluru edition of the Hindu carried a front-page story on an summons that the Special Court for Economic Offences had issued to Mallya, who owed the Income Tax Department some Rs75 crores, or about $13.3 million, which he had not paid despite repeated reminders. The police, often waiving the rules for the powerful, told the court that they were too busy to execute the summons.

But let me not single out Mallya here. The truth is that almost all the owners of IPL teams (seven out of nine, by one estimate) are being investigated by one government agency or another, in one country or another, for economic offences of one kind or another. Since this is a shady operation run by shady characters, Indian companies known for their professionalism, entrepreneurial innovation, and technical excellence have stayed away from the IPL altogether. Here is a question for those who still think the tournament is worth defending - why is it that companies like the Tatas, the Mahindras, or Infosys have not promoted an IPL team? (Editor's note - Tata Consultancy Services sponsor Rajasthan Royals.)

To this writer, that the IPL was corrupt from top to bottom (and side to side) was clear from the start - which is why I have never exercised my right of free entry for its matches in Bengaluru. But as I watched the tournament unfold, I saw also that it was deeply divisive in a sociological sense. It was a tamasha for the rich and upwardly mobile living in the cities of southern and western India. Rural and small town India were largely left out, as were the most populous states. That Uttar Pradesh and Madhya Pradesh, both of whom have excellent Ranji Trophy records, had no IPL team between them, while Maharashtra had two, was symptomatic of the tournament's identification with the powerful and the moneyed. The entire structure of the IPL was a denial of the rights of equal citizenship that a truly "national" game should promote.

The IPL is representative of the worst sides of Indian capitalism and Indian society. Corrupt and cronyist, it has also promoted chamchagiri and compliance. The behaviour of Messrs Lalit Modi and N Srinivasan cannot shock or surprise me, but I have been distressed at the way in which some respected cricket commmentators have become apologists for the IPL and its management. Theirs is a betrayal that has wounded the image of cricket in India, and beyond. George Orwell once said: "A writer should never be a loyal member of a political party." Likewise, for his credibility and even his sanity, a cricket writer/commentator should keep a safe distance from those who run the game in his country.

What is to be done now? The vested interests are asking for such token measures as the legalisation of betting and the resignation of the odd official. In truth, far more radical steps are called for. The IPL should be disbanded. The Syed Mushtaq Ali Trophy, played between state sides, should be upgraded, making it the flagship Twenty20 tournament in the country. Then the clubs and state associations that have run our domestic game reasonably well for the past 80 years would be given back their authority, and the crooks and the moneybags turfed out altogether.

Even now, in every city and town in India, there are selfless cricket coaches and administrators active, nurturing young talent, supervising matches and leagues. The way to save Indian cricket is to allow these modern-day equivalents of Duraiswami and M Chinnaswamy to take charge once more.

When corporations bankroll politics, we all pay the price

Letting taxpayers fund parties directly could revive our rotten system – and at £1 per elector, it would be cheaper too

• 
• • George Monbiot
  • The Guardian, Monday 29 October 2012 21.30 GMT

‘Despite attempts to reform it, US campaign finance is more corrupt and corrupting than it has been for decades.' Illustration: Daniel Pudles

It's a revolting spectacle: the two presidential candidates engaged in a frantic and demeaning scramble for money. By 6 November, Barack Obama and Mitt Romney will each have raised more than $1bn. Other groups have already spent a further billion. Every election costs more than the one before; every election, as a result, drags the United States deeper into cronyism and corruption. Whichever candidate takes the most votes, it's the money that wins.

Is it conceivable, for instance, that Romney, whose top five donors are all Wall Street banks, would put the financial sector back in its cage? Or that Obama, who has received $700,000 from both Microsoft and Google, would challenge their monopolistic powers? Or, in the Senate, that the leading climate change denier James Inhofe, whose biggest donors are fossil fuel companies, could change his views, even when confronted by an overwhelming weight of evidence? The US feeding frenzy shows how the safeguards and structures of a nominal democracy can remain in place while the system they define mutates into plutocracy.

Despite perpetual attempts to reform it, US campaign finance is now more corrupt and corrupting than it has been for decades. It is hard to see how it can be redeemed. If the corporate cronies and billionaires' bootlickers who currently hold office were to vote to change the system, they'd commit political suicide. What else, apart from the money they spend, would recommend them to the American people?

But we should see this system as a ghastly warning of what happens if a nation fails to purge the big money from politics. The British system, by comparison to the US one, looks almost cute. Total campaign spending in the last general election – by the parties, the candidates and independent groups – was £58m: about one sixtieth of the cost of the current presidential race. There's a cap on overall spending and tough restrictions on political advertising.

But it's still rotten. There is no limit on individual donations. In a system with low total budgets, this grants tremendous leverage to the richest donors. The political parties know that if they do anything that offends the interests of corporate power they jeopardise their prospects.

The solutions proposed by parliament would make our system a little less rotten. At the end of last year, the committee on standards in public life proposed that donationsshould be capped at an annual £10,000, the limits on campaign spending should be reduced, and public funding for political parties should be raised. Parties, it says, should receive a state subsidy based on the size of their vote at the last election.

The political process would still be dominated by people with plenty of disposable income. In the course of a five-year election cycle, a husband and wife would be allowed to donate, from the same bank account, £100,000. State funding pegged to votes at the last election favours the incumbent parties. It means that even when public support for a party has collapsed (think of the Liberal Democrats), it still receives a popularity bonus.

Even so, and despite their manifesto pledges, the three major parties have refused to accept the committee's findings. The excuse all of them use is that the state cannot afford more funding for political parties. This is a ridiculous objection. The money required is scarcely a rounding error in national accounts. It probably represents less than we pay every day for the crony capitalism the present system encourages: the unnecessary spending on private finance initiative projects, on roads to nowhere, on theTrident programme and all the rest, whose primary purpose is to keep the 1% sweet. The overall cost of our suborned political process is incalculable: a corrupt and inefficient economy, and a political system engineered to meet not the needs of the electorate, but the demands of big business and billionaires.

I would go much further than the parliamentary committee. This, I think, is what a democratic funding system would look like: each party would be able to charge the same, modest fee for membership (perhaps £50). It would then receive matching funding from the state, as a multiple of its membership receipts. There would be no other sources of income. (This formula would make brokerage by trade unions redundant.)

This system, I believe, would not only clean up politics, it would also force parties to re-engage with the public. It would oblige them to be more entrepreneurial in raising their membership, and therefore their democratic legitimacy. It creates an incentive for voters to join a party and to begin, once more, to participate in politics.

The cost to the public would be perhaps £50m a year, or a little more than £1 per elector: three times the price of a telephone vote on The X Factor. This, on the scale of state expenditure, is microscopic.

Politicians and the tabloid press would complain bitterly about this system, claiming, as they already do, that taxpayers cannot afford to fund politics. But when you look at how the appeasement of the banking sector has ruined the economy, at how corporate muscle prevents action from being taken on climate change, at the economic and political distortions caused by the system of crony capitalism, and at the hideous example on the other side of the Atlantic, you discover that we can't afford not to.

IPL can't duck the F(FIXING) word

by Sharda Ugra in Cricinfo

On Wednesday night, Lalit Modi complained about how the TV channel that showed the sting operation and put certain information "in the public domain" was "totally misleading". He felt for the viewers, the fans and the sporting fraternity, he said, because the sting had no proof. 

Quite the contrary. What India TV's "Operation IPL" proved beyond doubt was that India's young domestic cricketers, those who drift away from centrestage, are quite happy to pocket any extra cash that the delusional or foolish may want to shell out.

If caught they will either be reprimanded - like Ravindra Jadeja or Manish Pandey - or be consigned to the some outer darkness like the suspended five players will possibly be. And that will be that.

What the India TV programme did not prove on camera was that any of the players stung on tape had either willingly accepted cash on camera and then bowled a no-ball, or "spot-fixed" as promised. That is not to say that does not happen - it just didn't show up on tape.

The IPL, set up to imitate the franchise model of American sport, is actually a very cosy family business. The owners are, for the majority, in this largely for individual and corporate mileage. They owe their original loyalty to the BCCI, which continues to play patriarch. It is why they are protected and if players are caught being invited to break rules, they are the ones who get punished. This is not to say that players are poor lambs being seduced by cash but everyone knows the difference between being the guy receiving the pay cheque and the guy actually signing it.

In leagues where rules matter, teams are punished - however powerful they may be. In 2006, Juventus of Turin, historically one of the richest and most powerful football clubs in Europe, were found guilty of rigging games with four other teams and stripped of back-to-back Serie A titles, relegated to Serie B, booted out of the UEFA Champions League and forced to play three home matches without any fans.

The National Rugby League in Australia has fined four teams more than US$165,000 for breaching the salary cap in 2012. A fifth team has just lost an appeal over a US$185,000 salary cap fine from 2010.

Sometimes it's not what the club itself does; earlier this month, football clubs AC Milan and Inter Milan had to pay 20,000 euros and 10,000 euros for insulting banners seen among their fans during a local derby as well as one that racially abused a player.

During a 2011 NFL lockout, three teams including the Tampa Bay Buccaneers received six figure fines - $250,000 was found to be the Buccaneers' fine - for breaking the rule that no players could be contacted during the lockout period. By this yardstick, Mumbai Indians should have been fined along with Jadeja but weren't. Over the last few years the players get flung the rule-books and the franchises offering extra frills are treated with respect.

If Ravi Sawani discovers that the black money being talked of casually by the suspended five was actually paid out, will any of the teams be punished? A sports law expert, Vidushpat Singhania, has said that for any code or investigation to actually matter, it had to be completely spelt out and it needed to have teeth. That is how the partnership between the ICC and Interpol is said to work. It is how the US anti-doping agency was able to ensure that Balco went to court and Marion Jones went to jail. If the BCCI is serious about its anti-corruption code, it must have the government, the cops and the courts on its side. The first problem with this, though, is that the BCCI has long avoided public scrutiny.

Modi, in that interview, spoke warmly of his "close", "great" and "best friends" who had "supported" his league in its early days, buying up franchises, and with whom he said was always "impartial".

Everyone involved with the league knows there are some franchises who can be a bit bendy with the rules because they are allowed to be, and there is another that is not required to bend rules because it cannot be argued with.

	Rules have been changed as the IPL has gone along: without warning, the retention clause was brought in, as opposed to all players going back into a public auction

It is why the addition of two teams in 2010 became so problematic - the new entrants came from outside the circle of friends and the flexibility of the IPL's rules was not about to be explained to them.

Rules have been changed as the IPL has gone along: without warning, the retention clause was brought in, as opposed to all players going back into a public auction. This helped some of the key "icons" stay with teams that could offer them rich pickings.

Then came the "secret" bid to help solve dead-heat tie-breaks during an auction. The most public 

secret of that new rule was the fact that whoever had the most cash would get the player they wanted and anything beyond $2m would remain unmentioned and be given to the BCCI as a bit of a sweetener.

Franchises will always talk about what it actually costs to get the best domestic talent into their side. There are many stories about offers that players couldn't refuse: extra cash or "jobs" as euphemistic extras, cars, owners criss-crossing the country in chartered planes to speak to the most desirable domestic players …

The Rs 30 lakh salary cap for non-India players began with noble intentions. It was the BCCI's attempt to try to keep domestic cricketers interested in playing all formats, to ensure that Twenty20 cricket does not become what it has - the one form of cricket that every kid wants to play - and the IPL contract the one legal but still flexible document everyone wants to grab.

Now Rs 30 lakhs in India is a more than decent income in itself - and more so for someone in his 20s. It puts the player in the top 1% of the Indian salary bracket, alongside the Ambani brothers, Sonia Gandhi and Shah Rukh Khan. According to the National Council of Applied Economic Research, any household earning an annual income of Rs 12.5 lakh (1% or less than 1% of the population) are India's "affluent or rich."

Yet the figure is a victim of its environment - and of the messages cricketers get. Some franchises are willing to offer more to ensure that they have at least four half-good domestic players once they have filled their quota of four foreigners and local "stars" in the playing XI.

The IPL's ecosystem grumbles that 'market forces' should come into play over salary caps. It will imply that market forces will put in more cash with the overseas buys and less with the Indian players, which would be fine if this were not an event that required teams have seven Indians in their playing XI.

The India TV sting operation will end up being misleading only if the IPL allows it to be. What the sting operation has revealed again is that some of the IPL's most influential stakeholders are willing to go the extra mile to get players they believe they need. The players, who cannot understand what the word 'enough' means, are just willing to bargain long and hard.

If the franchises are not pulled up or reined in, another sting operation in a few years' time will just offer up another round of suspensions.

Sharda Ugra is senior editor at ESPNcricinfo

------

Why do the IPL franchises get away with it

by Harsha Bhogle in cricinfo

The India TV "sting" this week, where players were caught on camera allegedly attempting to negotiate more lucrative IPL deals for themselves, was, I'm afraid, tame and misleading. There were some issues there that deserved airing, but they were concealed by the theatrical, incessant self-promotion of the TV channel in question. Cricket needs to be careful of those who write film-style dialogues and those who over-dramatise. 

And so, in a typically Pavlovian response, far too many people are screaming match-fixing. Or its cousin, spot-fixing. The greater issue in this sting - if you were patient enough to get to it - was the realisation that many players get paid more than they are entitled to. And that because there is a ceiling on how much uncapped domestic players can earn, there are some naughty money transfers going on.

It is a practice that has been whispered about, occasionally loudly talked about, for a long time now; especially in the days before IPL 4. With a limited number of capped Indian players in the auction, there was a rush to find the best of the rest, and strictly speaking, if one franchise couldn't pay more than another, very few players had strong enough reasons to move. But then, there are many things that are whispered about on the circuit, and just because something is whispered about, it need not necessarily be true. More important, it cannot be proved to be true.

And so the issue of players being paid more than the contracted amount remained a whisper. Now players are saying it happens. The BCCI can look at it two ways. It can disbelieve the players or it can accept what they are saying and launch a serious investigation (which has been done but I do not know what its scope is) though it is very unlikely the board would not have known about it in the first place.

It will be unfortunate if only the players are investigated because you cannot accept money unless someone offers it. If the players are saying they were offered extra money, then it means the franchises were violating IPL rules too. If players are to be punished for accepting money they shouldn't have from franchises, then the franchises should be punished too. In his recommendation in 2010, on the Ravindra Jadeja case, Arun Jaitley suggested as much, and I think his legal acumen and stature can be used to strengthen procedures in the IPL.

Eventually this league belongs as much to the BCCI as to the franchise holders, and if it has to become one of the great sports leagues in the world (and it should not consider a smaller objective), they need to work together to strengthen it. And so, this cannot be buried, it has to be taken as seriously as a corporation would a whistle-blower.

To be fair, the basic principle behind the founding of the IPL was sound: that each franchise has equal resources available to it and so has an equal chance of winning the title. If the transfer of uncapped players favours richer franchises, then the principle on which the IPL was conceived is threatened. And so to take it to the next stage it needs stronger processes, but it needs more openness, for the more transparent an organisation is, the less it can hide wrongdoing. It is also something the fans are entitled to, because without them there is no revenue.

Now to the other danger, which too was known, but which the sting has highlighted. Indian cricket, like the Mumbai film industry, lures many towards it. Some come with the dream of making it big and playing for India for ten or 15 years; some others quickly fall away and seek every opportunity to make a buck in the time they have. It is not wrong but it exposes them to all manner of people. As there are fine and respectable people, there are maggots, too, who prey on the insecurity of young cricketers and lure them onto the path that can only lead to fixing and other crimes. And match-fixing, or spot-fixing, remains the single greatest threat to the continued success of the IPL. This sting, if the videos were ethically edited, confirms that day might already be upon us.

The people who carried out the sting exploited this vulnerability among young cricketers. The only way to protect them from more such vultures is to educate them and provide harsh deterrents. Ironically, though, such stings seem to have become the only way of exposing loopholes. Maybe a law passed by the government making match-fixing a criminal offence will help.

In many industries, corporations are free to run their business as they want but are answerable to a higher entity. For its own good, the IPL needs to have a higher entity, one that seeks no political or monetary gain, to question its functioning. This entity could be self-appointed, and there are many champions of corporate governance with a track record of integrity who will be happy to serve on it. The IPL will thus become a stronger, more rigorous organisation, and in becoming so, will benefit Indian cricket enormously.

 

Harsha Bhogle commentates on the IPL and other cricket, and is a television presenter and writer.

The short, sharp life of 'Chinese century'

By Nick Ottens

If there is to be an Asian century, it won't be China's alone. While it still has hundreds of millions of people living in poverty, the country is losing its cheap labor advantage to East Asian competitors while more industrialized nations in the region are far more receptive to international trade.

The Chinese economy is expected to overtake the United States as the world's largest in sheer size by the middle of this decade but the ruling Communist Party has ample reason to be worried about perpetuating China's impressive growth rates for another generation.

As China's middle class expands in the urban east, it is expecting more than just growth but in the western hinterland, a lack of development and, perhaps even more frustrating to the people there, a lack of political accountability fuels unrest and discontent. The party will be increasingly hard pressed to meet the aspirations of both these peoples. Economic and political openness, as desired in the coastal provinces, would weaken the state's grip on industrial development, which could exacerbate the existing imbalance between cities and countryside.

Chinese labor is already becoming too expensive for some manufacturers who are taking their business to countries as Indonesia and Vietnam while Malaysia, Thailand and Taiwan are more attractive for technology companies that require an educated workforce and a business climate that isn't too burdened by regulatory restrictions and corruption.

Labor laws and tax regimes in the rest of South and Southeast Asia are generally more flexible. These countries welcome international trade and investment whereas China seeks to protect its "infant industries" from free and fair competition on the global market. This policy enables the ruling class in Beijing to build high-speed railways across China but the cost, which is less clear, could be hugely detrimental to its economy in the future.

Foreign investors in China have to cope with laws and regulations that are inconsistently enforced - sometimes arbitrary. The Chinese legal system cannot guarantee the sanctity of contracts, which is vital to a market economy. Capital account transactions are tightly regulated.

This is a system that thrives on cronyism where businesses that are connected with local and state officials prosper and companies that aren't could see their investment go up in smoke when a magistrate determines that factory wages should increase by a third, overnight.

China does attract huge amounts of foreign direct investment. In fact, it takes in every month what India assumes in a year. Yet China grows at a rate just two percentage points faster than India. And even there, corruption is endemic.

At its most recent congress in March of this year, the Communist Party affirmed the need to improve "balanced growth", which should translate into increased welfare spending, including subsidies for farmers and the urban underclass. Western stereotypes notwithstanding, the Chinese state is not sitting on an infinite amount of cash however. It cannot simultaneously build a proper welfare state and allow the subsidizing of companies, especially in real estate, to continue unabated. If it wants to expand social programs and thus prevent civil unrest, it has to challenge vested interest with allies in the party.

With major changes in political leadership expected next year, it may not be until 2013 before a comprehensive social agenda is implemented. That could be two years wasted while necessary economic reforms to further open up China to world markets are delayed.

There is another, less immediate concern that could put a stop to this Chinese century before the world has a chance to recognize that it's living in one.

By the middle of the 21st century, 400 million Chinese will have retired. That's more than America's total projected population by that time. India, which is set to overtake China as the world's most populous nation by 2030, is expected to have nearly 400 million people more in 2050 than China.

How is China going to pay for all these old people? China doesn't have an expansive public pension system, which means that many Chinese in their prime, often without siblings because of their government's "one child" policy, will have to provide not only for their parents but, as life expectancy rises, their grandparents as well. Naturally, wages will have to rise to accommodate this unprecedented level of dependency which can only happen if Chinese labor becomes much more productive and skilled - fast.

The party has to manage this while not only dealing with internal pressure to democratize; it is also expected to finance American and European deficit spending when these continents blame China for its "colonialist" scramble for resources, including water, in Africa and Central Asia - resources it desperately needs to continue to grow; to invest in its future industrial base and to alleviate hundreds of millions of people out of poverty.

If despite this all, China somehow ends as tomorrow's superpower, "owning" the 21st century, that will be quite a feat.

Nick Ottens is an historian from the Netherlands and editor of the transatlantic news and commentary website Atlantic Sentinel. He is also a contributing analyst with the geopolitical and strategic consultancy firm Wikistrat.